11th Sep 2014 10:14
LONDON (Alliance News) - Gable Inc Thursday reported a drop in first-half pretax profit despite an improved underlying insurance profit, as it opted to set aside an additional risk margin following a property fire claim.
In a statement, the European non-life insurance company, which underwrites specialist policies for the commercial sectors in the UK, Denmark, France, Germany, Italy, Norway, Spain and Sweden, said it made a GBP2.5 million pretax profit in the six months ended June 30, compared with GBP4.0 million in the corresponding period last year.
Underlying insurance profit, which is the insurer's net earned premium less net claims and expenses incurred in insurance activities, increased to GBP7.8 million from GBP6.2 million. However, the additional risk margin provision of GBP2.4 million meant pretax profit levels were not maintained.
Gable's combined operating ratio, a measure of underwriting profitability - with anything below 100% representing a profit and anything higher representing a loss - deteriorated to 77% from 66% the equivalent period last year.
"Unfortunately we had a substantial loss in the year which affected our combined operating ratio," Chief Executive William Dewsall told Alliance News. "That skewed the figures a bit. This one was quite substantial, and we had to pay it relatively quickly to help our client recover from the event."
Dewsall also said he thinks Gable is a touch over-reserved at present, and outlined the group's plans for the additional risk margin provision, which remains in its accounts.
"I think we'll get it back and, when it does come back to us, we'll think about doing a special dividend or releasing it to the market as profit at the end of the year," Dewsall said. "Hopefully we'll be able to get that back and release it to shareholders."
Gable, which reported a 43% increase in first-half gross written premium to GBP39.0 million, also revealed that it has signed a partnership deal with iprism Underwriting Agency Ltd to write commercial business in the UK market. It expects the agreement to deliver in the region of GBP100.0 million of gross written premium over the next three years.
Gable said iprism provides over 1,650 UK authorised insurance brokers with an online trading platform that allows them access to comparative pricing for small business and household insurance products from the UK's largest Insurers. That allows the brokers to make efficiencies within their businesses. Point of sale documentation is backed up by a real time referral service from iprism's in-house underwriters.
According to Dewsall, Gable has already begun writing business following the agreement.
"The deal adds considerable weight to Gable's SME segment in the UK," Dewsall said.
The CEO said he thinks there will be further announcements in the second half of the year about "further traction" in UK and European markets.
Although Gable has been expanding its reach across Europe and its range of products, it has seen a small delay in an expected move to Belgium. Dewsall expects other areas, such as the Nordic states, to more than compensate.
"It was the product we were originally offered that we were prepared to underwrite but what they brought to the table was slightly different. We weren't prepared to provide the coverage they required because it of the losses it could lead to. We've now spoken to the brokers about this so they're now re-jigging that. We should have more information on that in the next couple of months," Dewsall told Alliance News, explaining the delay in entering Belgium.
With Gable continuing to grow gross written premium, Dewsall said that organic growth remains the insurer's focus and does not plan on making acquisitions.
"Why would I want to acquire somebody else's problem? As long as I'm CEO of this business, all of our growth will be organic and not through acquisition," he told Alliance News.
Gable shares were Thursday quoted down 5.1% at 75.00 pence.
By Samuel Agini; [email protected]; @samuelagini
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
GAH.L