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Real-Time news about Alea (London Stock Exchange): 0 recent articles
|m.t.glass: ALEA would presumably argue they are already achieving the best return they safely can, on the monies set aside for meeting all obligations. That KPMG report is presumably meant to point out that there are others who might do better - and to whom the ALEA board might be tempted to sell on their obligations in exchange for cash.
Were ALEA to do so, is the cash they might obtain and pay off the shareholders with, likely to be at a discount or a premium to the current share price??|
|m.t.glass: LONDON (AFX) - Alea PLC was down in early trading today as the Bermudan
reinsurer posted a first half pretax loss of 14.4 mln usd, down from a profit of 25.9 mln usd in the first half of 2005 after the company stopped writing new
business at the end of 2005, after major losses during the 2005 hurricane
At 9.09 am shares were down 2-1/2 to 86.
Numis Securities reiterated its 'sell' recommendation, saying that it
continues to believe that the current share price continues to overvalue the
company given the considerable risks and uncertainties involved.
The UK broker added that there is still the potential for reserves -- the
estimate cost of goods sold -- to adversely develop.
|m.t.glass: From Bermuda -
Monday, May 22, 2006
Shares tumble on storm forecasts
By Lilla Zuill
Bermuda's publicly listed insurers saw their share prices move lower as markets closed on Friday.
A number likely lost ground as investors reacted to growing predictions that the 2006 hurricane season will see above average activity for the third year in a row.
Nine of the Island's insurers that trade on the New York Stock Exchange or Nasdaq lost ground on Friday, one remained unchanged and four advanced.
AccuWeather, a US-based weather forecaster, last week predicted three major hurricanes would hit the US in 2006 and said warmer Atlantic surface temperatures created a greater likelihood of storms travelling up the Eastern seaboard. Last year's storms caused the most costly damage in Florida and in areas surrounding the Gulf of Mexico.
AccuWeather's storm predictions, which generally mirror the predictions from other forecasters for an above-active hurricane season when it officially begins on June 1, may have fuelled already heightened investor concerns. Many investors got burned on insurance stocks last year, with some losing more than half their market value after the large losses. Most have regained some of the losses in the months since.
At least four of Bermuda's insurers have however floundered in the wake of 2006 losses. Alea, Rosemont, PXRe and Quanta are now either going up on the sales block or being put into run-off, a form of winding down an insurance company that allows claims to be met. At least three of the four can directly attribute their troubles to larger than expected hurricane losses.
Market losses sustained by Bermuda insurers this week were in line with losses sustained by the wider market. The KBW Insurance Index, which tracks the trading of 24 insurance companies active in the US and includes four Bermuda-based firms and designed to represent the price performance of the broader insurance market, lost 2.7 percent over the week.
Bermuda insurers Aspen Insurance Holdings Ltd., Endurance Specialty Holdings Ltd., Platinum Underwriters, XL Capital, PXRe, RenaissanceRe and Montpelier Re were amongst those to see their shares close lower on Friday.
At least one of Bermuda's insurers, Max Re, may have lost ground on other news.
The Front Street-based reinsurer saw its share price fall seven cents to close at $22.72 after it was notified by the Nasdaq that its failure to make a timely quarterly filing put it in violation of listing requirements. The company is now at risk of a delisting.
Max Re hasn't filed its first quarter report pending the outcome of an already announced review of three finite risk contracts that may have been improperly accounted for. Max Re told investors it is considering a restatement of earnings up to $25 million over a several-year period, and intends to address Nasdaq's concerns in a hearing.
Montpelier, one of the reinsurers worst hit by storm claims last year, also saw its shares fall to a new low this week. The shares fell to $15 on Wednesday, an all-time low point, and a decline from a 52-week high of $36.35. By Friday, Montpelier had regained some ground, closing down 19 cents to $15.12 in composite trading on the New York Stock Exchange.
Investors may question holding insurance stocks if forecasters are right about 2006 hurricane prospects. The insurance industry sustained losses estimated in the region of $80 billion last year from deadly hurricanes Katrina, Rita and Wilma, making it the most costly hurricane season on record. Bermuda insurers and reinsurers shouldered about $12 billion of the total bill.
While losses in 2005 were high, leaving the Bermuda market with an overall loss for the year, investors eagerly stepped up to help shore up balance sheets, pouring some $20 billion back into the sector. The sector likely attracted more capital because insurers can generally charge more for policies in the wake of a costly catastrophe like Katrina.
The Bermuda market ended 2005 with more capital than a year earlier. The influx of cash replenished the coffers of established companies as well as backing a wave of new reinsurers forming to take advantage of an expected rise in 2006 property-catastrophe, and offshore energy policies.|
|m.t.glass: Could the Alea boss's move from Alea Bermuda to Amlin Bermuda have a kiss-of-death effect on Amlin's share price? (AML)|
|m.t.glass: Surely the share price of ALEA doesn't influence the price people pay for the renewal rights. Buyers of renewal rights are buying renewal rights at whatever they are considered to be worth, not buying the shares. How would artificially maintaining a higher share price matter in determining value of renewal rights?|
|paddyfool: For those who think that there will be any capital released when ALEA goes into run-off, note the word when, I will endeavour to explain how it will work.
a) A sale to a run-off company will be announced.
b) A surplus will be declared, the purported difference between liabilities and realisable assets.
c) These assets will all go to the run-off company.
d) The run-off company will then provide ALEA and you the shareholder with a call/warrant on the assets redeemable in n years time (with n being a number bigger than 3).
e) the value of the warrant will be in proportion to the afforementioned surplus.
f) almost immediately the value of the underlying assets will be diminished as the run-off company will have little or no interest in understating the reserves.
g) It is extremely unlikely that any assets will be liquidated and distributed to shareholders upfront.
The share price is still underpinned by a belief that there will be some ongoing business rescued from the wreckage. At a bbb rating that is extremely unlikely almost to the point of impossibility.
When this hope is finally stripped away then this becomes a pure asset play. Hence the activities above will more than likely take place. The market will apply a very large discount to whatever assets are declared, my expectation at that point is that the discount will be in excess of 60%. In effect the instruments will be priced as junk.|
|chrissh: FAO Simon Cawkwell,
As a valued member of T1ps.... would you be so kind as to give me your views on eventual Alea price and time frame ?
How many times have you shorted Insurance Companies ?
BTW... thanks Adeyberry.... I have just opened my IG account online and I think I will open a position tomorrow morning.
I work in the same industry as ALEA and have made very good previous returns in the sector I am familiar with, so here's hoping again.......
Thank you all,|
|m.t.glass: I can see the headlines tomorrow "ALEA share price hit by bad grammar."
|m.t.glass: Looking at the chart, the current share price slippage is nothing new. That longterm trend will take it rapidly into pennyshareland if it doesn't find salvation sometime soon. Anyone who bought soon after floatation last year has seen the share price halve already. Whatever its pre-float history might have been, it looks as though exposure to market scrutiny has never generated great enthusiasm among investors. Now the management are talking of having to divert their activities away from the very business they considered such a good opportunity in the first place.
PS: Would someone more skilled than me at fundamental analysis care to comment on the scale and manageability of its debt in relation to capitalisation? And how this might influence the price any predator might consider paying? (That's if KKR are prepared to relinquish a big chunk of their influence or maybe continue as a guarantor. The whole setup seems too much of a personal project somehow)
Alea warned there could be no assurance that a sale will be concluded, a sentiment echoed by a number of analysts.
"We are not optimistic that the group will be able to find a corporate buyer at attractive levels as the risks involved are likely to be a major deterrent," Numis Securities said.
"The investment case continues to revolve around the terms of any fundraising," said Bridgewell Securities analyst Geoff Miller.
"Without a fundraising the downgrade is a reminder that it is likely the business would be run off, as it will be difficult to generate new business with a lower credit rating. The fund raising would be worthwhile only if this position could be reversed," Miller said.|
|m.t.glass: Here's how The Telegraph sees it:
Alea calls on shareholders for $210m cash to avoid downgrade
By James Moore, Financial Correspondent (Filed: 01/09/2005)
Troubled insurer Alea yesterday called on its shareholders for $210m to help keep its business going before even totting up its exposure to Hurricane Katrina.
The company admitted that the threat of a downgrade from specialist credit agency AM Best, which is worried about the operation's financial health, had already hit new business and said pre-tax profits had slumped to $25.9m (£14.5m) from $48.8m.
Alea also said that it had been forced to set aside an extra $34.7m to deal with claims, mainly from its US casualty reinsurance business, despite saying in March that it was confident that it had identified all the problems. The extra money brings its total reserve strengthening to $128m. The cash call - worse than analysts had feared - is designed to stave off the downgrade, which would seriously hinder its ability to write business in the US.
It is likely to come in the form of a rights issue, although Alea could raise up to $50m by issuing new preference shares. Alea is one of several businesses to either float on the UK stock market or raise capital on it if already listed during the early years of the decade. Many of the larger players were at the time cutting back on writing new business as they struggled with stock market falls and September 11 attacks.
The insurer has now admitted that it effectively mispriced the reinsurance it was writing which has left its shareholders to pick up the tab. US casualty insurance covers companies for claims such as workers compensation. Insurers writing this type of business lay off their liabilities by buying reinsurance.
Alea admitted that its combined ratio - a key measure of how profitable its insurance is - had deteriorated sharply to 101.9pc compared with 95.8pc. The 101.9pc figure means Alea paid out £101.90 in costs and claims for every £100 of premium taken in and was only prevented from making a sizeable loss because returns from investing those premiums were healthy.
Windstorm Erwin, which battered northern Europe in February, hit profits by $18.5m but the company said it was "too early to say" how much it would have to pay out as a result of Katrina. Chief executive Mark Ricciardelli said the company plans to alter its strategy in a bid to deal with the "soft market". That will include writing less reinsurance and more frontline insurance, particularly US property insurance.
The company was floated at 250p in November 2003 but its share price is now 149p.|
Alea share price data is direct from the London Stock Exchange