i just updated my analysis on this pos, just for kciks, the illinois department has it just about right on paying claims at 60 cents on the dollar, just roughly, i am projecting just over 2b in total sources of funds, the biggest worry is the dramatic dropoff in premiums, i have no idea what happened, but they are running at much lower levels than earlier this year, i have them at just about 50m a quarter, or 200m a year, with maybe 4.5 years of life left, for 900m, add in 830m of assets, and 270m or so of captive tursts, and you get 2b in sources, on the uses side, on flow they easily have 2.1b of losses, plus another 900m in bulk plus mod pool, for around 3b in uses, figuring investment income and expenses will just about offset, one thing the illinois department should force them to do right away though is to stop paying interest on their debt, no way should they be paying out 6m a year to a debtholder when their policyholders won't get paid back, that hsould be a no brainer, as for equity value, well, there is none.
The operational costs of the company are annually about 32 milj. The moment when the revenues minus the operational costs are below the settled claims is the point where the company can keep going on indefinitely . 230-32 = 198 milj. We need a reduction in the settled claims from annual 530 to 192 milj that is about a reduction of 60%.
settled claims are going up, not down, they had a slight decline in net settled claims from q3 to q4 as they are ceding more claims to captives, but those captive trusts will be exhausted before long, at which point the growing claims paid will revert back to tgic, you also seem to forget that revenues are declining as the insurance in force declines, gross written premiums are down below 70m this quarter vs 91m in q1 08, for example, but yet your simple example assumes revenues are flat, look at even reported revenues, even though they had a huge improvement in net realized investment gains yoy, revenues dropped from 270m in 2008 to 237m in 2009, they will probably drop below 200m in 2010 given that the one time boost from realized investment gains will drop, granted it will take years for this company to run out of money, somewhere along the line you might catch a break and get a pump and dump to bail you out of your position, but it is a long shot.