CBL Insurance IPO

[Snow Leopard]

...I am definitely going to give the entire 147 page announcement a proper look over (accounts first and then the frippery) but superficially it looks good to me...

So on Page 98 - Note 26 Contingent liabilities (many pages still to go )

"Contingent liabilities are not recognised in the SOFP¹ but are disclosed where settlement is less than probable but more than remote. If settlement becomes probable, a provision is recognised"

Made me smile .

Best Wishes
Paper Tiger

PS "At the year-end there were no contingent liabilities (2014: nil)."

¹Statement Of Financial Position

[kiora]

So on Page 98 - Note 26 Contingent liabilities (many pages still to go )

"Contingent liabilities are not recognised in the SOFP¹ but are disclosed where settlement is less than probable but more than remote. If settlement becomes probable, a provision is recognised"

Made me smile .

Best Wishes
Paper Tiger

PS "At the year-end there were no contingent liabilities (2014: nil)."

¹Statement Of Financial Position

Its an insurance company after all that works on probabilities PT

[Snow Leopard]

Research all done and dusted for now

Findings:

Should have bought them when they listed - I would have a tidy paper profit by now.

Missed the day the results actually came out as I was on an airplane (AirAsia X, not Air New Zealand).

They have an office here in Kuala Lumpur! Not far from the Petronas Towers and the KLCC branch of NZ Curry House. By a quirk of fate I walked by them today having been to listen to the Malaysian Philharmonic Orchestra (Sibelius: Symphony No 1; Nielsen: Flute Concerto; Liszt: Hungarian Rhapsody for Orchestra No 1).

The 20.88cps earning is based on a weighted 170M shares and not the end of year 220M, which would give about 16.1cps.
But by the time you have manipulated the numbers for the one-offness of the IPO you can accept 20cps as a reasonable picture of where they were.

Cash flow has been good.

The figures for Assetinsure since acquisition look like an outlier which bolstered the result significantly.

They have cash to use for more acquisitions & expansion, so if they do it mostly right then generally they should be able to grow profits over the next few years by say 10%.

Guess cps of $0.21 for FY16, and a few years of averaging 10% growth then I would value them at $2.60 now looking at $2.74 at year end.

So, not a convincing buy for me.
I will try to remember to keep an eye on them. I might buy a few, in case they surprise on the upside.

Best Wishes
Paper Tiger

[kiora]

A nice clean and solid result.Well done CBL. A growth story with undemanding metrics
https://nzx.com/files/attachments/234678.pdf

[Snow Leopard]

Thought I should mention that I bought some of these and was about 5% in profit at close yesterday, plus I have the dividend (about which there is a long story and involves Computershare receiving the Wrath of the Tiger).

Feeling a little more positive about their future and I would probably buy some more but the sell side is ridiculously thin.

As Always Please Do Your Own Research.

Best Wishes
Paper Tiger

[Grunter]

Have just become interested in this stock - anyone have any reliable ways of valuing Insurance companies? I've heard Price/Book ratios are a good rule of thumb:

P/B = $588,735,000/$193,732,000 = 3 , which is quite high, so would require further analysis to tease out the details.

Also noted briefly that the claims ratio is below 50% of GWP. The company is new and in growth mode, and with Insurance companies, the claims ratio will be much, much higher over the long term (90%???) as the claims catch up, so we should expect this to grow quite substantially over the next 3 years.

[macduffy]

If you ever find that good rule of thumb, Grunter, let me know please. I've been interested ever since Standard Insurance went west in the 1960's - unauthorised dealings by their Sydney manager caused their downfall - and have dabbled in insurance shares in a minor way over the years. Currently have a small holding in TWR. It's still largely a black book to me - seems to depend on assumptions, esoteric ways of valuing liabilities - contingent and otherwise - and the price of fish! Just as an aside, as you are probably aware CBL isn't your typical insurance company being much more involved in perfomance guarantee type business and less in property insurance. I hold a few from IPO.

[kiora]

Have just become interested in this stock - anyone have any reliable ways of valuing Insurance companies? I've heard Price/Book ratios are a good rule of thumb:

P/B = $588,735,000/$193,732,000 = 3 , which is quite high, so would require further analysis to tease out the details.

Also noted briefly that the claims ratio is below 50% of GWP. The company is new and in growth mode, and with Insurance companies, the claims ratio will be much, much higher over the long term (90%???) as the claims catch up, so we should expect this to grow quite substantially over the next 3 years.

It is not the typical insurance company though Grunter
http://cblcorporation.co.nz/about-us/our-group/
I strongly suspect claims ratio will not go higher anytime soon.My understanding is CBL takes no risk.All risk is farmed out?It generally avoids exposure to natural perils or disaster risk
They have actually been around since 1973 with 40 years of experience.
http://www.4-traders.com/CBL-CORPORA...978/consensus/

[macduffy]

My understanding is CBL takes no risk.All risk is farmed out?

Not entirely. They "share" the risk with re-insurers. But then, don't all insurers?

[kiora]

Not entirely. They "share" the risk with re-insurers. But then, don't all insurers?

It generally avoids exposure to natural perils or disaster risk
Many of its products CBL has the ability to recover claims from insured counter parties.Whatever that means