måndag 26 januari 2015

What Could We Expect From Vardia in Sales 2015?

In recent time have I seen several discussions regarding Vardia sales numbers on different blogs and almost fierce comments from some readers in the commentfields. Therefore I want to highlight this post to really focus on the Sales and try to give a fair estimate on where we would end up after 2015.

Before we start I want to highlight the big Q everyone has:

Q: What if the big insurance companies just lower the price and compete Vardia out of the market?
A: Vardia's business model is to provide low risk customers with insurance products. Since low risk customer will do less insurance claims then high risk customers, Vardia could offer the product to a lower price. In other words Vardia says that, why should you share a risk with high risk customers when you are a low risk customer?

This is the main reason why Vardia will be a winner in the end, and this business model is not done by the big insurance companies today. Of course to this you could add several things in Vardias advantage like more efficient IT, lean organisation etc. but it's still the core business model that will make Vardia successful. 

Now over to the numbers,
To make this forecast as correct as possible I will investigate how 2014 sales number were per annual, monthly and daily basis. Then adjust a modest annual sales growth on below market expectations on 15% (For Vardia this is modest). 


How was sales on annual and monthly basis 2014?



-Total sales of 1044.3 million NOK 2014.
-Average per month 87 million NOK.

How was sales on daily basis 2014 and how will it be 2015?

Public holidays 2014 which fell on a weekday (Could have 1 day wrong here on some country) :
Denmark: 11 days
Sweden; 15 days
Norway: 12 days

We take an average here and say 13 days in general.

Weekends (Saturday and Sunday) 2014: 104 days

Holiday (I assume everyone has 5 weeks); 35 days

Number of days per year:  365 days

How many effective working days do we end up with per year now?

365 - 13 - 104 - 35 = 188 days

If we assume 15% sales growth next year we end up at 1200.6 million NOK, divide that per effective working day, we have sales per day at: 6.38 million NOK.


How will sales be per month 2015?
After analyzing local holidays and normal vacation patterns I did this assumptions for effective working days per month for 2015:

January: 14 Days
February: 18 Days
March: 18 Days
April: 17 Days
May: 17 Days
June: 12 Days
July: 9 Days
August: 13 Days
September: 19 Days
October: 19 Days
November: 19 Days
December: 14 Days

If we now apply the assumed average sales per day on effective working days for 2015 we end up with a sales per month like this:



So next year, annual sales forecast on 1200.5 million NOK and GWP forecast on 56-60 NOK per share. 2015 will be a great year for Vardia Insurance!!

Sincerely,
Eighth Wonder Investing


Note: Vardia offer products to everyone, but high risk customers gets a high premium.
Full disclosure: Long Vardia Insurance Group (VARDIA)
Disclaimer: All text on this blog is not a form of investment advice, this is only for personal use and I disclaim myself  for misspelling or wrong calculus.

Inga kommentarer:

Skicka en kommentar