CIX- Calliden group

[stoploss]

Hi taken a small position in this . In a nice uptrend presently and volume has picked up. Anyone have previous experience with this one ?

[Halebop]

The company's business model was predicated on building market share and being taken over. I'm guessing this will still happen at some point.

The problem is they panicked a bit when organic market share growth was coming too slow and opted to acquire businesses. But because they didn't have a lot of capital this left them in the worst of both worlds - they still lacked scale yet owned a hodge-podge mix of businesses operating different systems and processes. They then went through an expensive process of integration. In short, they had big company problems with small company scale.

The good news is a lot of this has been remedied. The bad news is their lack of capital means they have had to hand margins their reinsurer when they should have been reaping rewards.

Have almost doubled my money on this but bought on a cigar butt strategy (they were just too cheap) - am not really a believer.

[stoploss]

The company's business model was predicated on building market share and being taken over. I'm guessing this will still happen at some point.

The problem is they panicked a bit when organic market share growth was coming too slow and opted to acquire businesses. But because they didn't have a lot of capital this left them in the worst of both worlds - they still lacked scale yet owned a hodge-podge mix of businesses operating different systems and processes. They then went through an expensive process of integration. In short, they had big company problems with small company scale.

The good news is a lot of this has been remedied. The bad news is their lack of capital means they have had to hand margins their reinsurer when they should have been reaping rewards.

Have almost doubled my money on this but bought on a cigar butt strategy (they were just too cheap) - am not really a believer.

Many thanks.

[Halebop]

Not sure what the trigger is (Maybe Challenger or Greencape?) but up almost 10% today.

[stoploss]

Not sure what the trigger is (Maybe Challenger or Greencape?) but up almost 10% today.

I don't care why , I'm happy with it ... BE a believer !!!!

[stoploss]

Update reads ok , http://www.asx.com.au/asxpdf/20130523/pdf/42g1vgjzssfbcp.pdf

[Penfold]

Looked at this one the other day. Want to add some insurance to my portfolio... can't say I liked all of what I read.

Decided to buy NIB Holdings instead. Seems pretty fully priced, but seems in far better financial shape.

After todays rally you couldn't discount QBE too. The falling dollar will be a windfall for them.

[Huang Chung]

Only problem with health insurance stocks in Australia is that their success or otherwise is largely dependent on government policy towards healthcare.

[Halebop]

Only problem with health insurance stocks in Australia is that their success or otherwise is largely dependent on government policy towards healthcare.

Healthcare in almost every country is exposed to government policy. For me the bigger problem is a historical pattern of high inflationary pressures on healthcare inputs.

At least for Calliden healthcare is not an exposure, except perhaps indirectly via Liability premium classes.

[stoploss]

Got bored with this.Taken a small profit .

[mark100]

For all the disappointment caused by it's downgrade last year CIX has posted a pretty good result along with a solid forecast. Hopefully they've learnt their lesson around optimistic forecasts.

NPAT of $6.2m, EPS 2.7c up a large % (no tax payable)
Total DPS for the year of 2.2cps along with a 0.5cps special dividend
Forecast of $7.5-9.5m NPAT for FY14 along with 60-80% payout

I bought after the result

[Huang Chung]

Same here.

Gave up some of the gains on the snap, so maybe a second bite of the cherry tomorrow.

[Halebop]

Have held for 18 months or so, including being caught out by the sudden drop late last year : (

Given their propensity to disappoint, was pleasantly surprised by the fat dividend! (My yield now double digits). Agree result was pretty good but still not good enough. Think if they prove the agency model is less volatile and deliver the sort of result they should be capable of, this should still have some legs.

[mark100]

Amortisation of customer relationships fell from $1.466m to $1.076m in FY13. Based on the amount of goodwill left this should fall again for FY14 to around $0.8m on my estimates.
I note in the conference call this morning they said there will be a significant drop in amortisation in 2015 and 2016 due to this particular goodwill item completely rolling off the balance sheet.

[mark100]

Well I always thought AUB or SDF might be interested here but wondered what would happen with the Insurance division. Anyway SDF have found a buyer for the insurance division and offered a nice premium. Interestingly during the AUB conference call today the MD was asked about making a rival bid. He played a straight bat and said they would do what's best for shareholders. A rival bid is probably unlikely but you can't rule it out in my view