Lancashire Share Discussion Threads

[effortless cool] 18/12/2014 14:37

Hooley,

I am a professional and am currently in the market. I think you would struggle to find anyone with any credibility who is anticipating a turn. The massive Aviation War losses we have had in the last 12 months could not even turn that small sector of the market. Underwriting is still profitable (just not profitable enough), so I believe that the only thing that will turn the market in the short to medium term is a mega-catastrophe.

Do I think that XL have got it wrong - yes! Hence I have bought Catlin and, if the deal completes, will short XL.

[hooley] 18/12/2014 14:10

So you wait for concrete evidence of the turn and don't anticipate that event? XL has got it wrong? What's good for Catlin is good for others. As a professional who was in the market for over 30 years we would look forward rather than back. Check back in 6 months and see who was right.

[salpara111] 18/12/2014 14:10

I am long and in profit so not unhappy!

[effortless cool] 18/12/2014 11:27

"Given the cash generating nature of the business I would be concerned that a private equity firm would swoop in and take them private at 750p".

Surely it would be more attractive for them to get in on Brindle's new venture at 1xNTA (or better).

"We are at the bottom of the cycle ..."

Based on what? Rates are still falling and most market participants expect that to continue next year.

"... so now would be the perfect time to take out this type of business".

Not at 750p, it wouldn't be.

[salpara111] 18/12/2014 11:20

Given the cash generating nature of the business I would be concerned that a private equity firm would swoop in and take them private at 750p.
We are at the bottom of the cycle so now would be the perfect time to take out this type of business.

[hooley] 17/12/2014 15:34

Based on Catlin's take-out p/e of 9.5, LRE should rise to 725p. Naive I know, but it has been over 900p. This is the time in the cycle to buy these sorts of business so XL reckons. Sit back and enjoy, unless you're short.

[effortless cool] 17/12/2014 14:30

I have closed my short for the time being.

Hopefully a bout of takeover fever will give me a better entry point.

[nw99] 17/12/2014 14:15

Bought a few with Catlin taken out

[hooley] 15/12/2014 09:25

With the share price near a 5 year low and the prospect of another special in February - based on continuing overcapacity in the u/w market - it's time to buy a few more.

[hooley] 15/12/2014 09:25

With the share price near a 5 year low and the prospect of another special in February - based on continuing overcapacity in the u/w market - it's time to buy a few more.

[salpara111] 05/12/2014 17:03

Happy to have bought back at 520.
I just look at cash flow and divi.
I see no reason why it cannot run back to £6 as that would imply a yield of 10% for next year.

[hooley] 05/12/2014 16:17

Is that the smell of burnt fur? There's nothing more gratifying to a bull than a bear squeeze which promises to tighten further..

[irnbru2] 05/12/2014 15:44

That Gavlan tip did it...lol.

[oniabsta] 05/12/2014 11:08

nrholland
“Tipped by Galvan Research as one of their stocks for 2015 ...”
Tried to register (twice)without success
Any chance of posting the jist of it?

[jonwig] 05/12/2014 07:25

mayzerg - life companies are different beasts, not at all comparable.

[mayzerg] 04/12/2014 18:07

Jonwig, worth adding Legal & General to the list? ;)

[nw99] 04/12/2014 14:44

Good spot thank you just doubled investment here

[nrholland] 04/12/2014 13:33

Tipped by Galvan Research as one of their stocks for 2015 ...

[woodcutter] 04/12/2014 12:04

In any market where we begin to witness competitive pricing resulting in reduced margins there's only a few ways to increase your margins and scale becomes even more important.

One of those options is to reduce the competition and LRE are one of the smaller players and as i said before a few insti's have substantial investments across a number of the players, in LREs case both Invesco and Blackrock are big holders.

They also have large holdings in others within the sector.
Analysis of market cap and holders in both LRE and others within the sector.

Market cap
AML £2232m top holders Invesco, Blackrock
HSX £2250m top holders Invesco, MFS
BEZ £1418m top holders Invesco, MFS
CGL £2017m top holders Invesco, MFS, Blackrock
JLT £1917m top holders JMH, MFS
LRE £980m top holders Invesco, Woodford, Blackrock smaller holding
NVA £357m
BRIT £1004m

Blackrock also have a substantive holding in DLG and RSA

Woodford is pretty shrewd, may he have seen an opportunity?

food for thought?

WC

[hooley] 04/12/2014 09:15

Worst case scenario would be the decision to run-off the liabilities and repay the capital. Thank heavens it's short tail and that the assets are cash/near cash. The last head count of employees was under 200. I reckon the NAV on a wind-up would be well north of 400p a share. I don't for one minute expect them to shut up shop. With a good team, someone out there could well pay a premium to NAV.

[woodcutter] 04/12/2014 08:26

Odey and more recently JPM have initiated a short position.

hxxp://shorttracker.co.uk/company/BMG5361W1047/all

There's also a small short on Amlin but LRE is much larger. There may be others but the website only records those of significance. Sorry EC no offence intended:-))

With regard to Brindle i'm inclined to agree with Hooley, sector isn't going to roll over and permit him to just come in and poach underwiters, business etc. Another player in the sector driving premiums even lower i just can't see it happening. Why would you back such a venture at this time, what kind of return on your capital would you be expecting, it might take years to build a sizeable business so i'm taking that with a pinch of salt.

If we see woodford offloading then i'll certainly reconsider my position but at present i'm in for the long haul with patience.

Woody

[hooley] 03/12/2014 19:02

It has been suggested that there has been some shorting activity in the dark pool - Odey got mentioned as having over 3%. If so, they're ahead at the moment, though closing might be tricky. As the shares are at a discount to NAV I'd like a few more sometime soon.

[plasybryn] 03/12/2014 18:38

Tipped by Galvan today in their 2015 share tips I believe.

[ursus] 03/12/2014 18:23

Understood - thanks. I don't think results have been flattered by reserve releases, and presume that they continue to reserve as before. (In fact LRE had to re-reserve for Costa Concordia, I seem to recall). Suspect there is shorting momentum behind the LRE fall of late - including you!

[effortless cool] 03/12/2014 17:54

Maybe I'm being too pessimistic, or maybe you have been lulled into a false sense of security by two successive lucky years for catastrophes?

The sector is making money and I don't see any of these companies as duds, but the market is challenging and geting worse, and the reserve surplus well must be starting to run dry for some of them.