Hardy Underwriting Share Discussion Threads

[simon gordon] 24/1/2012 13:10

Alphaville, Markets Live:

From the usually reliable Insurance Insider

"Montpelier and Mitsui approach Hardy

Bermudian cat specialist Montpelier Re and Japanese big three member Mitsui Sumitomo are among the 15 companies that have expressed interest in acquiring Hardy Underwriting, The Insurance Insider can reveal.

Last week the deadline set by bankers Rothschild and Peel Hunt for expressions of interest in the loss-struck Lloyd's (re)insurer passed after a flurry of interest."

[goldibucks] 21/12/2011 17:16

If BEZ offer the same poor premium to net tangible assets they offered for HDU last time, I suspect ARIG and other institutions will reject it again. Peel Hunt forecast net tangible assets of 232p at 31 Dec on 22 Nov so that less any downward adjustment required plus the 70p premium they offered last time is my starting point.

[topvest] 21/12/2011 14:22

Well I hope Beazley win if Hardy does lose its independence - that way as a shareholder of both we don't get caught at the bottom of the cycle. Hardy Underwriting is generally a good business, but has had a really bad year. With the benefit of hindsight they should have taken the offer on the table.

[a0148009] 21/12/2011 08:12

What a surprise!

[a0148009] 02/12/2011 16:50

Agree - at present they cannot quantify the catastrophe losses - certainly will take a big bite out of the NAV.
Would love to have been a fly on the wall at the last board meeting laying the blame for not accepting BEZ offer and buying in shares at 270p.

AO

[chillwill] 02/12/2011 13:13

They've pretty much stuck a for sale sign on the business it appears.

Usually that'd be good, maybe get some bids on the go, but after a host of catastrophe losses it smells a bit like desperation.

[1nf3rn0] 01/12/2011 16:56

The market doesn't think too highly of the strategy then going off today's trading.

[a0148009] 01/12/2011 12:02

Analysis

Shares in issue: 51.1m Ordinary Shares in Issue, as at Last Close.
Major Shareholder InformationShareholder Name (* - Executive/Director) Amount % Holding
Arab Insurance Group (B.S.C) 3,613,495 7.07
Majedie Investment Management 3,475,554 6.80
Baillie Gifford 3,086,252 6.04
Hermes Pensions Management Limited 2,291,263 4.48
Henderson Global Investors Ltd 2,230,809 4.36
JP Morgan Asset Management 2,146,081 4.20
Carlsson Capital 1,843,787 3.61
Hardy Underwriting Bermuda EBT 1,707,503 3.34
Aviva Investors 1,548,950 3.03
Director ShareholdingsDirector Name Amount % Holding
David Preston Mann 1,277,500 2.50
Barbara Jane Merry 562,493 1.10
Patrick James Gage 172,426 0.34
Jamie David MacDiarmid 112,018 0.22
William Paul Bailie 41,479 0.08
Allan Harry Dunkle 22,000 0.04
Anthony Taylor 17,000 0.03
Julian Michael Cusack 3,800 0.01

Obviously concerned with the catastrophe losses although the rest of the book
is very good. Looks to me that they were too aggresive to grow the business and picked the wrong lines.
They are important lead underwriters in their traditional business.
350p is out of the question but somewhere between 250 and 280 is possible, whether they will swallow their pride to become part of a larger group is anyones guess. I think they got a little too arrogant relying on their excellent long underwriting record and took larger lines on catastrophe than they would normally have done.
I am sure there is serious acquisition interest in them and a prospective buyer would probably not find a better opportunity.
edit NAV 30th June 2011 223p

AO

[1nf3rn0] 01/12/2011 08:02

Ha. Now they consider offers, after the share price has been decimated. I bet they are praying BEZ will offer the same price they offered last year... probably not though.

[inntolife] 01/12/2011 08:01

Well there you go, it is nice to call one correctly for a change. It all bepends on who wants it and how much they are prepared to pay. Not too sure that it will go up from here to much, good luck to all of you that are in this.
PSD

[inntolife] 30/11/2011 13:57

Even the dead cat didn't bounce that high.....so it must be really dead...
Woe Woe and thrice woe....no one wants these,so please be careful that is until the rumours about a bid start doing the rounds again...only for the very brave or those in the know....IMHO DYOR.

[inntolife] 18/11/2011 09:35

Bid £1.88 offer £2.00 That's 6 % lets you know where this is going if a seller steps in...The MM don't want any sellers....beware the dead cat....IMO

[goldibucks] 17/11/2011 21:03

The Hardy Board made the right decision at the time in turning down the Beazley offer. It was a pitiful premium to net tangible assets adjusted for overprovisioning so it only offered shareholders a change of management and money in the bank plus a year of profit for the business. They didn't know there was going to be an earthquake in Japan and a near collapse of the Euro at the time they rejected the offer. I didn't hold then but if Beazley made another offer at a similar premium to tangible net assets, I would vote no. Peel Hunt estimate net tangible assets per share of 232p post the Q3 update and they are not particularly bullish so I will be buying more every month at this price. Although the share price has fallen from 300p to 190p, net tangible assets are only forecast to fall 14% from 270p to 232p and that is after a very long run of strong growth. Against that backdrop, Hardy have delivered an 8.5% increase in premiums this year to date and been able to attract external capital to carry on growing premiums in spite of internal capital constraints after an unprecedented run of catastrophe losses. Hardy still has the ability to generate excellent returns for shareholders on a pot of money per share significantly higher than the current share price and those returns are not as affected by economic woes as companies in other sectors or subject to UK corporation tax. The references to historical share prices are interesting because if you compare Hardy on fundamentals across those periods like net premiums written and net tangible assets per share you will see that Hardy is superb value sub 200p. Last time I checked, earthquakes led to higher premiums, not more earthquakes, so although I am annoyed by the Board's inability to pin down historical catastrophe losses, I will continue to add to my holding at every opportunity. I think Hardy will recover to 300p within 12 months.

[1nf3rn0] 17/11/2011 09:27

What on earth were management here thinking rejecting the BEZ offer! Glad I hold BEZ, they're looking in a very strong position now relative to HDU.

[inntolife] 17/11/2011 08:57

I agree very difficult to make the decision, but I have decided to keep away from this one. When compared to BEZ profit margin 14.75% BEZ, 4.96% HDU....Net income of Revenues 10.98% BEZ, 1.34% HDU...ROCE 4.34% BEZ, 1.75% HDU...
The last time the share price got around these levels was August 2006 £1.96 before that was September 2005 £1.92 and before that was 2003..

"My havern't the board done wonders"

The board should of taken the money and run IMO

As I said at the start I don't know or feel just how low this is going to go before it attracts another bid and I'm not prepared to put my money in it, but I will enjoy watching and hopfully learning a bit about how these sorts of things pan out.

BTW is Billinsgate still going?

[goldibucks] 31/8/2011 22:42

Not sure what would possess an investor to sell 234p of net tangible assets for under 200p when there is potential for the 234p to recover to 250p-270p in the next 4 months but you never know. As an existing investor I am buying more at the current price, not selling. Underwriting isn't a momentum business, a bad period for claims will eventually lead to a bumper year, not more bad years like in many other businesses. I would rather be exposed to natural disaster statistics than the wider economy at the moment, Hardy was making an average of 15% ROCE until 2010, which is now tax free in Bermuda. When the incident of natural disaster reverts back to some kind of long term average, it will do very well.

[inntolife] 30/8/2011 14:09

Well there you go nearly half way through the season for the USA Eastern seaboard. Which runs from June 1st to 30th Nov....I learn somthing new every day.

Still think this has futher to drop. Personally I'm going to pile into it If and I mean If it drops below £2 per share.

[chillwill] 27/8/2011 10:16

De-rampers!!!! Haha, just kidding.

The insurance sector as a whole just seems to keep getting struck by these events. On the plus side premiums should move up, but then again it may not translate to profit if they keep having to pay out on them.

The best bet would be to buy after the high rate of natural disasters stop/slow down...... anyone who thinks they know when that'll be deserves to be wearing a straight jacket in a padded room though.

[inntolife] 25/8/2011 12:33

If I was going to make a hostile bid I'd wait for Irene and also wait untill half way through the hurricane season, because I can see this dropping and dropping. Sorry to be a doomsayer to all holders of this but that just my take on it.

[effortless cool] 25/8/2011 10:55

Most potential bidders now capital constrained in an improving market - why bother, better to concentrate on own businesses.

No one's going to do anything, in any case, until they see what happens with Irene.

[inntolife] 25/8/2011 10:25

A0148009, Looks like their legs should be wide open in the next month or so?

[inntolife] 28/7/2011 10:45

Bouncing back nicely, well not the first time that I have been wrong. I will still keep watching this, over the next month or so.
PSD