TWR - Tower Insurance.

[Antipodean]

Not to worry... announcement now out.

Last day to be in 4th March (this Friday), TH, record 8th March, trading resumes 9th March, payment on or before 22 March.

[ronaldson]

I note the " Diary Adjustments " paging, at least on the DB website, does not presently reflect the timetable now published for the Capital Return. That should be corrected.

[hogie]

Excuse my ignorance but what exactly does this "Capital Return" actually mean for Shareholders?

[Gerald]

Excuse my ignorance but what exactly does this "Capital Return" actually mean for Shareholders?

For every 10 shares you own, 1 is taken off you and you are paid $0.72. The remaining 9 shares should then have a slightly larger value as there are less shares on issue, but the future profits Tower is expected to make is unchanged. And the dividend might increase to say 5.5c since there are less shares.

I don't think they could do a buyback since Bain has 20% and this would have thrown them over which would have some complications? (I may be wrong)

[Antipodean]

The capital return is not optional so all holders (including Bain) would remain owning the same % of the company as they did prior (as all holdings are -relatively to others - unchanged)

[Antipodean]

The capital return shares have been cancelled and the money returns to holders this week.
Question for me... how does this look now for further investment and how does this affect the guidance issued in February?

There are now 379,483,987 shares on issue compared to 421,647,258 prior.

Guidance wise most recent is on 2/22/2022... "no change to Tower’s FY22 underlying net profit after tax (NPAT) guidance range of $21m to $25m, noting that this guidance assumes inflation pressures will continue throughout FY22 and that the $20m excess on Tower’s aggregate reinsurance is fully utilised."

So taking 21m - 25m NPAT assuming full usage of reinsurance (though only Tonga event seems to be relevant for the moment), .705 share price, and 379,483,987 shares on issue.
Gives us a the following:
EPS of 5.5 - 6.6 cps,
P/E of 12.7 - 10.7,
Dividends paid of 60-80% of NPAT gross yield of 6.6 - 7.5%.

If you added 8.75m (difference of 20m reinsurance excess and 11.25m max single event usage) to the top end you have potential surprise to the upside of
EPS 8.9 cps,
P/E 7.9,
Dividends paid of 60-80% of NPAT gross yield of up to 10.1%

Though this last scenario is highly optimistic and Tower is yet to deliver on a surprise to the upside.
Still risky this one but potential for the turn around remains.

[ronaldson]

Update for the Tonga eruption and tsunami provided - 288 claims to date estimated to cost $7.6m or just over $26k per claim suggesting most are MV/Contents rather than Commercial/Residential buildings. I guess to be deemed insurable in that environment/location structures must meet full building code standards so fewer are covered notwithstanding the actual extent of devastation.

Cyclone Dovi in North Is in February has cost $3.6m based upon 762 claims to date. AIG are already reporting a large number of claims from the heavy rainfall of the past few days and Tower will not be immune. While the overall $20m allowance by Tower for large events in the current financial year, now almost half elapsed, is not yet truly threatened it does seem these happenings are increasingly frequent and the prospect of a " good " year where some/all of the allowance can default to the bottom line at year end seems increasingly distant!

[hogie]

Update for the Tonga eruption and tsunami provided - 288 claims to date estimated to cost $7.6m or just over $26k per claim suggesting most are MV/Contents rather than Commercial/Residential buildings. I guess to be deemed insurable in that environment/location structures must meet full building code standards so fewer are covered notwithstanding the actual extent of devastation.

Cyclone Dovi in North Is in February has cost $3.6m based upon 762 claims to date. AIG are already reporting a large number of claims from the heavy rainfall of the past few days and Tower will not be immune. While the overall $20m allowance by Tower for large events in the current financial year, now almost half elapsed, is not yet truly threatened it does seem these happenings are increasingly frequent and the prospect of a " good " year where some/all of the allowance can default to the bottom line at year end seems increasingly distant!

No doubt a lot of vehicle damage claims from yesterday too ... quite a few cars in my work carpark filled up with water (I narrowly escaped before mine breached!).

[nztx]

Chip chip chipping away at the next reporting period's profit & dividend ?

Might need to add another portfolio of policies onboard to help mitigate or
expand the exposures ... whichever you like ?

Then some more large IT expenditure needed to handle a further infulx of policies ?

Can't look at only a half tower full of these curious things can we - when only a full
Tower is expected

[Beagle]

Narrowly escaped a flood at our place yesterday. Most rain in one hour I had ever seen yesterday morning. I was out in the middle of it unblocking gutters in the spouting and clearing drains on our deck. I got absolutely saturated. These so called one in one hundred year events seems to be happening every few weeks. Who'd own an insurance company with every increasingly wild weather caused by climate change