disc. non-holder and not looking to buy
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disc. non-holder and not looking to buy
I was recently looking for insurance quotes for a single story house on the flat in Lower Hutt. The primary natural hazard risk would be earthquake damage. Vero came in better than others including State and Tower. I don't see this as a particular negative for Tower because they are actively trying to orientate their portfolio away from perceived higher earthquake risk locations like the Wellington region. If I was in an area like Hamilton or Auckland and they weren't price competitive I'd be concerned.
From the interest.co.nz web site
"Suncorp Group today announced net profit after tax (NPAT) of A $250 million for the six months to 31 December 2018. The New Zealand business achieved NPAT of NZ$120 million, up +79% on the prior corresponding period."
Suncorp in NZ trades under the brands Vero, AA Insurance and ANZ Insurance.
Balance will be wondering whether he should chill some bubbly for the TWR announcement.
Boop boop de do
Marilyn
TWR should announce a good result indeed, given how the other insurance companies have creamed huge profit growth from little ole NZ.
Reporting date is a long way away though - May so a lot can happen in between.
Here's thinking that Bain will want to strike before the results come out!
Pretty good but no doubt no change to guidance is a bit of a disappointment to sum.
http://nzx-prod-s7fsd7f98s.s3-websit...751/295164.pdf
That $10m they mention ...does that mean if no disasters they can add that back to profit?
Assume that must be the case. Treat any upside or downside from that provision as an abnormal?
All good and steady as she goes sort of business update.
Revenues are growing, expenses are under control, claims ratio are down and on track to delivering NPAT (IN EXCESS) of $22m.
At this rate, better that Bain not take the company over!
No news is good news re the latest market update I guess .... looking very cheap if they hit that $22m NPAT and recommence paging Divis .....
4 months on, if NPAT is in excess of $17m for FY19, that will be a beat for me.
With TWR basically being flat since August 2017 (after the takeover bid was cancelled, and after the bigly capital raise was announced), market clearly not to sure... I'd think with a solid result and guidance for double digit growth, TWR should climb back into the mid 80's
Divi yield could beat most expectations particularly if they surprise to the upside. Let’s hope they don’t have to use all that reinsurance they have available and the weather gods play nice for the remainder of the FY.
Nice jump over the last few days. After trading at 75c or less all of 2019 twr closed at 76c today. This took out all the listed sellers except someone hopeful at $1.40 I wonder if this is simply from speculation of a good result or news leakage around some event like a takeover?
Perhaps the news that IAG has introduced Risk-Based pricing has given investors hope that the reputation of TWR might be improved? Or perhaps reading into the fact that TWR is turning around due to risk based pricing was one of the reasons IAG decided to follow suit ... good for investors nonetheless!
All speculation with no research of course ... that's how we roll :P
It certainly looks like takeover
Not long to wait until HY result. Will be interesting to look at forward guidance and if those dives are due to recommence shortly ...
2019HY results out 10am today we will see if the co us turned a corner re profit and potentially reinstate a divi - SP at present would suggest neither of these outcomes are likely to occur. Could get a good bump to the upside if the announcement and outlook is favourable ....
https://www.nzx.com/announcements/334054
Insurance companies made zillions over the years by investing premiums in companies that were a major cause of our current ‘climate crisis’ — and now bemoan the impacts that have resulted from that crisis.
Some would say karma
Good luck today with the announcement....might be one of their lucky years
Low expectations seems par for the course with TWR time will tell
Looks like this is going to be one of their lucky years .....Tower earnings on fire.
http://nzx-prod-s7fsd7f98s.s3-websit...777/300166.pdf
Still just an ordinary insurance company whose destiny is always in the lap of the gods
sure looks to be one of those lucky years winner, if only STU was lucky as well... or maybe one helps create one's luck (or lack of luck)?
We'll see tomorrow if it is a 'lucky' year for AFT...
Yes looks good at a high leve would be good to see those chch claims settled once and for all. Decent uptick in FY forecast however they do note that result has a few caveats ... should run a bit on this news perhaps Bain will want a crack at this sooner rather than later ...
I suspect if they can hit guidence this will rerate simply on as a dividend play if they can sort out chch and the tech upgrade
Should move into mid 80's over the coming period they say
Have to wonder what the SP reaction would have been had they not announced an increase In guidance....
Moving in the right direction I guess ...
Spent my weekend reading the result....recovery is well beyond expectation. They are planning to pay dividend next result...NPAT excess 26m...
true good to be true..the SP still at .80cents....
any thoughts? Plan to buy in..sound tempting...let say it pays dividend of .04 end of year...the sp will be more than $1??
Uplifted FY19 financial outlook• Strong business performance and benign weather environment in first half leads Tower to uplift itsone-off guidance for underlying NPAT, which is now expected to be in excess of $26m* in FY19• Key assumptions include: A $5m allowance for large events Loss ratios return to more normalised levels in second half A minor uplift in management expenses as transformation activity culminates• In respect to the 2019 financial year, and as previously advised, no dividend will be paid in the firsthalf of the financial year. The Board’s intention is to pay between 50% and 70% of second half 2019NPAT, where prudent to do so
What I am most pleased about is not only are they growing the top line (and the bottom line obviously) but also admin costs remaining in control.
I brought in in late 2017 with the cap raise, and several months ago again at 78 cents (only to see it drop below 70 not that long after!) but happy to have topped up... I would still say at 80c it is pretty good value, and given the turnaround, and the fact someone might take it over as well, I'd like to think we' won't see (much) below 80c again.
Big issues I see ahead which could impact the NPAT stated - the implementation of the new computing system - if all goes to plan it should be a great result reducing spend going forward - if they get it wrong could turn out to be a disaster with additional cost overruns etc .... and winter coming in they have benefited from fairly benign weather in the 1st half let’s hope that remains the same through the course of winter - I take the markets reaction as once bitten twice shy regarding the outlook - if they achieve it this should rerate majorly in the months ahead - great entry point if they stick to guidance, no tech issues and no major natural disasters .....
Thanks guys..
big buy in lately.....some one must be accumulating ...?
I am surprised at the lack of share price positivity despite results being pretty positive (and outlook positive as well)... I thought we'd easily be in the 80's now, I reckon we'll see a 4 ish cent dividend arriving in less than 5 months time (not a bad yield at all)
I bereave there is an opportunity in the insurance market going begging.
Most insurers are spooked by risks in Christchurch and are charging very high premiums for the risks they do underwrite.
Most of the buildings in Christchurch of earthquake-vulnerable construction have gone. An underwriter with a rigorous selection process which avoided hillside risks, liquefaction zones and buildings with legacy earthquake issues but selected for good construction would gain heaps of premium income.
What about the big one when the Alpine Fault gives way you ask? The fault is some distance away and remember the force of an earthquake diminishes over distance on a logarithmic scale. One of the reasons the Christchurch earthquake was so destructive was a large part of the movement was up and down rather than the horizontal side to side shaking expected.
Something for a properly resourced insurance company with a reinsurance syndicate behind then to have a go at.
Boop boop de do
Marilyn
A lot of accumulation lately...
With this extended run of mild weather this year, it has to be good for insurance companies balance sheet.
Working with one of the large companies (not tower) the last 12 months has seen a huge reduction in domestic weather related claims compared to previous period.
That and higher excesses as customers increase them to save premiums, means less claims as minor claims become uneconomical to claim for.
Of course this could all change with a run of bad weather events!
Yes true...higher access to claim so reduce the claims. Well...the way of insurance business is different now...the charge more for higher risk..and also there is EQC levies to cover the cost in case huge natural disasters strike
IAG in Aoteroa has had a boomer 6 months;
https://www.newsroom.co.nz/2019/02/0...ace-australia#
I thought the market would have gone long on TWR using the "rising tide lifts all boats" theory.
Seems not.
Boop boop de do
Marilyn
Suncorp had a boomer day the year before it... NZ General Insurance going fantastically and outlook for both (of their NZ Operations) reasonably positive as well... but yes, it is like people just simply don't believe it can be that good for Tower either... and still another 3 months before we get close to finding out.
Hold pretty dam good yesterday....buyers are starting to buy in..expecting great result with at least 4c dividend...
EOFY approaches - the weather overall seems to have held off fairly well which should support some extra bump to profit. Not sure what the Pacific is doing though, but I'm not aware of any big hits. What are expectations for divvies?
There's still plenty of uncertainty there - the regulators are doing funny things, Tower have a big system replacement that's midstream, and even though the Canterbury tail is getting small the EQC still seems to find ways to create uncertainty for the private insurers. They also have Bain sitting there at 19.9% - who knows what their strategy is and that's possibly causing some gun shyness from the bigger guys to adjust their holdings. Overall it is a really static trade-wise; I think there may just be lots of long-term holders who are waiting for the last few bad years to even out and the non-holders only see the potential speed humps I mentioned above.
If they are going to distribute circa $10m aka 4c div, I'd prefer if some of this was via a share buyback because with no imputation credits at present, one third of the div goes directly in RWT for those on a 33% tax rate.
It's a little better for companies as only 28% is lost, but still not great. I'm guessing this is one of several reasons behind the low div rates for most retirement companies as they also have little or no imputation credits (but for different reasons)
https://www.nzx.com/announcements/341433
Interesting announcement
I would have thought that many of Youi customers were previous dissatisfied Tower ones
But Tower says this is growth so it must be good
Disc. Don’t know much about Youi but their advertising seems to suggest cheap(er) insurance
Key takeouts:
Tower to buy Youi for $13M
No dividend as a result
Capital Raise of $47.2M to occur as part of the arrangement
Issue price of NZ$0.56 per share
Entitled to 1 share for every 4 shares held
Increase of Full Year Underlying NPAT guidance from $26M+ to $28M
Tower to pursue dispute with EQC if needed (likely)
Plenty of solvency up its sleeve
Solid growth continues, claims ratio favourable
Disc: Holding
Insurance companies are all getting smarter..with high excess fees and premium kept raising every year...all kiwis must have insurance..it is on their DNA
Why would Rand Merchant be selling their NZ operations? Could be poor asset quality with limited margins.
According to their statements they lost market share $26M 2018 to $24.5M in 2019 (premium).
The capital raise has virtually nothing to do with the acquisition. The EQC receivable is now in question and is assumed to be subject to litigation. The capital raise is to shore up solvency
Ratio.
Correct - that's the really interesting thing here. The RBNZ has obviously grown a pair and said "we won't approve the Youi deal unless you change how you look at the EQC disputed receivable asset from a capital perspective." Clever and probably very frustrating for the Tower Board. This could be taken one of two ways for shareholders; the likelihood for collection of the asset is perceived to have reduced (possible but not likely), and/but, the future collection of this asset from the EQC in whatever form (whether its 1% or 100%+ of the original assumption) will result in a substantial profit and dividend for shareholders to enjoy down the track if and when it materialises.
Read again re: balance sheet and the purpose of the capital raise re: EQC receivable.
You're probably not wrong re: Youi's market share. I'd say they compete most closely with the TradeMe Insurance brand (administered by Tower) for the low-cost offering in the market, be interesting to see what product Tower move the Youi policyholders on to at renewal assuming the deal goes through.
I guess on the upside, if (when?) the ACC receivable is received it won't be needed for regulatory capital requirements. It could therefore be distributed back to shareholders, potentially through a share buyback aka what Fletcher are doing now following their earlier capital raise. Alternatively strong organic growth won't need additional capital for quite a while.
Sounds like Tower will get most (if not all) of what they are owed and EQC don't want to go into battle over it (am I reading that right?)... meaning the extra capital being raised is almost entirely not needed... but will mean Tower is rock solid.
Mr Market clearly not impressed as the share price is down over 10 cents since monday... another profit upgrade, increasing GWP, technology upgrade programme roughly on track (no big blowout... yet) and a small yet nice growth opportunity the purchase of the Youi portfolio provides clearly not enough to please it - and the prospect of another year without dividends is certainly not helping.
Well TJ..u never know if they decided to declare dividend as u mentioned the capital raise not necessary which will make tower strong. So...if all goes well ..who know they will declare dividend to return the extra capital....
I am astonished the price dropped following the Youi acquisition announcement and lift in guidance. How narrow minded can the market be? It's like "We won't get a circa 5c dividend so lets beat the price down by at least that much"... when in fact earnings forecast went up and retained earnings are far more beneficial (due to taxation advantage) to all shareholders in the long run than a dividend payout.
In answer to the question, "Did TWR's SP, prior to the announcement, already have this priced in?", the answer, given the complete lack of market recognition since the H1 announcement, must be a resounding "No".
On top of this, prior to the announcement, SP of circa 77c per share meant the market valued 5 TWR shares at 5 x 77c = $3.85.
Post announcement, prior to the record date (all things being equal), 5 shares can be purchased for (4 x 77c) + (1 x 56c) = $3.64
And the price drops????
So today, at market close of 68c, those 5 shares can be bought for (4 x 68c) + (1x56c) = $3.28 = 15% cheaper then $3.85 pre a good-news announcement.
Have I got something completely wrong here?
4 more days left in TWR's financial year to seal it as a benign one re earthquake and weather-related claimable events.
From a balance sheet view the receivable is about 15c/share. If it's receipt is now significantly delayed and possibly in doubt, the assets underpinning Tower are less.
I however suspect more of the price drop is script supply/demand factors around a rights issue.
There's also a potential question mark around whether the acquisition is value adding or a tack on to try and make another capital raise justifiable.
http://nzx-prod-s7fsd7f98s.s3-websit...608/308538.pdf
Clearly the market thought purchasing Youi was somehow detrimental to Tower... glad they have come out this morning saying quite the opposite... and confirming what I thought (small, but solid and good option for growth).
How can I trade Tower's rights? The NZX posted a notice that they can only be traded on X-stream? I can't seem to trade on the Direct Broking platform. Thanks.
Apparently issues resolved... but doesn't seem to be trading on Direct Broking yet - and I'm not willing to guinea pig the first trade!
Yes. They are trading around 9c at the moment. Their value is only the ability to get the "rest" of the share for 56c when the offer ends. At 9c, there is effectively a 1c per share saving on buying the shares as trading now (66c).
I don't think double brokerage - exercising the right shouldn't attract a brokerage fee I wouldn't think?
Where/How do you apply if you want to take up the rights? Haven't rec'd any comms on it.
The web portal opened around 12pm today, I have taken up my full entitlement (and transferred money) a few moments ago.
I am still surprised the shares trading this cheap (sub 70 cents)
Considering dip my paw into the waters again:
First time I made lots of money;
Second time I lost some;
Third time ???.
When the last day to pay TJ?
Straight from my email confirmation....
"IMPORTANT:
Please check with your bank to ensure the payment is made in sufficient time for it to be received in Computershare’s bank account in cleared funds by 7:00pm (New Zealand time) on 15 October 2019.
If your payment is received for less than the amount paid due to bank fees being deducted from your payment, you will not receive all of the New Shares you have applied for. The number of New Shares allotted to you will be calculated based on the payment received. Any payment that is received and unable to be identified before the closing date, will be refunded without interest.
The registrar will endeavour to use all methods available to identify any such payments prior to actioning the refund. If you want to utilise this service and have any questions, please contact Computershare at tower@computershare.co.nz or 0800 222 065."
Just a reminder that rights trading is about to clsoe this afternoon.
huge tower fan. Currently 1/3 of my (not very big) portfolio and looking for $1 share price this year.
Looking to talk my book here and bring the forum on board.
I have done a quick and dirty comparison of Tower to IAG (big Aussie owned insurer) and present metrics below. The format sucks sorry.
Tower IAG Rough Solvency Ratio with Youi additions + cap raise 163% 163% spooky Rough Solvency assuming no EQC payout of $50m 119% still not awful. GWP (millions) 170 12,000 Net profit (millions) 28 1,076 Net profit per $GWP 0.16 0.09 Tower massively more profitable per $ of GWP basis. Need to confirm this. Growth YoY 8.90% 3.10% PE 9.7 20.91 Market cap (millions) 287 17,610
So tower is actually pretty well capitalised now, assuming there is a net $50m return on the EQC receivable, it will be broadly in line with IAG. If no return at all from EQC (deemed unlikely) then it will still be significantly over the RBNZ minimum requirements, including the additional requirements for the Youi premiums.
Tower makes vastly more net profit per $ of written premium than IAG (almost double by my calcs). Interested if someone can show this isnt the case. I simply took net profit / GWP as per the two reports below. Hope I havent made a huge mistake here.
https://www.iag.com.au/sites/default...19-Results.pdf
https://www.tower.co.nz/investor-centre/reports 2019 half year report
Tower growing extremely strongly and insurance is somewhat recession proof?.
Tower on half the PE
Bain capital hold 20% of Tower and may move at some point.
Whats not to like?
Congratulations to Tower on running a fair, rapid and successful capital raising for all shareholders. They have shown others (cough EBOS, Turners) how it should be done. Whole process from start to finish took less than a month, so lets not have speed used as an excuse to screw small shareholders via placements or SPPs again.
On a side note, anyone care to explain how Westpac increased their stake from 5.44% to 6.5% paying only 19.5 cents a share?!?
Transaction Type: On-market sales and purchases
Period: 21/9/2017 to 21/10/2019
Shares: 12,741,133
Consideration: $2,484,516.88
Average price per share: 2,484,516.88 / 12,741,133 = 19.5 cents a share
Share price range in this period was between 66 and 70 cents and the rights price was 56 cents.
Thanks Winner, didn't realise Tower was also listed on the ASX. Had assumed there was offsetting trades hidden in the numbers, some nice trading by Westpac there!
There is also an additional disclosure from Westpac on the ASX that they have increased their stake to 8.13% but it is not on the NZX as of posting.
Why do we tolerate such crap disclosure in NZ? Should copy the ASX requirements for dual listed shares and cut down on the double work.
Good to see all Tower directors taking up their rights allocations, though surprising how few they own (except Michael Stiassny).
Director Marcus Nagel took up his rights to take his grand total to 62 shares! :D
http://nzx-prod-s7fsd7f98s.s3-websit...284/310668.pdf
Interesting... they now hold 8% after the rights issue
Thanks for that, didn't realise Bain had a board rep.
Frustrating to see Westpac et al, Salt Funds Management and other high rollers helping themselves to loads of extra 56cent shares. Why wasn't that option presented first to long suffering existing shareholders via a pro-rata over-subscription facility?
Until the NZX and NZ directors understand that a market needs to be fair and equitable to attract broad based support I fear the NZX and companies listed on it will continue to struggle.
Decent volume of late heading into the AGM
??? The Tower ASM isn't until Feb or March most years.
Maybe you mean while we await Full Year Results announcement which is due in November sometime, true - but there won't be many surprises with the disclosure that occurred re: the capital raise and the delay of any dividend accordingly.
Regardless, the volume doesn't seem substantially different to the ordinary trend from what I'm looking at - where are you seeing additional volume (apart from the capital raise?)
In line with expectations
Not too bullish about F20 though
http://nzx-prod-s7fsd7f98s.s3-websit...557/312189.pdf
I reckon tower are doing a heartland... putting expectations low but we all know they are going to smash it (although the share price certainly doesn't believe either of them these days)
Remember this time last year in FY18 results announcement they said underlying NPAT in FY19 is in excess of $22m... was actually $27.4m.
So when they say $27 - $30m, we know its going to be at least $32m (and hopefully we get a big juicy dividend as well)
If you look at the details, it is all about the weather and they 'assume' that everything up to their reinsurance program will be spent on moderate catastrophe events. If the weather is good for 12 months and no catastrophe events, there's a solid circa 10m bump available there. But given where the climate seems to be heading at the moment - I wouldn't be expecting to bank it every year and that's why they don't set expectations on the basis of having it available.