|Brit Ins Hldgs
||EPS - Basic
||Market Cap (m)
Real-Time news about Brit Ins Hldgs (London Stock Exchange): 0 recent articles
|txi: I think the buyout price in this current market is acceptable as I would be very suprised if the share price today would be anywhere near the £10.75p offer let alone £11.41p|
|crawford: Interesting that the share price is now above £10.45; I assume that there is a bit of arbitrage going on - obviously someone is expecting some of the additional 25p to be paid.|
|spob: M&A and hurricanes stalk Lloyd's market
By Paul J Davies
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.
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|
|effortless cool: Effortless Cool - 11 Jun'10 - 08:30 - 223 of 287 edit
Look at the share price today - £10 would do it, I think.
I don't think I ridiculed you - I would also have been happy with £10. As it is, I've settled for £9.10.
|crawford: My dividend is automatically reinvested here - I hope the share price stays on an even projectory or rises after payment date!|
|effortless cool: Look at the share price today - £10 would do it, I think.|
|crawford: I'm surprised by this comment:
"Looking further ahead, the board has said 15p a share (the total dividend paid in 2008) will be the base for growing the 'distributions' per share. This would equate to a 2% yield (sic) albeit with a likely tax advantage. So be aware, the per share distribution is going to taper significantly from an 8% total return for 2009 although a 4% final distribution due for 2009 - with the share price about 745p - may still lend support in the short term."
Is Edmond saying that the return is going to fall from the 60p payout this year?|
|237gmoney: Chile wouldnt be the cause of this fall JT. Not many buy Insurance in Chile. Think this fall is a little over done. Brit have been made to pay their share of Standfords lawyer fees, but even still, It wouldnt cause this damage. I think the shorters have come en masse here now that the share price has consolidated. I would like to see how much stock is now out on loan??? both pre consolidation and afterwards.|
|investoree: Myopia there was a 4 for 1 recapitalisation with BRE which caused the jump in the share price. Have topped up again this morning in my ISA as their payments take the form of a capital gain and not as a dividend. Hopefully the problems in Chile won't impact too much on BRE|
|crawford: Sorry for the stupid question, but how does this work:
"Recommended final distribution of 30.0p1 per share making total distribution for the year of 60.0p1 per share (2008: 60.0p1 per share). Distribution to be made in the form of a capital reduction"
Should this increase the share price in theory by 30p?|
Brit Insurance share price data is direct from the London Stock Exchange