Brit Insurance Share Discussion Threads

[gorse] 20/10/2010 09:42

togo2 - where do you look to check if you can see whether a company has gone XD?

[togo2] 20/10/2010 09:39

gorse as far as I can see they have not gone xd but there was a sale of 72,782 through Mumis securities.

[gorse] 20/10/2010 08:20

It's gone XD - 30p.

[barrygibb] 20/10/2010 08:13

why the drop today
bg

[spob] 01/10/2010 01:07

Speculation grows over Brit Insurance sale as Footsie dips
By Miles Johnson

Published: September 30 2010 09:03 | Last updated: September 30 2010 20:47

Brit Insurance was in traders' sights on Thursday as speculation grew that it was close to a sale to a private equity consortium.

Interest focused on Brit's chief executive Dane Douetil relinquishing his vote on the board to negotiate a contract with Apollo and CVC, the buy-out groups who have made an £870m offer for the insurer.

EDITOR'S CHOICE
Treasury to probe high-frequency trading - Sep-29.New chief revamps BP safety operations - Sep-29.Growth in margins gives boost to Smiths - Sep-29.BA, Iberia and AA set to start sharing revenue - Sep-29.India court orders closure of Vedanta smelter - Sep-29.Shell plans rapid North American growth - Sep-29..

Brit has already agreed in principal to recommend an offer of up to £11 per share to its investors, a 53 per cent premium to its pre-approach price.

Its shares fell 0.3 per cent to £10.25

[makingheaps] 20/9/2010 10:18

Looks like someone knows the deal will conclude????

[spob] 17/9/2010 20:23

Brit Insurance to recommend CVC/Apollo offer
By Paul J Davies and Miles Johnson

Published: September 17 2010 18:48 | Last updated: September 17 2010 18:48

Brit Insurance, the sponsor of the England cricket team, is set to be bought by Apollo and CVC, the private equity groups, after the London-based insurer agreed in principle to recommend an offer to its shareholders of up to £11 per share.

UK-based CVC's surprise inclusion in a partnership with Apollo of the US came after it became apparent that Apollo would struggle to finance a deal alone, according to people with knowledge of the situation.

EDITOR'S CHOICE
In depth: Private equity - Sep-06.CVC to buy out TDC's Swiss division - Sep-17.Apollo pursues Brit Insurance with third offer - Jul-29.M&A and hurricanes stalk Lloyd's market - Sep-02..The deal values Brit at up to £870m, a 53 per cent premium to where the company's shares were trading before Apollo's initial approach was made public in June.

A takeover of Brit at a price equivalent to its expected book value at the end of the year is likely to boost valuations in the Lloyd's of London insurance sector, where most companies' shares have been languishing at discounts to book value.

Investors have shied away from the companies as a continued slide in premium rates for most types of insurance and low expected investment returns have led to a downbeat view of the sector's profitability.

Brit was one of the lowest rated of the sector's stocks before Apollo's initial approach. It was trading at 729.5p – a 30 per cent discount to book value – before Apollo's first £10 per share offer was rejected by the company in June.

Apollo made three offers for Brit over the summer before the company agreed to open its books for due diligence at £10.75.

CVC then also made a separate approach to the company, but was not brought in by the Brit board until it became apparent that Apollo would find it difficult to raise enough financing to complete a deal on its own.

The joint offer from Apollo and CVC announced on Friday is equivalent to £10.75 per share but also offers extra payments of up to 25p per share that will be granted on a straight sliding scale if the book value of Brit at the end of this year comes in above £10.75.

Brit shares closed at 987.5p.

A deal is dependent on completion of due diligence by the private equity consortium and on successful discussions with Brit's regulators. The Brit board and the private equity consortium have set a deadline of October 15 for the remaining pre-conditions to be satisfied.

However, Brit added that there was no certainty that a firm offer would be made even if all the conditions were satisfied.

[spob] 17/9/2010 20:14

oh gosh - only doubled up on these this afternoon

[makingheaps] 13/9/2010 12:25

Could be......up another 1% today. I'm more inclined to think this is just a sector move rather than BRE related. If there was a leak I think we'd see the price spiking closer to the deal price

[txi] 10/9/2010 15:32

Interesting upwards move this Friday - imminent news?

[spob] 08/9/2010 03:42

M&A and hurricanes stalk Lloyd's market
By Paul J Davies

FT

Published: September 2 2010 23:59 | Last updated: September 2 2010 23:59

Lloyd's of London insurers and reinsurers are watching nervously as Hurricane Earl passes perilously close to the US east coast.

Warnings of hurricane strength winds and heavy rains have been issued for parts of North Carolina and Massachusetts even though the storm is not expected to make landfall. But more worryingly, Earl is already the third named Atlantic hurricane this year and the most active part of the season is only just beginning.

Last year, when the El Niño-effect damped storm activity, only two named hurricanes developed. This year is forecast to be one of the most active storm seasons on record.

The insurance world has already been hit by big losses from February's Chilean earthquake and a costly winter storm in Europe, which helped make the first half of 2010 one of the worst ever for natural catastrophe losses. Global first-half losses of $22bn were more than double the first half average seen over the past decade, according to Munich Re.

At the same time, insurers are faced with a tough investment environment as ultra-low interest rates and a poor economic outlook hit the returns they can make from their mainly fixed-income holdings.

EDITOR'S CHOICE
Catastrophe losses hit Omega Insurance - Aug-31.Catastrophes hurt Amlin and Hiscox - Aug-23..

Investment returns at Lloyd's companies dropped dramatically in the first half compared with the same period last year to an average annualised rate of less than 3 per cent.

The longer this environment persists the more painful it will be, especially for those who insure longer term risks such as casualty or professional liability business.

In spite of those factors, premium rates are still declining, or softening, in most business lines with the exception of Latin American quake risks and offshore Gulf of Mexico energy policies, which were given a boost by the collapse of BP's deepwater drilling platform. This trend is only likely to quicken unless there are some big storm related losses, according to market specialists.

However, most Lloyd's companies still delivered robust interim profits and many also managed to grow their book value – or net tangible assets per share – which is a key measure for investors in the Lloyd's market.

But with the exception of Amlin, Hiscox and Lancashire, shares in all the listed Lloyd's companies are trading at a discount to book value as investors shy away from the sector. The Lloyd's companies are not alone – most of the New York-listed Bermudan reinsurers are also trading at discounts.

"Shares in the sector are trading on low valuations because investors are discounting the combined impact of softening rates and weak investment returns," says Thomas Dorner, analyst at Oriel Securities.

The big question in coming months is whether these low valuations will attract new financial bidders for some of the companies who could help drive consolidation.

Apollo, the US private equity group, is in the middle of extensive due diligence on Brit Insurance after it made a £10.75 per share offer for the group about four weeks ago. Meanwhile, Pamplona, an activist investor backed mainly by Russian money, still holds a near 10 per cent stake in Chaucer, which it is expected to use to encourage the company into some kind of consolidation.

One investor in the sector says change is needed because there is too much capacity and too much cost.

"These companies are always keen to write more business, but they need to increase their internal rates of return," the investor says. "There should be consolidation, but more active investors, private equity or hedge funds, need to come in and be a catalyst."

Michiel Bakker, head of the European Capital Markets and Advisory unit at Willis, the insurance broker, says that while many of the ingredients for consolidation in the Lloyd's market are there, he is cautious about the level of M&A activity to come.

"First-half losses hit some of the smaller companies hardest, which highlights the advantages of size and diversification," Mr Bakker says. "Also there is a general expectation that capital requirements for insurers will go up, which could drive consolidation.

"In Bermuda, people talked about the need for consolidation for years, but it has only just begun to happen."

According to Stephen Catlin, chief executive of Catlin, it is not just the level of capital requirements that could encourage consolidation, but also the cost of complying with beefed up regulations.

He said: "I think it's going to be very, very difficult for the small players to survive not because of lack of quality but simply because the cost of business is increasing".

But there are plenty of obstacles to M&A. Low valuations may attract interest from financial buyers such as Apollo, but bankers say it is extremely difficult for a board to consider recommending a bid that is below book value.

There is also a cultural issue, according to Mr Dorner. "The strong personalities involved in the sector have made mergers difficult in the past."


Tough times for Lloyds insurers Annualised investment return * Net tangible assets per share * Net tangible assets growth * Ratio share price / net tangible assets per share
Beazley 0.5% 114.0p 0.7% 0.99
Brit 3.2% 1,100.0p 4.6% 0.89
Catlin 3.6% 388.0p -2.0% 0.86
Amlin 3.4% 295.9p 2.2% 1.42
Hiscox 3.5% 318.9p 7.0% 1.15
Chaucer 2.8% 52.3p -5.8% 0.86
Sources: Oriel Securities; company reports * H1 2010

[makingheaps] 06/9/2010 22:49

I'm not thinking that no news is good news

[spob] 01/9/2010 02:16

5 weeks gone

[harry rags] 30/8/2010 12:37

spob

It did say it would take a number of weeks, but I would be expect some answers about now, perhaps this week?

[topvest] 20/8/2010 15:33

I hope so. Lets keep Brit independent!

[jonwig] 18/8/2010 15:34

Is the market signalling that the bid will be rejected by the board?

And appointing a senior executive today seems a strange move ...

[topvest] 28/7/2010 21:31

Same here, this is a great company. To be taken out at below NAV is disappointing.

[crawford] 28/7/2010 11:21

edmundshaw,
I agree, the offer is on the low side, we really need 2 bidders involved here. The options that kick in limit the upside to the offer IMHO.

Personally, I think this would be a hard company to replace in my portfolio, I would be reluctant to lose it.

[edmundshaw] 28/7/2010 10:53

Hm. Rsults out today too folks, and those numbers are good.

£10.75 is looking a steal. I wonder if the IIs who were telling the management to go for 1075p are having second thoughts now?

Tax rate halved to 13%; NAV per share £12.05; diluted earnings for the HALF are 87.3p; Combined ratio 96.5% (30 June 2009: 93.8%) including 7.1% for
the earthquake in Chile. Claims releases of £41.9m. All in a poor environment for investments returns

About the only thing that is down is written premium. And that could be construed as good, cautious management.

Any other reactions to the numbers here?

[effortless cool] 28/7/2010 08:59

Congratulations to holders. I think due diligence will go through okay but there will not be any counter offers.

[itchycrack] 28/7/2010 08:56

Excellent news! Was confident of this, nice result!!!