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Kenya Re HY16
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Liv
#11 Posted : Wednesday, August 31, 2016 1:39:29 AM
Rank: Veteran

Joined: 11/14/2006
Posts: 1,311

KenRe generated negative cash from its operations..... With such profitability something is not adding up.
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alotoftalk
#12 Posted : Wednesday, August 31, 2016 3:01:08 AM
Rank: Member

Joined: 8/27/2015
Posts: 138
Location: Harare
Liv wrote:

KenRe generated negative cash from its operations..... With such profitability something is not adding up.


This can be explained from the following three observations:

(i) They must have classified their purchase of investment securities as operating activities which is not consistent with the FY15 annual report. For Q216 CFO for 12/31 is KES 93,922MM vs KES 2,651,959MM in FY15.

(ii) Looking at the balance sheet they have increased their GoK securities by ~KES 1 Billion.

(iii) And the increase in receivables arising out of reinsurance arrangements of ~KES 1 Billion accounts.
Investment philosophy development in progress...
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VituVingiSana
#13 Posted : Wednesday, August 31, 2016 10:27:42 AM
Rank: Chief

Joined: 1/3/2007
Posts: 18,349
Location: Nairobi
Insurance Firms' accounting is different. Warren Buffett discusses this at length in his Chairman's Statements for Berkshire Hathaway

- KenRe purchased an additional stake in ZepRe and now that it owns 20%+ it accounts for it as an associate not an "investment"
- The Receivables (as @alotoftalk mentioned) jumped as KenRe wrote a lot of business in June 2016. Payments/Premiums to be received in 2H 2016.
- Re/insurance firms may buy "contracts" that require an immediate payment/expenditure but receive payment/income in later periods.

We need the full set of accounts to better understand the negative Operating CF.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Liv
#14 Posted : Wednesday, August 31, 2016 10:33:04 AM
Rank: Veteran

Joined: 11/14/2006
Posts: 1,311
alotoftalk wrote:
Liv wrote:

KenRe generated negative cash from its operations..... With such profitability something is not adding up.


This can be explained from the following three observations:

(i) They must have classified their purchase of investment securities as operating activities which is not consistent with the FY15 annual report. For Q216 CFO for 12/31 is KES 93,922MM vs KES 2,651,959MM in FY15.

(ii) Looking at the balance sheet they have increased their GoK securities by ~KES 1 Billion.

(iii) And the increase in receivables arising out of reinsurance arrangements of ~KES 1 Billion accounts.



These do not explain it fully given that net profit plus non cash items in the PL is more than Kes 2.2 Billion.

Don't you think there may be some asset increases that were not expensed in the PL so that profitability looks good?

Cash is fact profit is an opinion
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VituVingiSana
#15 Posted : Wednesday, August 31, 2016 11:04:40 AM
Rank: Chief

Joined: 1/3/2007
Posts: 18,349
Location: Nairobi
Liv wrote:
alotoftalk wrote:
Liv wrote:

KenRe generated negative cash from its operations..... With such profitability something is not adding up.


This can be explained from the following three observations:

(i) They must have classified their purchase of investment securities as operating activities which is not consistent with the FY15 annual report. For Q216 CFO for 12/31 is KES 93,922MM vs KES 2,651,959MM in FY15.

(ii) Looking at the balance sheet they have increased their GoK securities by ~KES 1 Billion.

(iii) And the increase in receivables arising out of reinsurance arrangements of ~KES 1 Billion accounts.



These do not explain it fully given that net profit plus non cash items in the PL is more than Kes 2.2 Billion.

Don't you think there may be some asset increases that were not expensed in the PL so that profitability looks good?

Cash is fact profit is an opinion

Yes, you are right. And I am a-OK with KenRe.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Ericsson
#16 Posted : Wednesday, August 31, 2016 2:39:01 PM
Rank: Elder

Joined: 12/4/2009
Posts: 10,808
Location: NAIROBI
A 1:1 or 1:2 bonus issue won't be bad at full year results
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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VituVingiSana
#17 Posted : Wednesday, August 31, 2016 3:32:31 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,349
Location: Nairobi
Ericsson wrote:
A 1:1 or 1:2 bonus issue won't be bad at full year results
GoK mambos. I think KenRe should do a Rights Issue like KCB and GoK doesn't participate. This will increase the non-GoK shareholding.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Ericsson
#18 Posted : Wednesday, August 31, 2016 4:04:55 PM
Rank: Elder

Joined: 12/4/2009
Posts: 10,808
Location: NAIROBI
@VVS
Rights issue ya nini.The company has alot of retained earnings and cash reserve.
Mimi nataka bonus shares na dividend apana patia mimi stress ya kutoa pesa rights issue
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Angelica _ann
#19 Posted : Wednesday, August 31, 2016 4:25:04 PM
Rank: Elder

Joined: 12/7/2012
Posts: 11,935
Ericsson wrote:
@VVS
Rights issue ya nini.The company has alot of retained earnings and cash reserve.
Mimi nataka bonus shares na dividend apana patia mimi stress ya kutoa pesa rights issue

Laughing out loudly Laughing out loudly Laughing out loudly You were very vocal and supported KENGEN rights, whereas here umeruka?
In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
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Ericsson
#20 Posted : Wednesday, August 31, 2016 4:48:26 PM
Rank: Elder

Joined: 12/4/2009
Posts: 10,808
Location: NAIROBI
@Angelica_ann;
Inategemea na fundamentals ya kampuni.
Rights issue yake itanikula pesa mingi sana
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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