TWR - Tower Insurance.

[macduffy]

- Let's hope we never see negative interest rates here. That money-making float that insurance companies invest isn't the money spinner it used to be but doesn't need to become a minus in the P and L a/c!

- natural disasters and reinsurance costs don't seem to be reducing.

I hold a few TWR myself but not looking to add more at this stage.

[winner69]

[QUOTEWhat's not to like...]

- Let's hope we never see negative interest rates here. That money-making float that insurance companies invest isn't the money spinner it used to be but doesn't need to become a minus in the P and L a/c!

- natural disasters and reinsurance costs don't seem to be reducing.

I hold a few TWR myself but not looking to add more at this stage.

Ironic that over the years insurance companies have invested a lot of that float money into companies/industries that supposedly have stuffed the environment so much and one of the main causes of so many natural disasters

[Southern_Belle]

Ouch - beaten to hell all over again

[kelfy]

OMG !!!!!!! So disappointed today

[BIRMANBOY]

Sort of glad I didn't buy any of these in March when I was contemplating it. Problem for me is the dividends are always unimputed which kind of puts me off. However they are maintaining y/e 15 dividend payouts which at current SP is 10 plus % before tax. Moderately interested again will keep an eye on SP movement. You don't see many insurance Co's going bust.

[smtrader]

If anyone subscribes to Soro's theories, they would've seen this one coming.. he noted that dividend levels are highly correlated with future SP movement.. TWR dropped their final dividend from 8c last year to 7.5c this year..

having said that though, only 500k almost traded, that much isn't enough to say it is rational that these few shareholders have beat the price down by almost 11% as off now..

Disc. looking to buy to cause a DCB:t_up:

[smtrader]

Just got to skim through their Half year results.. its actually pretty bad in the short/medium term for SP.. also they cancelled their share buy back... not going to be able to prop the SP up (or hold it from falling back down).. but still sounds like a good long term play.. il just borrow at 4% and pocket the 6% difference in dividends.8061

[peat]

You don't see many insurance Co's going bust.

In New Zealand there has been Standard Insurance , and following the Canterbury EQ's both AMI and Western Pacific went under.
In the USA there has been AIG and much earlier CONSECO.

So it does happen. Note I am not suggesting Tower will.
But lets face it, insurance is a risky business.....

[BIRMANBOY]

Borrowing to invest is not my idea of a good time smtrader..however if you change your avatar to s&mtrader I could understand it:scared:. Still stuck in the dark ages I am so probably missed out on lots of great opportunities. As a long term investment insurance Co's are usually the cockroaches of the investment world.. Have a bad year...no worries up the premiums next year. However its dividend history is not actually that reliable or consistent as other prospects so don't know. Sp that's a different story and have no idea.32014
$0.165

Just got to skim through their Half year results.. its actually pretty bad in the short/medium term for SP.. also they cancelled their share buy back... not going to be able to prop the SP up (or hold it from falling back down).. but still sounds like a good long term play.. il just borrow at 4% and pocket the 6% difference in dividends.8061

[BIRMANBOY]

True that's why there's all that re-insurance going on..to ameliorate the risks. They never completely die however just get absorbed into "luckier" better financed entities. However yes not that's going to help an investor much if it happens. Still relatively infrequent though.
In New Zealand there has been Standard Insurance , and following the Canterbury EQ's both AMI and Western Pacific went under.
In the USA there has been AIG and much earlier CONSECO.

So it does happen. Note I am not suggesting Tower will.
But lets face it, insurance is a risky business.....

[macduffy]

True that's why there's all that re-insurance going on..to ameliorate the risks. They never completely die however just get absorbed into "luckier" better financed entities. However yes not that's going to help an investor much if it happens. Still relatively infrequent though.

In Standard's case the company not only completely died but its unlucky - or unwise - shareholders had to cough up another 10shillings per share uncalled capital. Watching that happen put me off partly-paid shares completely!

[Snow Leopard]

Sort of glad I didn't buy any of these in March when I was contemplating it. Problem for me is the dividends are always unimputed which kind of puts me off. However they are maintaining y/e 15 dividend payouts which at current SP is 10 plus % before tax. Moderately interested again will keep an eye on SP movement. You don't see many insurance Co's going bust.

Sort of unhappy that I did buy some of these in March :crying: :crying: :crying:

There is not a lot of cheer anywhere in the announcement today.

AND that is without assuming that the IT systems that the say is now deemed a load of rubbish (they used different phraseology) includes the one built for them back in 2000 and which I was involved in.

Best Wishes
Paper Tiger

[winner69]

So 641 Christchurch claims remain outstanding - 5 years on

Not entirely TWR fault the delays (some over cap ones been shunted on to them) but an indictment on the whole industry. Shame on them all.

Almost criminal but then again its probably a case where the longer it takes the better off shareholders are.

[smtrader]

http://www.interest.co.nz/insurance/81761/tower-receives-155-new-canterbury-quake-claims-eqc-six-months-march-increases-quake

[winner69]

Some interesting comment about what CHch really cost Tower in the last half ....with the suggestion more carnage to come (something to affectvall insurers)

http://www.interest.co.nz/opinion/81776/cam-preston-argues-insurers-are-running-out-steam-canterbury-rebuildrepair-marathon

The CEO on thecradi this morning didn't sound too convincing about the future. He used the phrase 'continue to' do this and that ....but stopped short of saying continuing to disappoint.

The guy from Macquaries said any chance of a takeover was pretty slim.

[pierre]

Some interesting comment about what CHch really cost Tower in the last half ....with the suggestion more carnage to come (something to affectvall insurers)

http://www.interest.co.nz/opinion/81776/cam-preston-argues-insurers-are-running-out-steam-canterbury-rebuildrepair-marathon

The CEO on thecradi this morning didn't sound too convincing about the future. He used the phrase 'continue to' do this and that ....but stopped short of saying continuing to disappoint.

The guy from Macquaries said any chance of a takeover was pretty slim.

I hope HBL doesn't get excited about adding TWR into its portfolio.

[Snow Leopard]

Some interesting comment about what CHch really cost Tower in the last half ....with the suggestion more carnage to come (something to affectvall insurers)

http://www.interest.co.nz/opinion/81776/cam-preston-argues-insurers-are-running-out-steam-canterbury-rebuildrepair-marathon

The CEO on thecradi this morning didn't sound too convincing about the future. He used the phrase 'continue to' do this and that ....but stopped short of saying continuing to disappoint.

The guy from Macquaries said any chance of a takeover was pretty slim.

Cameron seems to have an axe or two that he is grinding, obviously poked himself in the eye whilst doing so.

Best Wishes
Paper Tiger

Disc: It was not one of my better investment decisions.

[smtrader]

Can anyone perhaps guide me as to why NAB became a SSH in TWR recently? i would've assumed they have enough analyst power to point out the headwinds they're facing?

[macduffy]

Can anyone perhaps guide me as to why NAB became a SSH in TWR recently? i would've assumed they have enough analyst power to point out the headwinds they're facing?

May be as nominee for another party. SSH notices are required for any "interest" in a company's shares - aggregating all holdings of subsidiary and associated entities.

[winner69]

May be as nominee for another party. SSH notices are required for any "interest" in a company's shares - aggregating all holdings of subsidiary and associated entities.

Basically all held by BNZ and managed by FNZC by looks of it

MLC and FNZC mentioned in dispatches

Been buying for a while now

[Beagle]

Sort of unhappy that I did buy some of these in March :crying: :crying: :crying:

There is not a lot of cheer anywhere in the announcement today.

AND that is without assuming that the IT systems that the say is now deemed a load of rubbish (they used different phraseology) includes the one built for them back in 2000 and which I was involved in.

Best Wishes
Paper Tiger

Maybe you should have a chat with Percy about the challenges insurance companies face with settlements in Christchurch. Get some feedback from ground zero so too speak.

[smtrader]

My mouse trigger finger is itching at 147.5-148

any advice guys.. am i getting greedy

[BIRMANBOY]

Nothing wrong with greed per se its just that it overides your powers of rational thinking....but betting isn't about rationale is it? Its about the adrenalin rush if you choose right and the guilt if not.
My mouse trigger finger is itching at 147.5-148

any advice guys.. am i getting greedy

[smtrader]

Nothing wrong with greed per se its just that it overides your powers of rational thinking....but betting isn't about rationale is it? Its about the adrenalin rush if you choose right and the guilt if not.

Beautifully said BB.

[smtrader]

TIMELY ALERT... check volumes on TWR.. they are OFF THE CHARTS nothing like it SINCE SEPT 2013.. some heavy weight dumping

[macduffy]

TIMELY ALERT... check volumes on TWR.. they are OFF THE CHARTS nothing like it SINCE SEPT 2013.. some heavy weight dumping

Shareprice has only weakened 1.5c today on that 6m+ volume. Which probably means that some other heavyweight is buying.

;)

Update on volume - over 7.5m

[smtrader]

Shareprice has only weakened 1.5c today on that 6m+ volume. Which probably means that some other heavyweight is buying.

;)

Update on volume - over 7.5m

Yeah they were all off the back of 6 trades done off market.. i wonder if that was the end of Tower's share buy back directly offering to buy some of the shares held by the top holders, because the off market doesn't happen instantly, the broker has to inform nzx and they have to be aware of it plus look for someone holding the shares to be a counter party... 1 of the trades was for 4.5M shares at one go (meaning one of the substantial holders sold out), so either TWR bought them (to stop a freefall on share price) or another buyer taking substantial holding (and risk) on.

That's my analysis.. (usual yada yada not to be taken as financial advice. :D)

[winner69]

Yeah they were all off the back of 6 trades done off market.. i wonder if that was the end of Tower's share buy back directly offering to buy some of the shares held by the top holders, because the off market doesn't happen instantly, the broker has to inform nzx and they have to be aware of it plus look for someone holding the shares to be a counter party... 1 of the trades was for 4.5M shares at one go (meaning one of the substantial holders sold out), so either TWR bought them (to stop a freefall on share price) or another buyer taking substantial holding (and risk) on.

That's my analysis.. (usual yada yada not to be taken as financial advice. :D)

Tower said they weren't going to buy back any more shares so not them buying.

Probably BNZ (aka NAB) selling after you cast aspersions on their stock picking abilities - thought they better get rid of them before too many people notice they have heaps.

[smtrader]

Tower said they weren't going to buy back any more shares so not them buying.

Probably BNZ (aka NAB) selling after you cast aspersions on their stock picking abilities - thought they better get rid of them before too many people notice they have heaps.

hahaha perhaps.

Given that they still have chch claims to settle from their own kitty and the cash they have on hand is decreasing rapidly, is it reasonable to assume that they will be significnatly cutting back their dividends in the future? Even though they said they intend to keep it the same this year

[BIRMANBOY]

One year, well 6 months is hardly reliable forward planning. Looking at the dividend history I don't get a "reliable" impression. In fact you might say last year was an aberration...Too many unknowns for me.
http://www.dividendyield.co.nz/viewdetails.php?loc=TWR

hahaha perhaps.

Given that they still have chch claims to settle from their own kitty and the cash they have on hand is decreasing rapidly, is it reasonable to assume that they will be significnatly cutting back their dividends in the future? Even though they said they intend to keep it the same this year

[BlackPeter]

Interesting volume ... 2.1 million shares just went through for $1.44; This might set a bottom to the share price?

Discl: just hoping ...

[Jaa]

Interesting volume ... 2.1 million shares just went through for $1.44; This might set a bottom to the share price?

Discl: just hoping ...

Devon funds management have been selling down their holding. They still have another 9m shares so maybe more weakness ahead?

[Arbroath]

Almost 11m shares traded today as a fund sells out (probably Devon). Obviously there is a buyer at $1.31-1.32 for large lines of stock and the $1.30 area seems a strong base now and back in 2011.

My guess is we have found a base again and patience will be rewarded at $1.50+ in 2017.

[Grunter]

Hard to see where Tower is heading, or if they are being left behind. There are new players eyeing up the Direct Market space that already are very successful in Australia, and the DM space is being fought with who has the best automated platform. Tower have had a massive screw up in their IT systems, and they are now a few years behind the competition.

Take a look at State's platform as an example of where the industry is heading for DM - automation and instant transaction. If I want to get a quote from Tower, I have to get someone to give me a call.

[BlackPeter]

Hard to see where Tower is heading, or if they are being left behind. There are new players eyeing up the Direct Market space that already are very successful in Australia, and the DM space is being fought with who has the best automated platform. Tower have had a massive screw up in their IT systems, and they are now a few years behind the competition.

Take a look at State's platform as an example of where the industry is heading for DM - automation and instant transaction. If I want to get a quote from Tower, I have to get someone to give me a call.

Not sure about Tower's response times ... but "automation" and "instant transactions" are in today's insurance market only a remote dream. I tried some months ago to get alternative quotes for our house and household insurance (I just wanted to see whether my current insurer is still up to scratch) - and it took me with the selected insurers (all big companies and "winners" in the Consumer magazine comparison) more than one hour each on the phone and afterwards some (sometimes overnight) waiting before they sent me an electronic quote. Surely - Tower can't be that much worse - can they?

[Grunter]

Not sure about Tower's response times ... but "automation" and "instant transactions" are in today's insurance market only a remote dream. I tried some months ago to get alternative quotes for our house and household insurance (I just wanted to see whether my current insurer is still up to scratch) - and it took me with the selected insurers (all big companies and "winners" in the Consumer magazine comparison) more than one hour each on the phone and afterwards some (sometimes overnight) waiting before they sent me an electronic quote. Surely - Tower can't be that much worse - can they?

Cechk out State's website. They have an instant transaction platform. TradeMe is another example.

I can guarantee that there are a number of players in the market currently working on these platforms, and they will be brought to market within the next 12 months or so.

[Ghost Monkey]

"TradeMe is another example."


I thought Tower was behind TradeMe's insurance platform?

[Grunter]

"TradeMe is another example."


I thought Tower was behind TradeMe's insurance platform?

It is. So Tower underwrite TradeMe's insurance offering, but TradeMe supply the platform (and take a cut). Theres nothing to stop TradeMe choosing to use another underwriter at any given time

[bung5]

It is. So Tower underwrite TradeMe's insurance offering, but TradeMe supply the platform (and take a cut). Theres nothing to stop TradeMe choosing to use another underwriter at any given time

A front end interface like that could be bought or developed easily. However I think we (shareholders) best return would be merging or selling out with/to another company.
Tower seems ripe for takeover at its current SP imo . Strong balance sheet and customer base.

[Humphrey Appleby]

From an insurance broker's point of view, Tower never ceases to amaze us in its ability to post losses, pay claims out of reinsurance revenue and all the while maintain its high dividend yield; who knows, maybe senior execs jumping ship before the ink's barely dry can be added to their list of industry-defying abilities?

http://www.insurancebusinessonline.co.nz/nz/news/breaking-news/breaking-news-tower-cfo-resigns-219853.aspx

Disc: Bought in at $1.24 last month despite my professional opinion/better judgement.

[Jaa]

From an insurance broker's point of view, Tower never ceases to amaze us in its ability to post losses, pay claims out of reinsurance revenue and all the while maintain its high dividend yield; who knows, maybe senior execs jumping ship before the ink's barely dry can be added to their list of industry-defying abilities?

http://www.insurancebusinessonline.co.nz/nz/news/breaking-news/breaking-news-tower-cfo-resigns-219853.aspx

Disc: Bought in at $1.24 last month despite my professional opinion/better judgement.

As a long suffering shareholder, I am getting tired of each year's "normal level of profitability" being diverted to upward revisions of estimated Christchurch earthquake costs.

Maybe the board got sick of the CFO's inability to accurately forecast the earthquakes total costs?

Whoever bought the extra $50m(?) of reinsurance after they happened deserves a pat on the back and to be listened to more. If it was the CFO maybe he got sick of being ignored?

All the reinsurance relating to the Chch earthquake is now gone. So lets hope they finally have it right!

[Jaa]

I should also add what a debt NZ and Christchurch owe to Tower, IAG, Suncorp and their reinsurance partners.

Tower was the least exposed to Christchurch of the major insurers and have been the fastest at settling Christchurch related claims. Yet they have run through all their reinsurance, the above mentioned bonus reinsurance and several years of profits to honour the claims. They have also held a large amount of excess capital over and above the Reserve Bank minimums as an extra safety buffer since the quakes (which I guess is now at risk).

Compared to the cowboys at AMI, Tower alone has probably saved NZ taxpayers half a billion dollars or so (and cost shareholders a $1+ a share). The big Aussie companies, billions and billions of dollars.

Not that anyone will care when selecting an insurer for their house, but they should.

[Under Surveillance]

I should also add what a debt NZ and Christchurch owe to Tower, IAG, Suncorp and their reinsurance partners.

Tower was the least exposed to Christchurch of the major insurers and have been the fastest at settling Christchurch related claims. Yet they have run through all their reinsurance, the above mentioned bonus reinsurance and several years of profits to honour the claims. They have also held a large amount of excess capital over and above the Reserve Bank minimums as an extra safety buffer since the quakes (which I guess is now at risk).

Compared to the cowboys at AMI, Tower alone has probably saved NZ taxpayers half a billion dollars or so (and cost shareholders a $1+ a share). The big Aussie companies, billions and billions of dollars.

Not that anyone will care when selecting an insurer for their house, but they should.

Could it be that the departing CFO is paying the price for having been gulled by Southern Response into supporting a syndicate including TWR acquiring SR at a knockdown price? Or perhaps he has been outspoken in pointing to the folly of TWR getting involved? I've heard it said that Key and Co have recently woken up to the hundreds of millions of unavoidable payouts that Southern Response has been deceitfully blind-eying, and want to flick SR and its obligations at "giveaway" terms to any willing dupes.

[BlackPeter]

Salt Asset Management accumulating: https://www.anzsecurities.co.nz/directtrade/dynamic/announcement.aspx?id=4193935

This should explain the rising SP ...

[winner69]

Tower along with all insurors as well as EQC/Gvt should all be ashamed of themselves

But they wont because that's how disaster capitalism works

Bastards

http://www.interest.co.nz/insurance/82620/cameron-preston-crunches-numbers-see-whats-it-insurers-delay-settling-canterbury

[BlackPeter]

Tower along with all insurors as well as EQC/Gvt should all be ashamed of themselves

But they wont because that's how disaster capitalism works

Bastards

http://www.interest.co.nz/insurance/82620/cameron-preston-crunches-numbers-see-whats-it-insurers-delay-settling-canterbury

Well - I guess the article is describing a less than perfect process as defined by government which had its first real test in a real world horror scenario. Of course are insurers benefiting from delaying claim payments, but I don't see any evidence that they systematically caused these delays.

Or are you referring to the comments below the article (which do hit ways under the belt) describing a (if true) terrible family tragedy without clear links to any actions (or lack thereof) of the insurance industry? Great example for absolutely irresponsible use of discussion forums, but nothing to do with irresponsible insurance companies.

I would be ashamed to use the tragic death of a child in this way ... but each to their own. It is certainly not an attempt to bring facts or rationality into the debate.

Back to the role of the insurance industry in the earth quake settlement business. The overwhelming majority of the effected house owners (me being one of them) have their claim settled and are happy with the settlement process. Yes, there have been some delays - and in the majority of the delays I am aware of, this was more due to the (by parliament created) complex interface between EQC and the private insurance industry or due to unclear responsibilities, than due to ill will on the side of the insurer.

And yes, there have been as well disputes around the scope of work. I am sure as well, that some have been due to the house owner wanting to get as well stuff fixed which was broken before (not every house owner is an innocent angel, even if they whing(e) like one ...) and sure - there have been cases where it was the insurer delaying the processing of the claim... maybe even due to staff being too cautious or distrusting.

I don't see a case to make against the insurance industry in general ... and if anything, Christchurch should be an example for the benefits of the industry. Just look at Earthquake damaged regions after 5 and 10 years in e.g. Turkey, Pakistan, Japan or Italy ... and than compare it with Christchurch. We don't know how lucky we are.

[Grunter]

Back to the role of the insurance industry in the earth quake settlement business. The overwhelming majority of the effected house owners (me being one of them) have their claim settled and are happy with the settlement process. Yes, there have been some delays - and in the majority of the delays I am aware of, this was more due to the (by parliament created) complex interface between EQC and the private insurance industry or due to unclear responsibilities, than due to ill will on the side of the insurer.



There have been rumours of sharp practices going on - with Insurers intentionally milking the disfunctional interaction between EQC and private Insurers to minimise the cost of claims on the Insurers, and maximise EQC's exposure.

Also, the likes of Tower have been using time and distance to reduce their cost of reinsurance each year. Hence the constant adjustments.

[bull....]

not looking good, bad management glad im out as those Canterbury earthquake claims to settle good bring the company down. investment income will keep declining as well industry headwind so will profit cover the claims or any other event? risky as

[Humphrey Appleby]

Could it be that the departing CFO is paying the price for having been gulled by Southern Response into supporting a syndicate including TWR acquiring SR at a knockdown price? Or perhaps he has been outspoken in pointing to the folly of TWR getting involved? I've heard it said that Key and Co have recently woken up to the hundreds of millions of unavoidable payouts that Southern Response has been deceitfully blind-eying, and want to flick SR and its obligations at "giveaway" terms to any willing dupes.

Are you able to substantiate that, Under Surveillance? While it's not impossible given how shady SR and DPMC have been about the total cost of their liabilities, I (and I daresay my broker colleagues) would be very interested to read more about if you've got something? It's the first I've heard of this! Cheers.

[BlackPeter]

There have been rumours of sharp practices going on - with Insurers intentionally milking the disfunctional interaction between EQC and private Insurers to minimise the cost of claims on the Insurers, and maximise EQC's exposure.

Also, the likes of Tower have been using time and distance to reduce their cost of reinsurance each year. Hence the constant adjustments.

Lots of rumours around ... however - rumours might often be vicious, but they are rarely based on facts. Are yours?

Related to the adjustments: not sure I understand your remarks re "using time and distance to reduce costs" but in terms of underestimating the size of the damage do I not think that Tower was the only entity getting it wrong. Actually - lets face it - nobody (neither state nor City nor any insurer including EQC) got it right fathoming the size of the damage in the first place ... so why outing Tower for underestimating the damage as well?

[Grunter]

Lots of rumours around ... however - rumours might often be vicious, but they are rarely based on facts. Are yours?

Related to the adjustments: not sure I understand your remarks re "using time and distance to reduce costs" but in terms of underestimating the size of the damage do I not think that Tower was the only entity getting it wrong. Actually - lets face it - nobody (neither state nor City nor any insurer including EQC) got it right fathoming the size of the damage in the first place ... so why outing Tower for underestimating the damage as well?

Refer to Winner's article.

And Tower are by no means the only Insurer in this situation - What drove Buffet buying into IAG in 2014? Reinsurance.

[Arbroath]

I have purchased at $1.30 so let's see who is right in 12 months....only hindsight will tell us.


not looking good, bad management glad im out as those Canterbury earthquake claims to settle good bring the company down. investment income will keep declining as well industry headwind so will profit cover the claims or any other event? risky as

[bull....]

I have purchased at $1.30 so let's see who is right in 12 months....only hindsight will tell us.

good luck to you. big fundees selling, big fundees buying guess everyone has a different opinion on this so time will tell indeed

[winner69]

I have purchased at $1.30 so let's see who is right in 12 months....only hindsight will tell us.

You'll probably be 'right' if they continue to be miserable to their chch clients .....and make money for shareholders in the process

Some things my conscience won't let me touch

[Jaa]

Tower along with all insurors as well as EQC/Gvt should all be ashamed of themselves

But they wont because that's how disaster capitalism works

Bastards

http://www.interest.co.nz/insurance/82620/cameron-preston-crunches-numbers-see-whats-it-insurers-delay-settling-canterbury

Tower had settled 96% of claims as at 31 March and have led the industry in claims settlement every year since the quakes.

The remaining cases are as likely to be decided in favor of Tower as for the homeowners.

You are barking up the wrong tree Winner69.

[BlackPeter]

Hmm - just follow the big money:

AMP - selling: https://www.nzx.com/files/attachments/239744.pdf
Devon - selling: https://www.nzx.com/files/attachments/239652.pdf

however:

SALT: buying: https://www.nzx.com/files/attachments/239714.pdf

Confusing ... begs the question - which of the funds have the better analysts ... or is this a clear 2/3 majority?

[Adam H]

How much do you guys think the recent announcement of higher than expected claims will affect the SP in the near term? Tried to 'pick the bottom' of TWR at 1.80, was thinking of cutting my losses at ~1.37 for last couple of weeks, SP is now close to 1.10! Well at least my loss in capital is helping people who were affected by the earthquakes

[BlackPeter]

Hard to say. What their announcement basically says is that the additional provision for the Canterbury earthquakes is similarly sized than what analysts expected them to earn this year.

On the other hand ... it is unclear how much of this money they will need to spend this year (these things take time), and obviously - a provision is not yet the money spent.

At this stage the market is clearly in panic mode (and this is normally not the right time to sell). It might pay to wait until the storm is over and review than whether you believe that this was the last bad news from this company (in this case it might pay to hold) or whether you've lost your confidence in management (in this case it might pay to cut losses and leave).

BTW - not sure, how the money you (and I:ohmy:) lost in Tower would benefit people affected by the earthquakes. It only helped the people who sold out earlier (and at a better price) ... to both of us.

Discl: holding .... lucky me just a small parcel;)

[winner69]

How much do you guys think the recent announcement of higher than expected claims will affect the SP in the near term? Tried to 'pick the bottom' of TWR at 1.80, was thinking of cutting my losses at ~1.37 for last couple of weeks, SP is now close to 1.10! Well at least my loss in capital is helping people who were affected by the earthquakes

Where it all ends up possibly depends on how more times they need to 'increase' this provision

Doubt whether his is the last time

[Adam H]

TWR was only ~6 % of my portfolio when i bought at 1.80. It is barely 3% now so i am not too worried, and am definitely not selling at these levels.

Giving money to people who suffered in the earthquake makes me feel good about losing money so i will continue to believe that that is where my lost capital has gone :-) Definitely makes me feel better than losing it to more savvy investors!

[Arbroath]

Where it all ends up possibly depends on how more times they need to 'increase' this provision

Doubt whether his is the last time

That is the question - I have total provision increases (after tax) of around $55 over the past 2 years. The commentary is always the same - escalating costs, more EQC claims going over cap ($100k), more claims getting to settle. It has to end some time but the question is how bad will the damage be before we get to the end.

Luckily only hold a few at $1.32

[BlackPeter]

OK - I did some fiddling with my spreadsheet. If we assume that previous analyst predictions are right (and just need to be corrected by this recent announcement), that they cut their dividend in half for only this year (uneducated guess), that their growth continues to be quite limited (but not dropping either) and that this was really the last provision and nothing similar to the Canterbury Earthquakes happens anytime soon, than a Tower share should be worth (according to the BP scale ;) and depending on what return you expect) between $1.40 and $1.50. This means, it is currently clearly undervalued. No reason to sell out in a hurry.

More interesting questions are:
- was this really the last provision for the Canterbury Earthquakes? Every million lost counts.
- how much is the software upgrade going to cost they are talking about - and how much will it improve business?
- will they manage to grow their business at some stage (currently its pretty much flat lining)?
- when are they going to "unleash the power of the Tower brand"
(I thought I have seen a similar sounding statement in the latest report, but can't find it now ... maybe I made it up myself?

And no, I don't have the answers to these questions. Just a couple of things to ponder about.

[winner69]

Thats on BP Scale - what is it on the Richter Scale

[Hoop]

Classic Bear Cycle textbook example being played out these last 18 months
Stage 3 Bear cycle (capitulation stage) is operating now.. methinks.

http://i458.photobucket.com/albums/qq306/Hoop_1/TWR%20072016.png (http://s458.photobucket.com/user/Hoop_1/media/TWR%20072016.png.html)

[kelfy]

How much do you guys think the recent announcement of higher than expected claims will affect the SP in the near term? Tried to 'pick the bottom' of TWR at 1.80, was thinking of cutting my losses at ~1.37 for last couple of weeks, SP is now close to 1.10! Well at least my loss in capital is helping people who were affected by the earthquakes

hahaaa..Me too. I am still holding my log at $1.80. Is a bit shame but I am ready to hold as long as I can.

[Jim]

hahaaa..Me too. I am still holding my log at $1.80. Is a bit shame but I am ready to hold as long as I can.
I bought some at $1.10 and I will average me down to $1.60. Hopes it would't go bust. Happy investing

http://www.nbr.co.nz/article/tower-stock-slumps-12-year-low-extra-canterbury-earthquake-costs-b-194013

[BlackPeter]

Classic Bear Cycle textbook example being played out these last 18 months
Stage 3 Bear cycle (capitulation stage) is operating now.. methinks.

http://i458.photobucket.com/albums/qq306/Hoop_1/TWR%20072016.png (http://s458.photobucket.com/user/Hoop_1/media/TWR%20072016.png.html)

If your hunch is correct - this would be good news ... I like the capitulation stage of bear cycles ... best time to buy!

DYOR, though ... too bad if it is not!

[malus]

Yes a good lesson Hoop.

I went for a ride with TWR starting Feb 2005 when they were Tower Group Holdings, I saw a value opportunity just before the Australian assets in the group were separated and floated off:



Australian Wealth Management (now IOOF).I still own. Separated in Feb 2005. Has produced a 9.64%pa compounding return. Steady, not stunning. :mellow:




Tower Australia (principally involved in life insurance as I recall and taken over by a Japanese Life Insurance Company). Separated in Nov 2006 and taken over in May 2011. Produced 43.5%pa compounding return... very happy with that one... the Japanese Company paying a premium to take over.:)


The TWR ride ended in Aug 2014 when I decided to exit at $1.84... could see trouble ahead, with major claims and conflict for management to be distracted with... difficult on one hand to be the good insurer settling with claimants and on the other hand minimising cost for the owners of the Company... too much conflict going on for me to justify holding. TWR return for the time I held was 10.25%pa compounding.

Hindsight being a wonderful thing... it was a good time to get out.

To those holding now... feel your pain, trust it's worth "weathering the storm"... return on assets and equity are taking a battering!;)

[Snow Leopard]

I was fool enough to invest in Tower NZ a while back and came out a few months later with about a 20% loss :(.

I was fool enough today to have some fun Tiger Bouncing - similar to dead cat bouncing but I try and remain alive threw* out :t_up:.

So I bought at $1.10 & then $1.05 sold about half at $1.15 :)
and then when I got a bit concerned :mellow: I sold the other about half for which I also got $1.15 (ish) ;).

So I have made a 6.39% gross return on funds employed on the day, but in absolute terms it does make up a quarter of my prior losses :confused:.


As for Tower Australia - I remember it well - one of my successful investments :cool::

Dai-ichi bought it at out at $4.00 a share and I had an average buy price sub $2.00 and my last purchase at $2.00 was less about 7 months prior to the take over :ohmy:.

Best Wishes
Paper Tiger

*that is deliberate

Disc: No Towers or Tigers were harm during bouncing.

[bull....]

not looking good, bad management glad im out as those Canterbury earthquake claims to settle good bring the company down. investment income will keep declining as well industry headwind so will profit cover the claims or any other event? risky as

dont think today is the last of the bad news, maybe they need to spend some more money on consultants to tell them how bad it could get

[malus]

As for Tower Australia - I remember it well - one of my successful investments :cool::

Dai-ichi bought it at out at $4.00 a share and I had an average buy price sub $2.00 and my last purchase at $2.00 was less about 7 months prior to the take over :ohmy:.



Yes... Yes Dai-ichi... thanks for the memory refresh PT:)

[winner69]

A train crash about to happen?

Always some body else's fault these problems - what a bugger eh

Love this bit "This has been further exacerbated by opportunistic advocates who created unfounded fear in regards to application of the statute of limitations. This has resulted in a higher number of disputes and litigation than expected.”

Isn't it their job to manage these sort of things?

[winner69]

Review the dividend - does that mean no dividend for a year

Doesn't seem anybody has wanted to buy them (too many uncertainties?) lately - so until all the mess has been cleaned up no hope of a white knight coming in and ending share holders misery?

[BlackPeter]

Review the dividend - does that mean no dividend for a year

Doesn't seem anybody has wanted to buy them (too many uncertainties?) lately - so until all the mess has been cleaned up no hope of a white knight coming in and ending share holders misery?

Well, with roughly 10 cents down due to the provision it could mean (all other things staying equal) no final dividend this year (saving roughly 7.5 cents per share) and a lower interim dividend next year (say 6 cents instead of 8.5 cents).

Hardly a doomsday scenario, but as you say - we don't know what else might linger in the dark ...

[Hectorplains]

Well, with roughly 10 cents down due to the provision it could mean (all other things staying equal) no final dividend this year (saving roughly 7.5 cents per share) and a lower interim dividend next year (say 6 cents instead of 8.5 cents).

Hardly a doomsday scenario, but as you say - we don't know what else might linger in the dark ...

That's the gist of the NBR interview with Devon funds - “The reality is if it’s not this issue {Chch quakes} it’s an issue around their IT systems. It’s just a never-ending series of things we {Tower} didn’t expect.”

[Lewylewylewy]

If tower have a bad year due to extra costs for that year, but carry the same number of customers over to the next year, does that mean that next year the price will fully recover? ... Or am I being naive? ... Tower is on my list of curios to investigate sometime when i have more play money available.

[winner69]

Perpetual now SSH

Bought heaps at 124/126 in July and probably could believe their good fortune to get another lot at 103

[bull....]

http://www.interest.co.nz/insurance/83568/tower-upsets-reinsurer-allegedly-catching-it-guard-its-haste-secure-desperately

potentially more bad news , also a big overseas operator maybe shorting the stock

the end maybe near?

[percy]

http://www.interest.co.nz/insurance/83568/tower-upsets-reinsurer-allegedly-catching-it-guard-its-haste-secure-desperately

potentially more bad news , also a big overseas operator maybe shorting the stock

the end maybe near?

Challenging.
Everyday "The Press" reports on ongoing earthquake insurance issues.
The easy claims were settled early.
Now the more difficult [and expensive] claims are trying to be resolved.
In the meantime a lot of the early "settled" claims are resurfacing as the repairs were not done properly.
With re-insurance issues now coming to light TWR's future certainly looks under pressure.
I read a great book on the history of Lloyds.Amazed me how quickly years of profits can suddenly dissappear,to be replaced by huge losses and ongoing liabilties.This was proved in ChCh by AMI going from a great successful insurance company to having the liabilities picked up by the government.Had AMI been floated 10 years ago we all would have lined up for their shares.

[McGinty]

I have my concerns with tower. As a customer I have recently sold a couple of properties and cancelled the insurance policies of both. Usually they pay out the unused premium within 3-5 working days; in both cases when I sold (July and Aug this year) they failed to pay out within 7-8 working days. Only after follow up calls to tower did they approve (or action the payment). I’ve never had this problem before.

On top of this they have started changing their home policies to only allowing excesses of $500 or $1000. When I had my old policies I use to opt for a $50 excess and pay a little more premium. Not an option anymore!

This could be looked at and been seen as management actively making changes to become more efficient and reduce claim expenses. But as a customer I’m going to start actively looking at other insurers. Who knows, my search may uncover that Tower is only aligning itself to all the others.

[BlackPeter]

Out with a loss .... but I guess the potential upside looks at the moment much smaller than the potential downside.

Another company with Michael Stiassny on board costing me money ... just wondering, whether there is a pattern?

[percy]

Out with a loss .... but I guess the potential upside looks at the moment much smaller than the potential downside.

Another company with Michael Stiassny on board costing me money ... just wondering, whether there is a pattern?
I think I would avoid him.

[winner69]

Westpac interests lightening exposure

Now have 2 million less shares

Wonder who bought?

[Jim]

Twr is under $1, might go down further and might needs recap its balance sheet in near future.

[bull....]

Twr is under $1, might go down further and might needs recap its balance sheet in near future.

could go too zero? the longer the claims drag on the more expensive they become and looks like it being shorted

[BlackPeter]

could go too zero? the longer the claims drag on the more expensive they become and looks like it being shorted

Not contesting your assessment of Towers health, but just a technical question ... How can you short a NZX stock?

[bull....]

Not contesting your assessment of Towers health, but just a technical question ... How can you short a NZX stock?

big institutions lend there stock holding for a fee to other firms who then sell into the market hoping to buy it back at a cheaper price.
An announcement was made which showed stock was lent to a prime broker by ubs possibly for shorting

[BlackPeter]

big institutions lend there stock holding for a fee to other firms who then sell into the market hoping to buy it back at a cheaper price.
An announcement was made which showed stock was lent to a prime broker by ubs possibly for shorting

OK, cheers. I understand the principle of shorting, but it sounds I first need to buy a bank to do this on the NZX - or are there brokers offering this service to retail investors?

[Schrodinger]

Bit of value @ .99? maybe a takeover by the Aussies..

[Grunter]

OK, cheers. I understand the principle of shorting, but it sounds I first need to buy a bank to do this on the NZX - or are there brokers offering this service to retail investors?

Leveraged Equities enables you to do this - i thin through Forsyth Barr?

Looks like there is some shorting going on with UBS being the prime broker lending the securities

https://nzx.com/companies/TWR/announcements/288933

[Grunter]

Bit of value @ .99? maybe a takeover by the Aussies..

Suncorp perhaps? or QBE....

[peat]

CFD's are pretty useful for shorting trades. TWR is available under CMC's limited cover of NZ shares for long or short positions.

[winner69]

Another down day today

Doesn't seem to be any signs of the down trend ending soon

[Jim]

Another down day today

Doesn't seem to be any signs of the down trend ending soon

I think this is the bottom of the trough, opportunity to accumulate if you have the dolls

[BlackPeter]

I think this is the bottom of the trough, opportunity to accumulate if you have the dolls

Any particular reason you want to share with us for this line of thought?

Chart looks very bearish to me ... and while the RSI is in deeply oversold territory ... just look at what happened the last couple of times with the share price when it was in this territory ... (hint: it plateaued and had than another steep drop).

[percy]

The downtrend remains intact.

[Southern_Belle]

The downtrend remains intact. No surprises. I used to work here & I would not insure a thing with them or invest a penny with them.

[cdonald]

I have been watching tower for a while now... the thing that puts me off is the dividend policy is up for review, which to me means no dividends for a while. I think there is a lot more pain to come on this one.

[Schrodinger]

I have been watching tower for a while now... the thing that puts me off is the dividend policy is up for review, which to me means no dividends for a while. I think there is a lot more pain to come on this one.

No doubt they will reduce the divs probably to zero. I still think Tower has a protectable customer base and remains a takeover target so will recover. It remains to be seen how long that will take. Pure value investor opinion here.

[Arbroath]

No doubt they will reduce the divs probably to zero. I still think Tower has a protectable customer base and remains a takeover target so will recover. It remains to be seen how long that will take. Pure value investor opinion here.

I tend to agree - no dividends for maybe 18 months as they retain cash to work through expensive Christchurch claims tail end. The situation with Peak Re is the greater concern as it could be a $50m hole in the accounts which would need to be plugged by a rights issue (which would be ironic given the shares the company was buying back at $2 a pop) to ensure they meet capital adequacy etc. A rights issue would likely be something ugly like a 1 for 2 at 60-70 cents.

The parent can draw down debt to cover it and they are debt free as a group which is very good. Just overall a lot of uncertainty and definitely a value play as the upside is still $1.80-$2.20 for a "clean" Tower making around $25m npat annually and paying out most of it in dividends or renewed share buybacks. The Peak Re situation needs to be sorted asap.

[winner69]

No doubt they will reduce the divs probably to zero. I still think Tower has a protectable customer base and remains a takeover target so will recover. It remains to be seen how long that will take. Pure value investor opinion here.

I have the feeling many/several have looked over Tower as an acquisition and say nah ....at least while an unquantified significant liability hanging over their heads

Maybe in a few years time if they get through the current crises

[Schrodinger]

Thats true but didnt IAG buy the good parts of AMI which was a terrible insurer? Tower is a better run company.

[winner69]

Thats true but didnt IAG buy the good parts of AMI which was a terrible insurer? Tower is a better run company.

But only after the bad parts had been taken by the government

Can Tower isolate / ring fence their bad parts?

[Schrodinger]

Possibly. Their losses are far smaller than AMI and I think the good parts will outweigh the bad so no need for Government intervention (AMI was insolvement).

[winner69]

Possibly. Their losses are far smaller than AMI and I think the good parts will outweigh the bad so no need for Government intervention (AMI was insolvement).

Agree but the immediate / short term issue is that the bad parts seem to be unquantifiable

Would you buy all of Tower in these circumstances? If you did you want a big discount to cover youself

[Arbroath]

Agree but the immediate / short term issue is that the bad parts seem to be unquantifiable

Would you buy all of Tower in these circumstances? If you did you want a big discount to cover youself

Agree winner - imho an opportunistic bid will only come at c. $1.50 once there is some clarity around Chch liabilities - could be another 12-24 months and in the meantime likely no divis so its a hold if you think they can work through it and then worth c. $2 in 2018 again.....maybe

[Schrodinger]

One problem is that the CC will not allow a purchase from IAG.

http://www.interest.co.nz/business/67880/lumley-acquisition-would-give-iag-66-nz-home-and-contents-and-vehicle-insurance

55% is probably above their comfort level.

[Humphrey Appleby]

Any thoughts on this re a takeover?

I daresay it would be a flat no for IAG, CC would have some issues with a majority market share however Suncorp or QBE could certainly be likely. In my experience, QBE aren't too keen on domestic insurance on NZ risks, and only offer it to a select large brokers (Crombies, Aon, Marsh) or cluster brokers (BWRS, Rothbury Group, etc) however a purchase of a ready-made Direct Insurer might appeal to them, especially if they're looking to expand; IAG have State and AMI, Suncorp have AA.

On the other hand, an Asian buyer further afield is possible. Dai-ichi Life took over TOWER Australia and rebranded the outfit, what's to say they wouldn't do the same over here to complete the set?

http://www.insurancebusinessonline.co.nz/nz/news/breaking-news/breaking-news-tower-buyout-rumours-fly-across-the-tasman-223757.aspx

[tim23]

Read an article today saying takeover talk? One of the banks could gobble up market cap is way under 200 million

[bull....]

would be massively surprised if anyone brought them at the moment with such big problematic overhangs ie Christchurch other aussie companies have the same problem so why would they want more liabilities sounds like talk to hold the share price up for someone to sell into lol

[tim23]

Could be opportunistic now with all the bad news out there?
I have the feeling many/several have looked over Tower as an acquisition and say nah ....at least while an unquantified significant liability hanging over their heads

Maybe in a few years time if they get through the current crises

[winner69]

Can't even calculate customers discounts correctly .....no wonder they have problems with adding up what Christchurch might cost them

Not a good look - from a consumers perspective anyway

[sb9]

Can't even calculate customers discounts correctly .....no wonder they have problems with adding up what Christchurch might cost them

Not a good look - from a consumers perspective anyway

I think you're referencing to the below article...

http://www.interest.co.nz/insurance/83825/tower-refund-23000-customers-having-incorrectly-calculated-its-multi-policy

SHOCKING!!!!!

[winner69]

a month or so and share price still sinking - 85 cents as i post

I see IAG spent a considerable amount on reinsurance for CHch last fiscal and sort if commented they don't really know if they need more

With no takeover likely where to with TWR share price

[Sgt Pepper]

a month or so and share price still sinking - 85 cents as i post

I see IAG spent a considerable amount on reinsurance for CHch last fiscal and sort if commented they don't really know if they need more

With no takeover likely where to with TWR share price

Indeed. Is Tower in a death spiral or are we approaching irresistible take over price??

[bull....]

not good for this company, wonder what the hit is they might not have cover?

[Scrunch]

not good for this company, wonder what the hit is they might not have cover?

Most of their policies by volume and value are likely to be in the major cities. From what I've seen in the news Wellington and Christchurch were shaken but ok which will limit the scale of the claims meaning this is not a repeat of the Christchurch in terms of claims and will be massively under any reinsurance limits (its blowing out the top of reinsurance limits that is creating problems re the Chch quakes).

Assuming the cumulative reinsured bill is modest it may even be good for the insurance industry as it helps disconnect the view large earthquakes in NZ create hundred of millions if not billions in claims.

[JAX]

Most of their policies by volume and value are likely to be in the major cities. From what I've seen in the news Wellington and Christchurch were shaken but ok which will limit the scale of the claims meaning this is not a repeat of the Christchurch in terms of claims and will be massively under any reinsurance limits (its blowing out the top of reinsurance limits that is creating problems re the Chch quakes).

Assuming the cumulative reinsured bill is modest it may even be good for the insurance industry as it helps disconnect the view large earthquakes in NZ create hundred of millions if not billions in claims.

Looking at the damage so far, surely its got to be already well into the hundreds of millions - replacing some of those roads will cost that (not that they will be insurance claims thou) - there is quite a bit of damage in Wellington as well with some of the port and its wharves moved by a metre - I have a friend who is in a 5 storey apartment building in Wellington CBD who says he was told the building will be condemned as has moved half a metre if so, that alone is a big claim. The TSB arena and BNZ building (why you would build a massive building like that on a wharf anyway is beyond me) both sustained damage. I would say this could quite easily get into the billions range.

[Bjauck]

Looking at the damage so far, surely its got to be already well into the hundreds of millions - replacing some of those roads will cost that (not that they will be insurance claims thou) - there is quite a bit of damage in Wellington as well with some of the port and its wharves moved by a metre - I have a friend who is in a 5 storey apartment building in Wellington CBD who says he was told the building will be condemned as has moved half a metre if so, that alone is a big claim. The TSB arena and BNZ building (why you would build a massive building like that on a wharf anyway is beyond me) both sustained damage. I would say this could quite easily get into the billions range. CNN has reported that it would be at least a billion dollars in damages. Another round of insurance premium hikes for the Shaky Isles?

[Southern_Belle]

CNN has reported that it would be at least a billion dollars in damages. Another round of insurance premium hikes for the Shaky Isles?Premium hikes the least of our worries. You just might see some insurers withdrawing coverage. Homeowners / landowners and business owners unable to get asset protection will reduce the value of those assets.

[winner69]

http://www.sharechat.co.nz/article/da94b2b2/tower-estimates-south-island-quake-could-trim-profit-by-up-to-7-2-mln.html?utm_medium=email&utm_campaign=Tower%20estimates%20South%20Island%20 quake%20could%20trim%20profit%20by%20up%20to%2072% 20mln&utm_content=Tower%20estimates%20South%20Island%20q uake%20could%20trim%20profit%20by%20up%20to%2072%2 0mln+CID_66a53b8f11b9f869bde214f4b24012d4&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticleda94b2b2tower-estimates-south-island-quake-could-trim-profit-by-up-to-7-2-mlnhtml

Not that much

How this affects 'expectations' no idea - but surely they plan / forecast / expect some disasters every year so this impact should not be a surprise .......only if they have see more disasters than normal

[Beagle]

Indeed. Is Tower in a death spiral or are we approaching irresistible take over price??

The former.

[JAX]

http://www.sharechat.co.nz/article/da94b2b2/tower-estimates-south-island-quake-could-trim-profit-by-up-to-7-2-mln.html?utm_medium=email&utm_campaign=Tower%20estimates%20South%20Island%20 quake%20could%20trim%20profit%20by%20up%20to%2072% 20mln&utm_content=Tower%20estimates%20South%20Island%20q uake%20could%20trim%20profit%20by%20up%20to%2072%2 0mln+CID_66a53b8f11b9f869bde214f4b24012d4&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticleda94b2b2tower-estimates-south-island-quake-could-trim-profit-by-up-to-7-2-mlnhtml

Not that much

How this affects 'expectations' no idea - but surely they plan / forecast / expect some disasters every year so this impact should not be a surprise .......only if they have see more disasters than normal

"The company's reinsurance programme provides more than $700 million of cover for these types of events once the excess of $10 million has been passed, which Tower says leaves the maximum possible impact of $7.2 million after tax. "

That is of course assuming it doesn't go past $700million. Which seems very unlikely but with these things, you dont really know - the CHCH overall costs were $45b and Key was saying they could get up there close to that. It also will inevitably mean Towers reinsurance costs will rise again not to mention all the additional costs to serve which will surely also hit the bottom line, just further down the track.

As an aside 700m also seems a small amount if for example a proper one ever did hit the Wellington CBD. That would be wiped out pretty quick as would this company I would imagine. I have my home insured with Tower, when it comes up, I think I might look at moving it to safer ground/backing (assuming all else is equal)

[winner69]

"The company's reinsurance programme provides more than $700 million of cover for these types of events once the excess of $10 million has been passed, which Tower says leaves the maximum possible impact of $7.2 million after tax. "

That is of course assuming it doesn't go past $700million. Which seems very unlikely but with these things, you dont really know - the CHCH overall costs were $45b and Key was saying they could get up there close to that. It also will inevitably mean Towers reinsurance costs will rise again not to mention all the additional costs to serve which will surely also hit the bottom line, just further down the track.

As an aside 700m also seems a small amount if for example a proper one ever did hit the Wellington CBD. That would be wiped out pretty quick as would this company I would imagine. I have my home insured with Tower, when it comes up, I think I might look at moving it to safer ground/backing (assuming all else is equal)

Hope they not involved with those (newish) buildings down on the Wellington waterfront - apparently one is a write off with collapsed floors and others looking a bit dodgy.

[Jim]

Another all time historical low !! If the FY announcement on Tuesday is negative God bless TWR shareholders.

[JeremyALD]

Another all time historical low !! If the FY announcement on Tuesday is negative God bless TWR shareholders.

I keep thinking that Tower is at such a low price that it must be a good buy.....but then again I've been thinking that since it was $1.20. thank goodness I resisted my urges!

[winner69]

So we might have New Tower and RunOff Co

Successfully ring fence Canterbury claims and punters will be more interested in buying the rest. There's hope for you long suffering shareholders yet.

[Beagle]

So we might have New Tower and RunOff Co

Successfully ring fence Canterbury claims and punters will be more interested in buying the rest. There's hope for you long suffering shareholders yet.

Rearranging the deck chairs on the Titanic ? Surely its not that hard to understand that there's a whole new chapter of claims coming from the most recent earthquakes ?
What do they do in three years time, ring-fence that off as well ? Why anyone would want to be invested in this industry at the moment is beyond me, go figure ?

[Arbroath]

Rearranging the deck chairs on the Titanic ? Surely its not that hard to understand that there's a whole new chapter of claims coming from the most recent earthquakes ?
What do they do in three years time, ring-fence that off as well ? Why anyone would want to be invested in this industry at the moment is beyond me, go figure ?

Roger - that misses the point that Tower now has c. $700m of reinsurance cover v the c. $350m of cover it was carrying at the time of the Christchurch earthquakes. A New Tower may be quite effective in illustrating that the underlying business can generate $20-25m NPAT and be worth c. $200m on its own. The issue will be how they fund the capital structure as there is no free lunch around Runoff Co which needs to have adequate capital funding to fulfil its liabilities. I suspect a rights issue to capitalise New Tower is in the offing but I for one would support it. Total business is being valued at $125m at the moment and underlying value once the dust settles is likely $200-250m across New Tower and Runoff Co (+ contributed new capital).

New Tower would also quickly become a takeover target as its a clean business.

[bull....]

is the capital raising for runoff or new tower? so big dilution coming? not much money left in the kitty

[bottomfeeder]

Reinsurance must be getting more and more expensive as well, that must affect their future bottom line.

[bull....]

just listened to conference call very vague around capital needed for new companies, Im thinking they will need a heap of new capital to recapitalize both companies to meet rbnz criteria and if they cant separate runoff completely then new tower is still liable for insurance claims so very iffy in my opinion sounds like a plan but very risky this stock. as they say one more adverse event could be the nail in the coffin?

[Bjauck]

...
New Tower would also quickly become a takeover target as its a clean business. Do the latest earthquakes reveal that NZ risk may still be underestimated? How much more will insurance and re-insurance premiums be rising and how much can the market withstand before more and more households and business forego insurance?

[Brain]

Great choice of name - Runoff . I can't associate anything positive with this name.

all I can think of is

run off with the wife
run off with the money

[Bjauck]

Great choice of name - Runoff . I can't associate anything positive with this name.

all I can think of is

run off with the wife
run off with the money At least it is quite an honest name...However my suggestion would be "Black Hole."

[Balance]

just listened to conference call very vague around capital needed for new companies, Im thinking they will need a heap of new capital to recapitalize both companies to meet rbnz criteria and if they cant separate runoff completely then new tower is still liable for insurance claims so very iffy in my opinion sounds like a plan but very risky this stock. as they say one more adverse event could be the nail in the coffin?

Bad bank, new bank makes a lot of sense.

Will involve a massive injection of capital to hive off 'bad' bank so best to wait on the sidelines.
They will need to capitalize the 'bad' bank with at least the current level of equity (NTA) of $160m to satisfy RBNZ and insurance council.

169m shares on issue so a 2 for 1 at 50c?

Amount required reduced by amount from a cornerstone shareholder (say, Heartland Bank)?

Interesting times ahead.

Fat fat fees for the corporate advisors!

[Bjauck]

Since Christchurch, it seems that many people are now discovering after the latest quakes that to "keep premiums affordable" they have to a large extent "Claytons" insurance policies: http://www.stuff.co.nz/national/nz-earthquake/86998712/nine-out-of-10-businesses-may-be-ineligble-for-quake-relief

Would a policy with a reasonable excess to cover you for all risks in NZ now be unaffordable? The cost of living on the Pacific ring of fire...

[peat]

Whats up with the 13.2 million declared as exposure to the Kaikoura EQ's in the last release???
I seem to recall a few weeks ago or less they declared their exposure as maximum $7.2 M

Management is pushing its luck with the recent release - it uses so many superlatives when the recent history of this company is nothing but a shambles.
How is 14 Mill down the tube in IT write offs. Who needs insurance claims to destroy shareholder wealth when you have this going on.

The company remains a speculative play only - doesnt qualify as an investment any more.

[winner69]

I'd be gutted if corporate welfare happened here

Tower need to manage their way through these disasters .....even if shareholders have to front up with more dosh

http://www.interest.co.nz/insurance/85065/government-confirms-it-has-not-been-approached-tower-insurer-seeks-capital-ring

[winner69]

http://www.interest.co.nz/insurance/85183/high-court-judge-orders-tower-pay-quake-claimant-four-times-more-original-settlement

No comment from me

[Beagle]

http://www.interest.co.nz/insurance/85183/high-court-judge-orders-tower-pay-quake-claimant-four-times-more-original-settlement

No comment from me

Tower just shot its credibility to bits. Potential investors in their proposed run-off company will be running alright, straight for the hills !

[bull....]

http://www.interest.co.nz/insurance/85183/high-court-judge-orders-tower-pay-quake-claimant-four-times-more-original-settlement

No comment from me

bad news for tower, they will have no idea of costs now to settle outstanding claims esp if heaps more people take legal action against them what is most concerning is that they withheld info from the people for there own material benefit.
Surely if more of this dodgy behaviour becomes known and shows a pattern and if they go bust and the fact they paid out all the money over the yrs as divs and buybacks then wouldn't the directors be liable for negligence? cause then small shareholders will lose all there money while big shareholders benefited from the buybacks, divs etc

[peat]

Tower just shot its credibility to bits. Potential investors in their proposed run-off company will be running alright, straight for the hills !

I've maintained its credibility was already shot with their IT losses, inadequate reserving, and ridiculous market announcements full of unbelievable superlatives. All insurers have had challenges with the Canterbury sequence, I can personally testify to that but shareholders have NOT been informed adequately Uberrimae fidae should work all ways.

[Beagle]

I've maintained its credibility was already shot with their IT losses, inadequate reserving, and ridiculous market announcements full of unbelievable superlatives. All insurers have had challenges with the Canterbury sequence, I can personally testify to that but shareholders have NOT been informed adequately Uberrimae fidae should work all ways.

Agree. Interesting / disturbing article on behind the paywall on NBR, one excerpt from the litigant in the case above sums it up perfectly. He said words to the effect that shareholders should be very worried.

[winner69]

How much Tower want back from EQC a bit of a mystery

http://www.interest.co.nz/insurance/85811/court-document-reveals-tower-has-6-million-stake-its-legal-battle-eqc-over-land

[Arbroath]

http://www.stuff.co.nz/business/89149897/27billion-paid-out-last-year-to-settle-canterbury-earthquake-claims

is there light at the end of the tunnel? EQC over cap claims fell sharply Q4 2016

[Baa_Baa]

http://www.stuff.co.nz/business/89149897/27billion-paid-out-last-year-to-settle-canterbury-earthquake-claims

is there light at the end of the tunnel? EQC over cap claims fell sharply Q4 2016

They struggling to get around to the 10,000+ claims for the Kaikoura earthquake, the majority of which are from Wellington. We still haven't heard from an assessor two-months on. Maybe Tower doesn't have too much cover exposure so won't affect them?

[bull....]

trading halt - wonder if its about split of company or a takeover

[bull....]

sounds like they received a bid

[Hawkeye]

NBR has something behind the paywall about this

[Hawkeye]

https://www.nzx.com/companies/TWR/announcements/296540

[Balance]

Takeover at $1.17 per share.

[winner69]

Takeover at $1.17 per share.

Well done to those who took a punt

Hope longer term holders come out of this fiasco better off.

[Beagle]

I think shareholders can count themselves as extremely lucky someone else wants try and de-flea this pup. The other thing is those people with Tower policies might now have an owner capable of properly capitalizing the business and perhaps even better still a company that might treat their policy holders claims in an ethical and more reasonable manner.

[Arbroath]

I think shareholders can count themselves as extremely lucky someone else wants try and de-flea this pup. The other thing is those people with Tower policies might now have an owner capable of properly capitalizing the business and perhaps even better still a company that might treat their policy holders claims in an ethical and more reasonable manner.

I'm not so sure about that Roger. Tower has quite a bit of strategic value. Suncorp might yet offer more than $1.17 now that someone has put their balls on the table. Fairfax is basically a value fund and Prem Watsa (Fairfax CEO) has an amazing track record so they no doubt see plenty of value at $1.17. I still think Tower is worth c. $1.50+ as a clean company (acknowledging they are far from clean right now).
For Suncorp taking out Tower makes sense as they get another 5% market share and Youi aside make the NZ insurance market an effective duopoly alongside IAG. I wouldn't discount a competing bid of maybe $1.30 a share but depends if Suncorp has the appetite - don't think the CC would allow IAG to bid but the NZCC are weak so you never know...

[tim23]

I agree another bidder emerging is a real possibility thinking of buying some more

[Snow Leopard]

Well, a bolt out of the blue. I did not see that coming.

Varying degrees of probable profit for post 8-Sep buyers.

Best Wishes
Paper Tiger

[peat]

I think shareholders can count themselves as extremely lucky someone else wants try and de-flea this pup.

I agree Roger , this one was in trouble. even more of a sell now.

[Beagle]

I'm not so sure about that Roger. Tower has quite a bit of strategic value. Suncorp might yet offer more than $1.17 now that someone has put their balls on the table. Fairfax is basically a value fund and Prem Watsa (Fairfax CEO) has an amazing track record so they no doubt see plenty of value at $1.17. I still think Tower is worth c. $1.50+ as a clean company (acknowledging they are far from clean right now).
For Suncorp taking out Tower makes sense as they get another 5% market share and Youi aside make the NZ insurance market an effective duopoly alongside IAG. I wouldn't discount a competing bid of maybe $1.30 a share but depends if Suncorp has the appetite - don't think the CC would allow IAG to bid but the NZCC are weak so you never know...

I suppose anything is possible but the true depth of the black hole that is the remaining claims in respect of the Canterbury earthquakes and now the Kaikoura ones is anyone's guess.
I would imagine Suncorp's appetite for expansion would be somewhat blunted by their recent financial performance and experience with the shaky isles http://www.scoop.co.nz/stories/BU1702/S00301/suncorps-nz-insurance-business-posts-57-drop.htm?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Friday+10+F ebruary+2017 and IAG already have a hugely dominant market position so while I agree the commerce commission are very weak, surely they're not totally pathetic ?...but then again they allowed Z to buy Caltex's interests which I think was a real shocker of a decision so you never know do you !

I think this is a sell, take the money and run just in case one of the approvals required under this takeover isn't forthcoming. I guess some will hold for a while in the hope of a competing takeover offer so perhaps waiting for a few weeks to see if one emerges isn't without its merits.

[Arbroath]

I'm not so sure about that Roger. Tower has quite a bit of strategic value. Suncorp might yet offer more than $1.17 now that someone has put their balls on the table. Fairfax is basically a value fund and Prem Watsa (Fairfax CEO) has an amazing track record so they no doubt see plenty of value at $1.17. I still think Tower is worth c. $1.50+ as a clean company (acknowledging they are far from clean right now).
For Suncorp taking out Tower makes sense as they get another 5% market share and Youi aside make the NZ insurance market an effective duopoly alongside IAG. I wouldn't discount a competing bid of maybe $1.30 a share but depends if Suncorp has the appetite - don't think the CC would allow IAG to bid but the NZCC are weak so you never know...

My crystal ball worked - Suncorp enters the fray at $1.30. This could get very interesting as Fairfax have the right to match Suncorp....let the games begin.

[JeremyALD]

My crystal ball worked - Suncorp enters the fray at $1.30. This could get very interesting as Fairfax have the right to match Suncorp....let the games begin.

Kudos to you for predicting this. Will be a few very interesting days for Tower.

[Balance]

My crystal ball worked - Suncorp enters the fray at $1.30. This could get very interesting as Fairfax have the right to match Suncorp....let the games begin.

Well done, Arbroath.

There is an escalation clause in Suncorp's offer so there are definitely expectations of a bidding war.

[Beagle]

I think the fact that other companies are after Tower indicates the expectation that super profits are to be forthcoming from poor old Kiwi's in terms of their insurance premiums in the years ahead.

Already IAG's profit out of N.Z. insurance and pricing I have seen from them on insurance products indicates to me Kiwi's are paying well over the odds for insurance and IAG appear to be exerting undue dominance on market pricing.
Hopes that the commerce commission would investigate excessive insurance costs due to a lack of effective market competition are slim. In my opinion Youi shouldn't even be here in N.Z. after their appalling commercial conduct but then we'd have even less competition :eek2:

[tim23]

Didn't follow my advice but happy to see my prediction playing out

[Drummer]

Volume almost 12M, any ideas why?

[Scrunch]

Volume almost 12M, any ideas why?

The ANZ securities graph has this volume all occurring at $1.40 at pretty much the same time (12pm). No-one is going to buy that sort of volume at 10c above the latest known bid unless they were intending on bidding for the first time or its one of the existing two bidders planning on an increased offer. There will need to be a substantial shareholder notice soon.

[Scrunch]

Vero buying at $1.40

[winner69]

On 14 March 2017, Vero agreed to purchase 11,315,720 ordinary shares in Tower Limited from Perpetual Limited and its subsidiaries ("Seller") at a sale price of $1.40 per Share (total consideration of $15,842,008) ("Transaction"). Settlement of the Transaction is to occur on 16 March 2017.


NZX.com

[Bjauck]

The vultures are gathering over TWR!

[Balance]

Well done, Arbroath.

There is an escalation clause in Suncorp's offer so there are definitely expectations of a bidding war.

Sp $1.38 vs those who at $1.10 on announcement of Fairfax offer - confirming once and for all that the first bid is never the last and final bid!

[tim23]

Just waiting for similar action with TTK got my offer from SPK in post today

[winner69]

Tower says it may need to raise capital to prop up its balance sheet during the takeover saga.

That could be interesting.

[Sideshow Bob]

http://www.stuff.co.nz/business/91023756/tower-insurance-chairman-michael-stiassny-expresses-frustration-at-claims-holdouts

It's all their customers fault!

[percy]

Tower says it may need to raise capital to prop up its balance sheet during the takeover saga.

That could be interesting.

You could think TWR shareholders "live in interesting times."

[percy]

http://www.stuff.co.nz/business/91023756/tower-insurance-chairman-michael-stiassny-expresses-frustration-at-claims-holdouts

It's all their customers fault!

Yeah right.!
Any one who reads "The Press" will be well aware everyday there have been articles and stories of insurance companies behaving badly.
I for one will never again invest in any insurance company.

[BlackPeter]

Yeah right.!
Any one who reads "The Press" will be well aware everyday there have been articles and stories of insurance companies behaving badly.
I for one will never again invest in any insurance company.

Have a look at CBL - they do quite nicely :)

[Southern_Belle]

yeah right.!
Any one who reads "the press" will be well aware everyday there have been articles and stories of insurance companies behaving badly.
I for one will never again invest in any insurance company.right to give them a wide berth. Senior management involved in carving up the tower business units now acting as ¨consultants¨ to suncorp

[Jim]

right to give them a wide berth. Senior management involved in carving up the tower business units now acting as ¨consultants¨ to suncorp

It was GPG that raid TWR, sold off the health insurance, fund management etc, took the money and sold out. Tower is just an insignificant insurance player now

[percy]

Have a look at CBL - they do quite nicely :)

Picture a chart of a Turkey being fattened up for Christmas.
It starts in the bottom left hand corner on 1st January.Each day you feed the turkey, and it puts on weight,and each day you mark on your chart,and the chart starts heading for the top right hand corner.Looks fantastic.But then on the 13th December you chop off the turkeys head.Chart drops to Zero.Insurance companies are the same.Fat profits until a huge underwriting disasterous loss cuts off their head.!
Read the history of Lloyds.

[BlackPeter]

Picture a chart of a Turkey being fattened up for Christmas.
It starts in the bottom left hand corner on 1st January.Each day you feed the turkey, and it puts on weight,and each day you mark on your chart,and the chart starts heading for the top right hand corner.Looks fantastic.But then on the 13th December you chop off the turkeys head.Chart drops to Zero.Insurance companies are the same.Fat profits until a huge underwriting disasterous loss cuts off their head.!
Read the history of Lloyds.

Are you saying that it might not be a good idea to invest into insurance companies who underwrite life insurance policies for turkeys without excluding the risk of intentional cultural mass-killings of said turkeys?

I absolutely agree.

However - looking at the larger picture of insurance companies do I think that your post just highlights the problem of insufficient diversification combined with underestimating the likelihood and damage of one particular insured event.

I don't think that the insurance business is that much different to the finance business - and we both are quite heavily invested into some examples of the latter kind. The trick is in both industries to properly manage and cost risk - and to diversify sufficiently to make sure that one (or a series of) super accident(s) does not kill the business.

I probably need to do still some more research on CBL (and this is stuff for a different thread), but I don't see any reason why insurance in general should be more risky or less profitable than any other well managed business in the financial world.

Do you?

[percy]

Are you saying that it might not be a good idea to invest into insurance companies who underwrite life insurance policies for turkeys without excluding the risk of intentional cultural mass-killings of said turkeys?

I absolutely agree.

However - looking at the larger picture of insurance companies do I think that your post just highlights the problem of insufficient diversification combined with underestimating the likelihood and damage of one particular insured event.

I don't think that the insurance business is that much different to the finance business - and we both are quite heavily invested into some examples of the latter kind. The trick is in both industries to properly manage and cost risk - and to diversify sufficiently to make sure that one (or a series of) super accident(s) does not kill the business.

I probably need to do still some more research on CBL (and this is stuff for a different thread), but I don't see any reason why insurance in general should be more risky or less profitable than any other well managed business in the financial world.

Do you?

Read the history of Lloyds.
9/11 I only sold one share and it was Tower.
You are right about finance companies.I think Banks in Australasia have better government controls on them now,but the wild west days of finance companies is exactly what insurances companies are like.
We still have to watch bad loans with HBL and TNR.Both currently have few.
I think back to Re-Insure in Aussie,years of great profits,holding mainly cash.Went broke.AMI in NZ,a great history of profits.One earthquake broke them. CBL just remember those who do not follow history are doomed to repeat it.Be careful.If you can understand insurance compay's accounting you are doing well.If you can't,don't buy something you don't understand.

[winner69]

Insurance companies bemoan the increased number of major weather events. Many blame climate change for this (as a result of man's love of fossil fuels)

Insurance companies make most of their money from the investment of premiums (and hope that premiums and underwriting cover the cost of claims).

Insurance companies over the years have been one of the largest investors in oil,coal etc companies

Certain irony that a large chunk of their huge profits over the years have come from things that probably cause the events they bemoan today

But all, OK it's me and you and other people who can afford insurance who pay for their past follies anyway

[percy]

And when in a low interest enviroment, their profits from investments are low they "appear to have a problem".
And if claims excede underwriting,they " appear to have a very big problem".

[winner69]

percy commented 'If you can understand insurance compay's accounting you are doing well'

Agree - even doubt if management understand them

It's an art form, especially once actuaries get involved (sorry Halebop)

[winner69]

in F16 investment income was about $9m on average investments of $200m ...hmmm

And insurance company 'Investment Managers' are renowed for flying around the world 1st class and enjoying the good life

[BlackPeter]

Just thought we should move this interesting discussion to a more appropriate thread:
http://www.sharetrader.co.nz/showthread.php?10191-CBL-Insurance-IPO&p=662332&viewfull=1#post662332

[alistar_mid]

when is tower going to accept one of these offers?

The longer is draws out the less likely and its reflected in the share price when the news first came out $1.32 now down to $1.10.

Cost me 23c per share which is 23 1c lollies back in the day.

[Baddarcy]

when is tower going to accept one of these offers?

The longer is draws out the less likely and its reflected in the share price when the news first came out $1.32 now down to $1.10.

Cost me 23c per share which is 23 1c lollies back in the day.

Its with the commerce commission i think at the moment. Then possibly the OIO after that, so don't hold your breath.

Gut feeling is the comment about a capital raising if it drags on too long from Tower is to blame for the price drop.

[Balance]

Its with the commerce commission i think at the moment. Then possibly the OIO after that, so don't hold your breath.

Gut feeling is the comment about a capital raising if it drags on too long from Tower is to blame for the price drop.

https://www.nzx.com/files/attachments/258718.pdf

Drawdown of $30m of BNZ facility in May has taken care of capital requirement.

Next deadline - Suncorp Commerce Commission clearance 30 June.

Fall back is that Fairfax is still interested and in negotiations.

[Arbroath]

My crystal ball worked - Suncorp enters the fray at $1.30. This could get very interesting as Fairfax have the right to match Suncorp....let the games begin.

Suncorp firms up at $1.40....as long as Comcom play ball the ball is back in Fairfax's court

[Drummer]

"Suncorp is seeking to acquire all Tower shares not already held by Vero at NZ$1.40 per share."

Anyone know what this means, all shares held by Tower or shares held by all investors?

[Scrunch]

Suncorp firms up at $1.40....as long as Comcom play ball the ball is back in Fairfax's court
Especially now that we are talking about post due diligence offers. Any due diligence done properly would have looked at the Christchurch earthquake provisioning. The offer price didn't drop having done that which is good.

[Marilyn Munroe]

Suncorp firms up at $1.40....as long as Comcom play ball the ball is back in Fairfax's court

The Commerce Commission was yelled at loudly by the comentariat for approving the IAG/AMI takeover. Might the CC now be gun shy over insurance takeovers?

Would it be prudent to sell to the market at current prices to de-risk the CC spoiling the party?

Boop boop de do
Marilyn

[peat]

The Commerce Commission was yelled at loudly by the comentariat for approving the IAG/AMI takeover. Might the CC now be gun shy over insurance takeovers?

Would it be prudent to sell to the market at current prices to de-risk the CC spoiling the party?

Boop boop de do
Marilyn

I dont think Com Com will reject this one. IAG have 46% so allowing Vero to have 30% (incl Tower) wouldnt seem inconsistent. And its arguable that having the Tower business backed by a major player will make the consumers better off in terms of the strength of their insurer. Although together the two Aussie firms will have 76% so that is quite dominant .....

I am surprised by the 7c discount though so some people must agree with you MM. But I reckon it will be let through. I personally would wait and get the $1.40 unless the funds were needed in a hurry.

[Balance]

The Commerce Commission was yelled at loudly by the comentariat for approving the IAG/AMI takeover. Might the CC now be gun shy over insurance takeovers?

Would it be prudent to sell to the market at current prices to de-risk the CC spoiling the party?

Boop boop de do
Marilyn

Why there's a 5% discount (risk premium) left in the sp.

Think myself CC will let the takeover through - precedent has been set and NZ is a land of duoploies anyway - be it beer, airline, building products, supermarkets, banking (Oz vs Kiwibank) etc etc.

[JeremyALD]

Anyone taking a stab at this one? Current SP $1.27. annoucement due next Wednesday. Stand to make 10% in one week if the Commerce Commission pass it.

[Flugenbear]

Anyone taking a stab at this one? Current SP $1.27. annoucement due next Wednesday. Stand to make 10% in one week if the Commerce Commission pass it.

I think I'll get passed if the CC are consistent with past rulings....

[tim23]

Anyone taking a stab at this one? Current SP $1.27. annoucement due next Wednesday. Stand to make 10% in one week if the Commerce Commission pass it.

Agree nice little arbitrage opportunity for the brave...

[winner69]

Agree nice little arbitrage opportunity for the brave...

Declined

https://nzx.com/companies/TWR/announcements/304511

[JeremyALD]

Merger declined. Definitely wasn't expecting that.

[JeremyALD]

Agree nice little arbitrage opportunity for the brave...

Unfortunately I was too brave, but I only put 6k down. It's going to be a bad day though, that much is sure :(

[Balance]

Appeals will be lodged for sure.

[bull....]

Im so glad, really impressed with the COMCOM of late - more competition is better for everyone

[winner69]

Im so glad, really impressed with the COMCOM of late - more competition is better for everyone

Agree ..............

[bull....]

70 - 80c pre t/o period

[Bjauck]

Im so glad, really impressed with the COMCOM of late - more competition is better for everyone Their decisions are no longer like a lottery?

[Balance]

Their decisions are no longer like a lottery?

https://www.nbr.co.nz/article/comcom-blocks-towers-sale-suncorp-th-205698

Looks well reasoned to me.

Fairfax could very well reappear as a buyer?

[Arbroath]

Their decisions are no longer like a lottery?

Comcom logic is a joke - remember how they kneecapped Chorus with their "preliminary decision" which halved their share price only to reverse it.

Declining Tower beggars belief when they are 5% market share and of questionable independent financial strength. I'd understand if IAG was trying it on but Vero are c. 25%. Hasn't Youi turned up in NZ as a new recent competitor - hard to make an argument there are barriers to entry etc.

Does this mean they have to relook at Z buying Caltex or the supermarket duopoly. Tower shareholders have been sacrificed at the alter of Mr Berry's ego.

[Bjauck]

https://www.nbr.co.nz/article/comcom-blocks-towers-sale-suncorp-th-205698

Looks well reasoned to me.

Fairfax could very well reappear as a buyer?
After allowing the IAG takeover maybe they tied their hands? A suncorp/tower tie in may have been a counterbalance.

[Balance]

Comcom logic is a joke - remember how they kneecapped Chorus with their "preliminary decision" which halved their share price only to reverse it.

Declining Tower beggars belief when they are 5% market share and of questionable independent financial strength. I'd understand if IAG was trying it on but Vero are c. 25%. Hasn't Youi turned up in NZ as a new recent competitor - hard to make an argument there are barriers to entry etc.

Does this mean they have to relook at Z buying Caltex or the supermarket duopoly. Tower shareholders have been sacrificed at the alter of Mr Berry's ego.

There is an appeal process - this is not the end game.

[Balance]

There is an appeal process - this is not the end game.

Bought some at 90c for a play.

Am expecting Vero to announce that they are appealing. Share price then expected to go back to $1.00 to $1.05.

Wish me good fortune! :D

[hardt]

Im so glad, really impressed with the COMCOM of late - more competition is better for everyone

Engineered competition does nothing for the market as a whole, VERO and Tower are already co-operating together in a way that no one could assume to be competitive... the merger was not to drive competition down but to drive efficiency through economies of scale, consolidating expenses between the two entities and move into a full range of coverage.

Sent a query to Vero to insure a turbo car of mine for the weekends, somehow my query found its way to Tower as I then received a quote from them over the phone claiming Vero does not offer that sort of cover...

For eff sake, let a free market be free, you can penalise those who do wrong once they do wrong...

Comcom is full of anointed intellectuals who have far too much power... seeing as an appeal would cost millions of dollars and take up to a year, where is the real oversight coming from?

I don't even hold TWR and I am livid

[peat]

https://www.nbr.co.nz/article/comcom-blocks-towers-sale-suncorp-th-205698

Looks well reasoned to me.

Fairfax could very well reappear as a buyer?

They have all the paperwork done, but it wouldnt be hard to change the price. It would be effectively charity to keep the bid at their previous level.

[winner69]

Four down to three players OK, three down to two a step too far says CC man

http://www.interest.co.nz/insurance/88984/commerce-commission-said-yes-iag-no-vero-jenée-tibshraney-asks-its-chairman-why

[JeremyALD]

They have all the paperwork done, but it wouldnt be hard to change the price. It would be effectively charity to keep the bid at their previous level.

I don't agree with this. The SP was 80 cents when they made their $1.17 offer and there were no other offers. What difference does it make that Vero was declined. The $1.17 offer was 23 cents below Vero's offer. I doubt Tower shareholders would accept much less. The company still has a strong underlying business that maybe in a few years will be done with the earthquake claims and be well ahead of where it is today.

[peat]

I don't agree with this. The SP was 80 cents when they made their $1.17 offer and there were no other offers. What difference does it make that Vero was declined. The $1.17 offer was 23 cents below Vero's offer. I doubt Tower shareholders would accept much less. The company still has a strong underlying business that maybe in a few years will be done with the earthquake claims and be well ahead of where it is today.
I note Phillips Capital have suggested fair value at 80c, and highlighted no moat, no dividend , a commoditised product, the risk of a capital raising, Chch legacy liabilities and in general agreed with the report i wrote and distributed last week.

However they did mention the full version of the Com Coms decision has still not been released. So any interested parties are still waiting for the detail before they form their view and their response.

[winner69]

You guys might be interested in this

http://www.interest.co.nz/insurance/89102/jenée-tibshraeny-looks-reports-forsyth-barr-and-macquarie-analysts-consider-what

[Fatboyj]

Bought some at 90c for a play.

Am expecting Vero to announce that they are appealing. Share price then expected to go back to $1.00 to $1.05.

Wish me good fortune! :D

You have chosen, wisely, I think :)

Vero to Appeal Commerce Commission Decision

https://www.nzx.com/companies/TWR/announcements/305937

[Balance]

You have chosen, wisely, I think :)

Vero to Appeal Commerce Commission Decision

https://www.nzx.com/companies/TWR/announcements/305937

Glad they made this decision before any capital raise!

Hopefully will see $1.05 :D

[JeremyALD]

Glad they made this decision before any capital raise!

Hopefully will see $1.05 :D

Fingers crossed as that would see me break even!

[Balance]

Fingers crossed as that would see me break even!

Disappointing 90c

Market obviously is more concerned about the capital raise and the likelihood that Vero will be unsuccessful.

[Fatboyj]

And Tower joining in with the appeal. I'd see this and think the share price would move, but not on recent events.

TOWER LODGES CROSS APPEAL
Tower Limited (NZX/ASX: TWR) advises that it has now lodged its own cross appeal against the Commerce Commission’s decision to decline Vero’s application to acquire 100% of Tower.
As previously advised, Tower’s Board fully supports Vero with its appeal. As this matter is now before the courts, no further comment will be made.
ENDS

[JeremyALD]

Vero out completely now and is not appealing. Very strange. What was the point of them appealing in the first place? Seems they have wanted to screw Tower over a bit in this whole exercise.

[Schrodinger]

Getting into buy territory - could be a nice value play. Surely their TradeMe tie up is producing results. Will try and look to see how its going.

[JeremyALD]

Have Vero flogged off the 20% stake they purchased ?
And if not, is that stake a market overhang? Or a spoiler to prevent someone else sniffing around? :(

Who knows but they certainly haven't sold any yet.... There's hardly any volume going through.

[Lewylewylewy]

I wouldn't imagine that they would sell the ones they own. Wouldn't make sense.

[Fatboyj]

So whats their play with the shares they own, will they just leave them languishing in their books or wait for the next potential buyer and cut a deal?

[Scrunch]

So whats their play with the shares they own, will they just leave them languishing in their books or wait for the next potential buyer and cut a deal?

Not sure but given the purchase price there's some ugly red ink if they need to be marked back to market through vero's p&l.

[Baddarcy]

The commerce commission is still investigating Vero's purchase of 19.9% separate from the takeover offer.

[Jim]

The commerce commission is still investigating Vero's purchase of 19.9% separate from the takeover offer.

D day for Tower shareholders tomorrow
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11943510

[trader_jackson]

Not sure if it has already been mentioned, but street talk (on AFR) has revealed:
- raise $NZ70 million via renounceable rights issue.
- offering the shares at 42¢ apiece and plans to use the proceeds to strengthen its regulatory capital base (step discount!)

- Goldman Sachs is overseeing the deal and the transaction will be wholly sub underwritten by a group of institutional investors

[Hectorplains]

Not sure if it has already been mentioned, but street talk (on AFR) has revealed:
- raise $NZ70 million via renounceable rights issue.
- offering the shares at 42¢ apiece and plans to use the proceeds to strengthen its regulatory capital base (step discount!)

- Goldman Sachs is overseeing the deal and the transaction will be wholly sub underwritten by a group of institutional investors



Nice find, TJ. That's one helluva discount; worse yet though, what a horribly botched announcement!

[Scrunch]

Nice find, TJ. That's one helluva discount; worse yet though, what a horribly botched announcement!

Agreed - it did seem a really odd time to put a trading halt on. Perhaps they got wind of a leak and put the hold on before trading on this hit the share price?

With 168.662m shares on issue, a 1:1 rights issue at NZ42c would raise $70.8m which aligns with the AFR commentary except for a rounding difference.

[winner69]

Reading the stuff Tower put out this morning nothing can go wrong in the future ..it is all go and F18 will be brilliant.



transformation 18 times and platform 12 times in announcements ....some replication of material though. I just love reading stuff like this

[bull....]

336m shares on issue , huge dilution for existing holders and they might get a 1c dividend in the future if there lucky. looks expensive at current prices

[Schrodinger]

Might be worth a punt but advise caution as to why the steep discount? If this is a guaranteed no brainer why do they need to discount so much.

Will be looking at the forecasts.

[winner69]

336m shares on issue , huge dilution for existing holders and they might get a 1c dividend in the future if there lucky. looks expensive at current prices

Only diluted if you don’t front up with the cash ...but doubling your holding might not be what everybody wants to do

Using say $20m profit (their underlying number) that’s eps of 6 cents on higher number of shares so they might eventually end up at 60/70 cents again next year....yes?

Would you buy now though but interesting to see what eventuates.

Bad luck current shareholders ...might be good for the vultures.

[Arbroath]

Might be worth a punt but advise caution as to why the steep discount? If this is a guaranteed no brainer why do they need to discount so much.

Will be looking at the forecasts.

I think this will turn the corner, anyone remember the massively discounted Nuplex rights issue about a decade ago? That was a great money maker.

The $70m raise repays BNZ and also covers the chance they lose the Peak Re arbitration which leaves an underlying npat of $18-20m a year and Canterbury, finally, well provisioned in the accounts.

I won't bet the house on it as insurance can be a tricky business but I will take up my rights in full and with a post-rights average of around 70c I hope by FY19 they are paying c. 5cps in dividends = 7/8% yield. Thats if they aren't taken over once the balance sheet is cleaner in FY18.

My guess, and it is only a guess, is the share price is 80c+ by Christmas next year (barring no major earthquake).

DYOR as usual.

[winner69]

Tower at least are more transformational than PEB

[bull....]

I think this will turn the corner, anyone remember the massively discounted Nuplex rights issue about a decade ago? That was a great money maker.

The $70m raise repays BNZ and also covers the chance they lose the Peak Re arbitration which leaves an underlying npat of $18-20m a year and Canterbury, finally, well provisioned in the accounts.

I won't bet the house on it as insurance can be a tricky business but I will take up my rights in full and with a post-rights average of around 70c I hope by FY19 they are paying c. 5cps in dividends = 7/8% yield. Thats if they aren't taken over once the balance sheet is cleaner in FY18.

My guess, and it is only a guess, is the share price is 80c+ by Christmas next year (barring no major earthquake).

DYOR as usual.

5c div sounds bit much? thats all there profit i would think 1c if your lucky while they still have christchurch on the books

[Arbroath]

I'd be looking for 1-2cps in FY18 and c. 5c FY19 as long as things go realtively smoothly and appreciate that is a fairly big assumption.

[Schrodinger]

I think this will turn the corner, anyone remember the massively discounted Nuplex rights issue about a decade ago? That was a great money maker.

The $70m raise repays BNZ and also covers the chance they lose the Peak Re arbitration which leaves an underlying npat of $18-20m a year and Canterbury, finally, well provisioned in the accounts.

I won't bet the house on it as insurance can be a tricky business but I will take up my rights in full and with a post-rights average of around 70c I hope by FY19 they are paying c. 5cps in dividends = 7/8% yield. Thats if they aren't taken over once the balance sheet is cleaner in FY18.

My guess, and it is only a guess, is the share price is 80c+ by Christmas next year (barring no major earthquake).

DYOR as usual.

Ok ran some quick numbers (please correct as necessary):

QBE has:
$8B in GWP
$690M wages (cant find their wage bill but estimate 75% is wages of $920M total)
9%

TWR:
$306M GWP
$54M Wages (wages should be $35M or so...)
18%

There is some serious fat that needs trimming. Also some overpaid execs that need to be removed.

As mentioned previoulsy a very attractive T/O target with all the underperformance and fat..

[bull....]

Ok ran some quick numbers (please correct as necessary):

QBE has:
$8B in GWP
$690M wages (cant find their wage bill but estimate 75% is wages of $920M total)
9%

TWR:
$306M GWP
$54M Wages (wages should be $35M or so...)
18%

There is some serious fat that needs trimming. Also some overpaid execs that need to be removed.

As mentioned previoulsy a very attractive T/O target with all the underperformance and fat..

mentioned long ago on the thread about management fat .... your right plenty of room to reduce management exp , weather they do it though is another question

[Drummer]

For some reason I cannot download the document from nzx, is this only open to existing holders, if so, what's the recorded date?

[Schrodinger]

I think they have been discounting premiums to build market share. They may have some pricing flexibility next year but they have too much expense currently.

Either raise prices or cut the excess. I would like to see some movement on this to be confident. That $10M+ fat goes straight to bottom line.

[bull....]

For some reason I cannot download the document from nzx, is this only open to existing holders, if so, what's the recorded date?

https://www.nzx.com/announcements/310249

at the back i think it says 22 november as record date if you wish to buy now ,better have someone as confirm dont want to put you wrong

[Beagle]

Tower at least are more transformational than PEB

That's not saying much is it mate. Both have a very dismal track record of destroying shareholder value, (for very different reasons although some would question the management competencies of both)

[Drummer]

Thanks, just will not download for me..... net admin may have blocked.

Was wondering why SP had not dropped more, but this explains it somewhat.

[bull....]

Might be worth a punt but advise caution as to why the steep discount? If this is a guaranteed no brainer why do they need to discount so much.

Will be looking at the forecasts.

if they win millions back from litigation next year, thats the punt :)

[HITMAN]

If they value the company at $0.43 cents why are people paying $0.70 cents today? This share has got to dive IMO. You should be able to pick up at $0.40 in the near future, I hope I'm wrong but there current management is left wanting.