Highway Insurance Share Discussion Threads

[factsonly] 18/3/2005 15:21

azalea - like they said, its an all share offer, and it's unusual to see any increase in such cases. The best we can expect is another small bit of cash on the side.

[azalea] 18/3/2005 14:01

With 682k 'buys'(inc 300k x2 @ 43p) versus 195k 'sells' and 65k ?, the balance of opinion appears to think that the 44/54 is just an opening shot!

[richiericher] 18/3/2005 09:25

Not higher enough for me as a HWY holder, but due to holding both, will be quite pleased to see these two together with Cox sniffing agian in a year or so...

[evo8] 18/3/2005 08:50

The Boards of Chaucer and Highway are pleased to confirm that they are in advanced discussions about a possible recommended all share offer by Chaucer for Highway on the basis of 44 Chaucer ordinary shares for every 54 Highway ordinary shares. Under the terms currently proposed, shareholders in Highway would retain their rights to the final dividend proposed for the year ending 31 December 2004 but would not receive the Chaucer final dividend. The Boards of Chaucer and Highway believe that Highway's motor insurance business would complement Chaucer's existing motor division and the enlarged group's motor business should benefit from a more substantial position within the UK motor insurance market. In addition, the Board of Chaucer has identified significant operational efficiencies and cost saving synergies which are achievable in the medium term from combining the two motor entities. A further update to shareholders will follow upon the outcome of final negotiations and remaining due diligence which is expected to be concluded before the end of April 2005.

[evo8] 18/3/2005 08:42

I'm holding too. This has good potential even without a counterbid.

RELEASE 18 March 2005
CHAUCER HOLDINGS PLC

PRELIMINARY RESULTS FOR YEAR ENDED 31 DECEMBER 2004 Chaucer Holdings PLC, the specialist Lloyd's insurer, announces record profits for the year ended 31 December 2004. Financial highlights • Profit before tax increased by 6.7% to £38.2m (2003: £35.8m) despite exceptional catastrophe losses • Annual dividend increased by 37.5% to 2.75p (2003: 2.00p) • Undiluted earnings per share increased to 12.8p (2003: 11.1p) • Return on equity of 27.0% (2003: 26.5%) • Gross written premium income up 21.6% to £391.1m (2003: £321.6m) • Net earned premium income up 32.6% to £285.1m (2003: £215.0m) Operational highlights • Combined ratio of 88.6% (2003: 83.0%) despite exceptional catastrophe losses • Positive contribution to profits from all business divisions • Average premium rate achieved by Chaucer in 2004 exceeded that for 2003 Outlook • Net unearned premium reserve of £129.2m written at favourable rates • Chaucer's underwriting interest increased to £372.0m for 2005 (2004:£317.0m) • 2005 has started encouragingly with renewal rates ahead of budget • Continued focus on building a leading specialist insurance business Financial highlights Results 2004 2003 Increase £m £m Gross premiums written 391.1 321.6 21.6% Net premiums written 315.5 232.3 35.8% Net earned premiums 285.1 215.0 32.6% Profit before tax and minority interest 38.2 35.8 6.7% Profit on ordinary activities after tax and minority interest 37.1 26.7 39.0% Per share amounts Undiluted earnings 12.8p 11.1p 15.3% Tangible net assets 44.2p 37.9p 16.6% Dividend - final 2.00p 1.35p
- total 2.75p 2.00p 37.5%

[oniabsta] 18/3/2005 08:38

If my maths are correct i make it a premium on the mid share price of 2.95p.This of course includes the divi of 1.85p. A 6.94% premium to the mid price.
Looking longer term to the possible synergies and larger scale cost benefits on balance i'm going to hold and accept the offer.

Edit - just had an after thought, still going to hold but the above calcs do not include the loss of 2p per share to chu's share price by chu's divi

[thecleaner] 18/3/2005 08:01

It is amazing that the HWY price has been stuck at this level as if somehow glued down.

[ursus] 18/3/2005 07:56

you've got to admire numis, who really make the market in these two shares. how clever they are to have manoeuvred the two prices to the very levels that the offer comes in at! is this what being broker to chu involves??

[factsonly] 18/3/2005 07:54

Like I said it was 50-66p BEST CASE. This share offer doesn't really offer much except that the HWY shareholders will then own shares that are even more undervalued.

[azalea] 18/3/2005 07:52

ursus
If your first assumption is right, then we should see it echoed by the big stake holders, who shoud be looking for something more up front, as I am!

[ursus] 18/3/2005 07:48

once i get over my surprise about how prescient the market was in pricing chu and hwy, i look at the prospects. if chu can reduce hwy's expense ratio and make profits on their combined investment funds of the sort hwy has made (chu's investment perf is pretty miserable) then this combined business will be hugely more valuable than the market currently prices them at.

mind you, if it works the other way round, we're in trouble...

[thecleaner] 18/3/2005 07:34

Hopefully a better offer will come from elsewhere. I will be holding and waiting. CHU are undervalued as well so I don't mind too much if I am lumbered with their shares.

[thecleaner] 18/3/2005 07:33

Rubbish offer. There is no incentive for HWY holders to agree to it.

[azalea] 18/3/2005 07:29

Factsonly
You may well prove to be right except about the 50-66p offer.

As you will no doubt know this morning, HWY has announced the possibility of
Chaucer Ins making an all share offer 44 - 54 HWY. By my calcs this is no more than HWY current price. I wonder what the boys at J O Hambro with 19.01% are going to think about this; sounds too cheap to me, but then as a holder I would wouldn't I. Any thoughts?

[ursus] 18/3/2005 07:27

well well what a surprise. and how very clever the market is to have chu and hwy already priced at the offer differential. saves having to chalk up new prices, i suppose

[factsonly] 17/3/2005 21:36

You have to consider that the announcement of takeover talks was when the share price was around 32/33p, therefore best case would be 50-66p offer. The disappointing thing was that the PAT figures weren't as high as they were hyped up to be. The investment fund growth was pretty lame to be honest, look how much the market has grown over the past 12/15 months.
I'm a holder but I am still quite objective... management can do much better. The discussions have also taken much longer than normal without any indicative offer range which isn't usually a good sign.

[oniabsta] 17/3/2005 19:52

SP 42.5p eps 7.4p HISTORIC p/e = 5.74.
NAV 40.4p.
Yield 6.3% rising by a min of 5% per yr as stated by company.

This company is cheap ! what i can't understand is this includes a bid premium ??? Surely not!

[thecleaner] 17/3/2005 19:05

Can't see why this trades under a P/E of 10 myself. Any offer should be 80p plus to value this company fairly, although I am sure it would never reach that level.

[topinfo] 17/3/2005 14:37

Should get 55p easily with any formal offer, andmaybe more depending on number of bidders.

[azalea] 17/3/2005 14:05

'Buys' 522k, sells 102k.

[azalea] 17/3/2005 11:55

I'm in NOW, the institutions are and have been piling in at 42.5p.

[lbo] 17/3/2005 10:29

The December Analyst report from equity development spoke of fair value on a yield basis of 54p

[richiericher] 17/3/2005 09:43

ursus...

With Chaurcer in the running and their results out Friday - We just might hear something this week!

Holding both - so here's hoping!

[ursus] 17/3/2005 09:40

the real driver of value is the investment fund, and the reserving that is "adequate to the point of robust". will hwy shareholders get the benefit of this, or the offeror?

looks like we won't hear for a bit.