I bought a few BIG as well , heres hoping. Ive read there was no shorting on CBL so everyone holding has been caught out unfort.
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Sad to hear for peoples loss on here. I went through it with Wynyard and it always sits in the back of your mind nowadays whether you make the appropriate choice when investing
https://www.nzx.com/announcements/299449
Guess there will be a few really pissed institutions who participated in the directors' $60m sell down less than a year ago?
https://www.nzx.com/announcements/290012
Then, there's those who participated in the $60m placement to strengthen the company's balance sheet etc etc in September 2016.
Appetite for CBL obviously was very very very good!
http://www.nzherald.co.nz/business/n...ectid=12001665
Another day, another headline with CBL in it
for all the wrong reasons
Directors and management selling shares to increase liquidity for the benefit of all shareholders is such a noble thing to do. Shareholders should be so grateful for such a generous gesture from the likes of Harris Hutchinson and all.
It is always an education to read Warren Buffett's annual reports for Berkshire Hathaway.
This year's report contains this gem which is likely to apply to CBL.
"As well-known analyst V.J. Dowling has pointed out, the loss reserves of an insurer are similar to a self-graded exam. Ignorance, wishful thinking or, occasionally, downright fraud can deliver inaccurate figures about an insurer’s financial condition for a very long time. "
Hello Blance me old mate.
Agree with you yet again. But you could have included with the aggrieved institutions (fund managers), the Chairman, Sir John , who bought 25,000 shares in his company off the market in February 2017.
Begs the question I reckon: He must have been a willing buyer so now that this bird's nest has unfolded, to a degree, how much did he really know about how things operated?
This thing is shaping as a novel or a movie in that it fits the saying " truth is stranger than fiction".
BTW Mr Harris wasnt just Ernest and Young's Entreupreneur of the Year 2017, but he was also voted Young Entreprenuer of the Year back in 1989. Actually given this latest stuff one cant disagree with the accolades in a kind of warped sense.
CBL group will still be around in 2050... ( maybe under different ownership by then )
They tried to grow too fast and spread themselves too thin... I still don't believe this is going to end as poorly as people think.
Time will tell...
Name an insurance company that hasn't been overcooked before.
The reserve bank used the term interim liquidation. Is there a difference between interim liquidation and liquidation? Has anybody got any ideas?
Appointing an interim liquidator can preserve a company’s assets pending the court’s determination of whether the company should be placed into final liquidation. This prevents further deterioration of a company’s financial position thereby increasing the likelihood of successful debt recovery.
Thanks Balance
As they are in breach of the minimum solvency requirement, RBNZ is coming after them and preventing any likelihood of damage to current policy holders.
They are not fundamentally over and there does remain an option to downsize back into a state the RBNZ will be comfortable with.
They have found themselves in a terrible position no doubt about that.
I have written off the investment completely and am trying to see what info I overlooked when I entered this one...
Say what you will about Mr Harris, but he is a bright cookie ( despite the mess his group is stuck in ) and no one should expect him to sit back as his life's work dies.
You can gather a lot about an executive with how they resolve situations just like this one... all eyes on Pete
bit more infor :
There are many reasons why it may be desirable to seek to have a company put into liquidation. The most common reason is that the company owes a client money. Another common reason is that the company has become unmanageable due to internal conflicts (particularly common with family owned companies). In cases such as this the client wishes for the company’s affairs to be wound up, and its assets realised and distributed by a liquidator.
Liquidation will enable a liquidator to realise the company’s assets and make a distribution to creditors including the client and, where the company is solvent, shareholders. The liquidator may also conduct an investigation into the company’s affairs. This can involve setting aside transactions under which the company has stripped itself of assets or seeking to recover funds from individual directors if the directors have breached their obligations to the company.
In order to address this problem it is possible to have an “interim liquidator” appointed to preserve the company’s assets pending the Court’s determination of whether or not to place the company into final liquidation.
Such applications are typically brought on an urgent basis and without notice to the company.
An interim liquidator does not have jurisdiction to realise the company’s assets and make distributions to creditors. Nor does an interim liquidator have the powers to make the sort of investigations and take the sort of recovery actions available to a final liquidator. Nonetheless, interim liquidators do have considerable powers they can use in order to preserve the company’s assets pending the final liquidation of the company, including, if necessary, assuming control of the operation of a company’s business.
If only it was that - one suspects not as RBNZ would have been very aware of the implications of getting an liquidator appointed.
It is hell of a mess - and heck of a pity for NZ Inc. NZ could do with a successful and thriving global insurance company.
It is sobering to note that the company has extracted close to quarter of a billion dollars ($245m) from the market since its IPO less than 2 years ago - $155m as new capital and $90m to directors and management cashing out.
How did it get into such a mess so quickly?
Long list of companies in Voluntary Administration
Company instigated this lot ...probably to help untangle the web
https://www.nzx.com/announcements/314698
ouch....
some of the biggest players that got stung harbour 17mil, ACC 4 mil, NZSuper 8mil shares. Not sure why the PMs at these govt entities are getting paid tax payer salaries just so they can buy out every ticker on the exchange...wheres the value add in that.
Some notable target price valuations given recently lol
Forbarr - $3.6
Blue Ocean - $ 3.63
FNZC - $3.49
UBS $3.7
Also big shoutout to Deloitte! (What happens when you put hundreds of grads who lacks common sense on the job btw)
Expensive lesson for some of the holders on here, wishing you the best of luck hoping something good can still come out of this mess. An important reminder for the rest of us "If you dont understand what you're buying, best not at all".
Good advise, but I think misplaced here. This is unless you are saying that anybody buying any companies shares needs to personally check all due diligence the company ever has done (or was supposed to do) in order of "understanding what you are buying".
Nothing wrong with the insurance business unless there are "black swan" events (and so far I don't see that in this case) or unless whoever is responsible for running the company don't know how to calculate their risks. Latter points to lack of management / board competence, which is hard for any shareholder to measure (particularly if the company was for more than 40 years lucky and has sound financial ratings and analyst assessments). You only notice lacking competence in running a business when it is too late.
Dust says "If you dont understand what you're buying, best not at all".
In CBL’s case surely reading the CBL presentation of early December with all the technical notes in it I would hazard a guess nobody on this forum would have understood what they really do ..except in vague terms.
And I did comment at the time only a few in the company probably did ...in hindsight maybe even they didn’t
Yes I agree BP, not saying there was anything wrong with investing in sound financial companies in general.
Speaking more from a personal experience, when CBL first got on my radar, I didn't even get as far as looking at their financials yet before every gut instinct started telling me to run in the opposite direction. Writing foreign business was a big turn off at first (not that theres anyting wrong with this, just I'm no expert in european insurance regulations)...then a quick trip to their website kind of sealed the deal, there are no legitimate businesses in 2018 running scuffed sites looking like that I can tell you. I've seen cryto ponzi sites whose made more effort in their presentation!
Fair enough ... and yes, I do remember winner commenting on the presentation.
I think what I would take out of both of these issues is that they either didn't bother to present to the respective audience or had pretty bad presenting skills (or both). I guess we will (hopefully) still learn whether their bad presentation skills resulted in the disappearance of hundreds of millions of dollars (and who knows - maybe the liquidator finds some of them (just being optimistic ;));
I still feel that it is more likely the recent events point either to board incompetence (lack of due diligence?) or to more sinister reasons - and these are both things which unfortunately can happen in any industry with or without presentation skills.
I do agree however, that their collection of (rather unrelated) niche markets around the world might be as well a sign for something, but again - I don't think this was the cause for the current situation.
If we assume (we don't know, but this is the only hint we have) that the current malaise is based on them miscalculating the long tail for the French construction industry, than neither a more glossy and readable presentation nor a better designed web page for the parent holding would have stopped what happened.
Their presentation skills must be pretty good as they have raised millions
That December presentation must have been really well presented ....seemed to get a few funds to add to their holdings
CBL another case of where Underlying Profit is highlighted and relied upon too much to assess the future
There is a big difference between PEB's channel stuffing ( booked revenues moving into receivables into doubtful debts into write downs ) and CBL's actuaries stuffing up risk assumptions and solvency ratios collapsing and big fat reserve strengthening to make up for it.
Also CBL had around $60m in net operating Cashflow 1H17... ( and about 70m spent on garbage acquisitions... )
One thing they both have in common is the funds seem to love em.
Looks like PEB has the better chance to succeed out of the two now.
I would say that PEB has raised the last of its capital. Harbour Asset fund managers are going to have to answer some really hard questions why their strategy of underwriting capital raisings/placements (nice fees, see?), supporting the share price post the capital raise (performance, see?) and building up an ever greater shareholding (more influence, see?) has blown up so spectacularly - $50m hit.
Cannot see their fund 'guardians' allowing any increased exposure to PEB - so PEB better perform!
I don't have any of this but trading is suspended. So what happens? Can this be suspended for indefinitely and investors are unsecured creditors?
Indeed...how curious!
"A series of capital raisings, including a float on the New Zealand and Australian stock exchanges in July 2007, raised the $246 million capital to develop the resource".
Actually, the source for this quote is quite interesting...a construction company talking about the "award winning access tunnel". Hmmmm...
https://www.tunneltalk.com/MacDow-Fe...Pike-River.php
And now, back on topic....
https://www.stuff.co.nz/business/mon...-cbl-insurance
The long tail liabilities that Percy alerted to.
Results out tomorrow... let us see some numbers for eff sake
So how does this gel with the interim liquidator appointment in NZ?
Irish Central Bank moves to prevent 'disorderly failure' of CBL Insurance Europe
Reuters Staff
DUBLIN, Feb 26 (Reuters) - An Irish court has appointed an administrator to CBL Insurance Europe (CBLIE), a wholly owned subsidiary of New Zealand’s CBL Corp Ltd, to avoid the risk of a “disorderly failure”, the Irish Central Bank announced on Monday.
The Irish Central Bank last week ordered CBLIE to cease writing new business with immediate effect and on Monday said that it was in a distressed financial position and had failed to address issues brought up by the bank in recent months.
CBL Insurance Europe, which underwrites construction-related insurance, is registered in Ireland and authorised to write business in Ireland and on a freedom of services basis in Belgium, Denmark, France, Italy, Norway, Romania, Spain, Sweden and Britain. (Reporting by Conor Humphries, editing by Louise Heavens)
Some good news for those who bought insurance off CBL in Europe though :
https://www.insurancetimes.co.uk/zur...426472.article
Keep an eye on this - looking unlikely that there's any gold left in the muck but who knows?
CBL really needs a proper 'good bank bad bank' restructure if there are any good bits indeed which could be recapitalised.
https://www.fool.com.au/2018/02/26/w...ors-appointed/
Grim reading.
Assuming they report their result, shouldn't there be the option of trading again, even if the buyers are speculators at penny prices. Or do nzx want to avoid trading so that the last traded price remains over $3 and there is no negative hit on indexes?
Exactly, that is what irked me about this whole thing... here the market is thinking this thing is chugging along well enough, pretty presentations and tooting about all the big growth opportunities...
For almost 8 months things have been fundamentally wrong, but in no way reflected to the market.
EDIT: first lot of reserve strengthening should have been a red flag
Nice term that ‘disorderly failure’
https://www.nbr.co.nz/article/cbl-ir...tion-th-213132
No results to be released as it sounds like its totally stuffed.
Disc: not a holder but feel sorry for those that are. I hope the Directors/MD are charged if there is evidence of gross negligence or fraud.
CBL is now an absolute sitter for a securities class action - will it happen though, probably not as NZ investors never want to do anything about it.
A major issue rearing it's head - CBL underwrites a large number of contractors bonds and building warranty products in the NZ market. Now those bonds and warranties are effectively useless.
Will this trigger a call on those bonds where contractors have to front up with cash to replace the bond? Cash that the contractors very likely do not have? Will this impact the construction sector?
And how about those home owners that have bought a new house with a now useless building warranty guarantee?
There have been no charges filed against anyone in respect of the 115 deaths due to negligence and incompetence over the CTV collapse from the Christchurch earthquake.
Why would anyone be charged over a 'trifle' matter like incompetence in managing AMI's overexposure to Christchurch?
https://www.interest.co.nz/opinion/9...-its-insurance
Article with some very damning insights into the workings of CBL, NZX and RBNZ.
Best part is the RBNZ's interactions with CBL since July 2017 and directions issued to CBL to fix its financial position.
CBL claims confidentiality, RBNZ will not deny or confirm and the NZX is blissfully unaware of anything going on.
Silence from the NZX re CBL is deafening.
Anyone who is a shareholder in CBL better wake up to the reality that NZX rules and regulations are a sham - there is no enforcement.
https://www.interest.co.nz/insurance...ance-europe-if
Confirmation by another publication that CBL will not be announcing its results toady - advised to NZX but NZX has chosen not to advise the market!
Guess NZX must be pink with embarrassment at how another Feltex, courtesy of Forsyth Barr and UBS, has revisited its listing board?
Anyone observing the share price of CBL will note how its share price started dropping away from end of July 2017.
Coincidental that RBNZ started its 'interactions' into the company's capital adequacy and claims provisioning at that time?
FMA and NZX are asleep at the wheels again or have they finally woken up to actually do some investigation?
Friends of directors, staff.....pass the word around, ....sell.
Sounds like SCF all over again, with the public service and hangers-on, thinking they can fix it without 'worrying' the community.
If CBL don’t file their report by March 31st the NZX will suspend trading in their shares
That George Kerr of PGC knows all about this
Balance, What’s George up to these days?
Just the one sell down, in april 2017 when MD and chairman sold a combined 10.4 mill shares , 4 % of the company to increase "liquidity" and repeating how healthy the company is. And FNZ increased holding from 5% to 6% plus in Jan 2018, they will be spewing along with the rest of us.:eek2:
Well spotted, and the daily SP drop in early August was a gap-down, quite precipitous on the day at the time, which indicates some were 'in the know', then 6-7 weeks of further downside .. ergo the selling continued. It wouldn't be obvious anything was particularly wrong to uninformed shareholders, possibly a conundrum as to why the SP weakness? Despicable, with hindsight considering the timings referred to re RBNZ awareness etc.
What a shambles. This stuff rocks ones confidence in the NZX as a platform for transparent markets.
I took a squiz through the last six months and sure its easy with hindsight but there were a few clues for people.
The first one really was that interim profit with the large increase in reserves.
Then later the CFO resigned.
Then there was some more announcements about reserves.
These were all ominous
Also I remember someone whose opinion I valued saying to me something very dubious about this company after those first reserve adjustments. Along the lines of un-quantifiable risk.
That Christmas presentation was a real doozy too huh. Made me feel a bit thick tbh, when I read that.
Guess I am - thick enough to have considered this company but not thick enough to invest.
Hindsight its always easy. I'm not an investor so my interest is purely academic but there's no real clear TA signal that good TA skills would have got you out, that's scary.
Further, nothing unusual about reserve adjustments with insurance companies so I doubt your first point would have raised too much concern.
Secondly CFO's resign from time to time for personal and career advancements or retirement so its not all that often I see that as a point of concern e.g. Rob McDonald resigning as CFO of AIR and me selling my shares in AIR late last year are pure coincidence, I don't think the new guy has such a great personality on the conference call but it certainly hasn't put me off.
The further announcement about reserves came in February right ? or perhaps I haven't looked at the timeline carefully enough ? Much time to consider one's options then was there ?
This will have come as a major shock to seasoned and well respected fund managers like well respected Harbour Asset management who at least in theory as a major shareholder have access to bending the managers and directors ears other that at annual meetings so if they got it wrong I think your average Joe Bloggs who also got it wrong can forgive themselves for not being perfect ?
I think the few clues that were there were pretty faint and far between. RBNZ's actions in keeping their long standing enquiries confidential is surely the matter that's the bone of contention to chew on ?
There was another big clue.Namely
The sell down by Harris and Hutchinson (discharged bankrupt) in April 017 virtually moments after their shares came out of escrow. The lame reason given at the time viz : “ to increase liquidity “ was actually crap because the buyers were only a few.
This whole mess will keep a lot of lawyers buzzing with excitement as they contemplate the potential for fame and fees. Interns line up!
I do feel (a bit) for Carden the CFO. He resigned in November and gave 6 months notice and is still in the office. No doubt he has working through all this **** of late and still puts his name to most announcements
CBL Managing Director, Peter Harris said, "On behalf of CBL I would like to thank Carden for his significant commitment and contribution to CBL over the last 10 years. He is leaving on good terms and not planning to take up another position, and his last day will be 30th April 2018."
Been around long enough .... maybe he did see the writing on the wall ...but thats just pure speculation
If the CFO couldn’t see the writing on the wall then nobody outside the company could possibly be expected to see it.
Yeh absolutely. Not suggesting otherwise but its still educational
Weird thing is I havent even looked at the chart until you mentioned it Beagle.
But of course there was a huge warning. That precipitous fall of a whole dollar (nearly 25%) in the space of six weeks last August. And the recovery from that never even reached 50%.
At least I hope this company gave off enough bad vibes that anyone who had it didnt jump in too hard.
https://stocknessmonster.com/announc...asx-2A1064940/
She saw the writing on the wall, in neon lights surrounded by glitter?
https://www.interest.co.nz/news/5969...after-striking
Was the writing on the wall 6 years ago?????
Excerpt :
"S&P has cut CBL to BB- with a negative outlook from BB+. S&P also said CBL, which is licenced under the new Reserve Bank prudential regulation regime for insurers and was formerly known as Contractors Bonding Ltd, has governance that's "less than adequate" with its board lacking independence from management."
"CBL now has reduced tolerance and ability to absorb shocks because of its weak risk based capitalisation, financial leverage, modest financial flexibility from entrepreneurial ownership, as well as concentration and credit quality risk regarding its investment assets," S&P said."
Looks like CBL switched its ratings agency to A.M Best in 2013.
"All policies currently in force will remain in place and should policyholders have a claim under their policies, it will be processed by CBLI in the ordinary course of business. However, it should be noted that the timing and quantum of payment under any policy a claim may be made under is uncertain at this time and as stated above, no claims can be paid while the company remains in interim liquidation."
that is what the email sent to me today. Basically my 10 years new built warranty is gone...!
Looks like the Preliminary Unaudited Normalized Underlying Adjusted Profit won't be announced
http://nzx-prod-s7fsd7f98s.s3-websit...890/275458.pdf
Are they still getting ready for a cap raise or is the game already over...
Reasonable to say the average investor wouldn't possess the ability to conduct proper DD on this dud, but Harbour and their team of talent, 5 something CFA charterholders dropping the ball on this just makes me chuckle :D I guess the old boys club are just dart board picking stocks these days too
Its well and truely done.
They mispredicted long-tail claims in a segment that was over 50% of their business. Not sure what the numbers are, but to mock an example if CBL generated 1 billion of revenue on 10 year warranty, they'd get acturial estimates for expected claims, at say 50m against 100m of recognised revenue, and deduct 20m admin to arrive at 30m profit. Actuarially they require a buffer for adverse claims, eg an additional 50m pa... Thus must maintain liquidity of approx 1b, reinsure a portion of the exposure, and hold the rest in the balance sheet.
Instead claims turn out to be 75m, and reserve provisioning requires the keep capital to cover up to 125m pa. So now have a 250m exposure, less the reinsurance. Which is fine, the business still generates a profit (50m over 10 years), and generates interest from funds held in trust... They just need additional reserves to fill the funding gap.
However, this is the story CBL have released, which given their track record with RBNZ we should ascribe very little confidence... 3rd party investor comes in, and judges that claims in the french construction segment are trending and will blow out. Project 95m pa over the next 10 years, leading to a operating loss of 15m over the next 10 years, and requiring an additional 200m of reserves.
So they need to book in a net loss of 150m , and raise an additional 300m+ in this example.
Thats where we were on the 8th... Now we are in liquidation mode, a sizeable discount to fair value on the assets of the business, so any "shareholder value" is eroded. That plus the fees of liquidators, lawyers, every single creditor jumping down the throat, not to mention the run on claims (the house you thought might be leaky but holds a 10 year CBL warranty, all of a sudden is definately leaky).
Credit downgrade from BBB(whatever it was) to E says it all. Its junk, and thats the Debt, equity sits down the pecking-order. At this stage its just a question of whether policy-holders funds are adequately ringfenced.
Good explanation, leesal.
Not hard to understand when you explain it so well.
http://www.nzherald.co.nz/business/n...ectid=12003448
What an absolute disgrace and abdication of responsibility and accountability to insurance policy holders!
Surely CBL can assess and contact their policy holders if they are still ok or need to get additional cover!
NZX, FMA, RBNZ and of course, CBL directors & management - DO YOUR FREAKING JOB!
12/06/17 - Credit Rating A- Excellent
The ratings reflect CBL’s strong risk-adjusted capitalisation, consistently profitable operating performance and low product risk profile and CBL maintaining a strong risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). This is reflective mainly of its moderate underwriting leverage and favourable liquidity position. In addition, with a conservative gross leverage ratio, the company is not considered to be highly dependent on reinsurance.”
ha...ha...
https://www.nbr.co.nz/article/cbl-in...ders-th-213285
You would think that the Directors must personally be "in the line of gunfire" from creditors for breaching a direct order by RBNZ.
Shows the contempt that the directors of CBL have for RBNZ? They pay a huge price for the contempt.
Probably thought they were dealing with the NZX - in which case the directors and management of the NZX would spend the next 6 months investigating while pissing in their pants as they face a QC from CBL.
Yes and Yes. One would hope that criminal prosecution will be pending especially in light of this http://www.sharechat.co.nz/article/2...m-offshorehtml
If they paid out the money whilst being insolvent.... directors are liable.
52 Board may authorise distributions
(1)
The board of a company that is satisfied on reasonable grounds that the company will, immediately after the distribution, satisfy the solvency test may, subject to section 53 and the constitution of the company, authorise a distribution by the company at a time, and of an amount, and to any shareholders it thinks fit.
(2)The directors who vote in favour of a distribution must sign a certificate stating that, in their opinion, the company will, immediately after the distribution, satisfy the solvency test and the grounds for that opinion.
(5)Every director who fails to comply with subsection (2) commits an offence and is liable on conviction to the penalty set out in section 373(1).
But the penalties are pitiful
Penalty for failure to comply with Act
(1)
A person convicted of an offence against any of the following sections of this Act is liable to a fine not exceeding $5,000:
Even Insurance stocks are not safe. There are some risks in the insurance sector as well. In the long run only strong balance sheets firms will have sustainable business.
https://www.investopedia.com/ask/ans...nce-sector.asp
Harbour Asset Management ‘valuing’ CBL at 88 cents for the purpose of valuing their funds.
There rationale
https://www.harbourasset.co.nz/wp-co...te-1-March.pdf