About time and hopefully only the beginning of the complete overhaul of the property industry.

Yes - the property industry is emblematic of the rent-seeking economy this country mostly thrives on.

To be fair, it looks like insurance is only part of the focus of the upcoming 4C episode, and although it is a large contributor to profits (~ 20%), it is not terminal even if that revenue stream disappears altogether.

I agree with your sentiments @NewbieHK . I would be even more full throated ......if I wasn't heavily invested in SDF.

It's difficult to draw any solid conclusions from the initial coverage; it's 4-corners after all. Not quite 60-minutes but sensationalist after all. The initial response from SDF has really poor optics which will no doubt not be a positive come the resumption of trading. This may be a great opportunity.

I wait with antici.......pation, to quote Frank-N-Furter.

Amazingly, for people of my generation, Tim Curry is 78 and still alive. Who knew?

JLG got a short mention as well in the 4 corners special.

SDF disclosed last night 5% of ebita comes from strata brokers, so add a bit and thats the total poolt , profits here could fall but they will not lose everything. as for JLG problematic, maybe more so.

That contrasts with ABC’s claim that the profit contribution is closer to 20% (the figure in my earlier post). Wonder where the discrepancy is and who is right…

The ABC’s claimed $43M is not more than 20% of earnings on whatever figure you want to use (statutory or underlying profit) - so that is definitely wrong.

Unless they meant FY23 statutory earnings - and they wrote this article weeks ago.

I’d like to know how they got to the $43M too.

I’d be very surprised if it is anything like 20%, strata is a very profitable niche would be my estimate, maybe less profitable going forward, the vast majority of the business is general insurance broking and then various agency of which strata is a subset, SDF has been very acquisitive which would dilute CHU

Thinking further on this, SDF bought CHU in 2/15 for est (undisclosed) $290m, 5% of its current mkt cap. CHU would be bigger now, say 10% if doubles, SDF is much bigger as well so likely the exposure is smaller than this, so lets say 5-10% of the total worth of the company. accords with SDF disclosure of 5%, more or less. SDF is the provider of the insurance policy, that is it takes a margin on its products. the allegation is that brokers are being incented ie taking 30-40% commission to sell them onto their strata clients. does that make the policies worthless?, no, of course not. is there a risk that SDF has to fine-tune the price of these contracts as they become scrutinised, certainly, so some of the strata book will become less profitable, we dont know how much but it will be less than 100%. All strata still require insurance, SDF and other providers want to make a profit. so SDF may lose some of the profits in this segment to make them comparable to others-who dont add on incentives, so on a fair playing field SDF has to met the market but not price at zero profits. so SDF has a choice to meet the market or lose business. that means the total loss to SDF is something much less than the 5-10%. to be clear they take a lesser clip, the business goes on. that is the bear case. the bull case is that SDF policies are fairly priced, and the losers are the brokers getting the kickbacks, they still have to sell policies that will not be all SDF but spread across various providers. Potentially SDF keeps all the business at close to current margins is the bull case.

ive initiated a position in SDF. it took 13 months for RMD to recover all its GLP1 retreat and reach ATH. This is different, it is not an existential threat (so better), but it is a profit hit (RMD no profit hit) , i believe a small hit, under 5% maybe well under.

hope this comes across clearly.

now this is turning into a rant lol. i met RK in the IPO process circa 2015 and have met him many times after that as a PM. he is the type of guy whose word is his honour, he would be livid that this could be his legacy in the industry, unacceptable. they will work to clean this up, adjust the products and move on, to be honest, i am much more worried about their US acquisition strategy and how they add value against the likes of MMC, BRO etc over there.

could be wrong that my view

That's pretty much how I see it as well:

~1-5% reduction in profit in the bear case.

BUT, what worries me more is the allegations and then the potential reflexive political reaction. The last thing management need is a to spend a significant fraction of their time energy and attention in a long a public investigation into Strata insurance. Plus there is an unknown hit to reputation and potential lost future business from that. I already own but may well top up depending on how severe the reaction is.

Looks like strata was about 13% of GWP in total.

It looks like that 20% estimate includes the part of the agency business which is exposed to strata insurance.