Lancashire Share Discussion Threads

[garycook] 19/1/2015 09:25

Just Sold my Amlin holdings and put the proceeds into LRE.Buyers out weighing sellers by 9-1.Hoping the forecoming results will be Ok with another small Special Dividend like last year

[hooley] 16/1/2015 13:33

Free cash flow is the key to special dividend payments. The business has been shrinking, hence the 75p recent special. If the trend is still downwards, there could well be another special with the final. It's happened before. Let's see what the prelims reveal on 6th february.

[speedsgh] 15/1/2015 19:53

New LRE article on the IC website today. A small teaser as it is subscription only...

"News late last month that New York-listed insurer XL Group (US:XL) had made an approach for Lloyd's underwriter Catling (CGL) has helped fuel speculation that wider sector consolidation could be on the cards. At present, insurance analysts mainly think that deal-doing in the UK is more likely to manifest itself through bolt-on acquisitions among the sector's smaller players and, crucially, mid-sized Lancashire (LRE) is being mooted as a potential target. Add that to the group's fairly modest share price rating, as well as its impressive dividend prospects, and snapping up Lancashire's shares now could prove lucrative..."

In the detail they do mention that XL's offer for CGL is c1.5x forecast NTA which, if applied to LRE, implies a takeover price of c620p so not too much of a premium to the current level. Also Westhouse are forecasting USD 1.35 dividend for FY2014 just ended so, seeing as USD 1.25 has already been paid out, they obviously aren't expecting another special div alongside the normal final maintenance div of USD 0.10.

[garycook] 15/1/2015 09:27

Speedsgh,Thanks for the Info.So this year roughly 15% return for LRE Shareholders.So looking at 5 previous years the worst case scenario would be a full year Dividend of 80 USD or 50p a Share giving roughly a 9% return if LRE Share price stays around 560 ?

[hooley] 15/1/2015 09:27

While underwriting rates are falling there have been big specials. That will continue. When the rates start to rise that will end. Another special is likely. Board's attitude is to repay surplus capital in the form of special divis. Business has been highly cash generative even though the market has seen u/w rates falling. A successful bid would need to be generous, so don't buy for that reason - it would be a bonus.

[speedsgh] 15/1/2015 09:10

GARY - a potted dividend history below. LRE have paid out 79.42p so far this FY. Would expect the standard USD 0.10 final maintenance payment which at current x-rates equates to 6.57p giving a total 85.99p. There is of course the possibility of an additional special div alongside the final payment but perhaps best to ignore that for now + treat it as a bonus if it does happen.

As you can see from the history LRE payments are lumpy but the 'bad' years tend to give a decent return whereas the 'good' years tend to provide exceptional returns. This FY is currently somewhere in the middle but that could all change if an additional special is announced with the final payment.

special (Dec 14) - USD 1.20/76.4112p
interim (Sep 14) - USD 0.05/3.0135p
---------------------------------
TOTAL FY 2013 - USD 0.80
special (Apr 14) - USD 0.20
final (Apr 14) - USD 0.10
special (Dec 13) - USD 0.45
interim (Sep 13) - USD 0.05
---------------------------------
TOTAL FY 2012 - USD 2.10
special (Apr 13) - USD 1.05
final (Apr 13) - USD 0.10
special (Dec 12) - USD 0.90
interim (Sep 12) - USD 0.05
---------------------------------
TOTAL FY 2011 - USD 0.95
final (Apr 12) - USD 0.10
special (Dec 11) - USD 0.80
interim (Sep 11) - USD 0.05
---------------------------------
TOTAL FY 2010 - USD 1.55
final (Apr 11) - USD 0.10
special (Jan 11) - USD 1.40
interim (Sep 10) - USD 0.05
---------------------------------
TOTAL FY 2009 - USD 1.40
final (Apr 10) - USD 0.10
special (Jan 10) - USD 1.25
interim (Oct 09) - USD 0.05

[garycook] 15/1/2015 08:31

Hold CGL looking to sell and Buy LRE.What is the current Dividend for LRE at present with the Specials is 97p.I have just worked out with a 1.60 Currency GBP/USD at 17.70 %.Can anyone clarify please.

[hooley] 13/1/2015 16:19

Shareholders have just been paid a 75p special dividend - hardly a sign of financial weakness! What's best for shareholders is uppermost. If a generous bid happens to come along it would probably be accepted. In the absence of a turn for the better in u/w rates another special could be coming shareholders way.

[nw99] 13/1/2015 15:20

Rising nicely

[salpara111] 12/1/2015 09:28

Never buy a stock solely based on possible takeover appeal.
Buy on fundamentals, as long as they are strong the share price will rise anyway.

[nw99] 12/1/2015 06:34

Lancashire the pick of underwriter targetsUS insurer XL Group's acquisition of Catlin in the largest-ever takeover of a Lloyd's of London underwriter could spark a wave of consolidation in the sector, according to analyst Anthony da Costa.He pinpointed specialist insurer Lancashire (LRE) as a potential takeover target should an acquisition frenzy take hold.'Lancashire, with a market capitalisation of £1 billion, offers the potential acquirer a diverse book of business with exposure to property, energy, marine and aviation, where the underwriting focus is primarily based on the top layers of risk,' he said.'Further, following the departure of [former chief executive] Richard Brindle in April 2014, the new management team may be more receptive to potential consolidation.'

[salpara111] 09/1/2015 13:43

Yeah, I was working on a bid here at 750 to take out.
Not sure it will happen but happy to hold.

[hooley] 09/1/2015 13:39

Catlin agrees take out of 9.5X eps. On a similar basis LRE would be valued at 740p. Who knows? It's a good reference point in case anyone else fancies their chances.

[hooley] 07/1/2015 09:44

Did I imagine it? There are reported signs of aviation rates hardening? With oil prices collapsing and QE ended, capacity should be contracting. Good signs for the future of u/w rates.

[cwa1] 24/12/2014 09:57

Straight from the RNS:-

Lancashire today announces that its Board of Directors has declared a special dividend for 2014 of $1.20 per common share (approximately GBP0.75 per common share at the current exchange rate), which will result in an aggregate payment of approximately $226.4 million. The dividend will be paid in Pounds Sterling on 19 December 2014 (the "Dividend Payment Date") to shareholders of record on 28 November 2014 (the "Record Date") using the GBP / $ spot market exchange rate at 12 Noon London time on the Record Date.

[altom] 24/12/2014 09:37

I have bought LRE recently. Would someone please tell me the qualifying date for last special divi.

[woodcutter] 23/12/2014 13:03

from a TA perspective if it can break into the gap it's on a free ride to 620p.

WC

[cwa1] 22/12/2014 11:35

A few hours after an e-mail to IG they've coughed up. Thanks for responses.

[carradj] 22/12/2014 10:24

Got mine today with Barclays

[deanowls] 22/12/2014 09:38

With TD and got mine Friday.

[cwa1] 22/12/2014 08:06

Anyone else NOT had their special dividend yet? Still not had it through IG Index but had it elsewhere? New to IG, so not sure if they are just slow or they've made a mistake!

Any input from other's experience welcomed.

[woodcutter] 19/12/2014 09:01

EC hope you didn't get hurt on your short, despite differences of opinion i never like to see investors lose money.

Hooley i said a few weeks ago consolidation in the sector was a possibility. As i've noted i don't have specific detailed knowledge of the sector but common market practice suggests further consolidation when pricing is competitive no matter which sector. It's an opportunity to acquire at a competitive buy out price.

As you're well aware acquiring when the sector has growth is expensive and often results in over paying. I doubt the CGL acquisition/merger will be the last in the sector if it remains soft. Shorting under the current environment is very high risk imv.

There's a great opportunity for overhead reduction and improvement in pricing power with fewer players so we'll see how it pans out over the next twelve months

woody

[hooley] 18/12/2014 20:23

Effortless Cool: I suppose I might call myself a dinosaur. In the days when I talked to Ken Grob and Ian Posgate, back in the 70s, it was all about u/w rates and capacity. As a research analyst covering the non-life insurance and broking sectors, knowing when to buy - at the bottom of the cycle - and when to sell - at the top - was crucial. Patience will bring its reward: after all, who knows when the cycle will turn, but turn it will, or should I say must.

[effortless cool] 18/12/2014 16:04

Thanks, Hooley, but I would prefer "specialist knowledge", rather than "inside knowledge", which could be misinterpreted!

[hooley] 18/12/2014 16:00

Effortless Cool,

Your inside knowledge noted and respected. However, with QE at an end and the problems in Russia and the collapse in the oil price, I have taken a view on the trend in u/w capacity from now onwards. I'm expecting it to tighten. I haven't been in the City for 20 years. After 40 years there I'd had enough. Let's see how it pans-out?