CBL sees annual earnings growth of up to 22% in 2017

Wednesday 1st March 2017

CBL Corp expects to see annual earnings growth of up to 22 percent in calendar 2017, providing detailed guidance less than a week after reporting full-year profit for 2016 that missed some market expectations.

The Auckland-based credit surety and financial risk insurance firm expects underlying operating profit to rise by between 18 percent and 22 percent in calendar 2017 on revenue growth of 12 percent to 16 percent, according to presentation slides filed to the NZX. The insurer's operating earnings rose 27 percent to $76.2 million in 2016, beating its prospectus forecast for earnings of $63.6 million, on a 36 percent gain in revenue to $333.5 million.

That implies an earnings forecast of $89.9 million-to-$93 million on revenue of $373.5 million-to-$386.9 million, which would be on a constant currency basis and include 100 percent of CBL's recent acquisitions: UK tax investigation insurance provider Professional Fee Protection, and France's largest specialist producer of construction-sector insurance Securities and Financial Solutions Europe SA.

The shares rose 0.3 percent to $2.98, having slumped 20 percent slump since the result last Friday, which disappointed some investors who were expecting faster earnings growth.

Last week, CBL had said it anticipated 2017 would be "a strong year with a developing pipeline of new business" and would refocus "on business development opportunities across the group and consolidating acquisitions", without providing specific guidance.

CBL listed on the NZX in 2015, raising $90 million to help fund the acquisition of Australia's largest surety bond insurer Assetinsure, selling shares at $1.45 apiece. The company began life as Contractors Bonding Ltd in 1973, and derives the bulk of its revenue from international operations, meaning its bottom line is influenced by unrealised foreign exchange movements.

BusinessDesk.co.nz

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