Alea Share Discussion Threads

[achilles] 20/2/2006 17:41

re opened my short this morning following the slight bounce last week, I was expecting a slightly higher bounce but it didn't come this time.

[adeyberry] 20/2/2006 17:05

Nice drop today!

I can't see the shorters closing recently, holding this up for long!

Low 50's soon, IMO!

[m.t.glass] 20/2/2006 15:00

Ditto asbestos claims

[shanksaj] 20/2/2006 14:39

In one respect Alea can't hide from S&P, because they simply won't know themselves yet...
Alea won't yet have a full knowledge of losses relating to Katrina - commercial insurance claims relating to loss of business will take several months more to come through.

[tigrebone] 20/2/2006 08:00

can someone tell me why this company is still valued at over £100m given that any future revenues from sold repeat business are capped vastly below this figure even assuming that current liabilities will all be honoured?

[adeyberry] 19/2/2006 22:32

Whilst I have full respect for your views EC, and you may well be right, my instinct tells me that this company hasn't finished dealing out the bad news yet!

Whilst I am no reinsurance expert admittedly, my educated guess is that this will be 40p before it's 80p, with such losses now incurred, and undoubtedly more to be revealed in due course!!

[effortless cool] 19/2/2006 22:13

Adeyberry,

Although I've been shorting this aggressively since the 120's, you may remember that I've been preaching caution all the way down.

If I've closed too soon, so be it. On what I know at the moment, if I come back in, I'm more likely to be long than short.

EC

[adeyberry] 19/2/2006 21:57

It's amazing how once someone has closed their short position, they suddenly become so bullish on said company!!

Although I have to admit at present, it is clear that the shorters closing recently are indeed responsible for pushing the price up, especially Friday last thing!

But it won't last, I'm sure of that!

[effortless cool] 19/2/2006 21:52

Gentlemen,

Time will tell. The only thing I'm sure of at the moment is that these are at the wrong price - but I don't know if they're too high or too low.

I'm out at the moment but may reopen a position when further news is published.

EC

[m.t.glass] 19/2/2006 21:11

"..that is certainly bad news for shorters.."

EC: The only thing which is bad for shorters is if the price stops falling. Do you really thing the S&P statement will have that effect? If it prompts a little rally I will renew some more shorts.

mtg ;o)

[paddyfool] 19/2/2006 18:41

EC the ratings agencies see what the management want them to see...........Again history is with us here when was the lasr run-off to payout......and if there was £100 million unfettered cash in this company it would have traded on

[handycam] 19/2/2006 17:28

S & P have been wrong before and cannot predict the future. I wager that these things will be sub 50p when the new under-reserving figures come out in April.

[effortless cool] 17/2/2006 21:27

MT Glass,

Sorry, I was obviously crediting you with more nous than you have.

A rating on its own gives very little information of value for shareholders. It needs to be considered in conjunction with other relevant information. In this case, the fact that Alea is currently priced at about a 70% discount to NTA.

A BBB-rating means that, based on the latest information available to them (which is more than we will see), S&P have a high degree of confidence that policyholder claims will be paid.

Now policyholders rank ahead of debt, and debt ranks ahead of equity, so you can't read too much into it, but S&P have further said they do not expect shareholders' funds to be exhausted - and that is certainly bad news for shorters.

EC

[m.t.glass] 16/2/2006 07:57

..In the bond world, BBB is an "investment grade" rating, and its affirmation by S&P is not a positive for shorters..


- previous higher ratings were presumably even less of a positive for shorters ;-)
Yet the share price is now into its ninth consecutive quarterly fall.. down 213.25p (78.5%) from its 271.5p high

[effortless cool] 16/2/2006 06:49

MT Glass,

With regard to S&P, this is what has happened:
(1) S&P affirmed their BBB rating
(2) Alea asked S&P to withdraw their rating.

This is a rare example of sound management from the people that run Alea.

Ratings are expensive for companies, both in monetary terms and in respect of the demands on management time. Now Alea is in run-off, there is no benefit to it in maintaining a rating. However, if Alea simply tell S&P to withdraw the rating, it could create a perception that they have something to hide.

By getting S&P to withdraw the rating immediately after they affirmed it, management demonstrate that they have nothing to hide, they are merely managing expenses prudently in run-off.

In the bond world, BBB is an "investment grade" rating, and its affirmation by S&P is not a positive for shorters.

EC

[m.t.glass] 15/2/2006 17:22

- same story as seen from Bermuda:


Alea asks to be taken off ratings

By Lilla Zuill

The Alea Group, a Bermuda-based insurance company that has been selling off units and putting others into run off, has asked the ratings firms that have been tracking its financial performance to suspend their analysis of the company.
Alea previously asked ratings firm A.M. Best to stop rating the company, and has now halted Standard & Poor's ratings.
Standard & Poor's, a ratings firm widely followed by insurance buyers, yesterday, in an e-mailed statement, said it had affirmed Alea's financial strength rating of 'BBB', but was asked to no longer keep the company under surveillance.
S&P had previously downgraded Alea's ratings, and the company also suffered a ratings downgrade from A.M. Best, another leading ratings firm, on concerns over whether the company was sufficiently capitalised.
As a company in run-off, Alea will stay open to honour claims from policies already sold but won't do any business. This could mean the company no longer sees any value in being rated by either ratings firm since the ratings are key to attracting customers, something Alea no longer needs to do.
Alea's management is taking steps to maximise the value of the group, including the sale of renewal rights, the "aggressive" management of costs, and the commutation of contracts, S&P said.
An insurer bowing out of the market can sell the renewal rights to another company effectively giving the buyer access to the seller's customers. And under a commutation, contracts are ended early, while coverage is arranged with another insurer.
The ratings agency also said it expects Alea to be able to meet any obligations it has under contracts it has sold, and that unrated debt and preferred securities held by Alea in Bermuda totalling $320 million are not in line to be paid ahead of policyholders.
Ongoing shareholder funds support net loss reserves estimated at $1.3 billion, S&P said. An insurance company sets up reserve funds to hold monies earmarked to pay for possible future claims.

[alexandrews] 15/2/2006 15:44

MTG,

Alea have requested that S&P withdraw their rating. Ergo, the company no longer has an S&P rating, so no, they can't claim to have a BBB rating.

That's my interpretation, anyway 8-)

Alex

[paddyfool] 14/2/2006 21:11

Basicaaly they think that the run-off will leave some value.........

[m.t.glass] 14/2/2006 21:02

Anyone care to translate this?
Does that second paragraph effectively mean that in future the company website will be able to permanently refer back to this current rating - being the last published one - knowing that no further (worse) S&P ratings can subsequently appear?



Standard & Poor's Ratings Services has affirmed its 'BBB' long-term counterparty credit and insurer financial strength ratings on all Alea group operating entities: Alea Europe AG, Alea (Bermuda) Ltd., Alea Global Risk Ltd., Alea Jersey Ltd., Alea London Ltd., Alea North America Insurance Co., and Alea North America Specialty Insurance Co.
The outlook is stable however, at the same time, the ratings were withdrawn at the request of the companies' management. Consequently, S&P's says it will no longer surveillance any of the Alea group of companies.
The Alea group went into run-off in 2005, and S&P's says management is taking steps to maximize the value of the group, including the sale of renewal rights, the aggressive management of costs, and the commutation of contracts.
S&P's says it expects the Alea group to meet its policyholder obligations in full.
Alea Group Holdings (Bermuda) Ltd. (not rated) – the holding company of the group – has unrated senior debt totaling $200 million and unrated guaranteed trust preferred securities at an intermediate holding company level totaling $120 million. S&P's reports however, that these are junior to the policyholder obligations of the group's operating companies.
Ongoing shareholder funds support net loss reserves estimated at $1.3 billion.
Although there has been adverse reserve development reported in recent years, S&P's says this is not expected to exhaust shareholder funds, in the operating companies or at the consolidated level.

[m.t.glass] 14/2/2006 11:32

It's a tennis ball rolling slowly down a long flight of steps.. it will bounce on some steps, but it won't climb back up ;o)

[harleymaxwell] 14/2/2006 10:04

gone a bit quiet now - any views as to direction now??

[handycam] 09/2/2006 18:54

Part of stock market life, Ade. By the way, you were short of Alba, not on it.

Finspreads have now squared almost forty per cent of their total short position.

[adeyberry] 09/2/2006 17:11

I was short on ABA, but got stopped out last week!!!

How do I feel now??!?!?!

Well, you can imagine....nuff said!!

[paddyfool] 09/2/2006 15:32

Well we may just get a little more today!