||EPS - Basic
||Market Cap (m)
Real-Time news about Tawa (London Stock Exchange): 0 recent articles
|topvest: Share price starting to respond on the demerger strategy. Any thoughts from others on which option they will take?|
|topvest: Well it's a year since we started this thread and the share price is below where it was then. Looks good value!|
|kimboy2: It is easy enough to register;
Investment summary: Specialism pays
Tawa is a specialist in the non-life run-off market. By being better at claims and re-insurance management, and by achieving economies of scale, Tawa aims for a better return than the run-off vendor may achieve. Because it accelerates the completion of run-off portfolios, it also releases capital earlier. In addition, Tawa provides management services to third parties in this space, and has made a material acquisition to boost its presence. We believe the share price (less than half NAV) more than reflects the risks in the business.
Model working by end 2009 after tight 2008
2008 was an annus horribilis, with materially negative investment returns, an
adverse exchange rate effect, and a shrinking business as acquisitions were too
expensive. 2009 saw more business as usual. The total investment return was
positive, the dollar moved in Tawa's favour, and acquisition pricing started to fall to more attractive levels. The group extracted $40m from one portfolio (KX Re), resulting in debt/equity falling to 13%. Tawa returned to profit (attributable $11.2m) and NAV per share rose. Today Tawa announced a further $35m will be extracted on 31 March 2010.
Market pricing more rational, allowing more acquisitions
Tawa's model requires a steady flow of acquisitions, but for much of 2008/09 too much capital was chasing run-off businesses. Tawa could not achieve its target 20% IRR. Pressure on sellers has increased with: i) the new capital requirements, ii)
investment losses diminishing capital cushions, and iii) lower investment returns, while some potential demand has reduced as financing has become more
expensive. Tawa addressed the absence of profitable portfolio opportunities, and introduced more earnings stability, by buying PRO, a run-off servicing business.
Valuation: 0.5x NAV is very attractive
Although the shares have risen markedly from 37p at end 2008, we believe that the issues from that year are still reflected in the price. At the current level of 60p, Tawa is trading at just under half the 2009 reported NAV (127p). Tawa's risks (insurance, investment return, exchange rate, credit) are more than fully reflected in the price.|
Tawa share price data is direct from the London Stock Exchange