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FIG, FREEDOM INSURANCE GROUP LIMITED
blacksheep
post Posted: Dec 6 2018, 10:51 AM
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Posts: 5,074
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In Reply To: blacksheep's post @ Oct 2 2018, 08:43 PM

SP down 43.64% @ 3.1c this morning following their Update - ouch!

COMPLETION OF STRATEGIC REVIEW AND BUSINESS UPDATE
QUOTE
Freedom Insurance Group Limited (ASX: FIG) (‘Freedom’) advises that the Board has completed its
strategic review process, announced to the ASX on 6 September 2018, and advises it is developing a
customer remediation program.

The strategic review was undertaken with the assistance of Deloitte, to examine Freedom’s business
structure and operating model in light of ASIC’s recommendations contained in its review of the life
insurance industry and the company’s ongoing discussions with the regulator. The Board has
received and considered Deloitte’s review of Freedom’s business.

In working with Deloitte on this strategic review and with the aim of protecting and maximising
shareholder value, Freedom implemented a number of initiatives.

These initiatives included cessation of new sales, changes to senior management, reduction in staff
and operating costs, and modifications to internal processes and remuneration of employees.
As announced on 2 October 2018, the strategic review also assessed future options for its business
model. Following this assessment, the Board has determined there is no immediate commercially
viable option to recommence sales of its life products. However, Freedom will continue to assess
alternative business models that may arise which would enhance shareholder value and deliver
enhanced customer outcomes.

As part of the review, the Board identified that, on a business-as-usual basis and in the absence of
any responsive action, the company may face a liquidity shortfall during calendar year 2019 arising
from the timing of payments of commission clawbacks in the absence of receipts of commissions
from new business sales. In this regard, the company is considering alternate options to address the
potential shortfall. In addition, Freedom is implementing initiatives to improve operational efficiency
and reduce costs.

Notwithstanding this potential liquidity issue, the Board remains satisfied that the company is
solvent, based on the funding, efficiency and business restructuring options available.
Freedom further advises that ASIC has commenced an investigation into past misconduct, which was
highlighted during the company’s recent appearance at the financial services Royal Commission.

Following communication from ASIC, the Board is of the view that the company is required to make
remediation payments in relation to affected customers. Freedom is currently undertaking a
detailed review to determine the size and scope of such remediation, which will be reviewed and
approved by an independent expert. Based on the Board’s initial analysis, Freedom expects to make
a provision for net remediation costs in its financial accounts for the period ending
31 December 2018 of between approximately $3 million and $4 million.




--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Oct 2 2018, 08:43 PM
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Posts: 5,074
Thanks: 2039


In Reply To: blacksheep's post @ Sep 21 2018, 04:02 PM

Confirmed in AFR article that Forager holds 11.2% of FIG.

QUOTE
Forager Funds Management owns 11.2 per cent of Freedom and senior analyst Alex Shevelev said the reduction of staff was in line with the goals of maximising the value of the current trail book.

"The company will have to seriously rethink their future distribution model if it is to meet ASIC's new regulatory requirements" Ms Shevelev said.

https://www.afr.com/business/banking-and-fi...20181002-h1652b

QUOTE
FREEDOM ANNOUNCES BUSINESS RESTRUCTURE
Freedom Insurance Group Limited (ASX: FIG) (‘Freedom’) today announces a restructuring of its
business and changes to its senior management.

As previously announced, the Board, with Deloitte’s assistance, has been undertaking a review of
Freedom’s strategy, business structure and operating model. The review aimed to protect and
maximise shareholder value, in particular future revenue from trail commissions represented by the
value of the company’s trail asset.

The strategic review considered options to transition the business model to comply with ASIC
recommendations following its recent review into the direct life insurance industry. In particular, the
Board notes that Freedom’s upfront commission revenue is largely derived from the sale of final
expenses insurance and the existing distribution model will not meet ASIC’s proposed new
regulatory regime.


The strategic review also has taken into account discussions with ASIC and critical business partners,
and the time and risks associated with any transition.

Based on detailed analysis, the Freedom Board decided to implement a restructuring of the business
involving the following elements:

•iimmediate suspension of new business sales of all direct insurance products;
• continued servicing and renewals of its in force book of policies; and
• restructuring of operations to align the business and staffing with its reduced activities.

Over the coming months, Freedom will continue to work constructively with its business partners to
assess future options for its business model.

Freedom will reduce its staff to approximately 90 employees and will decrease other operating costs
to align them with the reduced activities.

As a consequence of the reduced business activities, Managing Director and Chief Executive Officer,
Mr Keith Cohen has left the company and will cease as a Director of Freedom, effective immediately.
Mr Craig Orton, who has been responsible for managing Freedom’s operations since joining the
company in February this year as Chief Operating Officer, has been appointed as Chief Executive
Officer. Freedom’s Chief Financial Officer, Ms Jenny Andrews, intends to depart the company.

On implementation, these initiatives are expected to reduce annual operating expenses by at least
$15 million. The company will incur approximately $4.8 million of restructuring costs, inclusive of
redundancy payments for affected staff. The company will not generate up front commission
revenue while its sales are suspended. Consequently, the Board expects that, subject to the
character of any new business model that results in a resumption of sales, upfront commission
revenue for the current financial year will be lower than the prior year.

Following this business restructure, Freedom will continue to service its existing 350,000 customers,
whose policies will be unaffected by these changes. Freedom will continue to receive administration
fees and trailing commissions from its existing in force policies. As at 30 June 2018, the net present
value of commissions from its in force polices was valued at $73.971 million, partly offset by a
provision for clawback of commissions of $16.338 million.

The Board unanimously believes that, in light of the significant impacts on the business arising from
the recent ASIC review of the direct life insurance market and anticipated changes to the regulatory
environment, the business restructure announced today is in the best interests of Freedom
shareholders, business partners and policy holders.

The restructure also provides greater certainty for our existing policyholders. The business will
remain focussed on providing an excellent customer experience, including ongoing service and
supporting our customers in times of need through our high quality insurance and simple and timely
claims management.

https://www.afr.com/business/banking-and-fi...20181002-h1652b



--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Sep 21 2018, 04:02 PM
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Posts: 5,074
Thanks: 2039


In Reply To: blacksheep's post @ Jan 17 2018, 01:16 PM

Not sure if Forager got out of FIG in time - SP now 8.6c following revelations from Royal Commission. Ouch!

QUOTE
Another life insurance company, Freedom Insurance Group – which shocked Australia when it emerged it had sold a life insurance policy to a man with Down syndrome despite him clearly not understanding the policy – was also recommended for civil penalties over its handling its handling of vulnerable consumers.

Freedom closed its direct life insurance business in the midst of the hearings the other week.

Ms Orr said Freedom chief operating officer Craig Orton had acknowledged while giving evidence that the company had “engaged in misconduct and conduct falling below community expectation in respect of its treatment of at least six other vulnerable customers”.

Freedom had also failed to report breaches to ASIC, she said. Under the law, such a breach can carry a criminal provision.

“In the week before Mr Orton gave evidence, Freedom filed a breach report with ASIC which related in part to the complaints that Freedom had received in relation to its treatment of vulnerable customers,” Ms Orr said.

https://www.smh.com.au/business/banking-and...921-p50556.html


https://www.shortman.com.au/stock?q=fig
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--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Jan 17 2018, 01:16 PM
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Posts: 5,074
Thanks: 2039


Forager Funds Management Pty Ltd has been accumulating FIG - they now hold 8.67%

Steve Johnson of Forager explains the reasons in the video - https://www.youtube.com/watch?v=Z8UJIbehtvo
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--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
 



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