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I have noticed in last few weeks the dividend expectation has been revised upwards for DLG from 7.6p to now 13.3p for 2024
https://www.marketscreener.com/quote/stock/DIRECT-LINE-INSURANCE-GRO-22762509/finances/
It may not be Winslow’s gift to give. A strong offer may well get Ageas over the line. Another bidder gets involved and it’s game over. His best chance is if the follow up offer is weak.
I'm not expecting bad news per se. I'm expecting a steady improving progression on costs, underwriting and margins. If we don't meet all of the criteria to restart the dividend for FY23 that won't necessarily be bad news (it was never a slam dunk) as long as we can see the dividend restarting at the FY24 interims (that should be feasible). Winslow needs to show that he is capable of making sound business decisions, regardless of the Ageas "noise". Part of the reason that DLG got itself into this mess in FY22 was it's unwillingness to make sound business decisions (rather than addressing the issues and reducing the dividend, it proceeded to take unwarranted risks). Winslow needs to stamp his authority now, even if he's not seen as "playing to the galleries" (Blanc has ignored the hysteria and stuck to her guns, amd that's now starting to pay dividends for AV). With, or without Ageas, DLG's share price should be able to recover to (say) 250pps in the next 12-24 months once a sustainable dividend has been re-instated. That should be Winslow's sole focus regardless of whether or not Ageas comes back with an improved offer; if he sticks to the nitty-gritty the benefits (and potentially an improved offer if it comes to that) will come. Achieving 250pps should be just the first hurdle. Winslow then needs to focus on how best DLG can replace those profits from its commercial lines business but it has to be one step at the time.
The problem that Winslow has is that he has to offer a positive future vision to shareholders. If he starts by getting out bad news he will only encourage Ageas to make a slightly higher bid that shareholders will be happy to accept. Bad news in the next update doesn't serve Winslow's interests.
Let's not forget Penny sold £250,000 worth of shares right after confirming the dividend was safe! Why she's not been done for insider trading is beyond me. A lot of the Exco team has gone but I would hope a total clear out m.
The market seems to be pre-empting an improved offer. Either that or another suitor emerging. Glad I spied this one just after the bid was confirmed.
It's also nice to flush out everyone and anyone that holds DL shares, albeit it gets annoying with all the Holdings notications.
Bromtree, All of the insurers are putting up their premiums at the moment. DLG is not alone albeit that some of its policies have risen more in relative terms because they were lower to start with following the FY22 debacle. It's been my experience that although insurers are less inclined to match competing quotes on similar terms, they do tend to be more competitive for new customers (dual pricing still seems to be alive and well to some extent) and as one customer leaves another comes through the fornt door.
Comparing my family's various insurance policies this year with last, I find that I still have 50% of our policies underwritten by DLG directly/indirectly. Last year we had policies with Admiral, Churchill, Sainsbury's (underwritten by UK Insurance Ltd which is owned by DLG) and Tesco whilst this year we have policies with Admiral, Hastings Direct, Privelege (owned by DLG) and Sainsbury's.
It's not necessarily all doom and gloom.
With DLG Final Results due out on the 21st March, Adam Winslow has a few really tricky decisions to make.
Any incoming CEO will want to get all the skeletons out of the cupboard, declare any lingering bad news, and start the new leadership with a clean sheet.
In doing so he will be treading a fine line between doing so and not presenting the company in too bad a light to put off existing shareholders.
If he sways on the side of positivity he risks encouraging Ageas with a takeover.
Ageas ( and maybe other potential bidders) will be looking on with interest to see how the results might impact on a possible firm offer.
Lets hope he gets it right.
Sorry Trotsky, I was being flippant in replying to Stargate's stargazing at a chart and wondering why there haven't been "incremental increases" to earnings!
I appreciate the explanation but no need, I work in the reinsurance market!
What were your other quotes like??
Not currently a holder here but a little aside as to what is actually happening - I have held two car policies for years, they have just more than doubled....without any claims! When I phoned to cancel the girl said they have been having a lot of cancelations..... I wouldn't have a lot of expectations for the car insurance going forward
Guitarsolo, Penny James didn't "forget" to get re-insurance cover. DLG did in fact have re-insurance; it just didn't have as much as it might. It was a deliberate executive decision to have less re-insurance because re-insuring reduces DLG's profit upside when claims are below average. However, likewise, not re-insuring increases DLG's profit (or indeed loss) downside when claims are above average.
Unfortunately, once the decision had been made, DLG was, more or less, wedded to it for the "season"; it's not a policy that you can simply change "mid-stream" when you realise that claims are likely to be above average, without incurring a much higher re-insurance premium (which would, more or less, offset any benefit).
It was, essentially, a gamble that backfired in an attempt to continue to bolster DLG's bottom line (and maintain its already stretched dividend) to make up for other operational deficiencies that had built up over a period of years. I think DLG may have had operational issues for a number of years that it had failed to address and had been "covering them up" by taking more risks than it should. FY22 was simply the culmination of passed failings and DLG's inability to leverage its household brands.
Penny James may have taken the fall but, as I said in my previous post, I think there were collective failings in the executive team (some, or all, of whom James "inherited" when she became CEO) and I'm not sure whether the failings/weaknesses of some, or all, of those executives have yet been fully addressed. I wouldn't be too surprised to see Winslow looking to clear out some of the executive team in due course.
CVB123, DLG's recovery is still fragile and Adam Winslow needs to stamp his authority from the get go. If a final dividend is to be paid for FY23 then I think it would be better if DLG does not pay out more than (say) 40% of its FY23 profit (excluding any profit arising from the sale of its brokered commericial insurance business).
Winslow needs to set out how he plans to run the business going forward and DLG's (new) dividend policy. He should not overly concern himself with Ageas's possible offer; it seems fairly clear that the majority of DLG's existing shareholders support the BoD's decision to reject Ageas's original approach back in January. The ball is now firmly in Ageas's court to come back with a better offer that the BoD can recommend to shareholders (both the offer price and the cash element need to be markedly improved) or walk away.
The (so-called) bid is opportunistic. It'll probably take DLG another 12 months to get the business fully back on track and, in the meantime, it can't afford to throw money at shareholders just to try to stave off a potential (hostile) bid; it can however continue to set out its path to recovery and give shareholders a heads up on what they might reasonably expect in the next 12-24 months.
Shareholders should bear in mind that DLG has to some extent de-risked since FY22 (it now re-insures more of its potential weather-related risks) and if it keeps control of its manageable costs, keeps an eye on its inflationary inputs, and continues to price its average premiums in the middle-ground (it needs to avoid being too clever and becoming a bottom-end outlier like it did in FY22) then its potential profits over the next 12-24 months should be more predictable (de-risking should have reduced the probability of exceptional profits and losses).
Although not always appreciated by the markets, I'd like Winslow to be cut from the same cloth as Amanda Blanc; solid and (generally) reliable. That doesn't mean that Winslow (or indeed Blanc) will be incapable of mis-steps (best laid plans can always go awry) but I'd like him to be disciplined, better understand the strengths and waeknesses of his executive team, and only take calculated risks.
Penny James eventually fell on her sword following the debacle in FY22 but I can't help but think that some of the problems in FY22 were the result of the collective failings of some, or all, of her executive team and it may be time for a new broom to start clearing house.
Stargate, no chart is going to help you with a FY22 fk up with a load of cold winter burst pipe claims and Penny James forgetting to arrange suitable reinsurance cover!
Want to hold for future dividends
5 year chart started at 355, slightly over double 175 offer, however fundamentals page, is discouraging, because there is no positive increment, in yearly accounts. There is negative dividend cover. More recent chart, showed some indication, of getting an overdue uptrend started. Whether this is a new competent directorship at the wheel, i do not know, or simply a sign of other interested parties, establishing an equity position, prior to dissecting DLG.
If shareholders wanted Ageas shares they would buy then directly. Thought never even crossed my mind to hold them. Will cash up when all the final bids are in.
Has anyone considered what would EU insurance company shares would be like if Russia decides to take on an EU country such as Poland. Personally I would prefer to keep my money in this country under our Nuclear umbrella.
You can’t anything like as it was a VERY risky plan. who’s to say DLG may not be paying a dividend at all.. nothing is guaranteed
But look at IMB & VODA ..there value traps too
Running some numbers. The consensus analyst estimate for net income is £237m for 2024. Assuming DLG pays out 70% of net income, that is a £166m dividend which implies a yield of 6% at the current market price. If we assume net income recovers to £275m in 2025, a 70% payout assumes a dividend yield of 7%. £300m net income in 2026, 70% payout means a 7.65% yield at current levels.
In the absence of a bid, I think 275p share price by end 2025 assuming £300m net income and 6% dividend yield sounds about right considering where rates are. So looking at 60p or 28% capital appreciation and roughly 15% in dividends. 40% return over two years and still have the company paying dividends as opposed to taking a 275p offer today and losing the right to future dividends.
I’m actually happy to own the shares and collect the dividends. I will be collecting about 10% return on my capital as I bought shares below the current price.
Hard to find other places to invest wot make that kind of return.
But AGEAS dividend yield i see if it were to offer do a share offer carries 8.8%
This year it actually raised its dividend
https://www.dividendmax.com/belgium/euronext-brussels/life-insurance/ageas-sanv/dividends
I actually tend to agree with you. Once DLG starts paying a normalised dividend (likely 2025), the stock will be back to 275p and you can continue to collect the hefty dividend. Better to milk the cow…
Personally would rather they walked away and left DLG to become a dividend cash cow again as the bid really needs to be £3+ and many will miss the income (when it restarts).
Maybe, maybe not; DLG itself has big cash and investment balances and AGEAS will have at least two bankers it can turn to.
Ageas in an insurance company
they need certain levels of cash for their daily operations
hence they can't make a full cash offer because then they'd have to raise cash with current shareholders
that's why they're giving shares partially