Continued strong Quarter from Ensurance especially in the core Australian division.

Great to see not only a positive operating cashflow but also continued profitability.

With one off expenses associated with the settlement of the sale of UK division and set up of casualty division within Australia these costs will be yielding future growth in revenue and profitability.

Looking at the quarter I sense its a bit of a reset in terms of preparation of the sale of the UK division and formation of the casualty division in Australia.

Growth will thus occur both organically via price increases but also via new products as mentioned in 4C across the environmental impairment and general liability area across the Australian Market.

@Invmum good call re GWP growth and slowing nature and something to keep a close eye on but feel this the beginning of the journey for Tom and the team not a flattening.

Finally concur with @Mujo re the disciplined manner in which capital is being used. This is a real strength and look forward to the future quarters especially with the receipt of the 6.2 million in cash (in Q3 2023) which will be added to the 1.163 million in cash currently.

Disc. Top 5 position in RL and SM

@mujo appreciate the post and interesting development in the insurance, specifically MGA space.

For me this clearly shows the strength of this sector at the present time and attractive margins that accompany the players that operate in the space.

Fluent will be tested in terms of the multiples they will need to pay to gain a share in the space in Australia or they will need to wait years to see the cycle adjust and thus multiple offered to be lower.

Fluent's advantage may be the ability to provide funding for any MGA whom seeks to grow and capitalise on the positive conditions presented ie, accelerate grow. This makes sense on one hand but the question would be at what cost would equity be offered?

Fascinating to see unfold over the next 5 years.

Tom Kent - ENA CEO has repeatedly commented on the stretched mutiples in the market place presently and the need for patience and discipline.

In respect to being acquired themselves i suspect the offer for ENA to give equity away would need to be very attractive as the high insider ownership would simply lead to dilution.

Would love to here anyone else's thoughts?

DISC: Holder of ENA in RL and SM

Chairman Tony Leibowitz continues to top up at ENA with further purchase of over 320,000 shares at 0.23c this week.

Holding now sits at 17.5% with Tom Kent - CEO holding a further 15.8%

This takes past 12months purchases from CEO and Chairman to just under $690k

Disc Hold

Hi Straws had the opportunity to attend AGM of ENA on Wednesday 23rd Nov and wanted to share some insights in lookng ahead.

Firstly declaring my holding in RL and SM of ENA.

Secondly having attended larger AGM's it was fantastic to be able to able to sit in more of a intimate setting to complete the formalities and then break out in open dialoge and in turn one on one discussion with the key leaders of ENA.

Specifically , CEO - Tom, CFO - Lauren , Chairman - Tony and National Sales Manager in Nick.

In doing so the ability to explore the edge ENA have created and looking to exploit was of high interest and being able to ask how this will be executed to confirm this edge is real .

Key take outs:

• Ensurance is a very united and focused/ disciplined team led by Tom Kent driven to deliver material returns financially for shareholders for not only in the short term but over the next 5yrs plus.

• Current climate of insurance underwriting is presenting strong organic growth within Australia particularly with high margins when comparing to UK as an example. Much work has been undertaken this year to develop new products base on market trends which will be coming on stream over the next 6-9months and offer broader options for customers where traditional insurers are not covering at all . Areas include professional indemnity , management liability and cyber liability.

• UK sale for 8.2m (6.15m cash and 2.05m script of PSC)is on track and waiting for clearance of two regulatory checks. This cash when is lands will ensure funding for growth in Australia.

• 2022 has seen key positions in Australia fulfilled ( Nick in National Sales and Richard in Vic. Andrew Enc as well other Senior Underwriters) . Growth in Gross Written Premium (GWS) has flowed already but 2023 and beyond will see further opportunities.

• When delving deeper into the recruitment it is pleasing to see the focus on quality candidates whom are experienced and proven whom had worked with Tom Kent prior and were motivated to shift away from the larger organisations such as AXA due to the slow and bureaucratic nature of how they run and invoke change or meet the changing needs of the insurance market . This was explained as an edge currently being experienced for ENA with other underwriter's seeking to follow Nick's move to ENA (Nick did outline he does not see this continuing too long but in the current tight labour environment was a positive) .I was also able to explore what made a good Senior Underwriter and the response was interesting in terms of gender . We discussed that women's strengths of listening and paying attention to client requirements as well as cover the details is resulting in stronger results than their male counterparts . This is due to male senior underwriters tending to seek the results without necessarily building the relationship.

• Acquisitions may occur in the short to medium term but will only occur at reasonable multiples ie, under 8x EBITDA .This will be funded with cash where possible or equity / debt . Tom indicated ENA had already walked away to several opportunities but would not entertain acquisition at any price. Growing organically is the main focus .

• it was also discussed as the business grows over the next 3 plus years Ensurance may consider taking on the first million dollars of risk . This will in turn enable improved margins to transpire ie form 15% to 18% or higher.

• Liberty agreement working well and ENA look to exploit the opportunities it presents.

What to watch :

• Growing Operating Margins (especially in Australia)
• Growing GWP , 30% plus per annum
• Positive and Growing CF and Profitability
• Acquisitions to be purchased under 8x EBITDA
• Remain positive and optimistic for the future of ENA
• 
  

Call out to to Tom P fro TEP capital . Great to meet him at the AGM and share the experience.

Solid results released by Ensurance this morning .

Key metrics and highlights .

• Rev growth of 35% total to 2.1million for the quarter .
• Australian growth was 43% v 22% in UK (which is in the process of being sold)
• Q1 2022 rev was $955,000.
• Gross Written Premiums 16.4mill for the quarter up 28% versus Q1 2022.
• Unaudited Qrtly profit to $265,532 v $271 Q1 2022 .
• Profit Margin expansion to 12.87% v 0.02% LY Q1.
• Expect to see this continue expansion to occur in 2023 and beyond especially following the sale of UK operations
• From a cost side the increases to head count have seen staff costs rise 10% year on year (when taking the average qrtly salaries ) for the quarter to $1,388,000.

Tom Kent - CEO commented on continued strength across all segments and intends to release new product lines in the coming months.

Disciplined nature in terms of growing profitability and shareholder return coupled with high insider ownership and senior management alignment bode well for the next 3-5yrs

Hold my current valuation of 44c

Top 5 position in my portfolio

ENA Q1 2023.pdf

No surprises from Ensurance today with the release of full year results but what is evident is the pivot to Australian market which net profit (excluding head office) was 1.345million on revenue of 2.462m. Net profit margin of 54%.

The Sold UK business although delivering good top line of 4.832m for the full year contributed 262k to net profit on a margin of 5.4%.

The high insider ownership Tom Kent (CEO ) and Tony L (Chairman ) have and the discipline approach to the business displayed provides comfort that the future is positive.

Hold in RL and SM

Top 5 position

Really positive results fro ENA this morning .

Hard to fault.

• Q4 rev was 2.24m up 114% on Q4 2021 taking FY to 7.2mill up 61% on FY21
• Q4 GWP was 16million up 69% on LY taking FY GWP to 57m up 67%
• Q4 was fourth quarter in a row of positive CF ($350k) and has enabled ENA to turn a profit of $224k for the FY . 2021 was a loss of 1.3m
• Debt has been paid off
• 1million in cash on balance sheet ahead of sale of UK business for 8.2m which will be an enabler for growth in Australia at higher margins.
• Looking at the costs side for Q4 they came in at 1.8mill in total. Love the focus on the detail and discipline

ENA Q4 and FY 2022.pdf

In commenting on the year ahead Tom Kent CEO explained the uncertain environment presents opportunity for ENA across multiple areas with professional indemnity area particularly strong

ENA Q4 and FY 2022.pdf

Happy holder on SM and RL

Adding to the comments from TEP Capital i would like to add some further comments on the quality of the team being put together .

Having entered the eastern seaboard this year the lead for NSW Nick Beswick is ex AXA whom was lead senior underwriter with over 6yrs experience . Noted as a great recruitment for ENA.

Similarly in Victoria Richard Carey had been Senior lead Underwriter at Zurich for over 6yrs.

The move for such candidates to join ENA has alot to do with the Liberty agreement and potential upside.

As is always the case the coming 12-24months will see how effective they each are .

Continue to remain bullish on ENA.

Expecting 4th Qrt results to see another positive cashflow and a chance to be profitable

Would also like to see the 1m in debt paid off to Chair Tony L .

Long term i can see a dividend coming to shareholders which would nice.

Good tailwinds and disciplined approach to capital management. Especially in these volatile times

To further add to the comments of the 3rd Qrt results both revenue and GWP grew at 46% and 62% which is in line with the YTD revenue and GWP growth of 43% and 66%.

Looking to see this expand in the coming Quarters as TEP capital eluded to .

Currently 28.8mill of 40mill GWP is being generated out of UK arm with construction driving 60% of revenue and 25% revenue coming from cyber security.

The opening of Sydney on jan 1st 2022 and Melbourne branches May 2022 with two senior underwriters in line with Liberty agreement provides confidence growth can continue to accelerate .(Using what Tom at TEP capital outlined if each senior underwriter employed brings in 3.75mill and additional = $7-8mill additional in GWP annually which is 57% increase for the Australian division).

To support this the reference to the following conditions is another positive indicator for the future.

"The Australian division of the Company has again seen an increase in premiums, particularly in the classes of Professional Indemnity insurance and Cyber Liability insurance. The scarcity of capacity, particularly in construction related classes, has contributed to growth in new business enquiries and retention rates across the Ensurance Australia renewal portfolio"

The reference to scarcity of capacity provides ENA a real edge in what ENA elects to take on to ensure the quality of the GWP is enabling the business to be profitable.

With respect to costs ENA is on the cusp of profitability and in 3rd Qrt its costs were 1.481m which were 9.3% below the average costs of the first two quarters in FY22.

This disciplined nature will no doubt will be real positive as the quarters unfold for ENA.

Disc Held on SM and RL

Yes nice to see the overhang clear.

I was able to chat with Tom Kent today and can align the sentiments of TEP capital.

Tom Perfrement really appreciate the insight you have provided to date on ENA.

The business is strict on where it plays with a keen eye on high margins niche areas which continue to emerge such as terrorism.

Tom having rolled his TKSR business into ENA is keen to pay off debt (last 1mil) and in turn look to distribute via dividends in time if small acquisitions don't eventuate.

With approx 12 small ensurers being independent in Australia Tom Kent made it clear he sees the road to drive GWP organically as attractive as any acquisition if multiples to EBIT are greater than 4x.

Tom agreed that seeking to grow GWP by 20-25% was a reasonable assumption and in line with this remain cashflow positive

This is a bet which provides nice upside with low risk.

Held in IRL (in top 6 position in portfolio) and SM

BT

Liking the announcement and results to come over the coming 1-2 and 3 years

Topped up some more @ 25c today

Strong results for the half and outlook even brighter.

Positives

Growing Revenue

Positive Cashflow and Growing Profitability

Reduced debt

Growing Profit Margins

Opening more areas to win ie , terrorism product, niche cover in professional indemnity insurance, AI product development

Organic growth strong especially out of UK where Gross Written premiums were 20m or 29m for the half

High insider ownership and alignment

Looking forward to watching this thesis unfold and see how market rerates this niche play

Disc. Held RL