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Primus Guaranty (PRS) Earnings And Conference Call Notes

Fri, 07 Aug 2009 14:53:00 GMT

Last week, I noted that Primus (PRS) announced a fairly significant “credit mitigation” transaction, which clipped the tail risk on about $1.2 billion in notional CDS. Because Primus discloses such events and credit losses as they occur, and the company not writing new CDS business, non-GAPP earnings aren’t really a surprise – economic results of $47.5 million came from CDS premiums (no credit events in Q2) and a repurchase of debt at a large discount. The most interesting development is that Primus is now using its float – over $730 million at quarter’s end – to invest in investment grade corporates. On the conference call, CFO Richard Claiden said that $20 million of holding company capital was now[More...]

Primus (PRS) Credit Mitigations, or, If You Are Not A Systemic Risk

Fri, 31 Jul 2009 14:16:00 GMT

Primus Guaranty (PRS) announced yesterday that it entered into a significant credit mitigation deal with one of its counterparties, reworking $1.2 billion in notional value of credit default swaps. According to the press release, $40 million in notional exposure written on a monoline insurer was terminated for $15 million, or 37.5 cents on the dollar. The other billion-plus is being moved to a subsidiary of Primus Financial capitalized with $36 million, which is the maximum exposure (plus future premiums on those swaps) that can be lost. Working backwards, ring-fencing certain swaps clips the tail risk existing in the portfolio at about 3.1% – a fairly high level that’s about 50% above what I’ve modeled previously. From the press[More...]

Entertainment Properties (EPR): Load Up, Or Lights Off?

Fri, 06 Mar 2009 13:53:00 GMT

One area I have been looking to invest in is convertibles (bonds or preferred stock) – the yield component is appealing in distressed securities, and the embedded call option can offer upside exposure to some decent businesses. Although I’ve been enjoying the benefits of having a higher cash balance and little equity exposure, I hold cash to make strategic purchases, not as an end itself. Those of you who have read what I’ve written regarding Primus (PRS, PRD) know that I’m a fan of “stress testing” in circumstances where it’s possible – basically, seeing what kind of hit is priced into a company’s stock. In this case, the company had a nice dividing line between its traditional core assets and a handful[More...]

Primus Guaranty (PRS) Earnings Notes

Thu, 05 Feb 2009 00:43:00 GMT

Today, Primus Guaranty released its earnings – I still own both the holding company’s debt (PRD) and the stock (PRS). As background, Primus Guaranty is a holding company with a subsidiary (Primus Financial Products, or PFP) that was formerly an AAA/Aaa-rated counterparty selling credit default swaps (CDS). To increase acronym density, PFP is a Credit Derivative Products Company (CDPC), and as such does not need to post collateral should a CDS contract move against them. This, along with the long-dated maturities of the company’s debt (first maturity in 2021), means that liquidity risk is minimal. In the last several months, PFP has been downgraded by the ratings agencies – a formal nail[More...]

1-Year Analysis Of Coal Price vs. Energy Commodity Funds

Thu, 22 Jan 2009 18:47:00 GMT

The above chart (click to enlarge) depicts a one-year analysis of near-month Central Appalachian Coal Futures Contract Prices (NYMEX: QL), the Market Vectors Coal Company ETF (KOL), the U.S. Oil Fund (USO), the U.S. Natural Gas Fund (UNG), and the S&P 500 SPDR ETF (SPY). QL fared the best with a minor decline of 0.3%, compared to major losses of 61.4% for KOL, 58% for USO, 49.1% for UNG, and 34.7% for SPY. The chart was constructed using the daily closing prices for each component.[More...]

U.S. Insurance Industry - Jan 2 2009 3:09PM

Fri, 02 Jan 2009 21:03:00 GMT

Ongoing turmoil in the financial markets has resulted in a highly challenging environment for the U.S. insurance industry, a trend that is expected to continue in 2009. We also expect further consolidation in the industry. Life Insurers Increased losses in the investment portfolio and lower income from the variable annuity business will continue to hurt earnings. The Industry's statutory capital levels have fallen sharply in 2008 and some companies are trying to raise capital through the Troubled Assets Relief Program (TARP). We are not sure whether the lawmakers will allow the insurers access to TARP money. Further, many life insurers have substantial exposure to commercial-real-estate-backed securities, which will result in further losses during FY09. ? Property & Casualty[More...]

Primus: More Downward Pressure - Analyst Blog

Mon, 08 Dec 2008 18:45:00 GMT

Headquartered in Bermuda, Primus Guaranty Ltd. (PRS) sells credit swaps as protection against the risk of default on investment grade obligations. The primary purchasers of credit swaps are commercial and investment banks as well as portfolio managers, insurance companies, and other financial institutions seeking to reduce the credit risk exposure in their fixed-income security portfolios. During October 2008, Primus Financial, the issuing subsidiary was downgraded by both S&P and Moody's to AA+ and AA1 (from AAA and Aaa ) respectively, with negative implications. Additionally, S&P and Moody's downgraded the 7% notes issued by Primus Guaranty to "BB" and "BA1", respectively. In view of the challenging conditions, the company has decided to manage its business in the[More...]

Just How Bad Are the Credit Markets?

Mon, 24 Nov 2008 13:54:00 GMT

I do a lot of reading to try to stay on top of things – both news, as well as a number of blogs and other analysis sites. Many have been commenting on the distress in the bond markets on a number of fronts – long swap spreads, investment-grade corporates, and now highly-rated commercial mortgage-backed securities. The rapid blowout in CMBS spreads has hit lower rated tranches already, and the relative stability of the AAAs has probably led to some people being caught by surprise. [More...]

PartnerRe a Solid Value - Analyst Blog

Thu, 13 Nov 2008 18:24:00 GMT

PartnerRe Ltd.'s (PRE) 3Q08 operating earnings of $121.3 million or $2.27 per diluted share were substantially ahead of consensus estimate. We remain positive on PRE due to its excellent underwriting abilities, strong capitalization, solid ratings and reputation in the market, which will enable it to take advantage of the stronger demand being witnessed currently, though we suspect that additional losses in the investment portfolio and the current negative sentiment for the financials as a whole may somewhat weigh on the share price. Based on 3Q08 results, we are moderating our FY08 and FY09 estimates to $10.44 per share and $9.95 per share, respectively. At the current price, the shares of PRE trade at 0.98x its 3Q08 book value of $65.38 per share, almost at the bottom of its 10-year range, substantially below the peak of[More...]

Primus : At the Center Of CDS Storm

Mon, 03 Nov 2008 17:07:00 GMT

The number of high-profile defaults of late from Lehman (LEH) and Washington Mutual (WM), combined with the technical defaults of Fannie (FNM) and Freddie (FRE) and a ratings downgrade of [More...]

Evening Standard, London, market report column

Fri, 20 Nov 2009 19:52:00 GMT

Nov. 20--Shares in the UK's two biggest package holiday operators were among the heaviest blue-chip fallers today after one broker decided that their outlook was far from sunny.
Thomas Cook fell 6 3/4p to 211 3/4p, while TUI lost 5p at 250 1/4p after Morgan Stanley dropped its rating on both companies.
"Thomas Cook appears to us to have the most forecast risk as it has above-average margins and, we believe, needs to refinance its debts quicker than the market believes, potentially including new equity," the broker says.

[More...]

Lengthy Cleanup Process: Next Phase Covers Wide Range of Work at Paducah Plant

Sun, 12 Oct 2008 09:47:00 GMT

Oct. 12--The U.S. Department of Energy has started the long process of awarding new five-year contracts totaling roughly $600 million and 525 jobs to continue cleaning up the Paducah Gaseous Diffusion Plant.
Lead cleanup contractor Paducah Remediation Services and infrastructure contractor Swift & Staley currently do the work.
Those contracts expire in late 2009 and mid-2010, respectively.

[More...]

Primus Announces Third Credit Mitigation Transaction

Thu, 05 Nov 2009 13:47:00 GMT

Primus Guaranty, Ltd. (NYSE:PRS) announced that its subsidiary, Primus Financial Products, LLC ("Primus Financial") has completed its third credit mitigation transaction.
Each of the three credit mitigation transactions included certain reference entities which Primus Financial concluded had a high risk profile.
Any capital remaining at the final maturity of the credit swaps in the two subsidiaries will be returned to Primus Financial.

[More...]

Primus and Counterparty Terminate $1.3 Billion of Credit Swaps

Mon, 05 Oct 2009 13:49:00 GMT

Primus Guaranty, Ltd. (NYSE: PRS) today announced that its subsidiary, Primus Financial Products, LLC ("Primus Financial"), has terminated $1.3 billion notional principal of credit swaps with a significant counterparty.
Included in this portfolio were a small number of reference entities which Primus Financial concluded had a high risk profile, including certain financial guarantors.
This is the second credit mitigation transaction that Primus Financial has completed and announced in recent months.

[More...]

Primus Guaranty Reports Second Quarter 2009 Financial Results

Wed, 05 Aug 2009 13:47:00 GMT

Primus Guaranty, Ltd. (“Primus Guaranty” or “the Company”) (NYSE:PRS) today announced GAAP net income available to common shares of $596.9 million, or $14.46 per diluted share, for the second quarter of 2009, compared with GAAP net income available to common shares of $262.6 million, or $5.78 per diluted share, for the second quarter of 2008.[More...]

Primus Announces Credit Mitigation Transaction

Thu, 30 Jul 2009 21:02:00 GMT

Primus Guaranty, Ltd. (NYSE:PRS) today announced that its subsidiary, Primus Financial Products, LLC (“Primus Financial”), had entered into a transaction with a significant bank counterparty in respect of credit default swaps between Primus Financial and the counterparty with a total notional principal of $1.2 billion.[More...]

Primus Guaranty, Ltd. Schedules 2nd Quarter 2009 Earnings Conference Call

Wed, 22 Jul 2009 19:22:00 GMT

Primus Guaranty, Ltd. (NYSE:PRS) announced that it will host a conference call for investors on Wednesday, August 5, 2009, at 11 a.m. Eastern Time to discuss its 2nd quarter 2009 earnings, which are scheduled for release between 7 a.m. and 9 a.m. Eastern Time on Wednesday, August 5, 2009.[More...]

Primus Completes Transaction with CypressTree Investment Management

Thu, 09 Jul 2009 19:57:00 GMT

Primus Asset Management, Inc., a wholly owned subsidiary of Primus Guaranty, Ltd. (NYSE:PRS), today announced it has completed the acquisition of CypressTree Investment Management, LLP. Founded in 1995, CypressTree manages leveraged loans and high yield bonds in a variety of investment products, including collateralized loan obligations (CLOs), collateralized swap obligations (CSOs), off-shore funds and separately managed accounts. Its assets under management total approximately $2.4 billion.[More...]

Primus Agrees to Acquire CypressTree Investment Management

Tue, 12 May 2009 15:39:00 GMT

Primus Asset Management, Inc., a wholly owned subsidiary of Primus Guaranty, Ltd. (NYSE:PRS), today announced it had entered into a definitive agreement to acquire CypressTree Investment Management, LLP. Founded in 1995, CypressTree manages leveraged loans and high yield bonds in a variety of investment products, including collateralized loan obligations (CLOs), collateralized swap obligations (CSOs), off-shore funds and separately managed accounts. Its assets under management total approximately $2.4 billion.[More...]

Primus Guaranty Reports First Quarter 2009 Financial Results

Wed, 06 May 2009 13:16:00 GMT

Primus Guaranty, Ltd. (“Primus Guaranty” or “the Company”) (NYSE:PRS), a provider of credit protection, announced today GAAP net income of $106.8 million, or $2.61 per diluted share, for the first quarter of 2009, compared with a GAAP net loss of $(670.1) million, or $(14.85) per diluted share, for the first quarter of 2008.[More...]

Primus Guaranty Announces Director Elections

Tue, 05 May 2009 18:13:00 GMT

Primus Guaranty, Ltd. (NYSE:PRS) today announced that its shareholders re-elected Frank P. Filipps and Thomas J. Hartlage to its board of directors and that David Czerniecki was appointed to its board to fill a vacancy. The company’s board now has nine directors. Messrs. Filipps and Hartlage were elected as Class II directors with a term expiring in 2012 and Mr. Czerniecki was appointed as a Class I director with a term expiring in 2010. Mr. Czerniecki will serve on the board’s Finance and Investment Committee.[More...]

Primus Guaranty Comments on CDS on Asset-Backed Securities

Mon, 27 Apr 2009 21:45:00 GMT

Primus Guaranty, Ltd. (NYSE:PRS) today announced that two asset-backed securities, referenced by credit default swaps (“CDS”) written by Primus Financial Products, LLC (“Primus Financial”), were downgraded below Caa2 by Moody’s Investors Service (“Moody’s”). The notional principal on these CDS with counterparties is $15 million. Under the terms of the ISDA master agreement governing CDS on asset-backed securities, a downgrade of the underlying security to CCC (Standard & Poor’s) or Caa2 (Moody’s), or below, is considered a credit event.[More...]