Brit Insurance Share Discussion Threads

[crawford] 12/4/2010 08:14

yes, another good start, i was slightly worried about the polish air crash but i guess we dont cover that?

[essentialinvestor] 12/4/2010 08:10

Very strong start to the week.

[crawford] 09/4/2010 16:20

Someone sniffing around Chaucer? I know Brit was interested last year.

[hieronymous1] 09/4/2010 15:32

April 9th, 2010

Extended Range Forecast of Atlantic Seasonal Hurricane Activity and Landfall Strike Probability for 2010 (PDF; 1.5 MB)
Source: Dr. William Gray, Professor of Atmospheric Science, Colorado State University

We continue to foresee above-average activity for the 2010 Atlantic hurricane season. We have increased our seasonal forecast from the mid-point of our initial early December prediction due to a combination of anomalous warming of Atlantic tropical sea surface temperatures and a more confident view that the current El Nino will weaken. We anticipate an above-average probability of United States and Caribbean major hurricane landfall.


It is an ill wind... this should push up rates.

[crawford] 09/4/2010 12:36

envirovision,
yes, we need a bit of a push here to breach the resistence.

[envirovision] 09/4/2010 11:29

Crawford it would be nice to see the back of the triangle formation i agree, fifteen quid would be nice one day as well.

[essentialinvestor] 09/4/2010 11:16

At long last making progress.

[crawford] 09/4/2010 11:14

A move above 800p would do wonders here, we've been in a triangle formation since 2008.

[crawford] 08/4/2010 09:08

MakingHeaps,
stay patient, from my untrained eye there is a nice upward trend from mid-December last year.

Rivals such as CHU are also performing strongly so maybe the sector is moving up.

[makingheaps] 29/3/2010 12:38

For a second time a share comsolidation here has had a detrimental effect on the price. In addition the market seems turned off by all this financial engineering to save tax. Maybe the board should focus on what they are supposed to be good at, ie writing insurance

[crawford] 19/3/2010 10:56

some interest appearing here today.

[boadicea] 16/3/2010 19:40

Thanks, JTC.
From a practical point of view I had no worries but thought you had missed the background giving rise to jonwig's assertion about the retained earnings.

More importantly, the reason I (all of us?) are here is that I have been looking for companies with assured income streams, preferably with a high foreign content and/or paying a good dividend as I have very considerable fears about where the market will be in 6, 12 or 18 months time. BRE and Chaucer were two that seemed to tick many of the right boxes. They have also gone into my ISAs so the dividend/capital doesn't affect me personally - it was just a point of general interest.
Surprisingly, Barclays (on-line) reported that BRE did not qualify for an ISA. I don't know whether their system hadn't been adjusted to accommodate the consolidation but knowing their obduracy over eligible AIM stocks, not to mention their totally duplicitous attempt to pass the blame for their foul-up over the recent IERE/IERP issue on to the nomad, I assumed it was just Barclays being Barclays again.

[jtcod] 16/3/2010 18:36

I'm the same as you jonwig. It's all in Pep's for me so no capital gains anyway.

[jonwig] 16/3/2010 16:17

Boadicea - your analysis was much the same as mine. Since I intend moving these to my ISA next month, personal tax position won't be an issue, but I was concerned to learn just how these accounting machinations would help the company; I understand how the change in tax domicile - common to many general insurers - works, but not the reasoning behind the accounting details.

[boadicea] 16/3/2010 15:50

JTC - My point (and I assumed jonwig's was the same) is that following the company reconstruction, there are almost no retained earnings any more, just £15.4M in fact, down from £662.5M in the former company. Payment of the dividend from that is not mathematically or legally possible so an equivalent payment is being made by capital distribution.
It seems that a continuation of equivalent payments by return of capital will follow for some time until a cushion of distributable reserves has been built up when dividends will be resumed.

However, the practical question for shareholders is whether HMRC will allow these capital distributions to be treated as a reduction of original cost as is commonly the case with small returns of capital.

The formatting will probably be skewed, but these are the supporting figures from the 31.12.09 accounts -

____Equity (£m)______________31.12.09 _ 31.12.08

Called up share capital (Note 15) 277.9 ___ 247.3

Share premium account ________ 612.0 _____ -

Capital redemption reserve _______ - ________ -

Translation reserve _______________ - _______ 4.1

Own shares ____________________ (10.7) __ (64.2)

Retained earnings _______________ 15.4 __ 662.5


Total equity attributable to owners 894.6 __ 849.7
of the parent


The authorised share capital was increased from 0.2m shares of EUR1 each to
1,000.0m shares of EUR1 each as part of the corporate reorganisation which was
effective from 21 December 2009.

[jtcod] 16/3/2010 13:58

jonwig
"JTC - as I understand it, under IFRS the pending dividend is not accounted for in this year's balance sheet (ie. at 31/12/09), since it will be paid during the 2010 financial year."

To clarify, I do agree with this.

[jtcod] 16/3/2010 13:50

Boad
Perhaps I have been over harsh on jonwig with my comments but the div hasn't changed for years and 60p has been accounted for in the retained earnings for 2009 imo. I see that he is talking about going forward but is it really a concern given current earnings? The changes in the balance sheet were to accomodate the recent consolidation, nothing more. I just see no relevance to the observation.

jonwig
Regarding not doing the dividend the normal way, I thought the company said it was done for tax purposes. (Perhaps I am wrong.)

[jonwig] 16/3/2010 11:54

JTC - as I understand it, under IFRS the pending dividend is not accounted for in this year's balance sheet (ie. at 31/12/09), since it will be paid during the 2010 financial year.

(More precisely, the dividend is *proposed* not *declared* so isn't accounted for until after the vote.)

I'd expect 'Called up Share Capital' to be 30p x 78.4m shs = £23.5m less than the 31/12 value at the next balance sheet date. (Apart from new share issues in the meantime.)

However, assuming you are right, please explain the rationale of paying us our 'dividend' this way rather than the normal way, especially considering the cost of the exercise.

[boadicea] 16/3/2010 11:53

Sorry JTC, I seem to be missing your point.
I read retained earnings now to be post the interim dividend payment of 7.5p (equiv 30p on consolidation) and similarly post the previous similar final div, taken together costing £46.4M total as shown in the cash flow statement. This year there is no final dividend to be 'post' - there is a capital distribution proposed instead.
So a final won't and could not have been paid from £15.4M of distributable reserves as it would amount to over £23M.
The point is of course a legal one arising from the terms of the reorganisation which put the previous earnings into the category of share premium, but I fail to see how jonwig is in error or how a final of 30p could have been paid as a dividend.

[jtcod] 16/3/2010 10:49

Apart from that technical affect boad, retained earnings are 'post' dividend. It's a meaningless assertion to say they cannot pay a dividend from the retained earnings when it has already been deducted to arrive at the retained earnings figure.

[boadicea] 16/3/2010 10:34

I think jonwig is right.
The retained earnings currently amount to £15.4m and retained eps to 19.6p.
This follows from the transfer of formerly retained earnings to the share premium account, presumably a technical effect accompanying the recent consolidation which I haven't bothered to unravel.

[jtcod] 16/3/2010 09:48

"However, at present retained earnings are not enough to pay a 30p dividend."

How do you arrive at that conclusion jonwig?

There are currently 78.48m shares issued. Post tax (and comprehensive income adjustment) earnings pre-dividend were £81.6m for 2009. That's 104p per share.

[jonwig] 16/3/2010 08:10

Timetable for distribution has been announced (see link in header). Essentially xd on 10 June and pay on 14 July but subject to amendment.

It looks to be a horribly expensive process involving courts, votes and creation of new shares. At least the company has said that capital reduction will be used only as a temporary measure and they will revert in due course to paying 'dividends'.

As far as ordinary mortals go, the payment comes out of a reduction in 'equity attributable to ordinary shareholders' rather than 'retained earnings' so there's essentially no difference. However, at present retained earnings are not enough to pay a 30p dividend.