THE insurance industry has faced a tough time during the recession,
but there are signs that the worst may be over, which has prompted
Lombard Insurance to seek a listing on the London Stock Exchange.
It is coming to the market in a placing and intermediaries offer
sponsored by Charterhouse Bank. Brokers to the issue are Charterhouse
Tilney Securities.
The issue price of 160p per share values the company at #57m, some #3m
lower than had been hoped for. This reflects the downturn in the London
stock market in recent weeks.
On the basis of the forecast net assets at June 30, 1994, of 146.0p
per share and of pro forma forecast earnings per share for the year of
17.3p, the issue price represents a premium to net assets of 9.6% and a
price earnings multiple of 9.3 times.
The notional dividend yield, based on a notional dividend of 7.7p net
per share, is 6p at the issue price.
The company's principal subsidiary, Lombard General Insurance, is an
authorised general insurance company writing commercial and personal
lines business in the UK provincial market. It has nine UK branches,
including a small but growing office in Glasgow, which has its own
commercial business portfolio.
Lombard is small in national market terms with just 0.5% market share,
but it is more interested in quality rather than quantity of business.
To that end it deals with 1000 brokers and within that, a circle of
under 100 preferred brokers who provide 18% of its motor business and
33% of the commercial portfolio. It concentrates on low to medium risk
with no exposure to the London market and has therefore traded ahead of
many of its rivals during the recession.
Direct insurers such as Direct Line have attracted a lot of attention
in recent months, but Lombard's managing director, Andrew Laing, is
confident of the group's growth potential. This will come through
increased business for niche groups.
It has specialist businesses providing deposit guarantee cover for
house purchasers, motor policies for driving schools, older
motorcyclists, golf clubs, sailboards and companies with the BS5750
quality standard. Niche areas tend to be less price-sensitive and
competitive, enabling the group to at least maintain margins.
Application forms for the intermediaries offer should be submitted by
10am on Friday, May 13. Shares dealings are due to commence on
Wednesday, May 18.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article