Goshawk Insurance Share Discussion Threads

[handycam] 24/11/2005 08:51

24 November 2005


Wellington Underwriting plc

Further Hurricane Update

Wellington Underwriting plc (Wellington), whose wholly owned subsidiary
Wellington Underwriting Agencies Ltd manages Syndicate 2020 at Lloyd's (the
Syndicate), has today released a further update about the extent of losses
sustained from hurricanes Katrina, Rita and Wilma (the Hurricanes) in 2005.

Following the announcement on 15 November (the previous announcement) about the
estimated impact of hurricane losses to Wellington, significant new
notifications received by Syndicate 2020, particularly for Hurricane Katrina,
have resulted in a further assessment and increase of the potential net loss
estimate for the Hurricanes (including reinstatement premiums) from $330 million
to $485 million. The Group's share (approximately 66%) of these losses has
increased by approximately $100 million (#60 million). Consequently, the
previously disclosed net impact to Wellington's 2005 pre-tax profit of #90
million from Hurricane losses will be substantially higher.

Prior to the adverse development disclosed today, Wellington had anticipated it
would report a small pre-tax profit for its 2005 financial year, including the
contribution from its investment in Aspen Holdings Ltd. The additional losses
reported today will materially affect that estimate.

Notwithstanding the substantial increase in the estimated losses sustained from
the Hurricanes disclosed today, the Board reaffirms its intention to pay
dividends totalling 4p in respect of the 2005 financial year. Going forward, the
Board intends to distribute a dividend of not less than 40% of profit after tax
from Group Underwriting Operations, assuming normal market conditions. As
previously announced, Lloyd's has accepted the Syndicate's 2006 business plan
with a capacity of #800 million.

Syndicate 2020 Hurricane losses

The previously announced Hurricane loss estimate of $330 million net of
reinsurance and reinstatement premium has in total been increased to $485
million as shown below:

Previous Estimate Current Estimate Increase
($million) ($million) ($million)

Hurricane Katrina 195 330 135
Hurricane Rita 45 60 15
Hurricane Wilma 90 95 5

Total Hurricane estimated losses 330 485 155

Hurricane Katrina

The Syndicate's direct property, property treaty reinsurance and energy books of
business have been most impacted by losses emanating from Hurricane Katrina.
Since the previous announcement, the Board has become aware of a significant
number of loss advices processed through the Lloyd's central processing system
relating to Katrina, which showed a substantial increase in the Syndicate's
previously reported losses. The size and complexity of the Katrina losses have
increased as adjusters have advised claims at higher values than previously
anticipated. As a result of the increase in gross ultimate losses, the
Syndicate's direct property reinsurance programme is now exhausted and the
impact to net losses is $70 million. Property treaty, energy and loss estimates
in other areas have increased by $65 million, primarily due to additional market
information which has recently developed. These increases in estimated losses
have utilised all available reinsurance cover for this event and, as a result,
any further increase in gross losses will have the same impact on the net loss.

Hurricanes Rita and Wilma

A substantial portion of the losses experienced for Hurricane Rita have been
incurred within the offshore energy book of business. Based on market
information, the gross offshore energy loss has increased, but has been
contained within the reinsurance programme, leaving only modest residual
reinsurance cover for this event. The gross losses on other lines of business
are relatively small in comparison to the offshore energy losses: they are still
within the Syndicate's retentions and have not become large enough to recover
reinsurance. Accordingly, the Syndicate's losses in these lines of business have
increased by approximately $15 million.

The major lines of business impacted by Wilma are the direct property and
property treaty reinsurance books of business. Hurricane Wilma is in the early
stages of development. The losses are significantly different from those of
Katrina and Rita. The extent of business interruption and the severity of loss
on direct property risks are expected to be significantly less than those
experienced with Katrina. There has not been any material market or reported
loss information which would cause the Syndicate's current estimate to be
revised.

Reinsurance cover for direct property and property treaty reinsurance for
Hurricanes Rita, Wilma and further loss occurrences remains available.

The above losses represent the Board's best estimate based on information
currently available and it will advise the market of any further significant
developments.

For further information:

[effortless cool] 20/11/2005 09:00

This is an interesting announcement.



My interpretation is as follows...

Phoenix now control the management, but the banks still control the money. More money is needed to bring the company back within its banking covenants and, hence, hand control of the money back to the management. This will alllow the management to run the company in the interest of equity, rather than the banks to run it in the interest of debt. Hence, the proposed fund-raising.

Non-Phoenix shareholders now have a rather odd looking management team that they had no role in selecting and who have unknown links to Phoenix. They are facing a fund-raising underwritten by Phoenix on terms to be determined by Phoenix and the likelihood of low or zero returns if they don't allow Phoenix to carry out their plans.

Perhaps some shareholders are more equal than others?

[handycam] 18/11/2005 19:06

Phoenix have to pay off the bank to even stand a chance of getting some return from the run-off.

Izodia sends shivers all over, by the way.

[handycam] 16/11/2005 23:39

There is nothing worse than a failed rally.

[effortless cool] 15/11/2005 20:18

Phew! The Cool was becoming more Effortful by 10:00 this morning.

[effortless cool] 15/11/2005 06:38

thedawn,

I only had a small punt on BRE - started to believe in my own publicity! GOS was a big punt, and I'm more concerned about my diminishing profits on that.

[thedawn] 14/11/2005 23:42

EC - unlucky on BRE, I was keeping an eye on them after you mention, quite surprised at the consistent strength especially after going ex-dividend. Was interested in going short after your excellent call here but simply don't know enough about them as it goes. Hope you more than covered your losses on BRE from GOS.

Good luck to all.

[effortless cool] 14/11/2005 20:54

Brit produced a good announcement this morning, No move in their Katrina/Rita estimate and forecasting a whole year profit. I've closed my short at a loss.

[effortless cool] 14/11/2005 20:53

Ouch! Two days of sustained rises - I don't know why.

[Abuse team] 14/11/2005 15:28

Post removed by ADVFN

[latifs100] 14/11/2005 08:52

has this been tipped weekedn?

[Abuse team] 11/11/2005 19:21

Post removed by ADVFN

[handycam] 11/11/2005 16:42

Shares always rise before suspension.

[handycam] 11/11/2005 10:19

Of course you are!

[paddyfool] 10/11/2005 16:20

I am a he!

[handycam] 10/11/2005 15:17

Dear EC,

I did not mean to put you on the spot. I'm sorry.

Yours etc.,

[quotes_4_u] 09/11/2005 22:08

amazing call !

[effortless cool] 09/11/2005 21:18

I'm sorry, but I can't comment on Alea.

[handycam] 09/11/2005 18:06

Dear Mr. Cool,

Do you agree with Paddyfool on Alea? He (she?) rates it a carbon copy of GOS and I for one am inclined to agree with him.

I see that Kiln got their issue away. I really don't trust Kiln.

[anatole] 08/11/2005 09:02

Cool
please let us know yr views on Alea asap on that thread

[thedawn] 07/11/2005 13:22

EC

Thanks for your thoughts on BRE. I was interested to hear about Berkshire Hathaway having the lowest profits since 2001 due to their high exposure to insurance. Not a good sign for BRE either.

Do you have any targets for the share price? I note from the chart it recently fell through its 200 day moving average which it has stayed above for almost a year. Not a good sign either. The notes to the market are in my opinion extremely positive though. They mention a return of cash despite the hurricanes. Could it be the share is currently being supported by this expectation perhaps? If it doesn't happen after a half promise like that it could be a serious fall in order. The guys on the BRE board seem mostly positive also, but they would, wouldn't they!

Cheers and thanks again!

[effortless cool] 05/11/2005 09:27

neilrr,

It's by no means a basket case like GOS, but Brit (BRE) could be worth a look.

It hasn't updated its Katrina loss since 19 September, at which point it was already through its reinsurance programme. Most of its peers have reported signficant deteriorations in their Katrina loss since then.

It has yet to anounce its Wilma loss, which should be another £20m or so.

It's dividend policy is stupid (paying out 70% of post-tax profits) and is in disarray this year, when it seems likely it will have to go back to the High Court to amend its capital structure to allow it to pay an uncovered dividend.

Fidelity, a major shareholder, appears to be trying to sell out entirely. Other investors who came in anticipating high income may also be looking to withdraw over the coming months.

I'm building a speculative short position.

EC

[effortless cool] 05/11/2005 09:19

The bad news didn't take long to arrive - header updated.

[neilrr] 04/11/2005 15:01

Effortless,

What's the next undiscovered stinker?