I am not an expert on an APRA enforced designation that HLI must enter run off (APRA, the Australian Prudential Regulation Authority, is HLI’s regulator).
However a quick look at available discussions on the topic suggest capital adequacy calculations would become punitive (to protect policy holders), capital management would be severely constrained (no buy backs), and dividends/distributions would need explicit APRA approval (less frequent and lumpy).
Yes shareholders would get all their money back, as: HLI is over capitalised, forward losses look benign, delayed revenue recognition feeds would continue to support profit generation/franking credit creation for many years, etc.
As a retiree this would make current, very attractive, annual dividend income streams less reliable/more choppy.
Lack of buyback activity without any explanation does not build confidence discussions with APRA are likely occurring and ongoing.
HLI Price at posting:
$3.98 Sentiment: Hold Disclosure: Held
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