31st Mar 2016 11:14
LONDON (Alliance News) - Gable Holdings Inc, the AIM-listed property, casualty, motor and specialty insurer, on Thursday said it expects to report a second, consecutive pretax loss, hurt by storms and floods in the UK and Europe at the end of 2015.
Gable, which underwrites insurance policies in the UK, Denmark, France, Germany, Ireland, Italy, the Netherlands, Norway, Spain and Sweden, said it expects to report a pretax loss of between GBP7 million and GBP8 million in 2015. That follows a pretax loss of GBP5.4 million in 2014, versus a pretax profit of GBP7.2 million in 2013.
The latest loss was made worse by provisions for claims relating to flooding in the UK and Europe in December, Gable said on Thursday, which will result in a hit limited to between GBP2.0 million and GBP3.0 million by arrangements with reinsurers.
"The overall performance was impacted only at the year-end by the severe December storms and floods, and we were once again quick to respond to our customers' requirements in getting many businesses back in action following the storms, whilst Gable was also well protected through its reinsurance arrangements, limiting the ultimate financial impact," Chief Executive William Dewsall said in a statement.
Dewsall said Gable saw "continued momentum in high quality new business" in the first quarter of 2016, giving the company "confidence concerning the levels of profitable business" that can be achieved in the year as a whole.
As an insurer, Gable must ensure it carries the reserves needed to meet claims from customers as they fall due, by setting aside provisions at actuarial best estimates to ensure. Gable's accounts will show a GBP7.5 million provision to eliminate a previously disclosed historical gap between carried reserves and actuarial best estimates.
Another reason for the loss was the quota share reinsurance agreement revealed by Gable in December, designed to reduce capital requirements by taking at least GBP15 million of gross written premium off its Liechtenstein-based Gable Insurance AG insurance writing company's 2015 accounts. The agreement was made with Citadel Reinsurance Ltd.
The move formed one element of funding arrangements designed to make sure the Liechtenstein-based company met regulatory capital requirements under new Solvency II insurance rules that came into force at the start of 2016.
Gross written premiums exceeded GBP100.0 million in 2015, Gable said on Thursday, up by 25% on the GBP80.0 million written in 2014, with high retention rates and new referrals driving growth in underlying business across European markets.
In addition, Gable called time on plans that could have resulted in issuing up to GBP10.0 million of convertible loan notes. The insurer raised just shy of GBP4.0 million by issuing loan notes to investors including Chief Executive Dewsall.
In December, Gable said the the funds raised through the loan note were being used to invest CHF6.0 million in Gable Insurance AG to provide it with additional regulatory capital.
Shares in Gable were down 9.9% at 11.26 pence on Thursday.
By Samuel Agini; [email protected]; @samuelagini
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