Author Topic: Digit  (Read 15890 times)

petec

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Re: Digit
« Reply #10 on: January 16, 2021, 11:45:45 PM »
They still Own the same shares and prefs, as far as I know, but a lower % since they’ve just been diluted a bit.

Yes it should flow to book value.
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KFS

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Re: Digit
« Reply #11 on: January 18, 2021, 12:17:08 PM »

So how much is Digit going to trade for if it does an IPO on the Nasdaq? I think you have to consider this option
In this environment which comes along once every 20 or 30 years...why not cash in...would be huge $$$$ for Fairfax at the holding company level...support for the hard market and buybacks...what an opportunity.

Dazel

Would love to see them list 49% if they could get the same types of prices described as above. Not to cash out or support Fairfax business TBH, but to rapidly grow and take market share in the Indian markets.

Given the hoops that Fairfax had to jump through before starting Digit (reduction of ICICI ownership), and given their stated focus and optimism of growth of the business in India, I'd honestly be surprised if they considered selling or listing Digit.  Wouldn't this be a bit like "cutting the flowers and watering the weeds"?  Then again, I suppose it wouldn't be the first time; the sale of First Capital a few years ago comes to mind.  I understand the cash would be great for support of the hard market and buybacks, but I'm not so sure this is the best place to start. 

From the 2017 shareholders letter::
"ICICI Lombard is an Indian insurance company that we began in 2001 from scratch as a minority partner with ICICI Bank. Over the following 16 years, ICICI Lombard went on to become the largest non-government-owned property and casualty insurance company in India. Until fairly recently, our ownership interest was limited to 26% by government mandate. About three years ago, the government allowed the foreign ownership to go to 49%, which resulted in our going to 35% by buying 9% from ICICI Bank. Since then, given ICICI Lombard’s intent to go public, ICICI Bank wanting to control ICICI Lombard with at least 55% ownership, and Indian law requiring that the public own at least 25% of a public company, our ownership would be reduced to a mere 20%. As property and casualty insurance is our core business and we are very optimistic about the growth prospects in India, and as Indian law does not permit an ownership of 10% or more in more than one insurance company, we agreed with ICICI Bank that we would reduce our interest in ICICI Lombard to below 10% so that we could start our own property and casualty company in India, Digit. ICICI Lombard is a great company led by an exceptional leader, Bhargav Dasgupta, and we wish them much success in the years to come. We have thoroughly enjoyed our partnership with ICICI Bank and its CEO Chanda Kochhar and we wish them also much success in the future."

petec

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Re: Digit
« Reply #12 on: January 19, 2021, 12:25:35 AM »

So how much is Digit going to trade for if it does an IPO on the Nasdaq? I think you have to consider this option
In this environment which comes along once every 20 or 30 years...why not cash in...would be huge $$$$ for Fairfax at the holding company level...support for the hard market and buybacks...what an opportunity.

Dazel

Would love to see them list 49% if they could get the same types of prices described as above. Not to cash out or support Fairfax business TBH, but to rapidly grow and take market share in the Indian markets.

Given the hoops that Fairfax had to jump through before starting Digit (reduction of ICICI ownership), and given their stated focus and optimism of growth of the business in India, I'd honestly be surprised if they considered selling or listing Digit.  Wouldn't this be a bit like "cutting the flowers and watering the weeds"?  Then again, I suppose it wouldn't be the first time; the sale of First Capital a few years ago comes to mind.  I understand the cash would be great for support of the hard market and buybacks, but I'm not so sure this is the best place to start. 

From the 2017 shareholders letter::
"ICICI Lombard is an Indian insurance company that we began in 2001 from scratch as a minority partner with ICICI Bank. Over the following 16 years, ICICI Lombard went on to become the largest non-government-owned property and casualty insurance company in India. Until fairly recently, our ownership interest was limited to 26% by government mandate. About three years ago, the government allowed the foreign ownership to go to 49%, which resulted in our going to 35% by buying 9% from ICICI Bank. Since then, given ICICI Lombard’s intent to go public, ICICI Bank wanting to control ICICI Lombard with at least 55% ownership, and Indian law requiring that the public own at least 25% of a public company, our ownership would be reduced to a mere 20%. As property and casualty insurance is our core business and we are very optimistic about the growth prospects in India, and as Indian law does not permit an ownership of 10% or more in more than one insurance company, we agreed with ICICI Bank that we would reduce our interest in ICICI Lombard to below 10% so that we could start our own property and casualty company in India, Digit. ICICI Lombard is a great company led by an exceptional leader, Bhargav Dasgupta, and we wish them much success in the years to come. We have thoroughly enjoyed our partnership with ICICI Bank and its CEO Chanda Kochhar and we wish them also much success in the future."

Absolutely agree. They will own Digit for a long time, and rightly so. It might get listed though, to give the PE partners a way out.

I don't think the sale of First Capital counts as selling a flower. I understand what you're saying, and it's a great business, but in the view of it's CEO Fairfax could not support its next phase of growth as well as Mitsui.

Plus they got a great price and were able to keep a 25% profit share for no equity.
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KFS

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Re: Digit
« Reply #13 on: January 19, 2021, 06:47:04 AM »

So how much is Digit going to trade for if it does an IPO on the Nasdaq? I think you have to consider this option
In this environment which comes along once every 20 or 30 years...why not cash in...would be huge $$$$ for Fairfax at the holding company level...support for the hard market and buybacks...what an opportunity.

Dazel

Would love to see them list 49% if they could get the same types of prices described as above. Not to cash out or support Fairfax business TBH, but to rapidly grow and take market share in the Indian markets.

Given the hoops that Fairfax had to jump through before starting Digit (reduction of ICICI ownership), and given their stated focus and optimism of growth of the business in India, I'd honestly be surprised if they considered selling or listing Digit.  Wouldn't this be a bit like "cutting the flowers and watering the weeds"?  Then again, I suppose it wouldn't be the first time; the sale of First Capital a few years ago comes to mind.  I understand the cash would be great for support of the hard market and buybacks, but I'm not so sure this is the best place to start. 

From the 2017 shareholders letter::
"ICICI Lombard is an Indian insurance company that we began in 2001 from scratch as a minority partner with ICICI Bank. Over the following 16 years, ICICI Lombard went on to become the largest non-government-owned property and casualty insurance company in India. Until fairly recently, our ownership interest was limited to 26% by government mandate. About three years ago, the government allowed the foreign ownership to go to 49%, which resulted in our going to 35% by buying 9% from ICICI Bank. Since then, given ICICI Lombard’s intent to go public, ICICI Bank wanting to control ICICI Lombard with at least 55% ownership, and Indian law requiring that the public own at least 25% of a public company, our ownership would be reduced to a mere 20%. As property and casualty insurance is our core business and we are very optimistic about the growth prospects in India, and as Indian law does not permit an ownership of 10% or more in more than one insurance company, we agreed with ICICI Bank that we would reduce our interest in ICICI Lombard to below 10% so that we could start our own property and casualty company in India, Digit. ICICI Lombard is a great company led by an exceptional leader, Bhargav Dasgupta, and we wish them much success in the years to come. We have thoroughly enjoyed our partnership with ICICI Bank and its CEO Chanda Kochhar and we wish them also much success in the future."

Absolutely agree. They will own Digit for a long time, and rightly so. It might get listed though, to give the PE partners a way out.

I don't think the sale of First Capital counts as selling a flower. I understand what you're saying, and it's a great business, but in the view of it's CEO Fairfax could not support its next phase of growth as well as Mitsui.

Plus they got a great price and were able to keep a 25% profit share for no equity.

Ok, I suppose listing Digit as a way out for the PE partners would make sense.  Thanks. 


bluedevil

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Re: Digit
« Reply #14 on: January 19, 2021, 10:33:04 AM »
I think Digit is the single most exciting piece of the Fairfax empire.
Certainly, the fact that their investment has gone up 17x or so in a few years is exciting.  But to me even more so are:

(1) The runway for future success.  When you think of the penetration level in India, and future GDP growth, if the company can grow like this in a flat year, the possibilities when the wind resumes at the company's back will be very interesting.  Obviously hard to say how much of the pie Digit will capture as things go forward, but it has evidenced an ability to grow fast.  It is clearly winning at the customer level. 

(2)  What Digit could mean for the broader Fairfax insurance empire.  I imagine the success has turned a few heads at Fairfax.  The principles that Digit is applying could be applied to Fairfax's insurance operations all over the world.  Eastern Europe, Latin America, Middle East.  That's both good from an offensive perspective, and a defensive perspective.  If Fairfax doesn't do it, someone else will.  I am hoping this lights a fire across Fairfax's insurance operations to innovate with technology.  Same concept with Ki.  It seems inevitable that insurance will face serious disruption in the next decade.  The experience at Digit and Ki hopefully increase the odds that Fairfax will be on the right side of that disruption. 

ourkid8

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Re: Digit
« Reply #15 on: January 19, 2021, 10:40:27 AM »
#2 is the most exciting aspect as Fairfax has no choice but to implement all the learnings from Digit across their insurance empire.  Look at LMND and their growth!   

I think Digit is the single most exciting piece of the Fairfax empire.
Certainly, the fact that their investment has gone up 17x or so in a few years is exciting.  But to me even more so are:

(1) The runway for future success.  When you think of the penetration level in India, and future GDP growth, if the company can grow like this in a flat year, the possibilities when the wind resumes at the company's back will be very interesting.  Obviously hard to say how much of the pie Digit will capture as things go forward, but it has evidenced an ability to grow fast.  It is clearly winning at the customer level. 

(2)  What Digit could mean for the broader Fairfax insurance empire.  I imagine the success has turned a few heads at Fairfax.  The principles that Digit is applying could be applied to Fairfax's insurance operations all over the world.  Eastern Europe, Latin America, Middle East.  That's both good from an offensive perspective, and a defensive perspective.  If Fairfax doesn't do it, someone else will.  I am hoping this lights a fire across Fairfax's insurance operations to innovate with technology.  Same concept with Ki.  It seems inevitable that insurance will face serious disruption in the next decade.  The experience at Digit and Ki hopefully increase the odds that Fairfax will be on the right side of that disruption.
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Daphne

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Re: Digit
« Reply #16 on: January 19, 2021, 01:40:18 PM »
Forget LMND and reproducing DIGIT, FFH already has underway the next digital platform through a Brit and Blackstone arrangement announced in Sept 2020 that saw FFH pony up $250m seed money for a 60/40 position.

Adding to the growing list of potential multi baggers is FFh investment in Altius minerals currently trading at $15. FFH holds +600m warrants it can exercise at $15 worth $2.50 each.  And, FFH has another three years of potential growth before it’s obliged to exercise them.

doc75

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Re: Digit
« Reply #17 on: January 21, 2021, 07:58:54 AM »
Forget LMND and reproducing DIGIT, FFH already has underway the next digital platform through a Brit and Blackstone arrangement announced in Sept 2020 that saw FFH pony up $250m seed money for a 60/40 position.

Adding to the growing list of potential multi baggers is FFh investment in Altius minerals currently trading at $15. FFH holds +600m warrants it can exercise at $15 worth $2.50 each.  And, FFH has another three years of potential growth before it’s obliged to exercise them.

Isn't it something like 6.7 million ALS warrants, that they got in conjunction with a preferred share purchase?  (Similar to what they did with Westaim.).

ourkid8

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Re: Digit
« Reply #18 on: January 21, 2021, 08:27:59 AM »
Would you be able to elaborate on Ki?

1. Is Brit the only company to roll this out or will all the members in lloyds of london do so?
2. Fairfax and blackstone own this venture
3. Will Ki write policies and own the risk or will that be only with Brit

Sorry, i have a lot of questions as I do not understand the venture however I believe they have started to write policies as of Jan 21.

Forget LMND and reproducing DIGIT, FFH already has underway the next digital platform through a Brit and Blackstone arrangement announced in Sept 2020 that saw FFH pony up $250m seed money for a 60/40 position.
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Daphne

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Re: Digit
« Reply #19 on: January 21, 2021, 12:33:19 PM »
This is what I know

Digital Lloyd’s syndicate Ki reported that it has raised US$500 million from funds managed by Blackstone Tactical Opportunities and Fairfax Financial Holdings, parent of specialty insurer Brit that is behind Ki.

Ki said the capital commitment will fund its expansion as it launches in the fourth quarter of 2020. The follow-only digital entity hopes to write its first risk in January 2021.


Brit first announced its new venture Ki in May 2020. Ki was incubated by BritX, Brit’s innovation team, working in collaboration with Google Cloud.

Ki promises to reduce the amount of time needed by brokers to place their follow capacity. Ki’s algorithm, developed with support from University College London, will evaluate Lloyd’s policies and automatically quote for business through its digital platform, built by Google Cloud and accessed directly by brokers

Ki will underwrite using an algorithm-driven approach and offer instant follow capacity through its proprietary digital platform.

Ki is the first fully digital-only syndicate to be approved by Lloyd’s of London, in keeping with its Future at Lloyd’s initiative.

Ki is targeting a range of specialty business following selected leaders in the Lloyd’s market, including Brit.

Qasim Abbas, senior managing director at Blackstone, said Ki’s digital model will “enable it to build to significant scale, while its algorithmically-driven approach represents an important evolution in the portfolio management of specialty risks.”

Matthew Wilson, CEO of Brit and chairman of Ki, said the investments in Ki will allow the business to reach its full potential with significant committed capital ad that Blackstone is “entering the Lloyd’s market at a pivotal moment, with increased acceptance of digital models and a flight to quality.”

Mark Allan, CEO of Ki and Group CFO of Brit, said support from Blackstone is a “significant statement of confidence in Ki and the vision we have set out.”