Bombardier (OTCQX:BDRAF)(OTCQX:BDRBF)(OTC:BOMBF) continues to be in a fragile state. While the company will be able to deleverage its balance sheet by selling its rail transportation unit to Alstom for $8.4 billion next year and become solely a corporate jet manufacturer, we believe that its future still looks bleak. As the founding family continues to have the majority of the voting power in the company, there’s no guarantee that it will not fail to create value this time, considering that, under its leadership, Bombardier suffered immense losses by developing and later selling at a loss its own civil aviation project to Airbus (OTCPK:EADSF). In addition, by operating in a small and saturated business jet market, it will be hard for Bombardier to drive growth in the following years. For that reason, we continue to believe that there’s no value left in Bombardier stock and the opportunity cost of holding its shares is too high even at the current price.

Weak Growth Prospects Ahead

Bombardier’s stock declined by more than 20% since we published our latest article on the company in July, and there’s every reason that its share price will either decline even more in the following months or it will be trading at the current levels for a while. The reality is that Bombardier was struggling to create value for years, and it was able to survive for so long, mostly thanks to the help of the government of Quebec, which supported the business through various financial instruments and programs. After spending more than $6 billion on its commercial aviation project, the company sold its stake in the project to Airbus earlier this year for less than $600 million and was left with an overleveraged balance sheet. As a result, Bombardier had no other choice but to divest its interest

When house hunting, the price of homeowners insurance probably isn’t top of mind. But homes with hidden risks can make getting coverage difficult, expensive or both. Learning how to identify them could save you a bundle.

This could be a particularly important concern for first-time home buyers and those moving from cities to suburban or rural areas who may not be aware of common hazards, says Jennifer Naughton, risk consulting officer for North America for Chubb, an insurance company.

Three out of 10 city dwellers told a Chubb survey in early August that they were considering moving out of the city because of the novel coronavirus outbreak. Meanwhile, the number of first-time home buyers in the first half of 2020 rose 4% compared to a year earlier as lower interest rates made mortgages more affordable, according to Genworth Mortgage Insurance.

 

WHERE’S THE NEAREST FIRE HYDRANT?

A homeowners insurance premium can depend in part on distance to the nearest fire hydrant and fire station, Naughton says. Homes that are on narrow roads or otherwise difficult for firetrucks to access also could be more expensive to insure.

“If they have to cross over a bridge, it’s not only a consideration of can a car go over that bridge, but also can a fire engine,” she says.

Some homes are at such high risk of wildfires and severe weather — hurricanes, tornadoes, windstorms and hail — that private companies won’t insure them. Without insurance, you can’t get a mortgage, so you’d need to turn to state-run risk pools such as Beach and Windstorm Plans or Fair Access to Insurance Requirements Plans, better known as FAIR. These policies typically cost more and cover less than regular homeowners insurance.

Also, many homeowners policies in storm-prone areas have hurricane deductibles that are higher than the normal

For instance, Henrico County-based Elephant Insurance announced in August that it would offer a discounted rate to customers working from home. The company said policyholders and spouses working from home and driving less would be eligible to receive the new discount, depending on the number of days driven to work and the customer’s occupation.

“Some part of the work force will be working from home for a while, and as long as they work from home they deserve this consideration,” said Alberto Schiavon, Elephant’s CEO.

State Farm, the nation’s largest auto insurer, started reducing auto rates in every state in May because of changes in driving behavior.

The company said the national average for those rate reductions is 11%, saving customers a total of about $2.2 billion. Rate changes depend on a customer’s individual renewals.

State Farm said its rate reduction went in to effect on July 27 for new customers in Virginia, while existing customers will see the rate change on their renewal date.

The rate reductions in Virginia average about 9.6% and are expected to save the 1.2 million State Farm customers in the state a total of $84.3 million.

Many other major auto insurers also offered deals in the spring that have since expired.

For instance, Allstate, the nation’s fourth largest auto insurer, refunded 15% of its customers’ monthly premiums in April, May, and June. The company said the paybacks amounted to more than $1 billion.

Source Article

(Reuters) – Wells Fargo & Co <WFC.N> has started to cut jobs at its commercial banking unit as part of larger reductions that will impact nearly all of its functions and business lines, a company spokeswoman said on Wednesday.

The bank resumed job cuts in early August after it paused layoffs in March because of the COVID-19 pandemic.

Wells Fargo said in July it would launch a broad cost-cutting initiative this year as the bank braces for massive loan losses caused by the pandemic and continues to work through expensive regulatory and operational problems tied to a long-running sales scandal.

“We are at the beginning of a multiyear effort to build a stronger, more efficient company for our customers, employees, communities, and shareholders,” a spokeswoman said via email on Wednesday.

“The work will consist of a broad range of actions, including workforce reductions, to bring our expenses more in line with our peers,” she added, without specifying the number of job cuts.

Wells Fargo has cut 700 jobs as part of workforce reductions that could ultimately impact “tens of thousands” of staff, Bloomberg News reported on Wednesday citing people with knowledge of the matter.

At the height of the COVID-19 pandemic last spring, the heads of large U.S. banks including Morgan Stanley <MS.N>, Bank of America Corp <BAC.N> and others had pledged not to cut any jobs in 2020.

However, as executives prepare for an extended recession and loan losses that come with it, layoffs are back on the table.

Goldman Sachs Group Inc <GS.N> said last month it plans to move forward with “a modest number of layoffs”.

(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Shailesh Kuber)

Source Article

Investment Thesis

Headquartered in Green Bay, Wisconsin, Associated Banc-Corp (ASB) is the $36 billion asset holding company for Associated Bank, a Midwest commercial and retail bank. Associated offers a broad array of banking and capital market products and services to retail and commercial customers throughout Wisconsin, Illinois, and Minnesota, as well as a few other nearby states.

With the excess equity from the insurance sale, future capital deployment opportunities could represent upside over time. However, ASB has historically had lower than average profitability levels and a higher expense base, which kept a lid on valuation relative to peer banks.

However, I have become more positive on the shares following ASB’s announcement of additional cost rationalization efforts, branch sales, and early redemption of higher cost borrowings.

My bullish stance is driven by management’s increased focus on enhancing profitability through expense control. I expect to see an improvement in operating leverage and the efficiency ratio, albeit at a slow rate, but any sustainable improvement is often rewarded by shareholders through the form of valuation relative to peers, even if the move up is to simply be “average” (like in ASB’s case). While the current branch count is a little too high, in my view, I believe the recent actions to not only stem expense growth, but cutting costs should lead to share price outperformance.

ChartData by YCharts

While I don’t believe ASB is going to start to trade at a premium to Midwest banks, most peers are near 1.1x Price to Tangible Book Value per share. In the next few weeks, I believe bank’s third quarter earnings are likely to shed some light on the overall credit picture.

In my mind, if things look worse from a credit perspective, ASB should be fairly insulated given its extremely low share price valuation. If