Novae Share Discussion Threads

[jancarl1] 11/11/2006 00:56

OK. Now the Moody's outlook I would rate as material, because highly leveraged as it is, a positive rating change in this business hits the bottom line fast and solid. This adds one more lever to the equation:
1. solid rate increases in 2006
2. No major desasters to hit the combined ratio
3. Interest rates rising to boost investment income

Just like everyone else in the sector. Add some share specifics:

4. Provisioning levels bottoming out (releases possible)
5. New business line on track to provide earnings growth in 2007
6. Cost of capital to come down in 2007 due to rating improvement
7. Dividends to recommence in 2007 quite likely
8. M&A activity in the sector focusing on underperformers
9. Underperformance against the sector
10. Big institutional investors as major shareholders

I guess I agree with you vikcom.

[vikcom] 10/11/2006 22:22

i reckon this is one the best buys on the market, but it may not be for long.

[18bt] 10/11/2006 17:06

This will help:

Friday 10th November 2006: 16:21

Moody's Investors Service has changed the outlook of the A3 Insurance Financial Strength Ratings of Lloyd's syndicates 1007 and 2147 - Novae Syndicates Limited -- to positive. The company said this was due to the improving overall aggregate financial position of the Lloyd's and strengthened Lloyd's Central Resources, as well as the syndicates' existing stand-alone credit fundamentals.

Moody's stated that the group's position has been affected by reserving issues on discontinued US Casualty business. The group's gross underwriting leverage (gross premiums written and gross loss reserves relative to shareholders' equity) remains material.

However, reserving adjustments on discontinued business have been declining in recent years, as confirmed in Novae's press release of 9th November 2006, and have been offset by returns from continuing business.

[2delta] 10/11/2006 14:08

yesterday's q3 did make pleasant reading especially the benign claims and no nasty surprises. seems to be a few buyers today. expect to see a re-rating over the next few months as market gains confidence in recovery potential. fosh has done an excellent job so far.

[sailor30] 10/11/2006 13:11

Property catastrophe reinsurance and aviation reinsurance have so far enjoyed a
benign claims experience during 2006; the net incurred loss ratio for Syndicate
2147 after nine months is 7%. Not only does this represent a marked improvement
upon 2004 and 2005 at this stage (60% and 21% respectively) but it also compares
favourably with the excellent years of 2002 (11%) and 2003 (10%).

Would anyone care to comment on this ?

[2delta] 09/11/2006 14:29

agree with JanCarl what with no major hurricanes i would expect profit forecasts to be raised. board is being far too conservative, virtually rest of lloyds sector shares are soaring on anticipation of increased profits. pleased to see no horror's concerning previous legacy business. starting to feel confident that current share price is cheap and as we move forward into '07 will be vindicated on my recent purchase as we breach 12 month highs. onwards and upwards in due course.

[jancarl1] 09/11/2006 09:13

OK, there we have our statement. Bottom line: all forecasts stay intact, 2m reserves consumed (18m left), new business performs accoding to plan. Quite boring, but I guess we can mark that as good news for a turnaround case.

What surprises me though is the unchanged forecasts on profitability after the benign hurricane season. I guess we are being a bit conservative here.

Second surprise was 13m business written by the new insurance unit in 4 months combined with the expectation to reach 55-60 by year end. Then again, it is a seasonal business. We will see.

Unfortunately I do not think we will see an extra boost in the share price My best hope is performance in line with sector for the time being.

[robow] 08/11/2006 15:25

any chance of a few charts here?

[2delta] 08/11/2006 15:01

concerned nva's share price is getting left behind compared to sector. maybe market fretting possible reserving hike if 20m not enough. agree, trading statement needed to reasure market otherwise waiting until march. if company so cheap where are the private equity boys or what about a management buy out.

[jancarl1] 07/11/2006 08:22

As noted earlier, unfortunately NVAs share price seems to be somewhat independent of the insurance (non-life) index. On a day like yesterday it was about the only insurance share worldwide that decreased in value. Seems like the market still does not believe in the recovery. Maybe a little trading statement would give some comfort? Otherwise we will have to wait until full year results in March.

[slainegardener] 06/11/2006 17:40

I'm watching. Not much happening though :-(

[jimbob220] 03/11/2006 13:31

Cathedral just been bought by Alchemy Partners for 1.5 X net assets.
Watch this space!

[jancarl1] 24/10/2006 15:53

At least we will have some discussions around fair value of WUN shares, which given todays reaction reflect well on NVA for obvious reasons. What a great day!

[18bt] 24/10/2006 15:19

Shares have perked up on news of Catlin/Wellington discussions. Not sure I can see another Lloyd's entity buy Novae, but my comments in 36 about M&A activity were correct (more luck than judgement). Let's see whether the excitement lasts.

[bammmy] 21/10/2006 17:53

Hi BT, Thank you for your reply, that is the kind of responce I was looking forward to.We shall all wait for a hurricane free next few weeks and a positive outlook. Incidentially I spoke to Mathew Fost, on the telephone, whilst doing "my research", a very helpful and informative man. His thoughts are onwards and upwards.

Wait and see

Once again thank you for supporting my sentiments regarding the earlier responce.

[18bt] 21/10/2006 08:31

JC,

Agree with your thoughts. I work in industry and potential issue with Novae is that UK rates are falling fast even if no hurricanes. I remain holder and agree greatly undervalued, especially in relation to perr group, but there is a huge credibility gap which could close significantly with finals/pre-close statement. The other interesting thought is take-over activity: I suspect Matthew Fosh won't give in easily, but they do now have a clean UK insurer in some attractive areas. Easier for someone to buy than build.

BT

[bammmy] 20/10/2006 17:51

Many thanks, that's exactly the kind of answer I was NOT looking for, pretentious help like that is of no use and probably the reason the small time investor does not write in to forums like this. I said I was a small time invester, not a fool.

I hope other people read this for advice and see the answer to a straight forward question, without having their integrity brought in to question!

[jancarl1] 20/10/2006 17:13

Bammy,

if you do not understand a stock after doing your own research, you should not invest. Personally I give it at least a full week of due diligence (Annual reports, Announcements, web site, press, etc.) and at least another month of following share price movements before I jump. Plus, since this is a recovery stock with lots of volatility, you need diversification, i.e. lots of other situations that at best are uncorrelated. Otherwise you will find no sleep. If you do not want to make the effort, stick to mutual funds, go to the casino or donate to charity. All IMHO.

Good luck,

JCD

[bammmy] 18/10/2006 20:12

Hi,I read your comments with great interest,you all seem so well informed, but to me the Joe Soap what does it all mean?????

Please be so kind as to put it, so that I as a small time invester can understand.
Many thanks

Bammy

[jancarl1] 18/10/2006 18:06

18BT

Prospective PE of 6 and 1XNAV is actually not correct, since 30p NAV was reported at the interims and does not reflect full year profits. So if PE 6 was correct I would assume 33p NAV at full year. However PE 6 in my view can easily be achieved/slightly beaten by the old SVB business alone, which in terms of capitalization is merely half of Novae. At half year stage the new business did not contribute at all, since it started july 1st. Agreed given the business plan in place of 60m written it will not contribute an awful lot (7.5-10m maybe), but it will alert the market to the fact that there actually is a growth story in the stock as capacity of Novae is becoming fully utilized. Therfore it will appear that a PE of 5-6 and a valuation below NAV is much too harsh for a business with a 20% growth rate, given that the industry is rated at 1.3-1.6 NAV and 8-10 PE. That for me implies 40+ for Novae on the cheap side and 60+ if the new business performs well and an adequate dividend is reinstated (keep in mind that we are currently seeing a major rerating of the industry, up more than 30% since July and a good season of results ahead of us until April)

Just my grain of salt. But I am a big fan of the industry at the moment.

Cheers

Jan Carl

[vikcom] 18/10/2006 10:35

not much hurricane damage this year, this is going to +40p

[18bt] 18/10/2006 07:31

Appears to be holding above 30p, which bodes well for reaction to good news.

[18bt] 16/10/2006 10:34

Not convinced we'll go past 30 convincingly without some more news, but if news then in line, could get re-rated. Prospective PE of 6 and 1.0x NAV.

[jancarl1] 11/10/2006 14:14

Fidelity brought its holding to 14,99% with last Fridays purchase. Smart move. Next couple of days will show if we can go past 30p with some conviction. Next stop 37p, beyond that the chart is clear. Interesting times, indeed.