One of the Lloyds Insurance Brokers and trading derd cheap on a p/E of only just over 4. There is of course a reason for this and it was the termination of talks with Highways Insurance Holdings Plc (late april) were both parties jointly terminated a possible combining of their respective businesses.

Investors took this as a negative sign with Cox and the shares plummeted and have been well oversold.


The plusses are that you can snap this up at a P/E of 4.2

2 Directors have bought into the recovery

The share trades at a large discount to the sector

Last results were excelent

The forward statement is very encouraging and business is well on track

The share is in uptrend and has been for 4 consecutive days.





please DYOR.

cheers GF.

Might have ticked up in the morning but it fell down this afternoon.

No problems, the reasons maybe in this piece re- to the US poachers..........

Paterson's share picks
FundWatch, This Is Money
18 June 2004

N OUR regular column, Andrew Oxlade takes share tips from the City's top stock-pickers...

FUND manager Adrian Paterson is backing a selection of shares in insurance firms and small oil companies.

Paterson is so impressed with the energy sector that he has ploughed 15% of his 314m Artemis UK Growth fund into such shares, with explorers Regal Petroleum and Cairn Energy as the biggest bets.


He is not the only respected fund manager* to buy into the oil price boom. Two weeks ago, FundWatch revealed legendary stock-picker Anthony Bolton had taken a large punt on BP, Shell and Cairn in his Fidelity Special Values investment trust*.


'We've got a high oil prices and good reasons to think that will continue,' says Paterson. 'There's been no major discoveries for several years, plus theres high demand in Asia and very rigid supply.'


While Paterson does not have Bolton's unrivalled three decades of running top performing funds, the 36-year-old has already enjoyed considerable success. His Jupiter Undervalued Assets, Jupiter Smaller Companies and Primadona funds performed relatively well up until a career break in 2001.


In September 2002, he returned to the City to take control of the Artemis UK Growth fund. And in the past year, the fund has shone, returning 30% compared with a 13% rise in the UK stock market.


The largest holding is Regal Petroleum, an Aim-listed* oil and gas explorer. The company, which looks for gas in Eastern Europe, has also made discoveries in Greece. 'The reserves may be in excess of what has so far been talked about,' says Paterson.


The shares have risen from 80p to 400p since Paterson first backed them last year.


The explosive rise of Cairn shares has been more widely recognised. Fresh oil discoveries in India have sent the shares rocketing from less than 400p at the beginning of the year to 1180p.


He has avoided leviathans such as BP, Europe's largest company, because he believes its shares have grown too expensive. However, he says Shell is the exception. Its shares tumbled when the company admitted overstating reserves earlier this year.


Anglo Irish Bank makes up 3% of the Artemis fund. 'The management have a fabulous track record over many years,' says Paterson. The company, whose staple trade is lending to small firms, has also benefited from the booming Irish economy.


Evolution Group, the investment bank previously known as Beeson Gregory, also makes the portfolio top five. Shares in stockbrokers tend to rocket when stock markets rise but plummet further than other sectors when markets fall. Paterson says Evolution has some bear market* protection with more than 100m in the bank. 'If the market falls then Evolution would be ideally placed for buying distressed rivals,' he says.


Lloyds of London insurers make up a bullish 10% of the portfolio. These niche operators were unloved by investors until the 9/11 attacks on the US. The additional terrorist threat allowed them to hike premiums on virtually all policies and they have been rising ever since. However, the first falls in premiums spurred many fund managers to exit in recent months.

Paterson, on the other hand, believes a worst-case scenario is already priced into the shares. Hiscox is the largest insurance holding but he has also backed Chaucer, Beasley, Benfield, Brit, COX, SVB and Wellington. He also believes large Bermuda-based US re-insurers may be interested in snapping up bargains in the UKs fragmented insurance sector. 'That would really shake things up,' he adds.


Shares in gold mining firms could also pay dividends* if the decline in the dollar continues, as Paterson expects. Investors head for the safety of gold bullion when the Greenback lets them down. This pushes up the value of gold miners. Paterson holds Avocet Mining, Randgold Resources and Celtic Resources.


Other FTSE 100 holdings include banks Lloyds TSB and Barclays because they are 'cheap with big yields', and mmO2 because of its takeover potential.


IP2IPO* is one of the more unusual holdings. The company has bought up the rights to develop nascent products from the chemistry departments of leading universities such as Oxford, Southampton, Londons Kings College and York.


The company paid 15m to Oxford for a 50% share of profits for the next 25 years. It then develops ideas into companies and spins them off on the stock market.


'It's very difficult to value,' admits Paterson, 'but I feel the value will go a lot higher especially if they find a blockbuster drug. It's a 20-year investment for me.'


Paterson, a fan of new floats, has not touched an IPO for several months as they have been 'absolute rubbish'. His most recent buys were Civica, which provides IT services to local authorities, and Titan Europe, which makes tractor wheels.


Paterson is cautious about the stock market as a whole. He has made no new investments for two months and has 5% of the money is tucked away in cash accounts. ENDS

cheers GF.

Started to move northwards again.

cheers GF.

Have you noticed the tax charge was just 8.2% for the year.

Back to a normal tax charge of 30% this will surely impact earnings per share & therefore p/e?

Looking at last years profits the tax charge was just 4.3m. On a normal 30% tax charge they would have had 15.63m deducted from profits & therefore eps.

reference COX INsurance there was a big ? mark as to whether their reserves were adequate which is so vital with insurers as so often final claims costs are higher than even prudent estimates.

how is the pension fund....massively under funded. i do not know

are their substantial options in favour of executives which could greatly water down ones equity holding.

i wondered as to the real reason for the departure of UTLEY who had developed a fine career since his days at the halifax insurance company.

utley was close to wood of DIRECT LINE fame and fortune. i continue to hold a substantial number of cox shares in anticipation of a takeover from WOOD.. ..my holding is at a sharp loss following the twin towers disaster. also i had no idea that cox was a specialist insurer of nuclear reactors in russia. one never knows what horrible risks an insurer is taking on and that was the case with cox albeit a reasonably successful exit was made in lieu of possible liquidation.

Strange MPW777 that you own a substantial number of Cox shares but yet you dont know about their positive reserves, their very adequate pension fund and you also make these other claims. Very strange I feel, as I check out everything possible before buying into a share and I can tell you this I have no fears on any of the negatives that you have put forward and neither as the top fund manager Adrian Paterson of the Artemis UK Growth Fund who as bought a substantial holding. I feel there maybe other funds also buying into this after last weeks very large buys.

Could you please give the thread some insight as to why you have not checked out these issues although you hold a substantial number of Cox shares????????.

cheers GF.

Identified by the Value investor Stephen Bland of the Motley Fool as a cheap value share, please see link.

http://www.fool.co.uk/valueinvesting/2004/vi040611.htm

cheers GF.

Here it is again.
http://www.fool.co.uk/valueinvesting/2004/vi040611.htm

cheers GF.

Oh and just to clear things up on the tax front, one item which was certainly misunderstood or misrepresented by a previous poster. From the companys last stated accounts.................

Taxation

The Group has significant tax losses available to shelter the results of
operations for a number of years to come. Recognising this and the
predictability of much of the Group's profit streams in 2001 the Group
established a deferred tax asset of approximately 40m. Following a further
review of future profit streams, and agreement with the Inland Revenue of the
treatment of items arising from the discontinuation of Commercial the Group has
recognised a further amount of approximately 22m.

cheers GF.

Is that from 2001, three years ago goldfinger?

mpw777 you say:
reference COX INsurance there was a big ? mark as to whether their reserves were adequate which is so vital with insurers as so often final claims costs are higher than even prudent estimates.

how is the pension fund....massively under funded. i do not know


Do you have any further info on this please?

Oh & if they have sheltered losses still g/f why was there a tax charge at all?

For those posters on the thread bears or bulls and who are not out to deliberately mislead, re- to tax, please see RNS 17th March 2004, results for year ended 2003. Alongside the annual report and accounts this also clarifys, note the present and future tax postion of the company.

cheers GF.

Just ticked up a penny, NICE. Way undervalued on a P/E of just over 4.

cheers GF

Guys,

This dispute has rumbled on for some time now and there is obviously a certain amount of bad feeling here.

I have received complaints from both sides about different posts and posters and myself and Mike have taken action where we have deemed it necessary.

It is obvious that from time to time there will be disputes of this nature when views conflict. I would ask that we now return to sensible debate.


Ian

This is one reason I see also for the low rating:
From the RNS 17th March:

Calculation of inwards reinsurance claims remains subject to further subjective
assessment because the Company must rely on estimates of loss provided by the
intermediate insurer or reinsurer.

Reinsurance recoveries represent the amounts expected to be recoverable from the
syndicate's reinsurers in respect of reported gross losses. As currently
estimated, gross ultimate claims will exceed the vertical limit of the Group's
whole account reinsurance protections. Calculation of such recoveries is
particularly sensitive as to whether or not reinsurers will follow direct
writers, should the courts deem that the attack on the WTC constitute two losses
rather than one. After taking legal advice, management consider that the likely
treatment from reinsurers should not prove disadvantageous to the Group. It
remains difficult to reach a final decision prior to resolution of the dispute
and establishment of a legal ruling regarding the underlying claim. Should
reinsurers argue successfully that the reinsurance policy should respond on a
one event basis only, even though the inwards claim was deemed to be two losses,
the resulting net loss to the Company would increase materially from the
estimates currently provided. The amount of reinsurance recoveries also remains
sensitive to potential insolvencies of reinsurers, with a current assumption
that there will be no major default.

Whilst the directors consider that the loss estimate is the best that can be
made on the basis of information currently available, it remains subject to
uncertainties as described above. Further information could be received which
may cause the estimate to be adjusted, either upwards or downwards. The cost or
benefit of any such future adjustments will be reflected in the Financial
Statements for the period in which the adjustments are made. It may take a
number of years to resolve these uncertainties.

IanT,

Thank you, I hope you will continue to take action, more often even. I am often so fed up of seeing certain names crop up I don't even read the posts. The main reason I renewed my membership with Shares is to read the sensible information packed BB and wish that some folks would mind their manners and find other ways to pass their time.

There, been wanting to say that for a long time.

angi,

I appreciate your comments. A little tip to help you filter out any poster whom you do not wish to read would be to use the squelch facility. therefore, you can read through the posts you want to read unhindered.

Ian

IanT

Thanks again, I don't know why I didn't think of that before, it's amazing.

third eye posting no 15

posting no 20 gives you a part response. however it is also the case that one just does not know what insurers are underwriting and how adequate are their reserves. many insurers do not even have a 'wing and a prayer' i have an active knowledge of this scenario. over the decades most insurers have priced for turnover and not for profit. for instance when INDEPENDENT went down AXA and ROYAL SUNALLIANCE took on automatically all former business of independent which was offered by insurance brokers. complete madness...it turned out that,for example, royal sunalliance was nearly broke solvency-wise and could well have been forced out of business

as regards the pension fund of COX my point is that there is so much funny business within pension funds coupled with their liabilities that the trading company can be ,in reality, a pensions office. all trading companies can or will encounter severe difficulties with a final salary pension fund . bradstock is a fine example....and the shareholders of W.H. SMITH would be in a more favourable bid position if their pension scheme had not given so much power to the trustees of the final salary pension scheme. thus one even should examine the pension deed itself which really no one is able to do. i hope this helps goldfinger and third eye. i shall obtain a copy of cox accounts and look at what they have currently to say about their pension fund...with a pinch of salt.