Member Info for Guitarsolo

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!

I count both Probitas and Aviva as clients and also, just a fortnight ago, one of my employees went to work for the former! Probitas is a very solid purchase in my view and allows Aviva to have access to the Lloyd's Market. Remember though, some of the lines of business are much riskier so expect Probitas' results to swing around much more than Aviva's general business. But having a well capitalised parent will help. The 82% combined ratio is very good but we have been in a post-Covid mini hard market. Underwriters in my (small and very specialised) field are already bemoaning that it won't last as long as they would like.

But for Aviva, this is a good move and shows Amanda Blanc's vision. Definitely correct to sell off the complicated foreign based insurance companies (Singapore, Poland etc) and have international exposure through a Lloyd's syndicate.

God, I wish we could un-invent religion.

Hi CaneToad, I can't shed any light on it but it might have been mentioned in the recent webinar.

GS

Hello Damian,

I was interested to see you're invested here (you too CaneToad!). It's been on my list to investigate as I particularly want to avoid another HFEL scenario!

I see AEI is currently trading at about a 5% discount to its NAV, which is worse than its 12 month average discount of under 1%. Is this a temporaty blip or a sign of possible decline? Trusts trading at a discount can't really issue any new equity (who would buy it?!) so the worry is they try doing other things to grow the fund.....HFEL's option trading springs to mind!

Anyway, would appreciate any insight as I delve a bit deeper.

Many thanks

Guitarsolo

It's no wonder that DLG has received an approach, and now specifically. Personal lines insurance premiums have increased significantly which, even allowing for claims inflation, will lead to it being much more profitable. But it will remain a competitive market so, in time, those premiums will adjust to something more normal. But in the meantime, insurers can make a bit of hay.

Now DLG is a special case owing to its 2022 fk up. It's share price (as we have noticed) is on the floor, so it's an easy target for an offer at a share price premium. However, I think we know that 2022 is more or less behind us, the business has been reset (premiums), the balance sheet has been largely repared (thanks to shareholders not receiving about 35ppps in dividends) and the future is looking better. FY23 will be OK. FY24 will be very good (and that is what Aegeas wants to buy before we know what it is).

Now I don't think DLG should be let go for anyting like Aegeas' offer. It might come back with a better one, or another bidder may enter the frame. If it comes to nought, it will also increase the pressure on the new CEO about the forward dividend (see my post of 9.30am that became irrelevant with the day's news!).

Guitarsolo

Hi Mary, I know from contacts in the industry that RSA are putting their pieces in place to take on NIG. So I would be pretty certain the deal is going through without a hitch.

Of course, whilst selling NIG boosts the solvency ratio it will also reduce earnings as it was a very good unit that sadly had to be sold to cover the Penny James mess from just over a year ago.

Regarding the dividend, I am leaning towards human nature taking control and the new CEO deciding to forego the y/e dividend (payable in May) whilst he can put all the blame onto the previous administration. Even if DLG could afford say 10pps, why not withhold it (saving £200m) and drip feed an extra 2p onto future dividends for 5 years in a row and look the hero? It might depend how much the institutions holding large blocks put the pressure on for some cash.

Guitarsolo

MPO: "LLOY has imo made a big mistake in creating the £450m [sic] provision, with Close Bros doing similar passing their dividend. This will depress the sector now until the September outcome, potentially dragging on for months thereafter."

A depressed share price for the next 7 months could be quite handy! If 10% below fair value (absent the FCA investigation) they save £200m on the buyback (buying more shares for the same money) which is >40% of their provision!

I don't blame you silverknight. If total returns are anything like 80p that's about 45% from here. The question is, over what time frame? Personally, I'm in deep enough here and have been since 2017, so I probably won't add. However, if the next update gives a good indication of the plan and the price still doesn't move up, then I could be tempted.

I know what you mean Silverknight. The market is treating so many shares badly; anyone who needs to raise money, anyone who is vulverable to interest rates, and in VSL's case "uncertainty".

I think a lot of companies (like VSL) that are being wound up because some people don't like the discount to NAV are struggling with their share prices. But there is no point bailing now. Might as well hope to get an update soon with a route map for returning as much cash as possible.

I do remain suspicious though that we are being buttered-up to accept a low ball offer for the rump, whenever that comes.

Thanks Agricore,

At the moment, I think it is the lack of commentary from VSL that is depressing the share price. That's easily rectified because all they need to do is update us with "so far $xxx of loans have matured with y% default, we expect a further $xxx to mature in the next 6 months, our plan to return this will be ABC with approval from HMRC etc".

As it stands, we should expect at least the current share price to be returned from matured loans (based on approx. figures of 75% of 83p NAV). On top of that we get the income still due from the loans (8p for 2024, hopefully at least 4p for 2025).

On top of that you get the ~25% of the NAV invested in equity. Unless there have been significant loan defaults (which there have not been in the last few years and nothing to suggest there should be now), the recent falls in the NAV are slanted towards the equity holdings, which makes sense as they would be far more volatile. But there is still quite a lot of value there.

I fear the money boys might be softening up VSL shareholders to think the company is worth less so that the "rump" can be sold off at a bigger discount to close the company down at the end. I'm just naturally suspicious!

I still expect to receive over 80p per share from this point onwards (dividends + capital return from loans + capital return from equity).

Guitarsolo

Bloo: "Someone should have told Tony Blair and Gordon brown that, years ago."

In the 13 Labour years (97-10) the population increased from 58,250,198 to 62,760,039 (+7.74%).

In the 13 Tory years the (10-23) population increased from 62,760,039 to 67,736,802 (+7.93%).

Source: macrotrends.net

So it increased more under the Tories.

"Emirates has selected and the Company has formally consented for MSNs 187, 201, 206, 208, & 42334 to undergo the premium economy retrofit."

What's the lifespan of a retrofit? If it is beyond the lease terms, could this be an indication that Emirates/AA4 are working towards a lease extension?

Many thanks for making the effort to check the rules Trotsky! So if they aren't able to sell enough assets it comes down to the cost of the refi of the bond and how much more it will cost compared to corporation tax on the non-distributed-as-dividends profits. Sadly, the banks will know this!

Trotsky, you may be correct re the REIT/income rules. But this was quoted a couple of days back by damofarl from the Edison report of June 2023:

"...the bond could be paid from a combination of cash at hand and cancellation of dividends, and whilst the later being a reit is linked to income, paying the debt would negative such so compliance would be maintained..." [sic]

Ignoring that it doesn't quite make sense (!), are Edison suggesting that there is a way of cancelling some dividend payments to allow for the bond repayment whilst maintaining REIT status?

GS

i don't know all the details of the reit rules but i believe there is some flexibility about what you can offset against "income" to still qualify for the reit rules.

rgl's problem is debt as we all know... my mantra is constantly shouting at me: "control your debts before your debts control you".

rgl and inglis have made a mess of this. they need a credible plan to repay the bond and show markets how they will keep debt at around 40% ltv. if they have a plan they should be showing the market so that our share price stops tanking. more worrying is if they don't have a plan!

but there is a 65% discount to nav so there is value there, they just need a plan. and if that includes sacrificing a dividend for 6/12 months because we come out of it on the other side much healthier, then say so!

inglis, in my view, appears guilty of trying to keep hold of his £700m portfolio rather than shrinking a bit to be in a healthier position. is that vanity/arrogance? i don't know.....

but as someone who has been here for 6 years+, purchases north of £1 (yes!) when it used to pay a covered 8.2p dividend, i am mighty ****ed off at these directors. covid was no one's fault obviously but other factors are.

guitarsolo

I'd agree Mary, although circumstances don't really allow me to trade. But DLG is slowly coming back to life after a bit of a shocker. Will there be a 2023 final (paid May 2024)? I don't know. If there isn't, and that will mean 2x finals plus 1x interim lost, then they will need to set out a plan for what happens for 2024. I suspect though they will try and throw the dogs (that's us!) a small bone of about 5-8p and then will "rebase" the dividend for 2024. In a way, I would rather take all the medicine now and then we look at 12-15pa for 2024 with it rising in line with profits from there. But directors like to look good, so throwing a bone now and a slightly lower, but easily achievable, dividend for 2024 with the much higher rates is likely.

Guitarsolo

CaneToad,

I've just been looking. Ouch! I'm glad I thought better than to buy the bond....leave it to people who know more about it.

But I agree with you that defaulting on the bond would be unimaginable for the company.

0715 and others have been right, they should have offloaded some properties to get the LTV down when they had more time. Now they need to do it urgently, and that is not a good place to be.

Inglis really should be issuing statements explaining what they are doing to stop this. Perhaps his silence is because they don't have anything to say that would calm people!

All rather worrying.

Guitarsolo

Silverknight, I don't believe there is much of a risk of loan defaults. Historically these have been low anyway (first lost protection which is what made VSL so good) and most are in the USA, whose economy is doing pretty well all things considered. The majority of the loans will mature within the first 24 months and be repaid. The problem here, in my view, is the uncertainty around disposing of the non-loan assets, principally equity holdings in non-liquid investments. As Krusty infers, that could take a while to unwind because you have to find the right buyer at the right time and we don't want them given away cheaply.

That's what is infuriating about what those ****holes at Staude Capital did to us.....When VSL was a going concern it could carry those non-loan investments and dispose of them at an opportune time. So their book value didn't matter really until they were sold. But now VSL has to sell them in relatively short order (say within 5 years) they don't get that luxury any more.

If I got my chance to tell Staude what I think of them it would be a fun few minutes.

Hi Pokerchips,

I'm pleased to see projections that the dividend cover will exceed x1.0 and creep up (albeit they're only projections).

I've been in CLIG since October 2013 when I bought in for 240p when the dividend was 24p. I've added over the years since, sometimes a bit too high in hindsight.

Bottom line, this is a solid investment if you can buy at a 10% yield. That was available recently and most likely will be again at some point. I wish the company was a bit more consistent with its performance as that would attract more funds. I wish too they would give a little more to the shareholders! But it's not bad overall, especially if you can be restrained to wait for the 10% yield opportunities.

Guitarsolo