Chesnara Share Discussion Threads

[jonwig] 20/9/2019 09:16

SLA - another holdings increase: SLA from 15.03% to 15.45%.

[keith95] 19/9/2019 22:58

MM's looking to trigger people's stop losses IMO with HFT algos ... bought a few today at 268p

[luderitz] 19/9/2019 19:52

Indeed but I wonder if it’s a short term trade like Black Rock are fond of doing on a regular basis, (not with CSN as far as I know though) back to 300p then out ..considered it myself.

[jonwig] 19/9/2019 17:56

Well, Canaccord are buyers, 5.03% from N/A:

[luderitz] 19/9/2019 16:53

I have held CSN in the past but quite a number of Companies with the word Insurance in their title seem to have depressed SP's at the moment.

For example big outfits like L&G (also held in the past) and the Pru which I hold now so with the inherent problems as mentioned above I think holders might consider holding on rather then taking a loss depending on their circumstance as I did with L&G many years ago and hopefully the Pru now.

By the way one of the things I did and still like about CSN is that they are small in terms of staff or they were when I started to trade/invest in them, might have changed now with their Swedish addition...fascinating this private investing isn't it 🙂

[jonwig] 19/9/2019 16:25

p49b - I guess the answer lies in the differences between them.

PHNX is a lot larger, and is busy taking on more assets and annuities. That gives it longer shelf-life. It's also, I think, UK-based. (FTSE100 does help of course!)

CSN is smaller, so would need a fundraising to do a big deal. Hence it's more obviously a closed-life fund, despite its open Swedish firm. It's also exposed to forex risks.

I doubt that's the whole story.

[p49b] 19/9/2019 16:13

I hold both CSN and PHNX and cant help noticing the divergence between them, what do investors think is the cause of CSN share price decline as PHNX has been steadier.

[essentialinvestor] 09/9/2019 16:59

It was the small size of director holdings here that put me off. Held briefly in the past.
Can't say I saw what would happen to yields, not that clever.

[jonwig] 09/9/2019 16:47

The problem with this share price (and other life insurers, which have huge piles of cash which they need to invest in 'risk-free' assets) is, of course, zero and sub-z interest rates.

There's a glimmer of hope, though: sub-ZIRP leads to and investment and consumption ice age, with the weakest banks unable to survive. MMT supplies an answer (a glib one, yes), that is, helcopter money, people's QE, whatever. The US would lead, UK follow, maybe Japan, China. The EZ? Maybe kicking and screaming when it's too late.

It is very dangerous of course. PQE would be described as 'temporary' which, of course, as Friedman points out, lasts forever. Hence hyperinflation. But that's later on!

Once you hear of hedge funds shorting the bond bubble, take notice and maybe buy this.

[speedsgh] 09/9/2019 15:46

Well, now we know why CEO John Deane hasn't dipped into his own pocket to buy shares in the market. An aggregate of 95,091 nil cost options doesn't give him much of an incentive to part with his own hard earned! Even at the current depressed price that represents just over £250k FOC.

Director/PDMR Shareholding -

Meanwhile the share price continues to post new lows. Now down 35%+ over the last 18 months.

[mister md] 06/9/2019 15:52

added some at 270.5p today for the dividend portfolio

[sogoesit] 06/9/2019 15:24

Agree with posts saying too little discussion of downside issues.
It's also been 3 years plus now that we get the mantra that "we're on the look-out to acquire but won't do deals if they are "expensive"".
Downside issue for me is what happens if sovereign debt (risk free discount factor) goes negative? (It already is in the eurozone).
Anyway, took the dividend and out today.
Good luck!

[luderitz] 05/9/2019 10:25

Down over -4% as well.

[mister md] 05/9/2019 09:22

went ex-dividend today, 7.43p

[gabsterx] 02/9/2019 06:52

epicsurf, I agree and mentioned this a few posts ago.

The thing that rubs me the wrong way about the reports and interviews is how they seem to highlight the positive figures and downplay the importance of the bad ones.

- Annual report 2018: Cash generation and solvency ratio up. These are the important metrics as they highlight the affordability of our dividend. EcV down due to market conditions, nothing to worry about.

- Interim 2019 report: EcV and profits are up, highlighting our strong performance. Cash generation and solvency down but that's due to a technicality, we still raised the dividend by 3% (even by eating into our balance sheet) which must mean things are ok

Yes it's somewhat normal for companies to do this but I would much rather have a CEO that comes out and says "We did not perform well this half, this is what we will do to improve". No need to sugar coat things.

[epicsurf] 31/8/2019 16:38

IC View

But should acquisitions prove difficult or too expensive, we agree with Panmure Gordon that Chesnara could itself become a takeover target, with the shares trading at a 25 per cent discount to the latest Solvency II own funds figure of £588m. With the interim dividend up, we stick to our guns (386p, 26 Jul 2018). Buy.

Last IC View: Buy, 377p, 29 Mar 2019

[speedsgh] 30/8/2019 11:02

Link here...

Chesnara confident about dividends after 'steady' interims -

[jonwig] 30/8/2019 09:35

it's a competitor site - gets blocked.
Search Chesnara on YouTube dated 30/08.

[topvest] 29/8/2019 20:31

Steady as she goes numbers as always. Happy to hold. About time for another acquisition though.

[luderitz] 29/8/2019 10:26

I suppose we can try and second guess all day but early on the share price is up 4% so obviously the market likes the numbers so far, see what it finishes at.

[gabsterx] 29/8/2019 10:06

Chesnara could be an interesting acquisition target itself as it is trading at about 35% discount to Economic Value (423 M market cap vs 645 EcV). In any case this rates it as a good buy at these levels as long as the dividend remains covered.

If Chesnara traded at 100% of EcV it would be worth 430p (based on 150M shares). My previous Gordon Growth model puts it at 345p so taking an average 390p would be fair value, which incidentally happens to be my cost basis :/

[speedsgh] 29/8/2019 09:22

It is evident that they feel ready to grow their UK & Netherlands operations further by acquisition ("We now have sufficient scale and presence in both the UK and the Netherlands to continue our focus on acquisition activity in those territories") but point out that the valuations of potential targets have been rising, and that they are not willing to overpay and will only contemplate deals that meet their strict criteria...

ACQUISITION ACTIVITY CONTINUES TO TAKE PLACE IN OUR TARGET MARKETS, WITH OPPORTUNITIES CONTINUING TO EMERGE.

We have witnessed an increase in activity in the territories in which Chesnara currently operates and also those where we do not have operations. We believe we have also seen a rise in seller's valuations and prices paid for potential targets. We have continued to measure potential targets against our stringent acquisition assessment, focusing on the price compared to the EcV, the cash generation capability, the strategic fit and the risks within the target. We are committed to maintaining our discipline when assessing potential acquisitions and ensuring that any offer we make is in the interests of all of our stakeholders, with suitable reward for the additional risks taken on. Chesnara has strong support from shareholders and lending institutions to progress our acquisition strategy. We also believe that our operating model has the flexibility to accommodate a wide range of potential target books. We believe our good network of contacts in the adviser community, who understand the Chesnara acquisition model, ensures that we are aware of most viable opportunities in the UK and Western Europe. With this in mind, we are confident that we are well positioned to continue the successful acquisition track record in the future.

[speedsgh] 29/8/2019 09:15

The 'Outlook and Brexit' section under the Chairman's Statement is very informative and addresses some of the items raised in posts this morning...

I remain optimistic that Chesnara can continue to deliver against its strategic objectives, which in turn fund our well established dividend strategy. The notable increase in Economic Value supports my optimism.

Looking forward, we foresee a sustained period of low interest rates and this will continue to put a degree of downward pressure on our cash generation. That said, even in the current low interest environment we believe the core business results together with the potential to initiate a range of management actions, means our future cash potential supports our dividend strategy for many years. In particular, the UK business remains a robust source of cash, with additional potential to take management actions to enhance the core cash. The nature of the cash utilisation in our overseas divisions together with the potential for future capital reduction actions, particularly in Scildon, means we retain a positive outlook regarding cash contributions in the future.

We now have sufficient scale and presence in both the UK and the Netherlands to continue our focus on acquisition activity in those territories in a disciplined manner. That discipline, means we will not do a deal if the price does not offer the appropriate value to our shareholders. We also remain open minded about new territories but the benefits would need to outweigh the inherent challenge of adding another regulatory environment into our business model. Our balance sheet has further capacity for debt and having completed a debt syndication process last year, we are in a strong position to take advantage of that balance sheet capacity. We have significant levels of surplus capital and recent experience suggests we retain shareholder support for further equity for the right deal. This, together with operational capacity, means we remain well positioned to act should an opportunity arise that meets our stringent price and risk profile criteria.

We remain committed to writing new business in both Sweden and the Netherlands with a view to replacing a meaningful proportion of the dividend strain through our new business operations. This is a material dampener to any run-off strain. Movestic has become an established profitable new business operation and, despite the current pricing pressures in the market, we continue to expect the division to deliver meaningful levels of profit in the future. We recognise that current new business profits from Scildon are not sufficient; however, the sustained volumes and reducing cost base do create a degree of encouragement that more meaningful profits can be delivered in the future.

The structure of the group, with established regulated entities in three European countries, together with the fact we do not trade or share resource across territories, means I remain of the view that whatever the outcome from the Brexit negotiations, we expect it to have little direct impact on our business model. In the event that Brexit has a negative impact on the value of sterling, relative to the euro and Swedish krona, as has been the case since the 30 June 2019, then the value of Chesnara would increase.

In light of the above, I remain confident that Chesnara is well positioned to continue to provide value to policyholders and shareholders.

[ramridge] 29/8/2019 09:09

There is an interesting slide (slide 19) in the presentation pack of 2018 Final Report.
It shows graphically a sensitivity analysis of various factors on Solvency, Cash Generation and ECV.
The sensitivity factors are rise and fall of equity stocks, interest rates, mortality rates, expenses, and so on.
It took me a few minutes to get my head around it, but it puts more meat on the bones when trying to understand this business.