Thanks for the post. Great article, great detective work by author to test the product.
Price is the culprit here. The genesis of life insurance began with funeral insurance, so it will always have value as long as mankind exist, the problem is price. As price increases, product value decreases, imo the RC completely missed the point, instead of appointing independent actuaries to establish a price cap like the Government monitor interest margins of banks, instead they went after incentive structures and a guy with down syndrome who was sold insurance 2 years ago. Classic example of treating the symptom and not the cause. This wasn't a surprise though, the whole purpose of the RC was a publicity stunt to name and shame because of ASIC failings. So now we have TV ads on funeral insurance blasting at daytime targeting retirees taking them down guilty trip lane, and once they sign up, those poor pensioners feel compelled to continue because their "investment" in the policy so far would be wasted.
The author have no right to criticise Forager however, classic response from individuals who think they are smarter, in reality nothing is more cheap than looking in rear-mirror and criticise another investor. Everybody was blind-sighted by Freedom having to appear in RC when they started reviewing insurance, if it hadn't and the SP kept going up, the author would think otherwise.
Author got everything wrong when it comes to numbers, you cannot "write down" a TA through redundancy cost, only by changing the discount and lapse rate assumptions. In fact there's nothing to "write down" because Freedom itself have no goodwill (only Spectrum). Those costs will hit cash. Total liabilities was $35m, not $67m And $30m (or 85%) of Total Liability is tied to TA, if TA is completely worthless then Total Liability will fall to $5m. Still it doesn't matter though, their current business model is small fish compared to what's happening in the horizon.
Imo
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