Tuesday 10 October 2017 by FIIG Research Company updates

Company updates – Eric Insurance and McPherson's

This week, a research report on Eric Insurance’s FY17 results and McPherson’s special resolution passes

Eric Insurance FY17 results

We have provided a research report on Eric Insurance's FY17 results released on 6 October 2017.

Main points:

  • Eric Insurance Ltd (Eric) bonds are currently at an indicative mid price of 100.9 and have a yield to worst of 9.70%, which is the highest in its peer group
  • Eric’s FY17 results were weaker than our expectations due to a number of issues. These included a challenging operating environment characterised by regulatory changes, lower than anticipated renewals from the Swann business and heightened claims experience from weather events
  • Eric is now in compliance with its Tier 1 capital requirements, that is, to have a Tier 1 capital to Prescribed Capital Amount (PCA) ratio of at least 80%. This was remedied through organic methods. It was 80.24% as at 31 August 2017 (71.04% 30 June 2017)
  • The group’s total PCA ratio remains well above the required level of 1.00x, at 2.02x as at 30 June 2017 (1.62x 30 June 2016)

The report is available here.External link - opens in a new window Note the content requires a wholesale login

McPherson’s special resolution passes

In September, a special resolution was put to noteholders of McPherson’s (MCP) 7.10% March 2021 and BBSW+4.30% March 2019. The purpose was to obtain approval to define the term “impairment” and alter covenants so that the maximum distributions to shareholders can be made, excluding any non cash impairment of intangible assets.

The resolution passed and noteholders will be contacted directly with further information.

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