CBL Insurance IPO

[hardt]

Have a heart - probably been having sleepless nights overseeing CBL.

To be fair, it is HARD to deal with any entity which chooses to disobey the law, regulation and instructions - especially when the RBNZ is sgown again to have little teeth to deal with such delinquencies.

Imagine having to apply to the court before action can be taken!

No job is easy and by no means do I believe RBNZ should take the blame for what CBL has done.

I do think, when it was apparent CBL was not co-operating, RBNZ and FMA through should have disclosed something... anything to the world to say.
"hey look, they aren't listening to us"... we found out almost a year later with no course for getting out.

Bad look for NZ, markets and insurance industry.

[Bear_me_out]

Some brief comments..........
The RBNZ does have teeth to deal with delinquencies
When its concerns were raised by the events at Elite in 2017, it placed a significant additional capital requirement on CBL (170% solvency)
The RBNZ's concerns over reserving were clearly resisted by the CBL, and also (somewhat surprising) resisted by its actuaries PriceWaterhouseCoopers (aren't we supposed to be able to rely on the work that actuaries do?)
When CBL and its actuaries finally admitted there was a reserving problem in Nov 2017, the RBNZ slapped a ban on this proposed reinsurance reserve transfer, while it waited to see if CBL would raise the capital needed to meet its 170% requirement.
When CBL defied the RBNZ and went ahead with the transfer, the RBNZ took them to court and successfully had them placed in interim liquidation in February 2018.
In the circumstances, and from the information available (more to come no doubt), to me this points to a relatively diligent time-frame of action by the RBNZ. I think that aggrieved shareholders (and possibly aggrieved policyholders, but we don't know yet whether the Company has enough assets to pay claims), don't have to look further than the CBL Board and Management, and CBL's "expert" advisers, for the reasons for their dramatic erosion (loss?) of capital.

[Balance]

https://www.radionz.co.nz/news/busin...for-cbl-s-woes

'Growing too fast and with too few controls' - give a kid a V8 and waytch what happens.

[Balance]

http://www.sharechat.co.nz/article/e...ails-show.html

FMA ignored and rejected complaints about CBL prospectus - including statement that it contained a blatant lie.

Asleep at the wheels - that's the FMA.

Good at the bottom of the cliff playing the soulful violin though.

[Balance]

A collapse like CBL (& Feltex & Credit Sails & Wynyard) can deliver valuable lessons for investors.

Biggest lesson : Anyone who trusts any due diligence done by the promoters Forsyth Barr and UBS, vetted by the equally incompetent FMA, is better off to donate their hard earned money to Destiny Church for salvation.

[bull....]

http://www.sharechat.co.nz/article/e...ails-show.html

FMA ignored and rejected complaints about CBL prospectus - including statement that it contained a blatant lie.

Asleep at the wheels - that's the FMA.

Good at the bottom of the cliff playing the soulful violin though.

huge revelation , actually i dont recall hearing about these concerns at the time of the ipo?

[Balance]

huge revelation , actually i dont recall hearing about these concerns at the time of the ipo?

CBL and its promoters would have had an expensive team of lawyers to stare down the FMA bullies.

That's the evidence to date of how the FMA works.

[RupertBear]

A collapse like CBL (& Feltex & Credit Sails & Wynyard) can deliver valuable lessons for investors.

Biggest lesson : Anyone who trusts any due diligence done by the promoters Forsyth Barr and UBS, vetted by the equally incompetent FMA, is better off to donate their hard earned money to Destiny Church for salvation.

Yep I learned a few valuable lessons from investing in Wynyard. I was reassured that Milford owned a huge amount and I was reassured by Sam Morgan investing in them. Big mistake. I also ignored many many comments on here warning they were in trouble and encouraging people to get out. I didnt listen. Another big mistake. I also held on during a very big sustained down trend hoping for the best. Infact I stupidly bought more thinking I would be onto a winner when it turned around. Big mistake.

With Wynyard it was easy for most of you to see it was going under. I lost money because I made a stupid investment and ignored the warning signs. With CBL you guys had the rug pulled out from under you without any warning. That is a way worse outcome and I feel truely sorry for people who have lost money on this train wreck.

[Balance]

Yep I learned a few valuable lessons from investing in Wynyard. I was reassured that Milford owned a huge amount and I was reassured by Sam Morgan investing in them. Big mistake. I also ignored many many comments on here warning they were in trouble and encouraging people to get out. I didnt listen. Another big mistake. I also held on during a very big sustained down trend hoping for the best. Infact I stupidly bought more thinking I would be onto a winner when it turned around. Big mistake.

With Wynyard it was easy for most of you to see it was going under. I lost money because I made a stupid investment and ignored the warning signs. With CBL you guys had the rug pulled out from under you without any warning. That is a way worse outcome and I feel truely sorry for people who have lost money on this train wreck.

https://www.intelligentinvestor.com....-month-1887231

Some good thoughts to apply in future :

The nature of insurance makes it a difficult area for investors.

It’s hard to assess management on its appreciation and management of risk.

A track record of managing through insurance cycles, supported by the appropriate business capabilities and a robust balance sheet, certainly helps.

As for management’s skin in the game, well, that only helps if it understands the game. In CBL’s case, it clearly didn’t.

In an amusing side-note, CBL's managing director was even crowned New Zealand's entrepreneur of the year by EY last year. It all goes to show that there's no substitute for independent research.

The fallout from CBL’s failure is still to be fully realised. But the lessons for investors are much clearer.

[Leftfield]

This article is an interesting read, as is the idea of many shareholders using the small claims court to chase a company (such as CBL) to remedy any 'alleged losses/neglect/illegal issues' etc.

Here's the link

(Disc not holding CBL - DYOR)