mwanahisa wrote:Thanks @msimon. You are obviously better at analysing insurance companies than I am, so I will certainly consider your views but I am not done buying Jubilee yet. Indeed, I intend to double my stake in Jubilee over the next one year. Obviously, the froth in the price will come down at some point. But 110 is an incredibly low valuation. I would love to get it at that price, but that is a dream.
Interesting - what you have to say on Panafric. I have a modest stake in it and have been considering whether to exit or to add. I will probably await a valuation of the APA stake to make my move. I also want more clarification on their real estate investment(s) in Runda.
As for Kenya Re, I am fully in agreement with you. But in this market, I have realised that sometimes if you get in too early, you may be lonely for quite a while. But I am happy to get the 5% dividend as I await a big payday sometime in the future. In the short term, I am convinced I will get a 20% return in any case, before too long.
Incidentally, what are your views on CFC Insurance Holdings assuming it trades at the introduction price of 6.157? Could you also weigh in on CIC?
the deal wrote:well msimon knws his stuff but like the so many sharp analysts out there he lacks 1 or 2 things msimon do u thnk kenya re can survive without mandary concessions? do u knw JUB has a stake in reinsurer?
Well CFC at 6 is below book, but the key is what's their underwriting margin.
Ultimately, you want an insurance company for 3 reasons moving parallel. That is for General Non-life insurers
1. Underwriting margins
2. Investment Income
3. Asset price appreciation.
If the demonstrate that ability,the they are good companies. Only buy at sensible px.
About the Runda Investments, i think that falls in their Life portfolio, am not sure about the returns.
One business i admire is CIC. Those guys have been generating alot of float in the last 5-7yrs and the returns have been great. In addition, their management if great and their business model is outstanding, i mean, just business from Co-op bank can always keep them in the green,what of other businesses?
The main challenge for us is the fact that its requirements for entry are hard so we have to wait for IPO,since we are not in kenya and part of a co-operative. However, news on the ground in kampala is that Co-op bank is opening shop in the next few months(probably through a takeover) and we'd like the to come with CIC.
Am not certain of the impact mandatory ceding would have on Kenya Re's bottom line, but i think, the real way would be for the to reduce the government holding, if not, bring in a serious management team. Am sure if Mr. James Mwangi or any of such caliber got hold of Kenya Re, it would be selling way higher. You know, at the prevailing price and earnings, assume they remained constant, and investor today would break even on earnings in 4yrs and on dividends in about 19-15yrs. So thats something. Consider this, companies with lesser earnings or similar earnings are selling for 10 times what kenya Re is going for. So something has got to give. We need a catalyst for this stock to shine and then the patient investors will be rewarded, in the mean time, the 5% is good enough and if reinvested at a higher rate, or same rate then the yield would be about 7-10%.