21st Dec 2015 11:40
LONDON (Alliance News) - Non-life insurer Gable Holdings Inc on Monday said it has agreed funding arrangements so that its Gable Insurance subsidiary meets the initial capital requirements under new Solvency II insurance rules governing capital set to come into force across the EU on January 1.
The funding arrangements comprise a combination of quota share reinsurance and the issue of a new convertible loan note instrument under which Gable has raised about GBP4.0 million. That money will be used to subscribe for CHF6.0 million of new shares in the Gable Insurance subsidiary, providing additional regulatory capital to that business.
The loan notes are convertible into shares at a minimum price of 10 pence. A coupon of 7.5% per annum will be paid on the instruments, and up to GBP10.0 million may be issued in total. Chief Executive William Dewsall invested GBP1.0 million in the loan notes already issued, while non-executive directors Kevin Alcock and Andrew Trott subscribed for GBP400,000 and GBP100,000 of the issue, respectively.
The quota share arrangement is designed to take at least GBP15.0 million of gross written premium off the 2015 Gable Insurance income statement. The overall effect of the deal, which will cede premiums to Citadel Reinsurance Ltd, will be to cut Gable's reported profits by GBP2.0 million in 2015.
"Whilst across Europe the implementation of Solvency II appears to be disjointed, the structure in Liechtenstein is clear and any fallout from the rest of Europe is only likely to be beneficial to Gable. Meanwhile, I am delighted that we have secured the support of a top class A-rated reinsurance partner and a number of new and existing investors to enable us to move securely into the Solvency II regime and sharpen our focus on profitable business," Dewsall said.
The funding arrangements are subject to approval by the regulator of the Gable Insurance subsidiary, which is the the Financial Market Authority Liechtenstein.
Shares in Gable were down 26% at 14.50 pence on Monday morning.
By Samuel Agini; [email protected]; @samuelagini
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