CBL Insurance IPO

[minimoke]

Charlatan may be a bit far

I may be a bit unkind there. But now I'm forced to think on a continuum where I would place him and where I would place Doug Somers-Edgar

[Balance]

I may be a bit unkind there. But now I'm forced to think on a continuum where I would place him and where I would place Doug Somers-Edgar

This article in the Sunday Star Times gives a good insight into the advice given on finance companies by Chris Lee. Have a read of this :

http://www.stuff.co.nz/business/pers...-and-adversity

Excerpts :

"In March 2006 Lee invested the Lindsays' money in Hanover Capital, but in October the next year he withdrew support for the company and wrote in his public blog: "Mark Hotchin and Eric Watson are not bankers, and not the sort of people one would regard as low-risk conservatives." Good one.

"In a letter to the couple in early February, Lee said: "Never did I make your decisions. Not once have I contacted you, or any client seeking to persuade you to invest money in anything. Never have I invested your money for you. You invested your money." Another good one.

[Edited by Moderator: Quoting large sections of articles is not good]

[Bear_me_out]

I may be a bit unkind there. But now I'm forced to think on a continuum where I would place him and where I would place Doug Somers-Edgar

Personally the only share analysis I pay attention to comes from Mint or AMP, the rest of them don't seem to have the rigours and depth required in my view. The Macquarie team in Sydney is quite good too, and correctly picked CBL for what it was ages ago. Commercial property = AMP, Fixed interest = Nikko, and that's about it I think.

Insurance is a particularly tricky area too, so it does need true expertise to assess -
(a) Life insurance accounting is quite complex, because of the enormous up-front commissions that they pay, and how profit is reported. Bit of a black hole forever putting more money in to pay commissions, than can be taken out as dividends.
(b) Short-tail general insurance (house, contents, motor) should be much more straightforward because it is much more a cash-in, cash-out business, and claim reserves are usually quite simple, but the Canterbury earthquakes taught everyone a lesson that even short-tail insurance can be problematic. Most insurers blew their catastrophe reinsurance limits, and claim provisions are still going up even with the best engineering advice that policyholder money can buy, as the long-suffering shareholders of Tower will know.
(c) Long-tail general insurance is, and always will be, a nightmare, e.g. asbestos risks in Australia. Getting into long-tail insurance business in a big way, in a foreign market, without apparently understanding the business, as seems to be the case with CBL, particularly difficult to assess. If CBL's Board, managers, and external "expert" advisers didn't fully understand it, then external analysts and investors would have needed exceptional insight to assess the true position.

[hardt]

http://www.nzherald.co.nz/business/n...ectid=12014245

Bryan Gaynor - " The CBL Insurance debacle raises serious questions about the Reserve Bank's ability to effectively execute its regulatory obligations. A major bank failure, which is highly unlikely but does happen occasionally, would put the Reserve Bank under enormous pressure. Recent comments from a senior Reserve Bank employee indicate that the regulator doesn't believe that keeping share market investors fully informed is one of its objectives. This attitude would be a disaster if one of the major Australian owned domestic banks had problems in New Zealand. "

[Marilyn Munroe]

http://www.nzherald.co.nz/business/n...ectid=12014245

Bryan Gaynor - " Recent comments from a senior Reserve Bank employee indicate that the regulator doesn't believe that keeping share market investors fully informed is one of its objectives. This attitude would be a disaster if one of the major Australian owned domestic banks had problems in New Zealand. "

It would be unlikely for Reserve Bank to make a public statement saying things at a major trading bank were sticky, because this would set off a stampede of withdrawls.

The Reserve Bank is not your friend, its function is to protect the banks and the system of which they are a key part.

Suggestions: If you are an unsecured bank creditor(have money on deposit) spread it around. Unless you are a supplicant for the issue of credit do you really need to have your business, personal, credit cards or retirement funds at the same bank.

Remember if there is the smell of danger in the air those that panic first come off best.

Boop boop de do
Marilyn

[Balance]

Headline in NBR this morning - CBL : The French Connection. Inurance Group's bosses owned personal stakes in SFS two years before its $110m acquisition.

Smells bad!

SFS acquired in November 2016 and in less than 8 months, SFS is already in trouble.

[BlackPeter]

Watershed report to be released by May 11 ...

https://www.nzx.com/announcements/315960

One thing is sure - and that's the administrators fees; And this is on top of management salaries (they are nicely paid for running the company down) and probably board fees ...

[Beagle]

Extremely unlikely shareholders will ever see even a single cent per share.

[BlackPeter]

Extremely unlikely shareholders will ever see even a single cent per share.

Agree - and I sort of moved on (ATM, SML, SUM and some others currently working in overdrive to recover my losses );

However - it looks every week more likely that something fishy was going on (Thanks, balance, for the latest pointer). I definitely hope that they use this time not just the wet bus ticket approach to punish the responsible bunch.

[Balance]

Headline in NBR this morning - CBL : The French Connection. Inurance Group's bosses owned personal stakes in SFS two years before its $110m acquisition.

Smells bad!

SFS acquired in November 2016 and in less than 8 months, SFS is already in trouble.

I stand corrected!

https://stocknessmonster.com/announc....asx-2A992879/

$150m acquisition and deal was completed and CBL took control in January 2017!

https://www.insurancetimes.co.uk/cap...426534.article

RBNZ assessed CBL's capital solvency in July 2017 and found CBL to have severely under-reserved its French business so that the ratio was less than ZERO (0)!!!!!

So in half a year after acquisition, SFS was insolvent!