at 230p today, having studied the trading statement and commentaries. Continuing to write nearly 10% more business every year outweighs the risks or the known damage done by bad weather this Spring. Hopeful of sp progress and healthy interim in August.
Having been overbought last Summer I sold my stake too soon. It now looks oversold, I think on fears about changes to something called Ogden and a decline in new car registrations? The business has been growing strongly, has a well covered progressive 5.5%+ yield, several positive broker analyses and consensus value of 280p.
I have taken a small rebuy stake ahead of 9.4p ex-div on Thursday, and I will double up when the sp is right approaching what I expect to be an encouraging trading update ahead of the MayDay break.
Sir Wood has publicly announced the Esure has a target of 3m policies by 2020 and neither govt faffing around about Ogden rate nor a CEO not conversant with social media will stand in his way. The company under CFO temporarily moved serenely onwards with premiums up 25% and policies up 9% to 2.373million. PBT up 35%, combined ratio better by 2.19 to 96.7%.
Vast majority is motor, but ancillary items like fees for payment by instalments. Nonetheless gratifying to see a profit on actual underwriting as well. Car premiums may plateau from this point (cannot see yet another IPT rise this year).
Rather shrewdly the reinsurance extended from 1 July to 31 Dec, as catastrophe reinsurers in many sectors lick their 2017 wounds and seek rises. At least Esure will suffer same measures as everyone else at year end (and by then Ogden may have been clarified!)
There is of course a finite number of extra UK cars each year, so the extra policies come mainly from people like the AA.
The great expansion has continued because Ogden has not been reversed yet and as the year has progressed other insurers have suffered hefty reinsurance rises after Esure. Last quarter comparison with market leader Direct Line showed we ate their lunch, this quarter we enjoyed a nice coffee and liqueur at their expense. Figures for motor only.
Year to date gross written premium Esure + 30%, DL 7%.
policies in force Esure + 19%, DL 0.2%
Just as important, projected combined ratios were getting closer, being 96-98% for Esure, whilst DL estimate 93-95%, that is to say profitable.
There was a rumour Sir Wood was thinking of selling his 31% stake, now would be a good time before the monolithic DL cranks up into higher gear and Ogden is partially reversed by the government. Enjoy the time in the sun, clouds are gathering on the horizon.
Car Reinsurance kicked in and created platform for growth as I predicted. Renewal costs of same up by 33%, easily absorbed by the higher premiums in the marketplace. For comparison, Direct Line premiums up 5%, policies up 0.5%. ESure premiums up 22%, policies up 8%. In the short term we ate their lunch.
Operating ratio down 2.6 points to 96.6%, against DL down 0.7% to 89% and those figures show both why DL is market leader and the considerable scope for Esure to improve systems and underwriting ability before matching them.
Home business for both marking time until rates can be increased.
Both companies easily met their government reserve standards to the extent each was able to increase dividends. For Esure roughly from 3p to 3.4p, plus special to total 4.1p.
The window of opportunity will rapidly close in remaining period as Ogden shock wears off and companies adapt, so Esure now needs to consolidate gains and work on reducing further their combined ratio. Dyor
"A new dividend policy and strong half-year results ensured LSE:DLG:Direct Line's telephone on wheels was ringing for investors on Tuesday.Taking the opportunity to rebase its dividend for the first time since its IPO five years ago, the insurer ..."
"A few months after splitting from the annoying tenor Gio Compario, LSE:ESUR:esure is hitting the right notes with investors through a surprise dividend windfall.The Sheilas' Wheels insurer wrong-footed the City Friday by offering a total pay-out ..."
Today bought Next, Greene King and Esure, each for the SIPP. All have their problems but are solid, we'll run companies making real profits and paying decent dividends, which should be sustainable. All are trading well down from their highs of the last three years.
In Esure's case they have rebased their dividends, bought the remaining half of Gocompare and sold off the entirety. Flush with cash and anxious to expand, today's irrational decision on injury compensation to switch to a negative interest rate plays into the hands of Esure given their reinsurance protections against large single events exist until July.
It is likely several insurers will need to raise rates across the board, so Esure can be proactive and scoop up increasing market share and income ahead of the renewal/reshaping of the excess loss deals. Their RNS on the subject indicates the damage and likely path forward.
There may be greater churn and the chance to undercut competitors on individual renewals, by raising rates proportionately less than other companies.
Of course the market may crash, but from the lowly current P/Es and share prices of each of these companies downside is limited.
"eSure Group (LSE:ESUR)We're looking at ISA compatible shares currently, including some dodgy punts, along with some which pretend sanity. Please remember we only comment from a trend perspective and you may feel it wise to check some fundamentals ..."
" ESURE INSURANCE (LSE:ESUR) We're looking at ISA compatible shares currently, including some "dodgy" punts, along with some which pretend sanity. Please remember we 'only' comment from a trend perspective and you may feel it wise to check some ..."
Hi folks - does anyone know what percentage of the base cost is now apportioned to go compare compared to the remaining esure shares? Will be helpful to have this info for CGT calculation as and when I dispose of either shares in the future. Many thanks
I've always found gocompare exceptionally irritating but it is a strong brand and there is a lot of space for growth,plus post demerger esure becomes a strong possible takeover target,so I'm happy to wait and see what happens
As shareholders, we should see no difference in the short term, as we will still own the same assets. However Gocompare is a bit of a tiddler to make its own way in the world, I reckon. I can see many shareholders dumping these as soon as they are allocated, so expect a sharp drop.
Beaufort's note from this morning on Research Tree: "The decision to review strategic opportunities for Gocompare.com is a good initiative considering the positive results anticipated from the latters business. In the past one year, esure has taken a lot of steps to boost the business of Gocompare.com. The possible demerger of the business would enhance the value delivered to shareholders. The appointment of Mr Crummack would also support Gocompare.coms business as it expands in insurance companion and focusses on a range of products. Nonetheless, the claims environment for the motor market remains weak which may hamper the earnings of esure."
"This opinion can't be ignored, but unfortunately we've absolutely nothing to suggest the next movement at LSE:ESUR:Esure will happen this week. It's just that our software says "it's gonna go" so we've placed a demo trade in the hope the four ..."
First quarter update today. The best one for quite some time. Hopefully the plan is coming together! All figures are up. Stands good comparison with HSTG, DLG and LRE, the latter also out today. Broker targets 275-307.
I agree that this is oversold, but it should drift lower still ex-div. I expect it to ultimately get into the low 220s again, even if there is a bounce today. This is a decent wee profit-making company, with an excellent dividend policy, but the div is the only reason to hold (as I do). Don't forget profits fell by 20%, so I expect the price to ultimately do the same.
It is worth noting that reports have already stated motor premiums are on the rise, so any rise here will not necessarily see a drop in premiums written.
"Motor insurers have stalled amid tough competition and rising claims, and LSE:ESUR:esure is no different. With the income statement for its motor business a wreck, investors fled the scene on Monday, sending shares in the Sheilas' Wheels owner ..."
" ESURE INSURANCEÂ (LSE:ESUR) Is one of these rare beasts, an insurance company without a furry toy talking down to the audience. In fact, didn't their actor actually appear in Top Gear? Anyway, we like their chart as it's looking quite simple. ..."
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