TWR - Tower Insurance.

[Arbroath]

Where it all ends up possibly depends on how more times they need to 'increase' this provision

Doubt whether his is the last time

That is the question - I have total provision increases (after tax) of around $55 over the past 2 years. The commentary is always the same - escalating costs, more EQC claims going over cap ($100k), more claims getting to settle. It has to end some time but the question is how bad will the damage be before we get to the end.

Luckily only hold a few at $1.32

[BlackPeter]

OK - I did some fiddling with my spreadsheet. If we assume that previous analyst predictions are right (and just need to be corrected by this recent announcement), that they cut their dividend in half for only this year (uneducated guess), that their growth continues to be quite limited (but not dropping either) and that this was really the last provision and nothing similar to the Canterbury Earthquakes happens anytime soon, than a Tower share should be worth (according to the BP scale and depending on what return you expect) between $1.40 and $1.50. This means, it is currently clearly undervalued. No reason to sell out in a hurry.

More interesting questions are:
- was this really the last provision for the Canterbury Earthquakes? Every million lost counts.
- how much is the software upgrade going to cost they are talking about - and how much will it improve business?
- will they manage to grow their business at some stage (currently its pretty much flat lining)?
- when are they going to "unleash the power of the Tower brand"
(I thought I have seen a similar sounding statement in the latest report, but can't find it now ... maybe I made it up myself?

And no, I don't have the answers to these questions. Just a couple of things to ponder about.

[winner69]

Thats on BP Scale - what is it on the Richter Scale

[Hoop]

Classic Bear Cycle textbook example being played out these last 18 months
Stage 3 Bear cycle (capitulation stage) is operating now.. methinks.

[kelfy]

How much do you guys think the recent announcement of higher than expected claims will affect the SP in the near term? Tried to 'pick the bottom' of TWR at 1.80, was thinking of cutting my losses at ~1.37 for last couple of weeks, SP is now close to 1.10! Well at least my loss in capital is helping people who were affected by the earthquakes

hahaaa..Me too. I am still holding my log at $1.80. Is a bit shame but I am ready to hold as long as I can.

[Jim]

hahaaa..Me too. I am still holding my log at $1.80. Is a bit shame but I am ready to hold as long as I can.

I bought some at $1.10 and I will average me down to $1.60. Hopes it would't go bust. Happy investing

http://www.nbr.co.nz/article/tower-s...costs-b-194013

[BlackPeter]

Classic Bear Cycle textbook example being played out these last 18 months
Stage 3 Bear cycle (capitulation stage) is operating now.. methinks.

If your hunch is correct - this would be good news ... I like the capitulation stage of bear cycles ... best time to buy!

DYOR, though ... too bad if it is not!

[malus]

Yes a good lesson Hoop.

I went for a ride with TWR starting Feb 2005 when they were Tower Group Holdings, I saw a value opportunity just before the Australian assets in the group were separated and floated off:

• Australian Wealth Management (now IOOF).I still own. Separated in Feb 2005. Has produced a 9.64%pa compounding return. Steady, not stunning.

• Tower Australia (principally involved in life insurance as I recall and taken over by a Japanese Life Insurance Company). Separated in Nov 2006 and taken over in May 2011. Produced 43.5%pa compounding return... very happy with that one... the Japanese Company paying a premium to take over.

The TWR ride ended in Aug 2014 when I decided to exit at $1.84... could see trouble ahead, with major claims and conflict for management to be distracted with... difficult on one hand to be the good insurer settling with claimants and on the other hand minimising cost for the owners of the Company... too much conflict going on for me to justify holding. TWR return for the time I held was 10.25%pa compounding.

Hindsight being a wonderful thing... it was a good time to get out.

To those holding now... feel your pain, trust it's worth "weathering the storm"... return on assets and equity are taking a battering!

[Snow Leopard]

I was fool enough to invest in Tower NZ a while back and came out a few months later with about a 20% loss .

I was fool enough today to have some fun Tiger Bouncing - similar to dead cat bouncing but I try and remain alive threw* out .

So I bought at $1.10 & then $1.05 sold about half at $1.15
and then when I got a bit concerned I sold the other about half for which I also got $1.15 (ish) .

So I have made a 6.39% gross return on funds employed on the day, but in absolute terms it does make up a quarter of my prior losses .


As for Tower Australia - I remember it well - one of my successful investments :

Dai-ichi bought it at out at $4.00 a share and I had an average buy price sub $2.00 and my last purchase at $2.00 was less about 7 months prior to the take over .

Best Wishes
Paper Tiger

*that is deliberate

Disc: No Towers or Tigers were harm during bouncing.

[bull....]

not looking good, bad management glad im out as those Canterbury earthquake claims to settle good bring the company down. investment income will keep declining as well industry headwind so will profit cover the claims or any other event? risky as

dont think today is the last of the bad news, maybe they need to spend some more money on consultants to tell them how bad it could get