CBL Insurance IPO

[leesal]

Looks like the Preliminary Unaudited Normalized Underlying Adjusted Profit won't be announced

http://nzx-prod-s7fsd7f98s.s3-websit...890/275458.pdf

Are they still getting ready for a cap raise or is the game already over...

Its well and truely done.

They mispredicted long-tail claims in a segment that was over 50% of their business. Not sure what the numbers are, but to mock an example if CBL generated 1 billion of revenue on 10 year warranty, they'd get acturial estimates for expected claims, at say 50m against 100m of recognised revenue, and deduct 20m admin to arrive at 30m profit. Actuarially they require a buffer for adverse claims, eg an additional 50m pa... Thus must maintain liquidity of approx 1b, reinsure a portion of the exposure, and hold the rest in the balance sheet.

Instead claims turn out to be 75m, and reserve provisioning requires the keep capital to cover up to 125m pa. So now have a 250m exposure, less the reinsurance. Which is fine, the business still generates a profit (50m over 10 years), and generates interest from funds held in trust... They just need additional reserves to fill the funding gap.

However, this is the story CBL have released, which given their track record with RBNZ we should ascribe very little confidence... 3rd party investor comes in, and judges that claims in the french construction segment are trending and will blow out. Project 95m pa over the next 10 years, leading to a operating loss of 15m over the next 10 years, and requiring an additional 200m of reserves.

So they need to book in a net loss of 150m , and raise an additional 300m+ in this example.

Thats where we were on the 8th... Now we are in liquidation mode, a sizeable discount to fair value on the assets of the business, so any "shareholder value" is eroded. That plus the fees of liquidators, lawyers, every single creditor jumping down the throat, not to mention the run on claims (the house you thought might be leaky but holds a 10 year CBL warranty, all of a sudden is definately leaky).

Credit downgrade from BBB(whatever it was) to E says it all. Its junk, and thats the Debt, equity sits down the pecking-order. At this stage its just a question of whether policy-holders funds are adequately ringfenced.

[Balance]

Good explanation, leesal.

Not hard to understand when you explain it so well.

[Balance]

http://www.nzherald.co.nz/business/n...ectid=12003448

What an absolute disgrace and abdication of responsibility and accountability to insurance policy holders!

Surely CBL can assess and contact their policy holders if they are still ok or need to get additional cover!

NZX, FMA, RBNZ and of course, CBL directors & management - DO YOUR FREAKING JOB!

[winner69]

http://www.nzherald.co.nz/business/n...ectid=12003448

What an absolute disgrace and abdication of responsibility and accountability to insurance policy holders!

Surely CBL can assess and contact their policy holders if they are still ok or need to get additional cover!

NZX, FMA, RBNZ and of course, CBL directors & management - DO YOUR FREAKING JOB!

No doubt Jacinda will ride in and save the day for home owners with these guarantees / bonds

And the culprits will live to fight another day (which is very wrong)

Isn’t that what moral hazard is all about

[whatsup]

No doubt Jacinda will ride in and save the day for home owners with these guarantees / bonds

And the culprits will live to fight another day (which is very wrong)

Isn’t that what moral hazard is all about

winner, was that a intended pun, Jac----, ( the horse ) riding in to save home owners ?

[hardt]

12/06/17 - Credit Rating A- Excellent

The ratings reflect CBL’s strong risk-adjusted capitalisation, consistently profitable operating performance and low product risk profile and CBL maintaining a strong risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). This is reflective mainly of its moderate underwriting leverage and favourable liquidity position. In addition, with a conservative gross leverage ratio, the company is not considered to be highly dependent on reinsurance.”

ha...ha...

[Beagle]

https://www.nbr.co.nz/article/cbl-in...ders-th-213285

You would think that the Directors must personally be "in the line of gunfire" from creditors for breaching a direct order by RBNZ.

[Balance]

https://www.nbr.co.nz/article/cbl-in...ders-th-213285

You would think that the Directors must personally be "in the line of gunfire" from creditors for breaching a direct order by RBNZ.

All their assets are safely tucked away in trusts.

Criminal prosecution should be taken to make sure they pay something for tipping this company into liquidation.

[minimoke]

https://www.nbr.co.nz/article/cbl-in...ders-th-213285

You would think that the Directors must personally be "in the line of gunfire" from creditors for breaching a direct order by RBNZ.

"CBL Insurance had recently confirmed to the Reserve Bank that it was continuing to operate despite being below the minimum regulatory solvency level." Isn't this the kind of information that ought to be released to the market at the time?

[Balance]

"CBL Insurance had recently confirmed to the Reserve Bank that it was continuing to operate despite being below the minimum regulatory solvency level." Isn't this the kind of information that ought to be released to the market at the time?

Shows the contempt that the directors of CBL have for RBNZ? They pay a huge price for the contempt.

Probably thought they were dealing with the NZX - in which case the directors and management of the NZX would spend the next 6 months investigating while pissing in their pants as they face a QC from CBL.