Q: Hello not to scare some investors but can you explain what happened to conseco in 2002-2003 period and why goeasy is not in the same situation now with interest rates going up fast ? Thanks !
5i Research Answer:
Conseco was not exactly similar to GSY, having very large insurance operations as well. It collapsed amid false accounting, exceptionally large compensation payments, and too-high debt. We would not say GSY has any of these issues, at least currently. GSY is not immune to rates, but it can adjust terms to clients as rates move higher. There is now a lower legal limit on rates, but so far GSY has managed this well. Charge-offs have been in the 9% range, but it remains highly profitable.