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TGIC and the Home reinsurance market in the US

4 Posts
Tjohn
0
TGIC was a small and successful reinsurance company. Now already for two years in runoff

Using the Claim model I did compute four scenarios from pessimistic to optimistic.

Pessimistic I

1-Net settled claims down only 12% , not keeping up with the downturn in default rate of 24%

Result is a stock value at the end of 2013 -$4,93

Normal II

2-Net settled claims down proportional with the down turn of the default rate of 24%
Result is a stock value at the end of 2013 $8,25

Optimistic III

4-a Compensation for the complaint against American Home Mortgage $111 million in damages and Net settled claims down only 12%

Result = a stock value at the end of 2013 $7,13

Optimistic IV

4-3-a Compensation for the complaint against American Home Mortgage $111 million in damages and Net settled claims down proportional with the down turn in the default rate –24%

Result = a stock value at the end of 2013 $16.57

Yo can download the model from:

www.visionfactory.nl/VisionFactory/GQ...

www.visionfactory.nl/VisionFactor...$...
Tjohn
0
The most recent SEC filling is indicating a tax presev plan of $450 milj

1. What are the NOLs?
The NOLs are the Company’s net operating loss carryforwards and other tax attributes that can generally be used to offset our future taxable income and
therefore reduce our federal income tax liabilities. The Company’s ability to use the NOLs could be adversely affected if we experience an “ownership
change” as defined under Section 382.
2. How important are the NOLs?
We had approximately $409.3 million of net operating losses as of December 31, 2010. While there can be no assurance that Triad will generate taxable
income in the future, we believe that the NOLs are a very valuable asset. Assuming a 35% federal income tax rate, and that we are able to use all of our
NOLs to offset future federal income tax liabilities, we could save up to an aggregate of approximately $143.3 million in federal income taxes over the
next 20 years. Because the NOLs can be carried forward over many years, we may need to continually manage our Section 382 risk for a significant
period of time. Also, the amount and timing of our future taxable income, if any, cannot be accurately predicted; therefore, we cannot estimate the exact
amount of NOLs that we can ultimately use to reduce our federal income tax liability.
Tjohn
0
TGIC

Based on the results of Q1 we have adjust the parameters and see as result a good performance of TGIC
The model is using the settled claims, income revenues and assets as the basic parameters
The model use a estimate of the settled claims for 2011 based on the results of Q1 2011 as starting point and the assumption is that the settled claims will continue to go down.
From the MICA data we see that the cure rate is back to the normal figures ca 93% similar to the year 2000-2004.
We estimate the setlled claim for 2011 on 350 milj. We think that is a realistic figure. Income is very stable and we estimat it on 180 milj for 2011 and use a for the next years an anual reduction of 10%
We added the operational cost into the model
We redused the profit on capital from 6 to 3%

AS result we will have a stock value in 2013 of $10 in 2014 $7.98 and than in 2015 up to $9 and in 2016 $12.87 2017 $17.62

Download the model:

www.visionfactory.nl/VisionFactory/GQ...
Tjohn
0
TGIC

Based on the results of Q1 we have adjust the parameters of the claim model and see as result a good performance of TGIC
The model is using the settled claims, income revenues and assets as the basic parameters
The model use a estimate of the settled claims for 2011 based on the results of Q1 2011 as starting point and the assumption is that the settled claims will continue to go down.
From the MICA data we see that the cure rate is back to the normal figures ca 93% similar to the year 2000-2004.
We estimate the setlled claim for 2011 on 350 milj. We think that is a realistic figure. Income is very stable and we estimat it on 180 milj for 2011 and use a for the next years an anual reduction of 10%
We added the operational cost into the model
We redused the profit on capital from 6 to 3%

AS result we will have a stock value in 2013 of $10 in 2014 $7.98 and than in 2015 up to $9 and in 2016 $12.87 2017 $17.62

Download the model:

www.visionfactory.nl/VisionFactory/GQ...
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