In April this year, CSEC announced that Willis Towers Watson (WTW) would, in collaboration with Allianz and AXA, include the C-Pod Mini in its offering to boat insurance customers in France. WTW is the third-largest insurance broker in the world, and it resells around 10,000 new boat insurances in France each year, while 60,000 of its customers extend their insurance.
The premium reduction for the insurance is 10% for Allianz’s customers and 5% for AXA’s customers. Given an insurance premium decrease of 10%, most customers’ payback time is less than two years. In June, WTW started to roll out its offering including C-Pod Mini through a digital online agreement.
It had excellent responses from the first almost 4,000 receivers. However, around this time, the commission model for the insurance agents was changed for the worse, prompting a strike among the agents. After some negotiation, the agents returned to their old commission model, including some unpaid wages. The talks were followed by vacation time in France, and we expect the agents to return to work in early September.
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Now Willis Towers Watson (WTW) reach an agreement with its insurance agents and compensations have been paid out through September and now WTW and the agents have an agreement to carry on the initial agreement.
CSEC have done cluster sampling and it looks like the acceptance rate are high. According to the press release, it varies between 77% and 100%.
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This is very good news, but we would like to see sharp orders coming in to C Security before adjusting our valuation. In our last update, we show some scenarios based on the expected average customer choosing three year subscriptions upon insurance renewal. In the most conservative scenario of 5% accepting the offer, the up-front revenues would increase net sales by approximately 10x the net sales reported for Q2 ’22.
<img loading="lazy" class="alignnone size-full wp-image-857130" src="https://res.cloudinary.com/redeye/w_789,h_309,c_fill,dpr_2.0/cms/app/uploads/2022/10/csec.png" alt="" width="789" height="309" />
<h2>Valuation</h2>
Redeye reiterates Base Case of SEK 0.08, Bear Case of SEK 0.02, and our more optimistic Bull Case of SEK 0.2.