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[escapetohome] 26/5/2016 15:23

Thanks so much for your insight Garbet.

May you live long and prosper.

[garbetklb] 26/5/2016 14:09

I don't currently own any insurance stocks.

I'd be v wary of brokers - tend to overpay themselves.

Insurance underwriting is a v difficult business - and I'd definitely try to dissuade my kids from it as a career. Growing is incredibly easy - if you're cheap & "flexible" with conditions, business will come pouring in. Brokers will praise how "innovative" you are. And what can the competitors do except be dragged down? Nobody wants to buy insurance & everyone thinks they are paying too much. Your product is your claims handling - which people (hopefully) get to see rarely and then their expectations are often too high. People (or their brokers) switch insurers for £1.

The big companies have got poor control and some of the small companies have "issues".

My last 2 holdings were :
Hiscox - a really class outfit. Sold because of market conditions.
Randall & Quilter - good at what they did (running off old companies). Sold because they diversified into more mainstream business, which I suspect won't be a winner.

Admiral is very well run - Englehardt was very good & Stevens very sound indeed and a v decent guy. He & his wife have given away about £100m to charity.

Esure & Hastings are probably worth a look. The big international reinsurers Munich, Swiss et al have huge financial muscle, but pretty erratic underwriting.

The cat reinsurance vehicles will overpay themselves to reflect their brilliant underwriting (actually an entirely fortuitous lack of big cats), so investors get skimmed.

To be brutally frank - why bother when there are plenty of alternative safe & steady alternatives? Or even wild & exciting ones - but easier to understand.

Unlike most businesses, cash is pretty much a red herring. Of course an insurer will have oodles of cash. The key issue is RESERVING.

Independent Insurance 15 years ago a perfect example.

[cheshire man] 26/5/2016 13:08

Put it behind you bb and don't be to hard on yourself .don't forget you've had far more winners then losers, of course it's never to late to learn lessons........ in particular at this game :-)

[eezymunny] 26/5/2016 12:43

Yes, well said battlebus. Always very cleansing to put a bit of blame on yourself, have a rethink, and kick on.

I'd say lessons to learn are to steer clear of businesses that are hard to understand - insurance is very tricky for example, because of all the delayed claims etc. I noted the possible under-reserving on here some years ago but there has been a lot of bullish claptrap written by both the company and on this board. Ignore claptrap and think for yourself....

For me averaging down is a no-no, unless it's into something valued below tangible net assets (and very understandable assets like cash and property as opposed to eg a loan book!).

[luckymouse] 26/5/2016 12:27

Well said battlebus - I & I'm sure others have been there before so no smugness at all. The main feeling amongst decent pi's is sympathy of course & lessons hard learnt are well learnt. Although I have no sympathy for the directors here as I feel they were only a stones throw from lying by omission.

Re averaging down - its a difficult one - from a position point of view if you are picking up a dip in a rangey jaunty chart in a healthy asset its ok I feel - and if theres a second lower dip that's also displaying positive momentum divergence that's definitely ok - perfect even. And from a trading rather than investing pov you actually bias average like a psycho into the spikes so your center of gravity is as nr the spike end as poss.

Where that tends to go horribly wrong is when its not a rangey jaunty chart - but instead hard trend - deadly in that case as hard trend has no definite end.
Sods law is its flips from range to hard trend just as you engage. The skill therefore is identifying and playing amongst the top 10% healthy assets & identifying hard trend early. I'm not saying either are easy!

ATB LM

[saucepan] 26/5/2016 12:14

Respect, battlebus. I hope your post, in turn, will be a lesson to others.

I also hope you soon make up your losses here elsewhere - especially as we have a number of similar interests :-)

[battlebus2] 26/5/2016 11:06

Well I've learnt a couple off valuable lessons here, one don't think you know it all and refuse to listen to advice from respected posters with a background in the relevant business ie garbetklb who several times tried to warn mean, unfortunately this was on deaf ears. Belatedly I thank him for his efforts to warn us all especially given he has no holding and could have spent his time elsewhere. Which brings me to point two, averaging down, given the previous statements showed progress in securing solvency 1 alongside an upbeat picture on business would you not be wise to average down?? Seems not when a few months later losses jump from the woodwork and suddenly solvency 2 is impossible without what looks like a piecemeal sale in which I'd expect little or nothing by way of return to holders.

Lessons sadly learnt, when the charts as bad as it is there's clearly a reason for this market valuation and to think otherwise is and has been extremely foolish.

The old adage run with your winners and cut your losses, well I've just put a post it note on the screen. Good luck to everyone involved.

[luckymouse] 26/5/2016 10:18

Well that happened! What next?

~LuckyMouse 27 Feb'16 - 19:24 - 3055 of 3113


free stock charts from uk.advfn.com

[garbetklb] 26/5/2016 09:58

mw16

Quite agree - you can only go by the track record of people on here.

Have a look back at my posts over the past year and see if you think I've been more, or less, correct given what's happened during that period.

You could be right about 18p. But it would have a lot more credibility if you explained why. Certainly the "big boys" don't seem to be rushing in just at the moment.

What's your take on the £10m Hogarth is talking about? Their 2015 accounts are overdue, but their 2014 accounts show net assets of £357k. Seems a bit unlikely that they would be in a position to stump up £10m.

Always good to be civil on bulletin boards - and the people who disagree with one's view & explain why are the most useful to pay attention to. I'd love to hear the bull case for gable explained.....

All the best

[mw16] 26/5/2016 09:38

Garbetklb

You couldnt believe a thing anyone says on this board. Same goes for Gable.

So sum of the parts is 18p, big boys will snap it up is no less a truth than the garbage you spit out.

[tsmith2] 26/5/2016 09:27

What is the amount that has been paid to dewsall's companies

[escapetohome] 26/5/2016 08:02

Tim winnifroth could be right on this one , a rare occurence , but i dont think hes wrong here.

Absolute dog!

Demonstrates the importance of a stop loss.

[the shuffle man] 26/5/2016 07:58

I see TW has written a scathing article today.

I presume that the auditors wouldn't sign off the accounts without the provisioning of the ATE write off and proposed capital injection which is why it was announced yesterday.

Does this give some comfort that the auditors are happy with this extra £10m injection or is this wishful thinking ?

[tsmith2] 26/5/2016 07:33

Zero cred. Look at connected party trans..

[topvest] 26/5/2016 07:28

What a dog this is. Management can't be trusted.

[garbetklb] 26/5/2016 07:13

Hi adyfc

Hogarth don't have an insurance licence - I'm pretty sure. I suspect it's the right idea - but has already happened.

Gable have been paying Hogarth for their services for years - you could work out how much by looking at Hogarth's report & accounts at Companies House (free online). I've not done so - but I'd have a bet that they look healthier than Gable's. What a surprise.......

I'm sure your sum of the parts will be a lot more likely than MW16's......

[adyfc] 26/5/2016 06:40

My bet is the best parts of Gable are being backed into Hogarth right now and that will leave a sum of the parts of 0p.

[garbetklb] 25/5/2016 23:56

Hi Smelgys

When an insurer writes a policy, they don't know what the outcome is going to be. For stuff like property insurance, you know about the claims pretty quickly, so know what the outcome is - and can learn from it and adjust your underwriting.

For long tail policies - such as Employers Liability, Public Liability and the injury side of motor, it can be a long time before you know of the claims and an even longer time before you know the final bill. For example, in the UK, an injured child has until they are 18 + 3 years to MAKE the claim. In practice most claims will be made sooner and, contrary to popular belief, insurers like to settle claims quickly as they are cheaper. I've not the faintest what the rules are in all the countries Gable dabble in - and I doubt they know all the twists & turns either. For a typical UK motor account, you'll begin to be reasonably confident of the result after about 5 years; typically longer for liability accounts.

So, what do you do in the meantime? Basically a mix of past experience & inspired guesswork. But it's v difficult when you have v little past experience OF THE PARTICULAR CLASS. Pretty bloody difficult where you are writing all sorts of stuff in all sorts of legal jurisdictions.

Of course Gable would say that they are reserving cautiously - and that they hope for substantial releases in years to come. They may be correct, they may not. Extraordinary claims should be covered by reinsurance. The auditors are probably asking for more reserves to cover ordinary claims - but more than Gable expect.

But so far, all the surprises have been negative - surprise flood losses, fires, ATE policies where they are writing off huge sums. My guess would be that this will continue.

OK, it's down to whether you believe they are over-reserved and will be able to release loads of wonga in years to come. Or are not.

Also, what is the prospect of them satisfying solvency II requirements and continuing underwriting? I don't know, but I doubt it.

[smelgys mum] 25/5/2016 22:41

There is also an important consideration (if my understanding is correct) that I am going to express in layman's terms, rather than possibly the correct 'technical/financial' language:GAH is holding some previous, current and future 'profits' back to keep the auditors happy. The latter wanted a bigger contingency/cash pile put aside to cover any extraordinary claims.GAH believes this level of contingency is 'over-egged' and will not be called upon. If GAH's assessment proves to be correct, there will be no need to continue to put such large amounts aside and the money can go to the bottom line (possibly even some retrospective 'contingency') as profits.Future eps may therefore exceed the figures suggested above, if not factored in.Someone more expert please correct me if I am wrong here.

[luckymouse] 25/5/2016 22:37

perhaps he is intimating provide in the collateral context - but honestly - its all way too vague & cloak n dagger for me. Having stepped out at 75p - and hoping for a turn around, I'm now watching to learn what I can, it doesn't fit the bill of a classic short candidate - high receivables, aggressive forward revenue recognition, foreign aim, micro miner, unqualified directors, sell ice to eskimos ceo, a veil on part of the numbers etc. (well..)

[garbetklb] 25/5/2016 22:32

Who's the bloke in Cayman??

[garbetklb] 25/5/2016 22:31

MWS16 - it would be great if you had something sensible to say, rather than repeat meaningless comments.
You could be right - why not argue your corner?
But, for god's sake, don't simply believe what the company tell you!
There's some pretty useful info on some of the bulletin boards - add to it!

[smelgys mum] 25/5/2016 22:21

The proper way of dealing with this is at the AGM, which I hope to attend. The Nomad also has a responsibility to ensure proper corporate governance including timely communication with shareholders. Nine months is ridiculous. I suspect that the bloke in the Caymans won't give too much of a monkey's about communications if the results are good. He may well have something to say if they're not!

[jamielein] 25/5/2016 22:18

1. Impossible to know what the sum of the parts is, and whether it's positive or negative, until you know how much future claims will cost.
2. The 'big boys' are not buying. Look at the share price chart over the last year. That will tell you all you need to know.
3. I can't say I fully understand what's going on here, other than I (along with many others on here) think that the company is most likely worthless.

I really hope nobody is sucked into buying these based on comments like mw16's.

[mw16] 25/5/2016 21:45

Sum of the parts is 18p. The big boys will snap this up