TWR - Tower Insurance.

[sb9]

plenty of institution notices yesterday on the sell side. still waiting for the notice to see who.s been soaking up the many millions of shares being off-loaded and absorbed. the selling should be only viewed as an opportunity for overweight insto's to re-weight due to big demand for a undervalued stock.

If its new fund they don't have to declare until they hit 5% threshold which is about 21mln shares. So it may take some time to know who the buyer may be.

[JohnnyTheHorse]

If its new fund they don't have to declare until they hit 5% threshold which is about 21mln shares. So it may take some time to know who the buyer may be.

Around 15% of the float has been traded since results end of Nov. Ever since then there has been a consistent trend of large off market purchases at or above market price. Must be at least a couple of funds buying.

[sb9]

Around 15% of the float has been traded since results end of Nov. Ever since then there has been a consistent trend of large off market purchases at or above market price. Must be at least a couple of funds buying.

Sure, off market acquisition seem to be norm as another big one goes through..

86.5

2,400,000

14:31

SP

[sb9]

Nice clearance of the lot at close of play at 87c.

[Southern Lad]

I see the Australian media have been running stories on the parties participating in a process to buy CBA’s general insurance business. Maybe this has highlighted the value of Tower and increases the chances Bain may instigate an auction to find a buyer for Tower now that Tower’s house is in (relative) order?

[Poet]

I see the Australian media have been running stories on the parties participating in a process to buy CBA’s general insurance business. Maybe this has highlighted the value of Tower and increases the chances Bain may instigate an auction to find a buyer for Tower now that Tower’s house is in (relative) order?

Yes, interesting - the sale price for CBA business is likely to be around 1.3 times Gross Written Premium (same multiple as recent sale of Westpac's general insurance business)
Applying the same metric to Tower's business would see a value around 1.3 times $385m GWP = $500.5. If we add the current cash assets of $140m we get a total value of $640m or $1.52 per share. So some 75% potential upside to the current $0.87

[winner69]

Yes, interesting - the sale price for CBA business is likely to be around 1.3 times Gross Written Premium (same multiple as recent sale of Westpac's general insurance business)
Applying the same metric to Tower's business would see a value around 1.3 times $385m GWP = $500.5. If we add the current cash assets of $140m we get a total value of $640m or $1.52 per share. So some 75% potential upside to the current $0.87

Wow ..sounds too good to be true

If it happened Salt Funds be slightly peeved but could still crow about doing well.

Might need to buy some more

[winner69]

Yes, interesting - the sale price for CBA business is likely to be around 1.3 times Gross Written Premium (same multiple as recent sale of Westpac's general insurance business)
Applying the same metric to Tower's business would see a value around 1.3 times $385m GWP = $500.5. If we add the current cash assets of $140m we get a total value of $640m or $1.52 per share. So some 75% potential upside to the current $0.87

so 'current cash assets' of 140m are about 33 cents a share - v current share price of 87 cents - implying market only valuing TWR at 54 cents?

I thought the 140m was only Tower's solvency margin

Be good if we got 152 plus in a takeover though

[Southern Lad]

Presumably it’s only the cash on hand above the required solvency margin which can be described as surplus. Cash required to be held to operate the insurance business would be included in the valuation of the insurance business.

A key question is who the likely bidders for Tower would be given that both IAG and Suncorp would face regulatory issues on the competition front. Given the banks are getting out of insurance, then other likely parties are offshore insurance companies looking to expand in NZ.

[macduffy]

Good point, S Lad. The further question is whether the govt or regulator/s would be happy seeing the last significant NZ general insurer being bought by foreign interests.