high turnover, page-21

Jam

Part of me wants to agree with you (the emotionally scarred part!); but part is in denial I guess!

I have read (and re-read!) everything coming out of CIX for the past few years, and if optimism was their key business Kirk would be seeing CIX at $1.11 not $0.11. It does make me wonder whether or not the Board are asking the same question: "ok, Kirk, you talk of a turnaround, so where is it?".

What gets me is that CIX's took CSA and made good money on it (even though in reality it was a claims processing company, and not an underwriter); and yet on their core insurance business they cannot get traction. They have decent (albeit, stagnant) GWP, steady (albeit, boring) investment revenue, and stable (albeit, high) COR: yet they get blown away by their CAT cover several times over the past few years. The real issue is therefore lack of scale: and the only remedy is get big or get out.

I was lucky enough to have a lunch with a few of the QBE guys some time back and they were whinging to me about lack of premium opportunities; and it struck me then - as it does now - that QBE should step up and buy CIX. Its not a quantum leap in thinking to arrive at this, but just a small step of common sense. But the "block" holdings by the likes of Hunter Hall are probably preventing this; and the lack of motivation from the Board clearly prevents any form of affirmative action.

My medium term thoughts on CIX is that it now is not a matter of "if" but "when" someone buys them: and on that basis anything sub-NTA should be good value (surely?). NTA in the mid 20's and a share price of less than half that, make this one to buy and bottom-drawer for the time being.

Or perhaps I am dreaming?...

(and if so, can I have a seat on the Board?)...

Regards
Kit