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Share Name | Share Symbol | Market | Stock Type |
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Goshawk Ins.Hds | GOS | London | Ordinary Share |
Open Price | Low Price | High Price | Close Price | Previous Close |
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4.50 | 4.50 |
Top Posts |
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Posted at 07/5/2007 18:22 by handycam There are 40.2 million reasons to remain short of Gos, whereas pre-reconstruction a market cap. of £6m wasn't enough to go for. Free float here is a maximum 25% or >200m shares, so there is added liquidity.We had the same position with Marconi at 2.1p. Nothing to go for, thought everyone, but the maths told otherwise. 9m we sold and then gave .54 of a penny to get them back, ie. £40m became £10m, as indeed it had to. That is what one can expect here. |
Posted at 03/5/2007 19:25 by handycam EC, with Gos, well, that's not what the auditors are saying. With suspension, £41m could easily be half that eighteen months' out, if as long as that. It's still very tight and I still wonder why Phoenix put in another £15m or so to get £20m back.Catlin is now the largest syndicate in the [Lloyds] market and the real benefit of Wellington is the significant scale in its US operation. The eps has moved ahead substantially and, obviously, you will have to pay 17pps back in dividend this Wednesday morning (9th). |
Posted at 27/4/2007 22:04 by effortless cool handycam,GOS results look pretty much as expected. I don't see it as a good short any more. Catlin, on the other hand, I am short on ... EC |
Posted at 27/4/2007 20:54 by handycam There's your answer, Brian. Time to re-open your bear, EC.By the way, EC, I reckon Catlin is the cheapest stock in the 350 basis 522p. A 17p final dividend is ex 9th May, which is a very confident yield on the part of the Board. After Katrina etc., I thought that Wellington would suffer more than it transpired to have done. CGL see the acquisition subsequently as some sort of a coup. Yours etc., |
Posted at 08/12/2006 09:51 by effortless cool So Britain's 344th richest man is now an investor.I still think that GOS is more likely to take him to 345th than 343rd. |
Posted at 29/9/2006 19:34 by lord santafe so you can not short GOS then?. |
Posted at 27/9/2006 11:45 by lord santafe I would imagine you can not short GOS after they announced that huge rights issue at 3p, or have I just forgotten to start trading in my finspreads again to just short GOS. |
Posted at 10/9/2005 08:42 by effortless cool TIP CLOSED 21/2/07Actually, we're up to seven reasons now (19/09/05) (1) Last year, GOS made a second half loss when claims from hurricane Ivan took it through the top of its reinsurance programme. On 6 September this year, following Hurricane Katrina, GOS announced that it believed that this loss would be contained within its reinsurance programme ( However, since then, market estimates of the loss from Katrina have risen from $25bn-$35bn to $40bn-$60bn ( Further, GOS has a dismal history of underestimating reserve requirements and then, subsequently, needing to book greater reserves. My forecast is that Katrina losses will, ultimately, take GOS through its reinsurance programme. This was correct. On 7 October, Goshawk raised their Katrina loss forecast by $30m, as well as adding a further $30m loss forecast for Rita. (2) Most insurers/reinsurers at least have bumper first half profits to provide a buffer between Katrina losses and their capital. GOS, however, somehow contrived to make a loss in the first-half, and the 6 September RNS hints at a break-even forecast for the full-year. Thus, if Katrina turns out worse than GOS originally forecast, it will probably erode the company's capital base. Consensus forecasts for Goshawk are now for a loss of $60m in 2005, which reduces prospective NTA to about 35p per share. (3) GOS is already about as small as a reinsurer can feasibly be. It has an A- rating from AM Best, and any loss of capital will threaten that rating. As of 9 September, AM Best placed Rosemont Re's (GOS's operating subsidiary) rating under review with negative implications ( If the Rosemont rating falls to BBB+ or below, then GOS has no future as a reinsurer unless it can raise fresh capital. On 19 October, Goshawk announced that AM Best had downgraded Rosemont Re from A- to B, with negative outlook. A "likely consequence" of this was that Rosemont would go into run-off. (4) A 9 Septmber RNS ( tells us that GOS is looking at capital-raising initiatives. But it is not that easy. Who's going to inject fresh capital when: (a) the ultimate loss from Katrina remains massively uncertain; (b) we're still only halfway through the hurricane season; (c) further uncertainty arises in respect of back-year reserves (e.g. Ivan, SCPIE) which GOS has had to strengthen regularly; (d) it means backing a management and underwriting team that have been unable to deliver a meaningful profit through the hardest (best) insurance market for a generation; and (e) the Board of GOS are involved in a very high profile corporate governance dispute. On 17 October Goshawk announced that all discussions with prospective capital providers had ended. (5) Time is very tight. Most reinsurance business starts 1 January each year, and the key purchasing decisions are made during December. What reinsurance buyer is going to take the risk of putting GOS on their acceptable security list as things stand? Capital needs to be raised to provide the necessary certainty, but Katrina is a very complex loss and its ultimate level will be far from clear by the year-end. GOS is in a very weak position and, even if it can raise capital (which I doubt), I believe it will be equity capital at a deep discount. On 24 October, GOS announced a deal to sell the Rosemone Re infrastructure and renewal rights to a new reinsurer (subject to approval by shareholders) Rosemont Re is now in run-off. (6) If GOS do get downgraded, it is not just future business that is threatened. Existing business may be subject to a downgrade clause allowing the insured to cancel the policy. Of course, they'll only exercise the clause if they haven't had a claim. (7) GOS have $13m of debt due for repayment in December 2005. They don't seem to have the cash to repay it; they haven't got any refinancing in place; they may be in breach of their covenants post-Katrina. On 3 November, Goshawk confirmed itw as in breach of its banking covenants. The bank now effectively controls cashflow out of Rosemont Re. Update 5/11/05 Goshawk is now priced at 5p and Rosemont Re is in run-off. There may be value in Rosemont Re, but shareholders have an immediate problem with the lack of working capital in the holdings company. GOS relies on remittances from Rosemont to fund its expenses, and they will need the permission of both the banks and the Bermudan regulatory authorities to make further remittances. I do not expect the necessary permissions to be granted, in which case the hholdings company will go bust. EC (Short March GOS @ 37.2p) (Added at 34.8p 15/9/05) (Added at 33.7p 22/9/05) (Added at 29.6p 4/10/05) (Added at 27.4p 5/10/05) (Added at 23.0p 6/10/05) (Added at 16.8p 17/10/05) (Closed at 3.9p 21/2/07) |
Posted at 01/7/2005 17:34 by ursus what an excellent letter this is! i've even beaten hashley james to the cut and paste job. i'm glad i sold gos before the tag debacle, but it shd provide some fun over coming weeks...and while phoenix is at it, how about having a look at the too generous amounts those dozers at highway pay themselves. RNS Number:3920O Phoenix Asset Management Partners L 01 July 2005 Phoenix Asset Management Partners Limited Phoenix Asset Management Partners Ltd are sending out the following letter to the registered shareholders of Goshawk Insurance Holdings Plc today. Dear Goshawk Shareholder We are writing to you as the representative of certain investment funds (the "Funds") holding 50,838,408 Ordinary shares in Goshawk Insurance Holdings plc which represents 28.9% of the outstanding share capital. At the forthcoming Annual General Meeting on 11th July 2005 we intend to vote against three of the motions before the meeting. This letter sets out our reasoning for this, our concerns about the current strategy of Goshawk and the details of an alternative proposal that we made to the company. AGM Motions The motions in questions are: Resolution 2. To reappoint S E C Miller, who is retiring by rotation in accordance with the Company's articles of association, as a director. Resolution 3. To reappoint G A Robb, who is retiring by rotation in accordance with the Company's articles of association, as a director. Resolution 6. To approve the directors' remuneration report for the financial year ended 31 December 2004, together with the auditors' report thereon. Problems with Directors' compensation We believe that the compensation awarded to directors in 2004 is out of line with the performance of the business in the year, is inconsistent with the Remuneration Report of 2003 and is just too high in absolute terms for the size and type of business Goshawk is. Although in 2004 the company suffered a loss of $8.8 mil and book value fell 9%, the total compensation of the top three officers of the company (Chairman, Chief Executive and Finance Director) rose by 114%, the biggest increase in the sector (defined as the relevant constituents of the FTSE All Share Insurance Index). In the 2004 Remuneration Report it is a stated policy to "reward successful performance". In our view, from a shareholder's perspective, 2004 was not a successful year. The 2003 Remuneration Report states that the Chairman, Paul Spencer, would be awarded a bonus based upon the share price on 30th September 2004 or at the offer price at the time of any takeover offer for the company that was successful prior to that date. The lowest share price required to trigger a bonus was 50p at which level he would receive #100,000. Neither of these conditions was satisfied and we would have expected there to be no bonus paid under this scheme. However, in the 2004 Remuneration Report the scheme is restated but the criteria have now been changed. The lowest strike price has been reduced to 40p and the expiry date has been moved back to 31st December 2004. As the shares closed at 40.25p on 31st December 2004, Mr. Spencer has been awarded a #100,000 bonus. The Report does not explain that the criteria have changed and it reads to us as though these were always the criteria, which is not the case. The end result is that Mr. Spencer earned $375,000 as non-executive Chairman in 2004 versus $43,000 in 2003. Viewed as a ratio to market capitalisation, Mr. Spencer is the best paid non-executive Chairman in the sector. Likewise the top three officers are the best paid in the sector. However, the movement in shareholder value (the change in book value plus dividends) at -9% is the second worst, as is the combined ratio of 108%. If we only consider the continuing business then the deterioration in 2004 is even greater. 2004 was a good year for Goshawk's management but a poor one for its shareholders. We believe the compensation policies and practices pursued by the board are not justified in the interests of shareholders, that they are not justified by industry comparisons and that the Remuneration Report does not adequately explain the reason for changes to the bonus scheme criteria. In conclusion we cannot support the motion approving the Report. Additionally, the two non- executive directors that are up for re-election are from the Remuneration Committee and in fact Mr. Miller is its Chairman. Problems with the current strategy The company is now taking considerable risks on behalf of shareholders. The Annual Report states that the maximum risk to be taken by the company on a single major catastrophe is limited to 30% of Rosemont Re's capital, equating to around 40% of Goshawk's shareholder capital. If this goes wrong the current management team have very little of their own money at stake. The company has also moved its share capital into US dollars without consulting shareholders who are largely UK sterling based. We accept that the earnings of the business are US dollar based but it doesn't follow that the capital should be. The company also decided it would report its earnings in US dollars. Given that its shareholders are predominantly UK based, and that the report is primarily for their purposes, this suggests to us a lack of sensitivity to shareholders' requirements. We believe that the company has been actively seeking a buyer of the business; the compensation plans are certainly structured to incentivise that outcome. However, apart from an unsuccessful approach from Nikko Principal Investments last year the strategy has not borne fruit. In the meantime the net asset value has declined and the share price has risen, in our view significantly reducing the chance of a takeover at a premium. There is a low barrier to entry in the Bermuda reinsurance market and we believe that any potential purchaser is likely to weigh the modest costs of starting up a new vehicle against the price of buying Goshawk with its portfolio of legacy risks. As a result, we believe a buyer will probably expect to pay a discount to book value offering little upside for Goshawk shareholders from the current price. In summary, Goshawk currently has a management that in our view pays itself too much, takes too much risk, outsources the investment of its float (capital & premiums), has little personal financial investment in the company and which has not delivered an exit for shareholders. The alternative In April 2005 we made an approach to Mr. Spencer with a proposal that we believe would create significant shareholder value and better align interests of management and shareholders. In June Mr. Spencer informed us that the Board had turned down our proposal. We proposed that Mr. Spencer step down as Chairman to be replaced by us (Sir Peter Thompson as Chairman and Gary Channon as Chief Executive responsible for capital allocation and investment). Russell Brooke would remain Chief Executive of Rosemont Re (Goshawk's re-insurance subsidiary) in Bermuda as he currently is. We proposed that we would run the company with an approach inspired by Warren Buffett and Charlie Munger of Berkshire Hathaway. We have developed a framework to combine long term value investing and intelligent value based underwriting. Using shareholder's capital twice to support two rewarding activities results in excellent long term returns, as Berkshire Hathaway has demonstrated. We are not claiming to be Messrs Buffett and Munger but we do claim to benefit from much of their wisdom and teachings which are in the public domain. We proposed that we would work for no pay or bonuses. We would have one option scheme that would pay us if we double the value of the company in 5 to 7 years. If we don't, we get nothing. We did not seek board control or any contractual notice period. If we were failing, the board could remove us immediately as could shareholders given that our equity interest would remain unchanged (we are not seeking equity control). These are the most aggressive shareholder orientated criteria we have come across. Our incentive would come from the 28.9% shareholding that we have. As Mr. Buffett might say, we are prepared to eat our own cooking. Our plan would yield immediate cost savings that we estimate at over $4 mil per annum coming from lower board compensation, the saving of external investment management fees and other savings, including moving the head office out of its unnecessary St. James' location. By following the teachings of Warren Buffett, Charlie Munger and Benjamin Graham over the past 7 years since we founded Phoenix Asset Management Partners, we have generated an average investment return of 15.4% per annum investing in the UK stock market whilst the total market (as defined by the FTSE All Share Index) has returned just 1.6% per annum (1/5/98 to 30/6/05). We believe our proposal was very compelling for Goshawk shareholders. Sir Peter Thompson brings decades of business experience and a record of generating outstanding returns for shareholders (as investors in NFC, FI Group and Community Hospitals could confirm). At Phoenix Gary Channon has produced best in class investment returns since we set-up the company in 1998. This has been achieved through the application of a rational, disciplined, risk averse investment strategy without leverage, derivatives or short selling. With that combination of business experience and investment expertise we anticipated that we could have earned excellent long term returns on Goshawk's capital, which was the only way in which we would have financially benefited from our plan for Goshawk. In view of all of this, we were disappointed when Mr. Spencer told us that the Board did not support it. Conclusion Shareholders will have their own views on the performance of Goshawk and its management and on the proposals we put to the board. If you share our view that the compensation policies and practices are not justified in the interests of shareholders you should make your views known to the board and take such action at the forthcoming AGM, in relation to the Remuneration Report and those directors who are responsible for it, as you see fit. If, like us, you consider that the present position is unacceptable and if, like us, you consider that there are alternatives which would achieve better returns for shareholders, we would urge you to make your views known to the board. We believe that Goshawk shareholders are being poorly treated by its management. We feel that now is the time for shareholders to stand up and be counted. It is our company, after all. Sir Peter Thompson Gary Channon |
Posted at 14/2/2005 20:30 by theberg Smallchange,Interims indeed showed GOS had turned the corner as I predicted in September 2003:- RNS Number:1987D Goshawk Insurance Holdings PLC 22 September 2004 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2004 FINANCIAL AND OPERATIONAL SUMMARY * Group profit after tax of $10.0 million(1) (2003: loss of $50.9 million) representing earnings per share of 5.8 cents (2003: loss per share of 29.1 cents). * Net assets per share increased to $1.07 (59p) from $1.03 (57p) at year end 2003 * Rosemont Re operating profit of $8.0 million (2003: $23.5 million) * Successful restructuring of the reinsurance portfolio to focus predominantly on short tail property and marine business * Full complement of Bermuda underwriting and analytical teams in place * Asset allocation consolidated and new investment managers appointed Russell Brooke, Chief Executive commented: "I am pleased to report that GoshawK returned to profitability during the first half of 2004 despite this being a transitional period for the Group. We have now laid a solid foundation for the company with the objective of being a leading property and marine reinsurer. We are continually enhancing our capabilities and believe that our strategy, team and technology position us well to take advantage of the improving rating environment in 2005." 22nd September 2004 For further information, please contact: GoshawK Insurance Holdings plc Paul Spencer Chairman 020 7661 9374 Russell Brooke Chief Executive 001 441 295 5485 Jonathan Beck Finance Director 001 441 295 5485 College Hill Associates Tony Friend 020 7457 2020 CHIEF EXECUTIVE'S STATEMENT GoshawK posted a profit and increased its tangible net asset value per share for the six months ended 30 June 2004. In addition, further progress was made in the stabilisation of the Group and the continued development of Rosemont Re, the Group's Bermuda-based reinsurance operation. Underwriting in the first half of 2004 was focused on property and marine catastrophe reinsurance. Premium rates in these markets have shown some softening. However, in our target lines of business, margins are still at a point where they exceed our internal return on capital hurdles. Risk selection continues to be a key performance driver and business that was either under-priced or not within core competency was declined. Loss activity in the first half was relatively light, although several named storms have made landfall in the US and Japan during the second half. The U.S. losses in particular will create some exciting opportunities for our reinsurance operation. Financial Results and Dividend GoshawK posted a profit after tax of $10.0 million (5.8 cents per share) for the six months ended 30 June 2004 compared to a loss after tax of $50.9 million (loss of 29.1 cents per share) for the six months ended 30 June 2003. Net Tangible Asset value was 107 cents per share compared to 103 cents per share at 31 December 2003 and 127 cents per share at 30 June 2003. No interim dividend is proposed. The financial results are presented in United States dollars for the first time in order to better reflect the operating currency of the Group. A pro forma outline of the result in sterling is set out in the table below: U.S. dollars Sterling Profit after tax $10.0 million #3.6 million(2) Earnings per share 5.8 cents 2.1 pence Net Tangible Asset Value $184.8 million #102.2 million Net Tangible Asset Value per share 107 cents 59 pence A non-recurring income adjustment of $4.7 million (2.7 cents per share) increased the profit for the period. The adjustment related to historical consolidation entries relating to provisions that are no longer required. The accounts for the prior year were not restated as the decision to write back the provisions was made in the current period. The financial results do not consolidate the results of GoshawK Dedicated (No.2) Limited for reasons outlined in previous public statements that continue to be applicable. Rosemont Re in Bermuda Rosemont Re posted a profit of $8 million (2003: $23 million) for the reporting period. This is reduced by central overheads, net of commission income, resulting in the Group profit on continuing operations of $3 million. The lower profit results from three major components: evolving business mix, lower investment returns and higher expenses. Premium volume is lower than last year due to the major restructuring of the reinsurance portfolio and to the reducing impact of the SCPIE portfolio. The restructuring involved the non-renewal of approximately $60 million of premium written in 2003 and the successful binding of an entirely new portfolio of predominantly property and marine catastrophe business. The bulk of the non-renewed business emanated from Syndicate 102 and medium tail business written in 2002 and 2003. The non-renewed business is, in total, currently producing satisfactory results thanks largely to the hard market conditions that existed when it was written. During the first half Rosemont Re has built a sound book of property and marine business, focusing on industrialised territories where data is of a higher standard and margins more attractive. Management is convinced that Rosemont Re's focused strategy will enhance shareholder returns in the medium term. The combined ratio for Rosemont Re was 90% (2003: 87%) reflecting the remaining influence of the result of the SCPIE portfolio on the overall result. The SCPIE portfolio is expected to run at a 93% ultimate combined ratio. As expected, investment returns for the year to date were lower due to a change in the risk profile of the investment portfolio from alternatives (hedge funds) to short duration U.S. fixed income securities. The reallocation was carried out in order to preserve capital and minimise credit, interest rate and currency risk. During the course of 2004 Rosemont Re has invested in staff and technology resources. As a result, expenses were higher than the prior period. This expenditure has enhanced all of the major trading capabilities of the company and will allow us to build on the opportunities that lie ahead. Loss activity The first half of the year saw little loss activity, but since then there has been a marked frequency of medium sized catastrophe events impacting our industry. Hurricanes Charley, Frances and Ivan have already caused significant damage in the U.S. and the Caribbean. Japan has also been impacted by four typhoons so far this year, the more serious ones being Chaba and Songda. Rosemont Re has used a combination of event-based modelling software and client feedback to predict losses from these events. Both Florida and Japan are core markets for Rosemont Re and current estimates are that all known events could produce net losses in a range of $13 million to $22 million. It should be noted that this estimate is subject to change as damage is assessed and loss advices are received over the next several weeks. Even an outcome at the top end of this range should not lead to a deterioration in the Group's net assets. During the first half, loss advices were received on a U.S. bail bond contract that originally formed part of the SCPIE retrocession contract written by Rosemont Re. Rosemont Re has investigated these claims and has engaged legal representation. Based on the findings of these investigations and an independent audit, management believes that a strong case exists for contesting the claims. While there is uncertainty as to the ultimate outcome, it should be noted, however, that there are a number of other components of the SCPIE portfolio that are performing better than expected. Funds at Lloyd's In August 2004, Lloyd's made a cash call and subsequently drew down GoshawK's entire Funds at Lloyd's ("FAL"). GoshawK had fully provided for the amount that had recourse to the Group on the balance sheet at 31 December 2003 and therefore, while the cash call reduces assets and liabilities, it has no impact on shareholders' equity. As a result, a #15 million letter of credit provided as FAL becomes an interest-bearing loan, repayable in 2008 and 2009, further to an agreement with GoshawK's lenders made in December 2003. GoshawK is pleased to confirm that it has received written confirmation from Lloyd's that the cash call described above represents the full and final settlement of all obligations under its covenant and charge. Investment Income The net investment return for the first half of 2004 was $5.7 million (2003: $15.3 million). As previously announced, the main reason for this variance was the lowering of the risk profile of the investment portfolio by the sales of alternative investments and reduction in non-dollar positions. Both of these factors were responsible for the outperformance of the portfolio in the prior year; however the board felt such performance was unsustainable over the long term and made the decision to realise the profits generated. The proceeds were reinvested in a strategy focused on capital preservation. We had previously announced the consolidation of the asset management function with two managers: Wellington Management in Boston and BlackRock in New York. At the period end, over $330 million of the Group's funds were managed by the two companies. During the period, the majority of the asset portfolio was invested in short duration US fixed income securities and cash or cash equivalents. In particular, the FAL was held entirely in cash. At the period end, the only allocation to alternatives was approximately $19 million invested in the GHK First Equity fund, an absolute return fund which invests in UK equities. Subsequent to the period end, the board authorised an allocation of $30 million of solvency funds to a hedge fund of funds operated by Wellington Management. The fund represents a prudent net allocation to the equity market and is not typical of most fund of funds products in that all the underlying funds are operated by Wellington Management and there is no layering of fees. Asset Management GoshawK's investment management business, GHK Asset Management Ltd. has transferred the management of GHK First Equity Limited to Mirabaud Asset Management Limited. The employees of GHK Asset Management Ltd have either transferred to Mirabaud or have left GoshawK. The Board is currently considering the future of GHK Asset Management Ltd in conjunction with its regulators and advisors. Non-Strategic Group Operations Management is continuing to make progress in reducing the number of companies in the Group. Negotiations are ongoing to transfer or sell non-core or dormant companies, including corporate capital vehicles and service companies for Syndicate 102. Should these be successful it could lead to an increase in net assets of the Group; a further update will be given when appropriate. In this regard, the Group will incur transaction costs as previously announced. The reduction of central overhead in London has been completed. The office at Baltic Exchange has been vacated and the registered office is now 33 St James's Square, London SW1Y 4JS. Our Chairman, Company Secretary and an assistant have been relocated to the new office. The finance function has been transferred to Bermuda. Board and Management GoshawK has hired Stephen Velotti as Senior U.S. Property Underwriter for Rosemont Re. Steve was previously at Converium in the U.S. and has an excellent track record and long standing relationships in the U.S. market. Steve will lead our growth strategy in the U.S. and his hire represents the completion of the underwriting team in Bermuda. Outlook The remainder of 2004 will be focused on assessing the impact of the recent catastrophe activity and setting the groundwork for the 2005 renewal season. We expect that 2005 premium rates will be positively impacted by the catastrophe activity and this puts us in an extremely competitive position for the 2005 renewals. The team at GoshawK/Rosemont Re has achieved a tremendous amount in the last nine months. We had to reassess the foundations of our business with the objective of being a leading property and marine reinsurer. The team and technology is in place, the portfolio repositioned and the rebranding successfully launched. We are fully resourced to develop and grow our portfolio in 2005, especially in the US. Russell Brooke Chief Executive 22 September 2004 |
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