25th May 2016 15:37
LONDON (Alliance News) - Gable Holdings Inc on Wednesday said it will book a provision in its full-year results that looks set to wipe out the majority of the insurance company's expected profit for the year and said it has launched a full strategic review of the business.
A GBP6.0 million provision will be booked in 2015, which Gable has previously said would deliver a pretax profit in the range of USD7.0 to USD8.0 million.
Since 2012, Gable had been expecting to receive a proportion of the damages awarded by a US court to a plaintiff, which Gable didn't name, regarding an After The Event insurance policy, but the plaintiff has now reached an out-of-court settlement which is valued at a significant discount to the estimated USD7.9 million that was awarded to the plaintiff on an interim basis.
Gable said the plaintiff reached the out-of-court settlement without informing Gable, which would be a breach of contract. Gable said the proportion it was set to receive was a "significant discount" to its contractual share of the damages, meaning its share, if secured, will now be even less.
Gable said it intends to challenge the legality of the settlement in the hope it can recoup some more funds, as the plaintiff has breached its contract with Gable, but said it will book a GBP6.0 million provision against 2015 results, which will hit its profit.
The company's underlying performance, however, will not be affected, Gable stressed.
In addition, Hogarth Underwriting Agencies Ltd, a subsidiary of Gable Chief Executive William Dewsall, has agreed to provide GBP10.0 million of capital to Gable's regulated subsidiary, and those funds will form part of Gable's regulatory capital in the 2016 financial year.
Gable also said it has launched a strategic review of the entire business and said it is open to all options.
Gable shares were down 23% to 6.91 pence per share on Wednesday after the announcement.
By Joshua Warner; [email protected]; @JoshAlliance
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