Just Share Discussion Threads

[eumaeus] 07/9/2018 10:30

Quick disclaimer: I used to work for the PRA, now I am retired. PRA are not changing the rules. They have decided that the put option embedded in the NNEG guarantee has been incorrectly valued, and that it would have been just as incorrectly valued under the old ICAS rules. *This is clearly explained in CP 13/18*, if you are a shareholder you should read this carefully and understand it. Nor is the issue to do with the risk of house price falls. The PRA are saying that the option is incorrectly valued even as things stand. You might want to challenge the PRA on the length of time it has taken to settle this, but that is a different matter.

[topvest] 07/9/2018 10:05

It would be nice now to see directors BUYING some shares to back up their confidence. Suspect they won't be doing that but loading up if there is a rights issue.

This really is not how regulation is supposed to work! I hope the PRA are ashamed of themselves as you cannot retrospectively change the rules without ruining investor confidence. Their consultation paper has had the effect of increasing prices and killing the market and they are still going to take months to reach a conclusion.

Investors hate uncertainty - who knows where the share price will be by the end of the year. If they have to do a fundraise it will be at well below 50p as there is no chance of doing any fundraise until the results of the consultation are finalised. Net result, we have been shafted by the PRAs shambolic "goal post moving". Potential lifetime mortgage customers can also now forget getting a good deal.

[boystown] 07/9/2018 09:39

Just been having another look at this with a view to buying more.

Can anyone explain to me how to accurately value 'Reinsurance assets' on the b/s?

[bolador] 07/9/2018 09:26

3 and a bit X OP EPS

[techno20] 07/9/2018 09:18

Have done exactly the same this morning. Perhaps naively, I don’t believe that the PRA will take action that fundamentally disrupts a market that is critical to the governments future finances.

[scrapheap] 07/9/2018 09:11

I've topped up to lower my average price - it's a flip of a coin, either we trade a lot higher or lower and likely so in a matter of months... with the possibility of an opportunistic bid from a rival at who knows what price always out there.

[nav_mike] 07/9/2018 08:53

I do work for an family firm FCA regulated insurance broker, and the amount of regulation they face is mind-numbing...to the point where they had to employ a full time compliance officer as well as an outside consultant

Im an accountant so have spent my whole life dealing with HMRC and their paperwork, but the FCA stuff is on a whole new level

[edwardt] 07/9/2018 08:47

the worst phrase ever ' i am from the regulator and i am here to help!

[nav_mike] 07/9/2018 08:45

FFS - with the sort of house price drops they are building into their modelling, the whole financial system in the UK would be in more trouble than they would be

Having messed things up so royally before the last crash, the regulators are turning into zealots who may just help cause the very thing they are supposed to be protecting everyone from

[edwardt] 07/9/2018 08:39

basically saying just have had it tough with the pra. it said they have a great business that is needed by th elderly but there is a risk they get taken out by regulation..

[nav_mike] 07/9/2018 08:35

Someone is selling agressively this morning - couldnt read that lex article - was it negative?

[scrapheap] 07/9/2018 00:46

Piece in lex in ft but can't read it as premium... Fyi

[topvest] 06/9/2018 21:44

They are very impressive on the analyst session. I think a sensible solution has to be found. They are already covered for a 28% house price fall and no house price inflation for 10 years afterwards. That is a lot more prudent than the banks. They are now absolutely wide open to a bid from Legal & General or Aviva in my view. It would be very easy to pick them up for tangible net asset value before Christmas or about a £1 below the EEV valuation. That would be a shame, because I think they are a very well managed group. I'm not brave enough to buy any more at the moment, but I'm certainly not selling.

[bolador] 06/9/2018 17:09

According to Numis the shares trade on about 4X OP EPS.
This company will not stay independent for long..that is my guess

[robsy2] 06/9/2018 14:11

Having listened to the presentation, I am encouraged.
JUST in the business of "helping people achive a better later life."
I think HMG etc will all want them to be able to do this.
As alluded to here, I can see how the reg authorities will, in the end, be able to get a set of rules that ensure thay can continue in their good work because if not?
They operate in a growth sector where there is a lot of opportunity , big barriers to entry etc.
The back book is ok. David R states that they have suffered 13 shortfalls in the last 10 years involving 250k GBP of capital , this needs to be seen against 9500 redemptions involving 765 Million GBP.
for the next 10 years they talk of 18 shortfalls worth 1 million GBP and 2.5 billion of redemptions....
I don't know what actuarial assumptions they use to calculate these figures....
They claim to have many options when it comes to increasing their capital and say that a rights is one of them but that this would be "the most costly" so only " if necessary".
New business is good,they are being more selctive still and say they have a good pipeline of new business opportunities , what they will get in greater margin they may lose on lower volumes, so that they see a " net - net" trade -off and are "comfortable with 2nd half expectations".BTW-No idea what they are.
They say they have flexibility to act dynamically to the funding shortfall and the evolving risk situation regarding interest rates , HPI etc etc . Seems plausable to me , this is what insurance companies do after all.
JUST is alean machine with around 1000 employees at EBIT of 220m that¡s profit per employee of nearly 200k GBP. Not bad.
I will be adding.
Best
R2

[18bt] 06/9/2018 10:48

In conclusion on capital, it sounds to me as though the major pushback will be on the timescales for introducing the change - Just don't think there will be any risk to policyholders if it was introduced over 10 years not 3. The existing transitionals (TMTP) are being phased out over 13. Even if they went for, say, 7 years, that would make a massive difference to the amount of new capital needed.

[18bt] 06/9/2018 10:17

Claim "mid teen" IRR on capital deployed on new business in H1 - given that margins are increasing, new business still looks v attractive for shareholders. Other industries would like this return, even financial investors would.

[bolador] 06/9/2018 10:14

18 BT

Could you please enlarge on your post 341 ?

Right now this looks to me as if the market is offering pound coins for fifty p.I know that this is not often the case (for sure) but JUST right now at 88p looks to be misspriced.

[18bt] 06/9/2018 10:01

Important points from David Richardson that the different type of ERMs (e.g.drawdown, interest served and lump sum)all have different cashflow profiles and LTVs. And that expected NNEG claims are 19 in the next 10 years costing £1m. That puts the timescales in perspective.

[18bt] 06/9/2018 09:52

Simon Thomas confirms that they are happy with market forecasts albeit that they will increase margins in 2nd half at expense of volumes

[18bt] 06/9/2018 09:42

RC says that capital proposals go well beyond the extreme tests applied to the banking sector.
Good performance from RC so far.

[18bt] 06/9/2018 09:39

3 messages from RC: 1) Writing new business on new assumptions and still doing it at attractive margins, therefore 2) it is a backbook issue 3) planning for a wide range of possible outcomes so the Board will be in a position to make best position. They are in active dialogue with the PRA over a number of aspects. Intending to put forward constructive challenge and some alternative solutions. "Lifetiem mortgages represent a very good asset to match liabilities".

[18bt] 06/9/2018 09:34

Listening to the analysts web-cast: RC says they will cover off the capital position "never fear"!

[edwardt] 06/9/2018 09:28

come on chaps -operating profit up 85%, 13% ahead of consensus, a ebit margin of 10.2%, versus 8.9% last year. got to be scope for more debt with t2 bonds to fend off regulatory meddling. if my house falls 1.7% a year for 20 years i have bigger problems and in that instance, owning lloyds et al is borderline crazy.

holding divi back is sensible and is definitely a game of cat and mouse with the regulator.