Highway Insurance Share Discussion Threads

[leadersoffice] 09/3/2007 07:10

Dividend has not been cut. 3.9p per share due 16th May 07

Very happy about that, a few people were suggesting the axe was going to swing and cut the divi.

[dumpling] 08/3/2007 13:34

I've some ITW as part of my ethical portfolio (ha!ha!). I looked at the iii website this morning - some nervous investors there as well. Hope for the best and fear the worst.

[taylor20] 08/3/2007 08:56

Off topic, I've picked up a few ITW this AM, they have a policy of returning 80% of cash generated back to shareholders (so cover is not great, and its AIM listed), but does mean this years yield is likely to be over 8%. (Interim yield is 3.3%)

[nigelwestm] 08/3/2007 08:09

Hi EC, taylor20. I take on board the point about claim inflation, but I thought that the motor market was going to prove relatively benign given that the winter had been mild.

Anyway, for the moment, this is all about the dividend. If the divi is maintained, and Highway's management indicate they will maintain it going forward I think the share price will stay up and may even improve from here.

If it gets cut, then I'm set to lose quite a bit of dosh.

We'll see tomorrow!

[effortless cool] 08/3/2007 06:40

taylor20 - no argument there, I'm still well down, unlike the longs.

[taylor20] 07/3/2007 22:51

Have to admit, I've no position at present, and agree with EC, the upturn in rates is proving slower than I expected. If they hadn't just realised a big chunk of cash I'd have said a dividend cut was guaranteed, but even so it's still going to be close.

Good luck holders, (probably a better entry point for that short now EC ;) )

[effortless cool] 07/3/2007 22:20

NigelWestM

"This company had a modest target for the appreciation of its investments. Despite recent falls, this should have been more than achieved by the year-end".

On the contrary, to my mind HWY sets very agressive target returns on its investments for an insurer. You don't achieve 2% over cash without significant volatility risk over the short term. I beleive they took a hit from Amaranth and will fail to achieve their target for 2006.

"Meanwhile, with some of its motor insurance competitors raising premiums you would have thought things in that part of the business would have been going better".

Premiums in some parts of the motor market are creeping up, but not at a pace to match claim inflation, which is running at about 5% per annum. Other parts of the market are flat or still weakening. Overall, I'd guess that HWY's claims ratio is deteriorating at about 4% per annum in the current rating environment.

This company is teetering right on the brink between profit and loss, and can't afford any slip ups.

[nigelwestm] 07/3/2007 17:07

Well, I suppose we'll see on Friday.

[dumpling] 07/3/2007 16:52

Old Investors' Chronicle article


15 September 2006

HIGHWAY INSURANCE (HWY)




Last year's hurricanes may have been good news for rates on catastrophe-related business lines, but it's a different matter for motor insurers such as Highway. In fact, with its half-year figures, the company said the market was "highly competitive", and admitted that premiums have come under pressure as underwriters have focused on grabbing market share at the expense of rates. Even so, management says it has been able to push through some rate increases in recent months.

Overall, Highway did remain profitable at the underwriting level, but the combined ratio (of claims to premiums) deteriorated, falling nearly two percentage points over the year to 98.1 per cent. Management says that cost inflation on claims is a big problem, and that inflation on injury awards is particularly concerning - they're rising at between 5 per cent and 10 per cent a year. In addition, investment income fell, helped by the impact of a weak bond market. Still, Highway does expect to at least maintain the full-year dividend at 5.3p.

House broker Numis Securities expects to reduce its existing full-year operating profit forecast of £19.7m by 10-15 per cent.



--------------------------------------------------------------------------------
Ord price: 71p Market value: £145m
Touch: 71-72p 12-month High: 95p Low: 46p
Dividend yield: 7.5% PE ratio: 9
Net asset value: 42p Combined ratio: 98.1%




--------------------------------------------------------------------------------
Half-year Net Pre-tax Investment Dividend per
to 30 Jun premiums (£m) profit (£m) Income (£m) share (p)

--------------------------------------------------------------------------------

2005 119 11.3 11.2 1.6
2006 111 7.5 10.9 1.6
% change -7 -34 -3 -

--------------------------------------------------------------------------------

Last IC view: Fairly priced, 74p, 25 Aug 2006
Ex-div: 13 Sep
Payment: 12 Oct



Former chief executive Andrew Gibson is to take the helm again at Highway. But, with a far from ideal rating environment, he may face a difficult task. The prospective 7.5 per cent yield is attractive to income investors and offers support but, trading on 1.7 times net assets, the shares aren't cheap. Fairly priced.

[nigelwestm] 07/3/2007 16:43

I don't get it though. This company had a modest target for the appreciation of its investments. Despite recent falls, this should have been more than achieved by the year-end. Meanwhile, with some of its motor insurance competitors raising premiums you would have thought things in that part of the business would have been going better.

It could be one gigantic tree-shake by the market makers ahead of Friday's results, trying to hoover up shares by frightening the new arrivals earlier this week. At least that's what I am hoping.

But if things are so bad that they cut the dividend, then we're screwed!

[dumpling] 07/3/2007 16:29

The phrases "challenging environment" "disappointing performance in one of the divisions" come to mind. It is strange that the price rose sharply a few weeks ago before the fall. Someone knows something we don't know (yet). Art least BRE have recovered a bit.

[nigelwestm] 07/3/2007 10:00

Well, the share price performance is now not looking too good. I hope that doesn't bode a negative results statement. In the past, the generous dividend has not been enough to support the share price when bad news has come along.

[dumpling] 06/3/2007 16:50

I got in later than you Nige. I paid 67P for my first lot. Fingers Xed.

[nigelwestm] 06/3/2007 16:23

Well, at least we get a healthy dividend I suppose. Can't complain too much. These have almost doubled in value since I first bought some...

[dumpling] 06/3/2007 16:16

I also hold BRE which disappointed the market today. Will HWY disappoint as well?

[nigelwestm] 06/3/2007 15:53

Spoke to soon... Now back below 80p. How disappointing...

[nigelwestm] 06/3/2007 09:20

Edging up a bit ahead of the results. A good sign...

[timben] 06/3/2007 08:57

Watched this for a while now, anybody know anything about this stock?

[gorse] 02/3/2007 12:00

This is still my largest holding despite having offloaded some when it was 85p recently. My holdings were acquired between Feb 05 and Sep 06.

[tr1] 02/3/2007 11:39

Results are on 9th March, ex divi 21st March.

[jpalmer25] 02/3/2007 11:21

> NigelWestM - 2 Mar'07 - 10:42 - 746

:-)

[nigelwestm] 02/3/2007 10:42

Hi Dumpling. The scarcity of posts on this once active board suggests that perhaps all the previous posters have sold out.

Do you know when the results are due? Last year, they were on 8 March.

[dumpling] 28/2/2007 17:11

I've topped up with another 2000.

[nigelwestm] 27/2/2007 15:30

Well, I've topped up. There'll be a dividend declaration when the results come out next month and my understanding is that the final dividend is expected to be at least 3.7p per share. At least, that's what the management were indicating when the interims came out in September...

[johnsoho] 27/2/2007 15:25

I think its just the market in general....thats currently down about 140 odd points or 2.4%, so nothing to do with Highway specifically as far as I am aware. Patience is required here I think.....and in any event following every market fall there is a market recovery and I don't think there is any reason for thinking this fall will be any different!!!!!