Hi Klogg, I think you pretty much nailed it. Personal insolvency...

Hi Klogg,
I think you pretty much nailed it. Personal insolvency will fluctuate periodically and is lower because unemployment is at record lows. But then we haven't had a recession in 25 years and the company has had decent revenues in the time. Interest rates aren't going up from here, but house prices (and rents) are still high, and I can't see them coming down to bargain levels ever. So, the PIA and bankruptcy side of the business will probably just bounce along or decline a bit.

The key segments will be personal and home loans. It is an ingenious strategy to have gone into these sectors as no loan provider can match the unique insight and depth of knowledge available to them with their captive clients. Plus, they know how to restructure their payments if there is trouble. If anyone can minimize defaults it will be these guys. We have seen many loan providers wiped out by loan defaults (see AXL and SIV as examples) so this is a huge consideration when assessing risk.

The conservative nature of the management is a big factor in raising confidence in this company. The shares may not be cheap by a huge margin (P/E around 8) but even the reduced dividends are not bad at prospective 6-7% gross.