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HL take ages to make the funds available. My Standard Life divi was paid on 21 May and is still not showing as available. If LGEN pay tomorrow it will be at least a week before I can access it I suspect.

Courdelion,

I am interested to know why you this this such a ridiculous suggestion. Can you explain?

Thx

Nolo

If anyone is to bid for LGEN they are going to have to offer rather more than £3 a share. The NAV is £1.78 per share but that is after deducting the store of future profits of £2.08 per share (essentially booked profits owed to future accounting periods) and, whilst I accept that this is a relatively simplistic way of looking at it, that would give a more realistic (imho) NAV of £3.85 per share. A 30% premium to that would take you over £5. Given that they are unlikely to be a willing seller and there is probably competition the price could go higher than that.

As a long term holder for the divi I wouldn’t be happy at less than £5.

In any case, I would be surprised if it were to pass the regulatory/political hurdles.

Just sayin’…but wtf do I know….

GLA

Katie,

You might find it useful to read Gordon Aitken’s Substack on LGEN and the other UK life insurers to get a better understanding of their numbers, business models and valuations. Recent changes in accounting rules have made a nonsense of things like reported profits and dividend cover and have been cogently and eloquently covered by posters such as Meconopsis many times in these pages.

There is no need to worry about dividend cover. A better measure would be cash generation cover.

I’m with D-C on the value that the UK life insurers represent.

Good luck

Nolo

It is also worth noting that almost all of LGEN’s business is as a result of once in a lifetime decisions whereas a significant % of AV’s is annual and short term competition could undermine performance.

Interesting Substack from Gordon Aitken in my inbox this am on why he believes Embedded Value is a better valuation model for life insurance shares than mere solvency II own funds on the basis of the essential fact that life insurance and pension customers cannot leave.

My rough calculations show a solvency II own funds per share of roughly £2.47 per share (not sure exactly how many shred are currently in issue due to buybacks) and, assuming that I have understood him correctly, other life insurers who do post their embedded valuation numbers that are typically 20-33% above Solvency II own funds. By my calculations that would indicate an embedded value per share of between £2.96 and £3.28. Which gives me comfort as I am rather overweight in the sector.

But I am sure that posters more knowledgeable than me will be able to either point out my errors or explain it better.

It would be helpful if LGEN and other publicly quoted life insurers would post their own embedded value figures as Gordon suggests.

Well worth a read/listen. Www.substack.com/@gordonmaitken

GLA

So we are now down 100p since the start of the conflict which coincided with the ticker change from PHNX.

V dull.

Worth reading Gordon Aitken’s Substack. He did an excellent recent post on the subject of private credit. In essence it is more of a problem with US insurers than UK ones because of the much stricter regulatory regime in the UK. In his opinion the chances of there being a private credit time bomb lurking in the UK insurers books were very low.

If you are interested or concerned I suggest you read his post.

Interesting question and I look forward to hearing Meconopsis’ view.

In the meantime, have you read Gordon Aitken’s blog post on Substack on the subject. Put simply he is broadly in favour of reducing what he regards as the excess solvency.

Are you sure about the p/e of 19.78? LSE shows it as being 48…..

Otherwise your post makes a lot of sense

Divi,

Look for @gordonmaitken on Substack

Nolo

Hi Pokerchips,

I think you are right on this. Gordon Aitken wrote an excellent piece on the risk of private credit recently which effectively ruled it out as an issue in the UK due to the regulatory environment. The US on t’other hand….

Those who are interested in this market will never regret reading Gordon’s posts. I’m not sure how to add a link on my phone or I would do so.

GLA

Nolo

Finley,

The trouble is that labour governments (and occasionally t’other side) suffer from believing the fallacy that governments can invest to grow the economy. They are often people with zero real business experience and yet they believe that growth will follow the squandering of tax payers funds and that they as the government can pick winners. I was a babe in arms when Tony Benn thought he could do it and many have tried since. It is delusional. Can anyone name a lasting commercial success from government investment that actually grew the economy?

The reality is that the best a government can do is create an environment in which business can thrive and entrepreneurs can take risks whilst protecting consumers.

We won’t get that from the current government. Let’s hope that they are replaced in 2029 by a government that gets it. I am not going to hold my breath.

Is there a more dispiriting phrase in a budget than “this government is investing in…..”?

Anyway, enough of politics.

GLA

Mike,

That would have been Gordon Aitken’s article. Blackfriars posted it on the PHNX chat.

I have reposted below. It is well worth a read for those on here who are interested and haven’t seen it.

https://substack.com/inbox/post/174350159?utm_campaign=post&utm_medium=web&triedRedirect=true

I’d love to hear Strictly and Meconopsis’ views on it.

GLA

Actually, Licker, I think you meant me rather than Pace.

You may well be right and I grant you that it isn’t a given but I can tell you that on 4 of the 5 times I have done it I have made a reasonable profit selling cum div and then buying back ex div. I tend to do it with circa 5% of my holding. And that is before considering that as I tend to reinvest the dividends in more shares and the price often rises when the dividend is paid I am getting rather more shares with my 5% sale and buyback than if I had merely done nothing.

I sometimes wish I was braver and did more than 5% but at that level it won’t interrupt my sleep patterns.

GLA

Buy some every month if you think the price will fluctuate. Buy and hold if you think it is going to continue to rise (as I do). Or wait till it goes ex div and buy then as it normally falls by more than the div when it goes ex div.

Personally, I am happy to be very long in these and have bought at prices far higher than this. I have also bought at much lower prices and my weighted average is comfortably below the current sp. I will continue to add when I can.

GLA

Madman,

The loss is a nonsensical result of changes to accounting rules. It is better to look at cash generation when considering life insurers ability to pay dividends.

There have been many posts about this on this board.

Worth doing some research.

Almost. I am massively overweight in LGEN and PHNX.

I think both are (still) significantly undervalued and the dividend is secure.

Whilst I like seeing the price rise (and I am sitting on significant paper gains on both) I would like the price to fall so that I can continue to add. My intention is to hold and collect the dividends till I shuffle off.

GLA

I’m not sure that earnings are a good basis for deciding whether the shares are cheap or not given the IFRS changes. Cash generation is a better indicator of profitability and that is looking good.

What makes you think dividends are to be paid out of debt? Have you read the accounts?

Arbinv,

Interesting read. Thanks.

So it looks like PHNX with a market cap of £6.91b as I write trades at nearly an 18% discount to its Own Funds of £8.4bn.

Gives me further confidence to top up and hold. What would it take for the co to trade at a premium instead I wonder?

As you note it currently has little or no profile in the US and that might help.

GLA

Nolo