undervalued insurance stock, page-23

Colonade

I agree. SHOULD pay a dividend as they need to use up some of those franking credits. Just a case of Kirk convincing a few people, such as -

(1) Board members - dominated by some of the major shareholders who may wish to see CIX recoup some of the initial costs (first two years losses arising from establishment of the new insurer) prior to paying dividends; and

(2) Bankers - who may wish to see cash retained on the balance sheet (or debt paid down) prior to release of "potential capital" (retained earnings).

My feelings are that the end of 2008 figure will be a smidgen short of $7 million (based on Kirk's comments last year about the value of AUGIL, and based on the H1 figures). Given that they are already prepared to hand back some capital to shreaholders in the form of a buyback, it would be odd if they didn't pay a dividend.

I will have a stab here and say that CIX will pay a 1 cent dividend for the full year, fully franked (using up aprox $2.3 million of earnings, with the balance being earmarked for debt reduction and future book purchases). That equates to around a 5% after tax yield, which is a good start. End 2009 should be twice that.

Regards
Kit