Ensurance jumps 20% after posting record quarter

Online insurance microcap Ensurance (ASX: ENA) had jumped 20% at the close today following the release of today’s activity report in which the company posted a record quarter with revenue up 35% on the previous period.

Formerly known as Parker Resources, Ensurance engages in the underwriting and sale of insurance products – notably construction, liability product range, terrorism, and sabotage - in Australia and the UK.

Gross written insurance premiums of $29m for the first half of FY 2022, were also up 70% year on year, and the company experienced positive cashflow for a second consecutive quarter, with profit margins increasing.

The business also recorded its largest first half gross written premium (GWP) result to date, with $20.62m reported, $3.22m higher than the previous period.

During the quarter, Ensurance Australia posted three consecutive months where GWP on one of its product lines, Professional Indemnity, exceeded $1m [of GWP] per month.

Management noted that hardening market conditions, coupled with recently developed in-house IT tools saw Ensurance Australia more closely partner with key brokers requiring fast solutions to complex insurance placements.

Organic growth & renewal

Driven by organic growth and an ever-increasing renewal book, Ensurance UK also had a successful second quarter, reporting a record $11.35m of GWP during the quarter.

The business also recorded its largest first half GWP result to date, with $20.62m reported, $3.22m higher than the same period in 2021.

During the quarter, Ensurance UK also wrote its first International Engineering risk to the value of $675k and this new product line is expected to bring significant, additional growth to the business over time.

New management

During the quarter, the company announced that Tom Kent had replaced Tony Leibowitz as CEO (effective 1 January 2022) with the latter reverting to the role of non-executive chairman.

Tony Kent’s appointment as CEO also coincides with the appointment of Nick Beswick as professional risks manager for the Australian division of the Company, (also effective 1 January 2022).

Capital raising

During the quarter, the company also issued 9,326,092 ordinary shares at $0.23 per share raising total proceeds of $2.145m. However, there was little disclosure on what funds raised will be used for.

The Company held cash and cash equivalents at the end of the quarter of $1.68m, while operating expenditure during the quarter was $1.58m.

Consensus does not cover this stock.

Based on Morningstar’s fair value of $0.40 (5/07/21) the stock appears to be undervalued.

Ensurance was up 20% at the close today