Member Info for Banburyboy

Dofus value your view but !

Just before xmas cruise director said bookings were highest in companies history.
Reseach by others on cabin availibilty support that.

Is this a case of a bird in the hand ! Yes post xmas bookings not great but against the backdrop of some significant sucess in the prior period ?
What would worry me most was increased cancelations. Welcome your view ?
Interesting insurance is doing well and Cheryl departs have they accidently mixed up the two businesses :)

All on here know im a Saga fan and agree we will do well.
The point i am trying to make is there are two sides to the De hann involvement.

Positive - hes saved the company sorted cash flow and there is no short term issues to 2022 on liquidity
Negative he has aquired 26% of the company for a song (his average is circa £2.75).
That dilution brought about by De han to my share holding has i perceive limited the gain to everybody else but it has limited it as we are now only 74% of the cake.

The exception is new shareholders or those that can afford to significantly average down who mitigate that loss.
To those with big holdings purhased at 50/60p the de hann impact is we wont say treble our money but say double.
Its a double edged sword and with the pademic looking worse the De hann move is looking better for ALL shareholders. Had they delayed the terms might have been even more distressed.
Keen on the company but on any upswing De hann gains to the detriment of some long term shareholders who didnt average down or take their rights. The IPO guys need £30 from here.

Bigbaddaz - i completely share your optimism but the read across to the £5 offer (33p to others - Smorty it was not formal but unsolicited which Euan dismised out of hand) is not a direct read across. Yes £140m after charges was injected but De hann now owns 26% of the business and our remaining 74% was diluted on a five to nine basis.
The "offer ' i agree is a bench mark but backed up by :

1. Insurance performing well and having a minimum standalone value of £900m (management /auditor goodwill assessment) with a top end of £1.6bn based on Hasting sale metrics.
2. Cruise need 80% occupancy and £234 ish per diam ticket sale to generate £40m per ship EBTD&I. Others on here have done website reseach which shows this is being exceeded.

Hoping TU confirms both the above and some one off gains from lower lockdown claims which will now cover 10 of the 12 months in the accounnts to 31st January.
Agreed this is a definate buy with limited risk as cruise cash burn £6-8m a month is covered by insurance cash inflow in the event of cruises being delayed further.

Bigbaddaz
Not seen you before on here so welcome. Endorse what Pianesta says and ten reccomendations a record here.
I think trading update 26th jan will give you a big leg up on your 50% if we are still waiting on the cruise starting update then

Away from politics. Two responses to why a drag on sp !

1 - lack of detailed trading update due 26th jan expecting steller bookings on cruise and a covid windfall on insurance.
2 need hmg to formally approve cruising.

Can saga opperate all 2021 not cruising yes. Cash burn from not crusing mid point £7m a month £84
M a year. Cash inflow on insurance £120m per annum and likely to benefit from lockdown. The two businesses are incredabily complementary in a lockdown.

Longer term we have ship loans which can be deffered or help from uk goverment. Also £250m of bond due 2024. The company being back on its feet and trading profitably is key to renewing the bonds at a reasonable rate of interest.

Titan have tv adverts on sky news seen at least two today intresting if trading update reveals the level of customer interest.

The £3.3m was unique to travel insurance

Guys
There is an upside on Motor and home see various posts from Pianista / Rogue and myself over the last few days.
The interim accounts and previous posts suggest travel insurance has been hit hard . Page 8 and page 9
Policies sold six months to 31st July 20 69k policies sold to 31st July 19 130k
PBT on other insurance which travel is the mainstay £17.4m to 31st July 19 down to £10.6m to July 20
Yes a little bit of mitigation from lower claims but the company provides an analysis of the covid hit on insurance on Page 9 and its cost them £3.3m between start and 31st July 2020.

Pianista to be honest I am enjoying the debate (and its difficult stuff to understand) On further review I am minded to side with your more cautious estimate. The main reason being that it looks for the majority of insurance Saga takes a broker fee and the claims risk (or opportunity !!) sits outside of the group as you did indeed suggest. So market share / admiral is not a brilliant "proxy" as the Saga model is different. What I did pick up in trawling last full year and interim accounts was
1 - Underwriting profit which fell from £86.7m in 2019 accounts to £41m in 2020 accounts was up to £28m (full year +£16m due to the lower value of bodily injury claims. Nothing to do with Covid but good news and hopefully a perminant trend. Anything to do with new whiplash rules ?.
2 - Travel and other took a hit in the interims 31st July which was why retail PBT was £42m £7m less than the comparative six month period.
3 - Sensativities in Note 20 (d) to the annual accounts suggest for every one percent change in loss ratio (which I think is 75% now ) profit before tax rises £0.7m not earth shattering also for every 1% reduction in claims outstanding the gain is £1.2m. Not to sure how these interact and relate to each other. If we add the two its good news.
4 - The inhouse underwriter is AICL they only seem to take motor insurance and in the last annual accounts of the gross premium of £348m on motor they underwrote £224m.
5 I think any benefit from reduced claims as Pianesta is indicating is a play on that £224m only rather than the larger numbers I started with.
Got there I hope eventually but good to work it through

As Rupans says we will know more on the 26th

Banbury

Rupans my figures are for a full year. I think Piaesta is suggesting a full year of £20m. I think we are a long way apart is around the proportion of reinsurance saga do. If Pianesta is right my market share / comparisons with admiral are not relevent as Saga is very risk adverse and reinsures much of its business.

Thanks Pianesta
I think its difficult and you suggest im double counting, im not so sure. Your £20m suggests saga share of the entire market benefit of £4.4bn is less than half a percent also suggests less than a tenth of admiral 3 month covid only benefit in a full year. We know Saga is 2-3% of the market and is a sixth the size of Admiral. Both point to a much higher figure than your £20m completely independent of the accouts. I dont think i am double counting i think one is underwritten claims and the other is not underwtitten and they are distinct. I agree its hard to read across as we dont know the underwriting and reinsurance profit share. The 26th will be interesting !!

Pianista thanks for responding and you thoughts appreciated .

I should have been more specific on the £210m it broadly comes from Note 26b and the claims table on page 180.
There is a timing difference on claims so I averaged 2019 and 2020 in the matrix and rounded.
So 209 = 189.8m plus £27.3m overhead = 216.6m. 2020 same figures £180.3m plus £19.9m = £200.2m average = £208.4m rounded up £210m.

I think there are two parts to this underwriting business and how the profit share works and the non under wriiten business which I am calling retail where again how does the re-insurance part work.

I like the comparison with Admiral which will hold good if there split of re-iinsurance / underwriting is similer.
If that's true its £26m for three months lets be prudent and lower to £20m for the three months to 30th June lets say we get half for the period to 30th November and a full two months from 1sT December to year end. So lower estimate £20m to June 17m to Nov 13m to January = £50m. Lets say it mirrors Admiral £26m to June £21m to November and £17m to January = £64m. So we have a range of £50m to £64m full year impact in Jan 21 accounts rolling into 21/22 accounts.

Is that realistic ? Lets do a top down comparison Industry reckons reduced claims are worth £4.4bn. Saga's share is 2-3% of the entire market = £88m to £132m and arguabily as others have mentioned our customer base have been the most inactivein the lockdown increasing this above both Admiral and the basic pro -rata on market share of £88m to £132m.

My point ( I think) is that if someone said to me Saga would have a "gain" from insurance claims of potentially up to £100m I would have laughed and said rubbish !! The two pieces of evidence presented seem to support that.
What I also like is talk about pressure on margins as customers get wise for next year !! For Saga the majority of customers are locked in either in year 1 or 2 of a three year deal. Yes we need to reward loyalty and lack of claims eventually but that "can" could be kicked down the road to a point when cruise is completely back on its feet.
Will collate all Saga share price predictions later but what's not to like about this companies prospects. And the fixed deals are looking a shrewd move. Banbury

Sorry should read
" £59m increase in admirals profit, add back £97m returned to customers = £156m divided by 6 as Saga is a sixthe the size = £26m
Comparable three month covid imact for SAGA

UK's biggest insurer of motor policies 15.4% of market.
Interim accounts were for the period to 30th June 2020 which includes 3 months of covid.
Profit on motor increased from £251.7m in June 19 to £310.4m in June 20
And that was in spite of giving customers back a £25 stay at home premium total £97m.
The key loss ratio fell from 61% in comparative 49% in latest accounts - 8% covid related 4% prior years which SAGA has and that is net of the £97m returned to customers.
Saga's motor book is between a 5th and a 6th of admirals so the like for like impact of just three months just on motor is £59m increase in tax add £97m rebate = £26m and that's just three months on motor only.

Interesting unlike Admiral / Hastings who reported a month earlier Saga chose not to include in their interims which were released on 10th September at same time as capital raise. Water under the bridge but I do wonder if Rog DH had sight and that was where the 27p valuation on his first tranch came from !
All water under the bridge but I do think this analysis and Rupen's research indicate a real pleasant surprise on insurance !!
All the best Banbury

Sorry guys fisrt post for some reason was heavily delayed and I could not remember my own predictions and thought it was lost in cyber space.
Go with second post £3.30 TU and £7.80 Xmas eve 21

Banbury

To all on the Saga Board a very merry Xmas and hopefully prosperous 2021.
What with Horses analysis on cruise and Rupan's info on delayed claims both Saga businesses look well prepared.
Be nice to have a prediction list which I am happy to be custodian of.

Close Jan 26 after trading update ? I will say £3.30
Xmas ever 2021 ? I will say £7.80.
Any others ?

All festive greetings to you all.
A great board lots of contributers and lots of it positive and really balanced.
Loads to look forward to in 2021 Horses data on cruises and Rupan's article on reduced claims all indicate both legs of Saga will do well moving forward.
So predictions ?
Close 26th January after TU. I will have my 30% on the base now of £2.40 so £3.20.
Xmas eve 2021 - i'm in for £8.20

I will collate predictions and collate a final table
Have a good one
Banbury

Rupans good post. They have 1.1m car insurance policies which is just shy of 3% of the market.
If £4.4bn is right our reducef claims on an equivilent annulised basis is £132m all to bottom line.
I know from reading Hastings accounts covid means claims inflaton ( sorting those that do claim) is up which will eat into this. Also travel insurance which was a big earner took a hit say £20m. Also our customers less likely to drive than the average so basing it on market share undestates. As you say more potential good news in here. Whats not to like !!!

Pianesta

I think you are right you cant normally have negative goodwill as its an asset and a negative would be a liability.

Thank Rogue / RH

Goodwill is effectively an intangible asset (you cant touch or feel it !!) that represents the value of a brand in terms of future earnings. Its initial value is created at the point a company is created so for saga insurance the IPO and for travel when they purchased Titan / Destinology.

At that point goodwill is more or less a balancing figure between the price paid and the real tangible assets so made up example Titan was brought for £100m and had £20m net tangible assets - goodwill is created at £80m.

Management have a responsibility to review all estimates in the accounts annually and goodwill for many companies is a key estimate.

Travel goodwill is now nil at management saw so much uncertainty with Covid so no further future write downs will happen. If we sold Titan as the goodwill is nil most of the proceeds would be pure profit.
Insurance goodwill which arose from the IPO has been slowely chipped away at. In Jan 20 we had a £370m write down to £718m which is the carrying value of insurance goodwill in the interims.
Management have tested this in the interims July 20 and what I really like reduced the discount factor from 13% to 9%. This reflects the fact (IMO) that the insurance business has stabalised in the first half compared to last year when margins / market share and profitability were under strain great news as this started the slow drift down before covid.
In laymans terms with very little assets / liabilities in the insurance business the question is do the future cash flows / resale value exceed the current carrying value of goodwill of £719m ? Hastings sale £1.66bn on similer metrics and £140m a year PBT discounted at 9% says insurance is worth more than £719m
Hope some or any of this makes sense as it all a bit nebulous. Banbury

Guys reseached this for 30 mins as top of leaderboard and brought in at £2.04. Just 1k.
Can see lots of upsides
Senegal looks like 64p per share return on special and share consol.
India 1.2bn
22k barrells a day costung less than $20 to produce
No debt signifcant free cash flow.

On the face of it looks massively undervalued but mister market knows his stuff. Can someone in the know summerise the downside and risks here please ? Many thanks