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Could be the bottom but who knows if rate increases are enough to turn around the underwriting losses? In meantime are the increases in price reducing volume that might put pressure on fixed costs? RSA Insurance called it a day today and withdrew from private car insurance which included their More Than direct brand following underwriting losses of over 100% on a operating ratio. And most of the comments from insurers has been anticipating inflation reducing but unfortunately it went back up. Very, very difficult to call where this could end up but I cant see anything happening quickly............
Inflation is double digit and Lloyds increases your premium by £1 and that's good you say but DLG do what they do and they are a rubbish share! Fair enough , you say you were pleasantly surprised but it does highlight how competitive the UK motor insurance market is.............
The main problem for the insurance industry just now is inflation as it hits everything and the actual impact is not yet fully understood in terms of what it will cost to settle claims. Unless insurers get rate increases into their insurance products then they will be in trouble. The DLG statement didnt give a lot on this point. Claims inflation is one thing but there is then the inflation costs on the business not least wage costs. A weakening economy also impacts on claims with more fraudulent and theft claims. Specifically on home insurance there has been little growth in premiums for years (although some this year) but this too could be a severe issue particularly if there are severe weather events (and the freeze last month wasnt really that special). Reporting the solvency position at the low end of the target range is not good news either.
I will declare my interest as I work in the insurance industry and of the above comments worry me as they affect all insurers not just DLG. Until the industry as a whole gets on top of the issues then I would be cautious about deciding what was a a bargain entry point for any insurer. A focus perhaps would be on identifying what increase in average premiums an insurer was achieving and to then perhaps have more confidence that they are in a position to deal with the impact of inflation.
I think your observation on not hitting deadlines is a little iffy bearing in mind the leeway that you allowed the previous management..........
However, I agree that exploration is different from production and that it should be less difficult to set delivery dates for a production plan. JP never hid the fact that the dream in the desert wasn't an exploration play and therefore timescales would be difficult to define - his problem, in my view, was that he gave guarantees to investors that the share price would be achieved in a reasonable period of time.
The new management are now trying to deliver on JP's promises and to call them out when they have had to clear up a mess that he created seems a little unfair (albeit all Directors should be held to account for their decisions)
I wouldnt like to have picked up this poisoned chalice that JP left ......................
Hawthorn
Simon - think you are confusing me with AN Other as I havent commented on shorting..........
That said I could see why someone might take the view that this is something to consider because (as I mentioned before) this is a market wide issue affecting all insurers to some degree or another and it is one that is not fully understood. The big question is why are these insurers now saying that it is an issue and they must take action now when it has been obvious that claims inflation has been building and growing for a long time? a shortage of cars fuelled in part by a lack of chips was always going to have a big impact on repair costs, credit hire charges, total loss claim pay outs. Sounds like the decision was to write lots more policies at what may now be premiums that are far too low and hope for the best! It will be interesting to see what Admiral come out with because they are a massive part of the motor insurance market in the UK and if Ernst & Young are talking about a ratio of around 111% its difficult to see how they can be part of that.
DYOR
That I think is why the SP fell - Sabre, who have a great track record suddenly reported figures that are poor for them and a reduction in private car business. So where did that business go and if Sabre couldn't make money out of it do we thing that Admiral (or others) would be able to do that? Or, as I think the stock market concluded, has someone else picked up business at rates that will lose them money. Ernst & Young predict ratios of over 100% for the motor insurance market for this year and next so if they are right then you need to be confident the insurer where you are invested isnt one of those making up that 100% plus figure. The Sabre story is actually more positive in that they have got the rate increases in that they need - they should hopefully be well placed to take advantage when the rest of the market (including Admiral?) does the same.
DYOR
I agree (almost!) - its not a Sabre problem, its an industry problem - Sabre is doing the right thing and its competitors have taken share at rates that will cause them pain. Just a matter of time for them to also raise rates. Look at some of the predictions from analysts like Ernst & Young who are reporting ratios of 111% plus this year and more next year for the UK motor insurance market - they dont make this stuff up. As Sabre say, they are well placed to take advantage of the market if rates rise - the only requirement is that rates rise!
It may be a bargain but when was the last time Sabre ever had a loss ratio like this? It isn't what they do.
It is a big bad world out there in this sector and it seems that no-one know quite knows how much damage inflation is causing right across the board - wages, claims handling costs, hire cars, spare parts, replacement total loss cars and potentially a major one is the impact of inflation on the very large personal injury claims that already run into the millions. Add a small inflationary amount on those over many years can be a big number.
The car driving public wont like it but all of this has to be paid for from somewhere and it will have to be in premium increases.
Lets see how it all pans out.
I am not invested in any insurance company shares but I work in that world which is why I watch and wonder at some of the things that happen in the industry..........
Its sad to see the dip in the price but if you are investing your money in these companies you need to know a bit more about their challenges - it really isn't a money making machine. A scenario that scares me about investing in a motor insurer might be as follows -
- Customer pays £400 for cover for his car that is worth £1,000
- Bad person steals car
- Bad person, possibly taking some substances, hits another car/people causing serious injuries
Outcome (with provisos but is not uncommon) -
- Insurer pays value of car assuming a total loss - £1000 therefore already losing a wee bit (but dont get too may)
- Insurer pays £5m for the damage/injuries caused to the property and people the thief hit
- Changes in rules means that the injured parties costs (plus recent inflation) could be even higher
Its a little simplistic as an example but believe me these are at least one of the things that will impact on your potential investment here (if you are in fact invested) - there is a large compulsory requirement imposed on insurers (as laid out above) that mitigates the joy that it is a compulsory insurance
My personal thoughts in investing in motor insurers (and DYOR) is to understand the impact of regulation because that changes them from a 'normal' business into one where government regulation via RTA rules is then further impacted by requirements imposed by the FCA
I dont have any current investments here but I do work in that world
Just another annoyed and almost bankrupt Sound shareholder passing through - I wont post again but be sure of the following -
- The comments Parsons made to shareholders guaranteed them that the SP would be at a certain level
- Sound won many awards for their communications with shareholders
- O&G investment is high risk and return but Parsons supported a view that there was a value to the assets (outside of the potential massive upside) which was proved not to exist (check the share price!)
Have a look at the Sound Energy history and if you decide that this is somewhere you want to remain invested then best of luck!
I have some recall that James Parsons went in print with a similar theme when he was at Sound (SOU). I trust that this your opinion that it is 'free money' as it would be disappointing to think that Mr Parsons might be making statements that he really shouldn't. Ask on the SOU board what their opinion of him is.
I would think long and hard about being invested in a business where he was involved personally. Your choice though...............
Just observed from the SOU share chat board that RGM will now have the benefit of more of his expertise.
It may just be bitterness on my part because he contributed to me losing a large proportion of my investment in SOU (if not all) but I think not. It is more to do with the manner in which he made statements and promises to the shareholders about the value of their shares. This is not an allegation of his actions there is a great deal of evidence on this either on the LSE site or on records shareholders have retained.
Worryingly, for RGM shareholders, is the image that this chap has of his abilities and the reality. He clearly stated that SOU was worth a price of well above 50p and that he, as a champion deal maker would make this a reality.
He walked away from SOU (going to RGM) with a share price of less than 2p.
I am sure all of this has been posted by other SOU shareholders, some of whom I understand are looking to involve the regulatory authorities but I was just moved to make my own comment following the news he had finally formally left SOU.
Just to avoid doubt, it is not an issue to fail to hit oil/gas in this game - investors know and anticipate that - the issue here is the manner that the concept of a bottom level foundation of value was promoted by Mr Parsons.
Make your own mind up about what he is going to bring to this business...……….
H
Not posted for a while as waiting for things to come to a conclusion.
We are where we are now but I don't think JP understood the level of upset with the PI's - I was quite surprised his comment about his desire only to represent shareholders that are pleasant (or words to that effect). Can I make it clear here that I don't agree with physical threats and most certainly not death threats.
However, we do have a reason to be upset as we were given assurances that went above and beyond 'marketing'. The comments around the SP being supported by the value of the business at various times was proven not to be the case. There were examples of exaggeration of a very high order. Many investors would probably have bailed out much earlier were they not previously told that the SP was worth a £1 or much more and that it was underpinned at 43p, which then became 23p which then vanished. If it was reasonable to tell investors that the SP could be four digits then I think it would have been equally fair to warn them that it was unlikely they could get 10p in the deal he could negotiate. We all know that O&G is a high risk game but it is not as high a risk game when you are being told that you have an asset worth a significant amount of money.
What is my point - my point is that he has not behaved in a way that is fit and proper as should the Director of a Company and therefore that he should not be a Director of a Company in the UK.
Having a read of the complaints process now.
H
That's a bit of a disappointment.
Interested to see what the Board have to say at the AGM...…
H
Picked up a few more SOU today but not sure that I think that purchases in the 50, 60k level are signs of great support.
The story is out there and people will make their choices - mine is that the story remains strong.
Really odd to see posters such as Gaspunter popping up at this late stage with puerile comments - it just highlights the weakness of the internet that anyone on a whim can have input on a matter of which they know little and whose motives are difficult to determine - are they just some sad individual with time to waste or do they think they can manipulate the markets?
Personally I am quietly excited about where we are now while understanding that deals of this nature take a great deal of time. I was involved in a meeting yesterday where the person I was talking with was pleased that they had just achieved funding for their project of £2m after two years of effort. We are looking for many hundreds of millions and into the billions potentially so we should be sure that this will not be a box ticking exercise by the purchaser.......
All in my opinion
H
We have an announcement on the GSA and you are talking about Twitter comments.
Odd to say the least.
H
Excellent! Well worth the effort to illustrate the inconsistencies.
You couldn't actually make this up as a story if you wanted to but someone out there actually thinks and talks like this. Very odd. Why they do might be another question.
H
Not sure why but you came out of my filter automatically - I will rectify that now.
However, will respond while passing!
JP just met everyone recently and said a great deal about what was going on. Also, a post recently quoted JP where he explained what was going on with the testing. Nowhere has there been an indication of issues.
There is only so much hand holding that can go on while they are doing their job so maybe best to let them do it.
If you have been in employment either as an employee or as a manager then you will be aware that micro management is a painful and unproductive experience.
You will hear something soon - it may range from extremely good to extremely poor (or somewhere in between) but you may as well accept that.
As a final point, if Sound told you that the reason for the delay was that they were working on other priorities would that help or would we just see a whole host of posts about mismanagement and conspiracy theories?
Hope everyone enjoys your response if you give one as I wont as you are filtered again because I think your posts are illogical and manic. Oh, and I still have a feeling of sick when I think back to your gloating when other shareholders were losing money as the price went down to 11p.
H
Thanks WH
Sorry, I know that this is a BB to share discussion and thoughts but your comment is just so obvious it is a little odd that you would post it thus my question.
I think we all hope that TE10 will flow commercially but that then is to be expected.
If I had no confidence that it was likely to flow commercially (and I am not sure of your reasons for that) then I don't think I would remain invested.
As we have been told a number of times this is a high risk./high reward venture and the choices that are made to stay in or get out will be linked to what information is available to us and from where we can make the decision about quite where that risk/reward balance is. I don't think we have that yet for TE10.
More generally the whole Tendrara project has clearly moved over time from the potential Supergiant to where we are now and that is part of the risk/reward element. Is there still enough gas there to go at and that can be extracted commercially.
I hope so (pun intended)
H
And you are invested why therefore?
H