Member Info for Meconopsis

“So are we on same page Pokerchips, LGEN’s dividends are not covered by earnings, it’s from loans that pay the outstanding dividend amount?”

driftking72 - I suspect that you’re getting your figures from third party web sites. The problem is that these show the IFRS accounting numbers, which are don’t give a true picture of what’s going on.

A quick read of the annual report shows…

Total dividends of1.23bn (page 242) paid out of an Adjusted Operating Profit of £1.711bn (page 2).

After payment of those dividends they were sat on Retained Earnings of £1.714bn (page 130).

There are future profits of £14.8bn in the CSM piggybank (page 2).

In addition, they have quite chunky money turning up from disposals.

I will give you that the IFRS operating profit is only £542m (page 2), but that number represents an accounting profit based on mark to market valuation of investments and doesn’t represent the business’s true position. It’s why they present the adjusted figure, which strips out the mark to market stuff.

There is LOTs on this in my posts if you scroll through my posting history.

Cross-post from DLG…

“Your argument that it would leave the combined group with 20% of the motor insurance does not warrant interference.”

Let me start by saying that I fundamentally agree with you sentiment.

Unfortunately, the CMA no longer takes a simple “whole of market” approach to competition and has moved to a market/geographic segment view.

What that practically means can be seen in their ruling for Barrett’s acquisition of Redrow. In that case, the CMA found that in a small number of geographic areas they were the only builders of any size and the CMA sought (fairly minor) remedies to ensure that it didn’t result in price distortion.

In the case of AV. and DLG, it’ll be a matter of considering whether the combined entity has a super-percentage in specific segments - eg family drivers of “boring cars” aged between 40 and 50.

I don’t agree with the approach. But that’s how it works…

“Your argument that it would leave the combined group with 20% of the motor insurance does not warrant interference.”

Let me start by saying that I fundamentally agree with you sentiment.

Unfortunately, the CMA no longer takes a simple “whole of market” approach to competition and has moved to a market/geographic segment view.

What that practically means can be seen in their ruling for Barrett’s acquisition of Redrow. In that case, the CMA found that in a small number of geographic areas they were the only builders of any size and the CMA sought (fairly minor) remedies to ensure that it didn’t result in price distortion.

In the case of AV. and DLG, it’ll be a matter of considering whether the combined entity has a super-percentage in specific segments - eg family drivers of “boring cars” aged between 40 and 50.

I don’t agree with the approach. But that’s how it works…

Oldbutnowisa - I'm sure that MrsThedetector is a very lovely lady.

"Net assets deteriorating from around 7.8b in 2020 to 2.2b in 2024.

Net assets per share deteriorating from 262p to 46p during the same period."

A good point and one worth explaining...

ALL insurers (life and general) show a significant drop in Net Tangible Asset Value Per Share between 2020 and 2025:

AV. - 354.08p (2020) decreased to 205.52p (2024)

LGEN - 152.80p (2020) decreased to 58.68p (2024)

MNG - 157.12p (2020) decreased to 80.27p (2024)

PHNX - 191.25p (2020) decreased to 40.57p (2024)

ADM - 304.69p (2020) decreased to 259.15p (2024)

[Data from Morningstar - my experience is that other sites have other data.]

This is a side-effect of the IFRS17 accounting changes as "future profits" have moved from being shown as an "asset" under IFRS4 to being shown as a "liability" under IFRS17. (It's a bit more technical than that, but it's broadly representative.)

Since Shareholders' Equity = Total Assets - Total Liabilities, then this leads to a drop in Shareholders' Equity and a drop in Net Tangible Asset Value Per Share.

The duration of the policies that the insurer writes affects how big the impact of IFRS17 is on Net Tangible Asset Value Per Share. If you write a one year policy then (broadly, and on average) six months of profit will be recognised in year and six months of profit will go into the CSM and be drawn down next year. If you write a 20 year policy then only 5% of the profit is recognised in year with the other 95% going into the CSM to be drawn down over the remaining 19 years.

So, ADM as the purest play general insurer has the smallest impact and PHNX as the purest play life insurer has the bigger impact. It's worth noting that PHNX grew its future store of profits (CSM) by 14% in the 2024 results.

If you look at Total Assets you get a different picture:

AV. - £479bn (2020) compares with £353bn (2025)

LGEN -£ 570bn (2020) compares with £544bn (2025)

MNG - £228bn (2020) compares with £184bn (2025)

PHNX - £334bn (2020) compares with £307bn (2025)

ADM - £7.8bn (2020) compares with £7.9bn (2025)

The drops here attributable to declines in underlying IFRS13 mark-to-maket values and also any business disposals. Aviva's bigger drop is less worrying than it looks as it reflects that they've disposed of large chunks of "non-core" business. PHNX also wrote down their intangible assets by £3.5bn between 2020 and 2024.

I hope that helps.

Well, having made 'arch enemy' status 🧐 I’m going to retire gracefully(ish) from the contretemps and leave Thedetector to have their final word. 🤪

Dear oh dear, you appear to be having a bit of an “emotional moment”. Sitting quietly in the corner might help…

My experience is that people who are successful don’t need to tell people they are.

They also tend to actually read the “cloudspeak” twaddle in the annual report and analyst briefings. All of which are freely available to you to peruse.

That

Anyway, I politely suggest - once again - that you read my posts.

If you read them Caerphilly then you’ll find out why I’m qualified to comment on this stuff.

In terms of deramping, you’ll find that I sensibly agree with Buffet about hamburgers.

“This is an unwarranted attack by you on a perfectly legit query by a very expert and currently winning investor of all types of investments”

If you are *that* good then you’d understand the relationship between 10 year gilt yields and dividend yields.

If you are *that* good then you’d understand the impact of mark to market on EPS.

If you are *that* good then you’d understand how the CSM holds 8-10 years of future profits.

If you are *that* good then you’d have asked these questions before investing (as you seem to have done).

I WAS ACTUALLY trying to be helpful. The answers to your questions are in my previous posts - they’re not hard to find.

Personally, I take a view that if I was *that* good then I’d have the butler driving me to the pub and not my wife.

Enjoy the Guinness and have a lovely weekend.

“I am always cautious when rating my own investments when divi issue is above what I call as relatively normal around 3.5 to 5.5%.”

As I say, go and read my previous posts explaining why Dividend Cover is a junk metric for any company that holds investments and then read the stuff around IFRS17 accounting and CSM.

Then look at the accounts at the value of the CSM.

Your 3.5% to 5.5% range is very old fashioned.

That range comes from the days of 2% 10 year gilt rates - to which you’d normally add at least 2% risk premium for the risk of investing in shares over gilts. 10 year gilts are currently 4.5% - so 6.5% sets a reasonable risk-based floor.

Secondly, you need to take a view on whether a share is reasonably priced. Life insurers took a big hit when Silicoln Valley Bank went under and have never quite recovered. A reasonable re-basing of the share price would bring the yield down to 7%.

I’m not saying that you’re wrong.

Just that you need to turn up with reasonable arguments based on showing some sector knowledge - not some arm-waving scare stuff.

You may just be “The best in the world.” The only question is what you’re “the best” at.

Live long and prosper 🖖

“ What is the dividend Cover metric for Lgen right now. I have seen a figure ,maybe right maybe wrong but if right it could maybe be a problem to solve for lgen.”

Look through my previous LGEN posts for an explanation of why the metric is meaningless for LGEN, PHNX, etc

“600 coming”

Not that I’m not rooting for this, but it is quite Trumpian…

…many people have told me that BEAUSTIFUL 600 is coming…

Apologies. In a strange old mood. ;)

And what a strange posting history @bob6 has.

They seem TO HAVE DISCOVERED THE KEYBOARD LOCK IF NOTHING ELSE!

RESISTANCE IS FUTILE! And all that.

Having watched Mikey17 last week, I have to wonder about bob6…

I broadly agree with you @scie

The academic view, which we all know, is that the share price movement is that if a 20p dividend is declared against a share priced at close at £3.00 then it should drop to £2.80.

But that academic view ignores the price that holders actually paid for the shares.

If you bought at £2.70 then some people will be happy to sell at £2.75 - taking both the 20p dividend and 5p increase in capital. Which is where the overshoot comes from. In my view ;)

@nicknaim - I agree with you.

Take your money out of an investment and you're going to occasionally lose. Timing the market is a bad idea and all that.

But you have to be patient and can't expect to be back in the holding in a few days. My view is that there is almost consistently some negative macro-economic news that trounces good sense and fundamentals. It's just about being patient.

And there are no guarantees.

Sorry, hit “send” too quickly…

“Does anyone have an opinion on the likelihood that the ex div price drop will exceed the value of the divi this year, like it did in 2024? (so I can buy back after the drop)”

My observations…

LGEN, PHNX, etc nearly all drop below ex-D price in the 30-60 days after the ex-D date as the dividend provides an element of price support beforehand.

But buying back in requires patience - it doesn’t necessarily happen in the 1-3 days after ex-D.

All you need to do is put a buy limit order in and wait for some economic bad news to hit.

And/but being in cash does put you in a position of potentially missing upside good news.

FWIW, I need half my dividends for income and the rest to generate income growth. So I’ve taken to selling half of my shares before ex-D and then putting in buy limit orders to juice an extra 5% out of the dividend reinvestment. It’s holding up well as a tactic.

With LGEN you need to watch the uneven timing between dividends. And you also need to keep a sharp eye on company financial calendars for potential briefings (as LGEN did recently).

You also need to keep an eye on that pesky stamp duty.

“I think it’s highly unlikely that the pattern will always apply. Taking PHNX as an example it did not overshoot the dividend reduction - at least not before the ensuing market chaos”

I’d argue that PHNX did overshoot. Admittedly not by much, but it was enough to have made it worth it had you had a limit order in place.

“Does anyone have an opinion on the likelihood that the ex div price drop will exceed the value of the divi this year, like it did in 2024? (so I can buy back after the drop)”

“I think it’s highly unlikely that the pattern will always apply. Taking PHNX as an example it did not overshoot the dividend reduction - at least not before the ensuing market chaos”

…I think it’s good to look at what I’ve got, rather than what I’ve hypothetically lost.

I sold down half my tech fund investments to be invested in shares like this - so that, in times like this, I can sleep.

My tech fund is down 25% since January versus 10-15% across my UK dividend shares.

Psychologically, I’d much prefer to live off dividends with an associated hypothetical loss than sell down something that’s fallen 25% - with every £1 of income is costing me £1.33 of units compared to where it was.

In the longer term the tech fund will almost certainly win.

I’m also reminded of why - when the tech fund is having a good run - that I shouldn’t be envious of the opportunity cost of having money invested somewhere more boring. 🥱

Share prices are down. Big whoop.

Love and peace to all.

It’s going to get worse before it gets better.

“ So the car dealer when he sells a car to the client does not owe a fiduciary duty to the client when he sells them a car. But he does owe them a fiduciary duty when he sells them a finance. Any commission paid to the car dealer for the sale of the finance agreement, even if it is notified to the client, is a bribe. The respondents lawyer has lost his way.”

This was part of the crux of the CoA ruling. It was attacked heavily yesterday - both one legal grounds and on the basis that anyone who thinks that is nuts.

“No. Bribery can exist outside of a fiduciary. ”

The legal argument yesterday from the Close KC was that bribery in common law relies on a fiduciary duty. Outside of that duty, it would be fraud (or a number of other things).

The KC also pushed the point that bribery is unique in restitution not relying on demonstration of loss. He also pointed out that case law in the area was pretty shoddily built on top of shoddy case law, etc

"This appears to be stuck in a very small trading range."

Given what is happening in the US, I'm actually surprised to see it holding up quite so well.

The buyback must be providing some price support...?