Firstly I would like to reinforce the comment by Strawman:
"TEPcapital shared a fantastic report and valuation on Ensurance (ASX:ENA)."
In fact although I follow ENA I had no idea that TEPCapital had posted the Straw and Valuation on the company - unless you're checking every time you may miss something worthwhile (I'm not sure whether the Strawman System can provide alerts for members or companies that you follow?).
Now back to ENA. TEPCapital's research report provides great information about the company, and a potted history since it moved from mineral exploration as Parker Minerals (of which I was a shareholder).
Its early days into the Insurance Sector, as an agent backed by insurers (ie ENA simply arranges the Insurance on behalf of particular Insurers - it takes no underwriting position ie no risk) wasn't a success because it had a weak business model. At that time it relied on an IT platform still in development, and was competing with the likes of Youi, Compare The Market, Real Insurance etc that were throwing literally millions of dollars on advertising. And at that time ENA was limiting its insurance product to specific construction policies, in Australia, then into UK. So ENA Mk1 was a failure, and the share price reflected that, falling from high 20's down to 2 cents thereabouts!
ENA Mk11: Enter a new Executive Chairman, Tony Leibowitz, formerly Chairman of Pilbara Minerals Ltd (and Chandler Macleod). Tony provided critical financial support, both as loan funds and additional equity capital to support a weakened balance sheet.
As a result ENA sold its Australian business, and totally revamped its UK operations, and invested in the development of a purpose built IT Platform. And brought on specialist UK insurance agent personnel with invaluable insurance linkages through the UK, whilst removing a lot of excessive personnel and other overheads.
Slowly but surely quarter on quarter you could see the UK business turning around. And then there was covid. So although the UK business got to break even and marginally positive, the covid lockdowns through parts of the UK have somewhat dampened the turnaround. This past quarter, due to be reported on in the next few weeks, is the first after the recent London lockdown, and should be considered as a baseline indicator of future UK profitability.
In the meantime ENA acquired the profitable TSKR group earlier this year, and through its network of more than 70 insurance broking houses Australia-wide should add to the bottom-line from 1st July - notwithstanding that the recent NSW and Vic lockdowns more than likely will have negatively impacted on its past quarter's performance.
More recently there have been 2 additional announcements:
A placement of $2.145 million to Sophisticated Investors (at 23 cents), and the appointment of a senior AXA Insurance Executive, from 1 January 2022 - AXA has already provided $100 million underwriting capacity to ENA previously. Clearly AXA is very supportive of ENA.
It is my view that upon increasing profitability in following quarters ENA will ultimately become visual to the far bigger Insurance Agency broking groups in Australia - AUB (mkt cap $1.75 Billion), SDF (mkt cap $4.76 Billion) and PSI ($1.34 Billion). But with both Tony Leibowitz and the former owner of TSKR holding just under 20% each there simply won't be a takeover unless it is considered a good deal to ENA shareholders. (Note that the current market cap of ENA is $20 Million).
