Lancashire Share Discussion Threads

[harleymaxwell] 23/4/2018 12:51

Nice move up today - must be a takeover candidate given consolidation in the Lloyds market at present

[jrphoenixw2] 25/3/2018 09:50

Note to self for future reference:

Per 1324/13-Mar^ 'Just going on the FX chart of Google/Finance I'm estimating the rate was circa 1.397, so looking for circa US0.10/1.397=7.16p'

My broker paid out at 7.15077p. I still don't know if that is correct, and they've got it wrong before.
Meanwhile the LRE website STILL shows '$0.10 (or approximately £0.07151)' hxxps://www.lancashiregroup.com/en/investors/shareholders/dividend-history.html

So it seems you can estimate the converted div closely by taking the GBP/US$ rate from Google/Finance at noon on the record date, versus, the LRE site which even weeks later still doesn't publish what the actual rate was.

[11_percent] 22/3/2018 17:36

Setanta have crossed the 10% mark.

[speedsgh] 21/3/2018 10:22

More deals expected as insurer M&As heat up -

Merger and acquisition activity appears poised to accelerate in 2018 despite healthy valuations as insurers pursue various growth strategies, analysts say.

Deals will also come as companies try to reinvent themselves for the digital age.

“Deal activity in 2017 contained signs of the M&A trends that we expect to see accelerate as more insurers seek to transform, using business acquisitions or disposals as elements of that transformation,” said consultancy Ernst & Young L.L.P. in a report called Global Insurance M&A Themes, 2018 Moving from Optimization to Transformation, issued Tuesday.

Acquisition prices are robust but not so high as to deter buyers.

“There is some level of anticipated consolidation in the valuations, but nothing prohibitive yet,” said Meyer Shields, Baltimore-based analyst with Keefe Bruyette & Woods Inc.

In January, American International Group Inc. bought Bermuda-based Validus Holdings Ltd. for $5.56 billion in cash, and on March 5, France’s Axa S.A. said it would buy Bermuda-based XL Group Ltd. for $15.3 billion in a blockbuster deal.

“The deals that have happened the past couple of years haven’t been sellers that are in trouble,” said James Auden, managing director at Fitch Ratings Inc. in Chicago. “These deals are more strategic in nature; you’re seeing premium in the purchase price.”

Growth is a driver behind the deals.

“The buyers want to grow strategically in a mature marker,” Mr. Auden said. “The sellers are getting favorable prices.”

Valuations vary in the insurance sector, with some mid-sized insurers and reinsurers trading at a premium.

Companies in the reinsurance and insurance sector are trading around book value on average, said Taoufik Gharib, senior director, North America insurance ratings, at U.S.-based S&P Global Ratings Inc., with the exception of a few Bermudian players including Hiscox Ltd., Arch Capital Group Ltd., RenaissanceRe Holdings Ltd. and Lancashire Holdings Ltd. “Those are the positive outliers in terms of trading at a premium relative to their year-end 2017 book value.”

Broadly, book value is calculated by subtracting liabilities and intangible assets, such as goodwill, from a company’s assets.

The early activity could signal further acquisitions.

“I think we’re going to see a lot more of it, and a lot of it will be in response to these deals,” Mr. Shields said.

Some acquirers will be seeking added reach and diversity.

“When companies consolidate, one of the things they are looking for is to be able to provide a greater array of product expertise to brokers and clients,” Mr. Shields said.

Companies must expand cautiously, however.

“There’s definitely benefits to diversification in insurance, but acquirers must have the expertise to operate in the various market segments,” or risk dragging down performance, Mr. Auden said.

“Scale is important to effectively compete in a consolidating market and potentially absorb some of the volatility we’ve seen in 2017 due to catastrophe losses,” Mr. Gharib said. “A global (insurance and reinsurance) company needs a large geographic footprint to access business and generate diversified and sustainable earnings.”

Mr. Shields says he remains skeptical of the absolute value of scale, “but if executives are worried about scale, they are going to pursue acquisitions that help them with it.”

The insurance sector’s move toward a more digital future will also spur some deal activity.

“We see a range of likely M&A activity forming part of the overall transformation of the sector in the short-to-medium term,” Ernst & Young said in its report. “The question of ‘buy or build’ has become central to many insurance M&A decisions and will continue to underpin consolidation as well as targeted acquisition of capabilities.”

Insurers continue to invest into insurtech businesses, Ernst & Young said, partly in response to the ongoing question of buy or build, but increasingly as a way of accessing and operating in emerging “digital ecosystems.”

[manrobert] 13/3/2018 09:31

price movements this morning don't seem to relate to trades.

[jrphoenixw2] 06/3/2018 15:49

Thanks Speeds,
Thing is the FX rate was fixed at noon on the R/D, and the above is still 'approx'. Maybe it's just a bug-bear of mine as I like knowing what to expect come the P/D, and the actual/reliable rate is hard to come by IME.

Also useful for me, as my broker are pretty useless at publicising the correct figure, AND also at processing the correct sum. Hence it's something I need to watch pretty closely; though perhaps less material of an issue these days when the Specials aren't in play.

[speedsgh] 06/3/2018 15:44

From LRE website...HTTPS://www.lancashiregroup.com/en/investors/shareholders/dividend-history.html On 14 February 2018 a final dividend of $0.10 (or approximately £0.07151) per common share was declared. The dividend will be paid in Pounds Sterling on 21 March 2018 to shareholders of record on 23 February 2018.

[jrphoenixw2] 06/3/2018 15:37

Has anyone got advice of the FX rate yet for the 21-March div?
Should have been fixed on the R/D 23-Feb. As usual I can't find the number, though I understand some brokers are better at this than others, incl mine.

[garycook] 23/2/2018 13:08

No Special then again in 2018.That is why the share price has tanked since results.Better opions elsewhere atm with currently over 5/6% dividends !!!

[speedsgh] 23/2/2018 10:21

It’s not a hard market, just a better one, says Lancashire Holdings (19/2) -

Despite 2017 catastrophe losses driving rate increases at the January 1st, 2018 renewals season, the shift in demand and supply remains insufficient to push the sector into a hard market, according to Paul Gregory, Lancashire Holdings Group Chief Underwriting Officer (CUO) and Chief Executive Officer (CEO) of Lancashire Insurance Company (UK) Limited.

“While conditions are better, the shift in demand and supply is not material enough to push us into a hard market, just a better one,” said Gregory, speaking during Lancashire’s fourth-quarter 2017 earnings call.

Overall, Lancashire management expressed positivity about market conditions and said the industry is heading in the right direction after years of falling rates and the high level of catastrophe losses experienced in the third and fourth-quarter of last year.

However, there’s a need to be realistic stressed Lancashire, highlighting that while rates have improved they didn’t increase as much as the firm would have liked, and that it’s important to remember that the marketplace is still going to be challenging in 2018.

“Yes rates are up and that’s great,” said Alex Maloney, Lancashire Group CEO, “but rates need to go up to a more sustainable level over a period of time,” he added.

As underlined by both Maloney and Gregory, the market definitely improved at 1/1 and has to some extent turned a corner, with noise of more disciplined underwriting in the market, something Lancashire expects to continue.

But demand appears to be relatively flat, and with the abundance of reinsurance capital in the space, from both traditional and alternative sources, the industry doesn’t seem to be approaching a hard market environment.

Maloney explained that were it a hard market then Lancashire would have raised more capital to take advantage of the opportunity, but ultimately he doesn’t feel the market has moved enough to take on more risk.

However, he explained that Lancashire is well positioned to take advantage of opportunities that do exist, and if the market dynamics shift and more opportunities arise throughout the year, the firm is well placed and able to access capital when needed.

During the call, Maloney also explained that the firm bought exactly the same amount of reinsurance protection for 2018 as it did for 2017, which, “is a clear indication of our view of opportunity for 2018, and a clear view of the availability of reinsurance at 1/1.”

At the same time, Lancashire revealed that it grew the limit sold by its third-party capital vehicle Kinesis Capital Management by roughly 30% at the renewals, suggesting that this may have risen to roughly $425 million for 2018.

Lancashire clearly feels the marketplace will remain challenging in 2018, and despite improvements at 1/1 which could persist throughout 2018, underlined its realistic approach to current market conditions that call for discipline as well as a desire to take advantage of any opportunities.

[speedsgh] 21/2/2018 19:35

That is the CFO's second open market purchase since results were released on 15/2. In fact there has been concerted buying by the board since results which currently amounts to c£465k. Remains to be seen whether they are merely attempting to support the share price or whether they genuinely believe the shares are substantially undervalued at the current price level. Only time will tell.

16/2/18 Michael Dawson (NED) bought 3,800 @ 588.5p = £22,363
16/2/18 Peter Clarke (Non Exec Chairman) bought 16,000 @ 566.9p = £90,704
16/2/18 Elaine Whelan (CFO) bought 20,000 @ 589.5p = £117,900
16/2/18 Alex Maloney (CEO) bought 21,700 @ 573p = £124,341
19/2/18 Samantha Hoe-Richardson (NED) bought 1,409 @ 567.75p = £8,000
20/2/18 Robert Lusardi (NED) bought 5,000 @ $7.89 (c564.5p) = c£28,225
20/2/18 Elaine Whelan (CFO) bought 13,500 @ 557.5p = £75,262

By way of comparison 2016 Final Results released on 16/2/2017 were followed by just a single open market purchase:

28/2/17 Michael Dawson (NED) bought 7,200 @ 693p = £49,896

[cwa1] 21/2/2018 16:16

Not exactly enough to account for it but every little helps:-

[jrphoenixw2] 21/2/2018 16:02

Boom... So what gave it the kick up the... ?

[speedsgh] 16/2/2018 13:54

Lancashire Holdings' (LCSHF) CEO Alex Maloney on Q4 2017 Results: Earnings Call Transcript -

[bulltradept] 16/2/2018 13:49

Buy from the IC : Never say never, but it seems less likely that claims going forward will be as high as in 2017. Premium rates are already hardening, and after recent weakness, the shares are trading on just 1.5 times forecast net tangible assets, giving room for some upside. Buy

Last IC View: Hold, 735p, 28 Jul 2017

[eastbourne1982] 16/2/2018 12:08

Short term sentiment will make this a good medium term buy at some point over the next few weeks, I reckon these will go sub £5.50, I'd be looking to buy at under £5.25.

[jrphoenixw2] 16/2/2018 04:20

Friday de-risking might not be pretty. Volume yesterday was 2.86m/460k=621% 30-day average.

[11_percent] 15/2/2018 22:04

This is going under £5 tomorrow.

[jrphoenixw2] 15/2/2018 17:58

Extract dated today:
'In reaction to the results, City stockbroker Numis Securities upgraded its rating for Lancashire to ‘add’ from ‘hold’ citing recent share price weakness and the positive outlook, maintaining its share price target at 775p. In a note to clients, the Numis analysts said that although the quantum of January reinsurance rate increases was less than the most bullish expectations, they believe that the breadth of price increase/stability is turning out to be wider than anticipated. They added: “This is consistent with what we would expect given Lancashire’s risk profile and the record catastrophes loss incidence in 2017, both in terms of quantum and frequency.” The analysts concluded: “We think current market earnings forecasts for financial year 2018 are well supported.”
www.proactiveinvestors.co.uk/companies/news/191709/lancashire-shares-fall-as-2017-results-bear-weight-of-natural-disasters-191709.html

[pogue] 15/2/2018 15:18

selling out now means I can invest in something with a decent yield plus I am still in profit. Just sold and bought some PFC.

[jrphoenixw2] 15/2/2018 14:55

I think it highlights how smaller investors should approach shares that pay Specials [SDs]. IME there is a wide variance across companies on how dependable such divs might be. It is a simple oversight to do a sift of a sector or index, see a juicy yield including SDs and misjudge the future security of it; I did it myself, my position used to be 4x the size of what I hold now. I only chopped the holding down as I'm in the final preparatory steps pre early-retirement, and have been de-risking/diversifying my portfolio these past 6-9 months. Not suggesting I'm clever or similar, rather in hindsight I was clearly being foolish, and it was my wife's nagging re: risk and pending retirement that forced my hand. Sobering to say the least...

p.s. don't see any point at all selling out now, odds on the damage is done.

[pogue] 15/2/2018 13:37

speedsgh
I too am mainly an income investor but am trying now to rotate my LTBH shares a bit to protect gains and increase income not an easy combo. Here I see an oportunity to reinvest money elsewhere for a better return for the next year or so, if the special dividend had held then I would stay regardless of the share price. This RNS has highlighted to me what I actually knew, its cyclic share and divi, and has sparked me into action.
Good luck with the long term hold here it will pay off I am sure I'll buy back at a later point.

[speedsgh] 15/2/2018 12:04

pogue - Thanks for your post #1300. Interesting to hear your perspective and fully understand your position. I suppose a lot will depend on individual investment styles. When I buy, I tend to stick with it for the long long run unless the investment story changes fundamentally.

I have been expecting a drought in the special dividend payments for some time. The company has been flagging for 2-3yrs that this would inevitably happen at some point when the benign period for catastrophes ended and the consequent stresses caused by this created opportunities for the company where they would be able to more efficiently deploy the previously under-utilised capital that in recent years has been returned to shareholders via special payments. This in turn should lead to greater profits, a higher share price and potentially greater distributions further down the line.

In assessing the return from my LRE investment, and in particular the income, I tend to average out the disributions over a 5yr+ period; this evens out those years with whopping special distributions against those with none. In my own case the average return is more than satisfactory (I try not to be too greedy) but for each it will of course depend on the average price paid in the first place.

I am also painfully aware that, whilst being predominantly an income investor, I am notoriously poor at trying to time selling equities in order to get back in lower further down the line. As a result I generally prefer to stay invested and hopefully average down if any opportunity presents itself. It's just what works for me. Others will naturally prefer very different methods which I completely understand.

[pogue] 15/2/2018 11:37

yes good call I held on through inertia should have sold then too. Still in profit just now though so thinking take the few pennies left of profit and go all the money made was on the specials and will be in the future I think.