Final Results

28 May 2015

Gable Holdings Inc.

("Gable" or the "Company")

Final Results

Gable (AIM: GAH), the European non-life insurance company, announces consolidated final results for the year ended 31 December 2014.

Business Overview 2014

· Record Gross Written Premium of £80m (2013: £58.9m)

· Net Earned Premiums of £51.4m (2013: £42.0m) in 2014

o The business has produced strong organic growth in new premiums across its core business lines

o New products launched in Ireland, Norway, Sweden and the UK

o New distribution agreements in Ireland, Sweden and the UK

· Underlying net insurance profit of £6.7m

· Combined Operating Ratio ('COR') of 87%*

· Underlying profit before taxation £0.9m with loss before tax of £5.4m (after additional reserve set aside) (2013: profit £7.2 million)

· £15.3m of cash generated in 2014 resulting in cash resources at period end of £42m (2013: £27m)

Current Trading and Outlook

· Strong performance in first quarter 2015 trading

· Launch of new Italian fleet motor product launched in March 2015 performing very strongly resulting in upgrade to initial GWP from Euro 10m to Euro 40m to date this year

· Further new products expected for launch in 2015

· Dividend policy to be reviewed for 2016

* Underlying COR before additional reserve set aside of £6.3m

Commenting, William Dewsall, Chief Executive, said:

"The Group's strong relationships with its pan-European network of producing brokers has enabled it to selectively grow premium income in particular segments offering the prospect of attractive underwriting returns. Our 2014 results have been impacted by a significant fire claim in France, which, including reinsurance reinstatement and net of reinsurance ultimately cost the Company £3.1m. This, together with a UK based claim amounting to £5.2m, of which £3.2m is recoverable under reinsurance, has disproportionately impacted our results given our relatively small size. Despite these losses, we still delivered an underlying combined ratio of 87% which is in line with our ongoing objective of delivering CORs of under 90%.

"In addition we have taken the decision to continue the programme commenced with our 2013 results by further strengthening our booked reserves through the application of an explicit reserving risk margin of £6.3m. We anticipate making a final charge of £7.5m in the current year, following this we anticipate that our internal and external actuarial ultimate loss ratio estimates will have converged.

"2015 has begun strongly with record GWP in Q1 reflecting the Group's strong franchise and range of innovative niche products. The Group continues to see attractive new business opportunities which are well supported by quota share reinsurance arrangements with major reinsurers. We expect these partnerships to continue as our pipeline of new business opportunities grows and we are also exploring a number of strategic alternatives in order to seek to optimise returns on equity.

"When we announced in March 2015 the new product for Italian motor fleets, our conservative expectation was for an initial programme of Euro 10 million of gross written premiums per annum. We are delighted that as a result of increased demand we have already written Euro 40 million of this business to date and expect this to increase to Euro 75 million on an annualised basis.

"We fully expect 2015 to result in a record year of growth with our pipeline of new business providing the next stage of momentum for the Group."

Enquiries:

About Gable Holdings Inc.

Gable is a European non-life insurance company underwriting a comprehensive range of specialist policies for the commercial sectors in the UK, Denmark, France, Germany, Italy, the Netherlands, Norway, Spain and Sweden. Gable benefits from a low-cost online underwriting platform and the Company has continued to successfully grow its business geographically whilst simultaneously exploiting a range of niche insurance segments which exist across the EU.

Gable Holdings Inc. is quoted on the London Stock Exchange's AIM market (ticker: GAH.L GAH.LN). For further information please visit www.gableholdings.com.

 Chairman's Statement

This has been a year of significant organic growth for Gable, now in its tenth year. We can be hugely proud of the achievements made during that time and mindful of the opportunities ahead for Gable as it continues to grow the business organically across Europe.

From a beginning in late 2005, Gable is now producing £80 million of gross written premium per annum across nine EU countries. The management team has successfully built selected distribution channels into those markets, providing bespoke commercial insurance products for small and medium sized enterprises across numerous market segments.

As we entered 2015, the challenges ahead remain that of executing upon a clear strategy to continue to grow the business organically and build upon the growing number of carefully selected distribution channels in each of our European markets, deliver bespoke and profitable products into each market and grow the number of countries where we can deliver new products to meet demand.

Gable is very well positioned for continued growth with a number of new opportunities available to the Group, expanding its product portfolio and new country launches in the EU where we are receiving increasing demand for bespoke products in some very substantial markets. In line with this anticipated growth the Board has also worked closely with its regulator, the FMA, to establish a solvency model which is appropriate for both the medium term requirements of the business and the potential future requirements of Solvency II. We continue to enjoy an open and productive relationship with the FMA and are grateful for their ongoing help and support.

The current year has already started strongly with first quarter trading demonstrating excellent growth. The management team continues to deliver further growth on the back of the significant new business lines, including a substantial uplift in the recently launched new product for the Italian fleet motor market, more on which William discusses later. Needless to say, Gable goes from strength-to-strength and is on track to produce significant new business in 2015.

I would like to thank everyone at Gable for their hard work over the last year and look forward to 2015 with great confidence.

Jost PilgrimChairman

28 May 2015

Chief Executive's Review

Overview of 2014

2014 produced another year of extremely strong top line growth as Gable benefitted from the continued expansion of its wholesale network in both existing and new territories. Gable now writes business in 9 European countries, providing a range of products through its wholesale network of selected brokers, providing a growing platform of bespoke products designed to meet specific market demand.

The continued growth in gross written premiums during the year was well represented across each country segment, with particularly strong performance again from the Group's UK account in commercial combined business where our service focus is well and truly founded on providing for the SME market across a number of distribution channels.

Gable has been very successful with the continued expansion of its distribution channels, working with selected broker networks, providing Gable's specialised commercial insurance products into each market.

The Group has continued to produce organic growth in what are now established markets for Gable in Europe such as Denmark, Norway and Italy where premiums continue to grow from established products and also from the introduction of new bespoke products, most recently in Norway and Italy.

We have been delighted with the very strong performance in the UK across a number of our products which now reach many thousands of SME businesses operating in the UK. We were pleased to announce the latest of our underwriting agreements with iprism Underwriting Agency which provides over 1,650 UK FCA authorised insurance broking firms with an innovative, online, trading platform that allows Brokers to make efficiencies within their businesses by giving them access to comparative pricing for SME insurance products from insurers. Point of sale documentation is backed up by a real time referral service from iprism's in-house systems.

At the half year we announced that we had received a significant property fire claim, 80% of which was recovered against reinsurance policies. I am pleased to say that this claim was settled quickly, greatly assisting our client to recover from the event. This was achieved by working with our reinsurance panel, whom we thank for being equally swift in their reimbursement of their element of the claim. Thankfully, such events are relatively rare but equally, we constantly take the opportunity presented by such situations to improve our risk analysis process in order to mitigate potential losses for both Gable and our reinsurers whilst providing valued and cost-effective protection to our clients.

Some twelve months ago Gable received regulatory approval in all its European territories to underwrite insurance Classes 3 (land vehicles other than rolling stock), 7 (goods in transit) and 10 (motor vehicle liability). In 2014 we successfully established a platform to launch our first product in these classes into the Italian market, resulting in the launch in March of 2015 of Gable's first bespoke motor product working with Movinsurein Italy.

Movinsure is an Italian underwriter providing highly selective, risk managed motor insurance for Italian domestic third party motor liability commercial fleet accounts. It was founded in 2010 by Carlo Faina, CEO of Movinsure and Managing Director of Berkshire Hathaway Italia. Movinsure was formed as an Italian underwriting vehicle following rigorous market research to construct an actuarial rating plan and the creation of an underwriting software platform. Movinsure provides a third party motor liability product with a high level of service to selected specialist commercial motor fleets operating in Italy. The programme targets a consistently profitable segment of this Euro 2bn per annum market and Gable's underwriting programme has a quota share with a panel of reinsurers led by Qatar Re.

Gable's agreement with Movinsure and our quota share with Qatar Re marks a significant new opportunity for the Company and we anticipate building a strong working relationship with Movinsure as we develop this significant market opportunity in what is a substantial major market in Italy. Like Gable, Movinsure provides a high service to its customers and has seized on the opportunity to provide a bespoke product to a selected number of major accounts in the Italian commercial motor fleet market, which is a segment of that major market which has shown to be consistently profitable.

Movinsure itself utilises sophisticated actuarial risk modelling and the entire programme is supported by A rated reinsurance through Gable's quota share agreement with Qatar Re. We look forward to the continued development of this market for Gable in Italy in the future.

Strategy for Growth

There is much to be proud of when we reflect back to when we started Gable ten years ago. I believe we have well and truly exceeded the early expectations for the business and today shareholders own a business which has a much broader commercial reach, many more customers and a growing reputation in each of the markets in which Gable operates.

In just the last four years we have achieved a four-fold increase in annualised gross written premiums, having only once in the last ten years returned to shareholders for additional capital to support that growth. That is a testament to our robust model and having taken the last year to work hard to consolidate our position for the next stage in the progression of Gable's growth to deliver profitable business, we remain very strongly positioned to once again drive the business forward.

Our strategy remains clear and focused: to grow the business working with selected brokers and broker networks to provide well priced bespoke insurance products for the commercial SME markets in Europe. This strategy will continue to stand our business in good stead, and we know that the pipeline of potential business in the short to medium term greatly outweighs our capacity to meet demand.

We know that we can grow the Gable business significantly again from current levels in a sustained and measured fashion, continuing to employ our disciplined underwriting philosophy and part of the process to achieve that is to re-set the bar when it comes to our current reserving policy which I discuss in more detail below.

We have also proven that we can partner effectively with major reinsurers to support our growth plans and these partnerships are testament to the nature and quality of the business that Gable is able to access. There are a number of further opportunities to work alongside new and existing reinsurance partners and we are regularly looking at ways to support our growth aspirations in a capital efficient way and optimise returns on equity for our shareholders. To this end, the Board has held initial discussions with providers of quota share reinsurance and structured debt products. Whilst there can be no certainty that negotiations with these and similar parties will be successfully concluded, the Board is confident that sufficient capital will be in place in advance of the commencement of Solvency II to support its ambitious plans.

Products and Markets

Gable currently has 19 products and is active in 9 European countries with strong and established broking relationships in these territories.

The focus for 2015 is to both develop and introduce new products whilst continuing to build on organic growth with existing products rolled out across European markets.

Reserving Policy

Since inception, the Group used a consistent approach to calculate reserves in respect of its insurance liabilities at the balance sheet date. In keeping with best practice, the Group has prepared an actuarial best estimate (which is subject to an independent actuarial peer review) of its reserves which has provided a "best estimate". In the absence of its own mature experience, this assessment has necessitated the use of certain market level benchmark data, hence such reviews can never fully capture the impact of the Group's "niche underwriting" strategy, tight policy wording and beneficial impact of a proactive and efficient claim handling process.

The Board has always been satisfied as to the adequacy of its reserves and for the above reasons, to differentiate between the niche underwriting strategy of the Group and the estimates derived from market level benchmarks, the Board has historically targeted held reserves below the independent actuary's best estimate, but within their range. Indeed experience shows that settlements are generally below the case reserve which increases the best estimate calculations that take the case reserves as a starting point. Nevertheless, the Board has made additional provisions in 2014 to reduce the gap between the carried reserve and the actuarial best estimate by 45 per cent to £7.5m.

For 2015 and beyond, Gable will apply a reserving policy based on an internal, class-specific actuarial assessment prepared by Gable's in house actuary on an ongoing basis. The internal assessment will be based on a more granular, bottom-up approach, taking into account coverage, claims reporting patterns and wording restrictions. The Board fully believes that its niche underwriting strategy will demonstrate loss ratios which outperform the wider market.

Reinsurance

GIAG manages its potential loss exposure by purchasing suitable reinsurance programmes for its products which are designed to mitigate financial losses. GIAG purchases an annual reinsurance programme running from 1 July to 30 June with international and global reinsurers of a credit rating of A or above. The reinsurance programmes are placed by our brokers AON and Arthur J. Gallagher.

As at 31 December 2014 the balance due from reinsurers in respect of a UK claim recognised late in the year was £3.2 million (2013: £nil).

The Group recognises that its reinsurance arrangements do not relieve it of its ultimate liability to policyholders and as such the Group is exposed to credit risk to the extent that any reinsurer is unable to meet obligations assumed under such reinsurance arrangements.

Results

For the year ended 31 December 2014, underlying net insurance profit was £6.7 million with a net insurance profit after additional reserve set aside of £0.4 million (2013: £11.9 million) on Gross Written Premiums which were 36 per cent higher at £80.0 million (2013: £58.9 million). Underlying profit before tax was £0.9 million with loss before tax after additional reserve set aside of £5.4 million (2013: profit £7.2 million) giving earnings per share of 0.67p on an underlying basis and a loss per share of 3.57p after additional reserve set aside (2013: 5.39p).

Dividend policy

To date it has been the Board's policy that shareholders' interests are better served if the Company retains earnings to provide solvency capital for the near to medium term anticipated growth in the business. Whilst in the near term that policy will remain in place, it is clear that with the anticipated growth in the business the threshold to change that policy is drawing closer. It is therefore the Board's intention to review its dividend policy in the final quarter of 2015 with the intention to initiate a dividend in the 2016 year.

Board and Management

In February 2015, we announced Board Changes. Gable appointed Jost Pilgrim as Non-Executive Chairman who replaces Michael Sofaer who has stepped down from the Board to pursue other business interests. Jost has worked with the Gable management team from its inception and brings with him enormous experience having worked at the highest levels in the European financial arena for many years. In turn, we would like to thank Michael for his contribution to Gable over the last five years and wish him well for the future. Andrew Trott an experienced and respected insurance liability lawyer in the London Insurance Market was appointed to the Gable Holdings board as a Non-Executive Director.

In August 2014 we were delighted to welcome Meera Rajoo-Oakley CERA FIA, to our management team who joined Gable as Group Actuary. Meera was previously Actuarial Risk Manager at Direct Line Insurance with oversight of insurance risk management. Before that she was an actuarial consultant with Grant Thornton for 6 years until 2013, where she specialised in commercial lines insurance, working on a range of disciplines including valuation of technical provisions under the SII regime, calculating SII capital requirements using the SII standard formula, assisting clients to build appropriate internal models, validation of internal models and the validation report, and development and documentation of Systems of Governance and policy frameworks. Meera's appointment has greatly enhanced our actuarial team and builds upon our corporate governance structure.

Our Customers, Brokers and People

We greatly appreciate the tremendous support we enjoy from our brokers across each country of operation. We very much look forward to continuing to build upon these relationships, and will continue to build further distribution channels on a county-by-country and product-by-product basis. Dependent upon the requirements and availability of local broking expertise and product specialisms in each country, we believe that Gable will continue to build further dedicated partnerships and make great inroads in developing new business relationships, as is evidenced with our most recent launch with Movinsure in Italy.

I would also like to thank all of our customers, across the increasing number of sectors and countries in Europe, also my thanks to Gable staff for their excellent work during 2014 and as we progress through the current year.

Current Trading and Outlook

We started 2015 verystrongly, producing in January the highest level of GWP written during any single monthly period in the ten years since the Company was first established. The year since then has continued to produce a strong rate of growth at the top line, fuelled by an excellent level of renewals and further organic growth, with particularly strong performances from our UK and Italian programmes of business.

When we announced in March the new product for Italian motor fleets, our capacity commenced with an initial programme of Euro 10 million of gross written premiums per annum and as a result of increasing demand we have now written Euro 40 million of new business in this class to date and expect this to increase to Euro 75 million on an annualised basis.

In addition, we continue to anticipate a strong run rate from our Italian commercial bonds business during the current year and into 2016 and have also been appointed exclusive underwriter to the Italian Serie A and Serie B, providing mandatory bonding to player transfer receivables/payables in the Serie A, Serie B and Pro Liga professional clubs, each of which fall under the administration of the Società Lega Calcio di Serie A. Gable's underwriting programme for this product has quota share with reinsurers.

Our business in the UK goes from strength-to-strength as we benefit from major agreements already in place with Risk Alliance and iprism in the UK and internationally with Arthur J. Gallagher International and most recently with Movinsure.

We fully expect to see another record year in 2015 with our pipeline of new business providing the next stage of momentum for the Group as it continues to grow significantly over the medium term. I believe that we have taken the prudent step at this stage with regard to our reserving policy which strengthens our position for the future as the business grows and allows us to embrace the significant number of opportunities available to Gable as we continue to expand the business.

The excellent prospects for of the Group's new business opportunities mean that we can look forward to a year of sustained and measured top line growth which is also in line with our disciplined underwriting strategy.

William DewsallChief Executive

28 May 2015

GROUP INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2014

All operations are continuing.

No statement of Comprehensive Income is presented as there is no other comprehensive income.

GROUP STATEMENT OF FINANCIAL POSITION

AT 31 DECEMBER 2014

The financial statements have been signed by the Board and authorised for issue on 28 May 2015.

William Dewsall J Blaise Craven

Chief Executive Director

GROUP STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2014

NOTES TO THE GROUP FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

1. BASIS OF PREPARATION

The Company was incorporated as a Corporation in the Cayman Islands which does not prescribe the adoption of any particular accounting framework. The Board had previously resolved that the Group would follow IFRS and apply the UK Companies Act 2006 when preparing its annual financial statements.

These financial statements have been prepared under the historical cost convention and in accordance with the requirements of International Financial Reporting Standards ("IFRS") endorsed by the European Union ("EU").

The Group financial statements consolidate the financial statements of Gable Holdings Inc. and subsidiary undertakings made up to 31 December 2014. Subsidiaries are entities over which the Group has control. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. The Group obtains and exercises control through voting rights.

Inter-company transactions, balances and unrealised gains on transactions between the Group companies are eliminated. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

In relation to the preparation of these financial statements, the Directors have been cognisant of the particular uncertainties outlined in note 3 and note 15. The financial statements have been prepared on a going concern basis and it is the opinion of the Directors, based upon the information available and the information set out in the statement as to Going Concern in the Directors' Report, that Gable Insurance AG and the Group will be able to maintain its solvency requirements and meet its liabilities when they fall due.

While a number of new or amended IFRS and IFRIC standards have been issued there are no new standards that have a material impact on the Group.

The Board believes that the Company and all of its subsidiaries have Sterling as a functional currency. The financial statements are presented in Sterling.

GROUP STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2014

The following notes form part of these financial statements.

NOTES TO THE GROUP FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

1. BASIS OF PREPARATION

The Company was incorporated as a Corporation in the Cayman Islands which does not prescribe the adoption of any particular accounting framework. The Board had previously resolved that the Group would follow IFRS and apply the UK Companies Act 2006 when preparing its annual financial statements.

These financial statements have been prepared under the historical cost convention and in accordance with the requirements of International Financial Reporting Standards ("IFRS") endorsed by the European Union ("EU").

The Group financial statements consolidate the financial statements of Gable Holdings Inc. and subsidiary undertakings made up to 31 December 2014. Subsidiaries are entities over which the Group has control. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. The Group obtains and exercises control through voting rights.

Inter-company transactions, balances and unrealised gains on transactions between the Group companies are eliminated. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

In relation to the preparation of these financial statements, the Directors have been cognisant of the particular uncertainties outlined in note 3 and note 15. The financial statements have been prepared on a going concern basis and it is the opinion of the Directors, based upon the information available and the information set out in the statement as to Going Concern in the Directors' Report, that Gable Insurance AG and the Group will be able to maintain its solvency requirements and meet its liabilities when they fall due.

While a number of new or amended IFRS and IFRIC standards have been issued there are no new standards that have a material impact on the Group.

The Board believes that the Company and all of its subsidiaries have Sterling as a functional currency. The financial statements are presented in Sterling.

2. PRINCIPAL ACCOUNTING POLICIES

Business combinations

Business combinations are accounted for using the acquisition method of accounting. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value at the acquisition date. The excess of the cost of acquisition over the fair value of the net assets acquired is recorded as goodwill.

Goodwill

Goodwill is recognised in the statement of financial position at cost less any impairment.

Goodwill is tested annually for impairment. Where there is any reduction in the carrying amount, this would be recognised in the income statement for the period in which the reduction is determined.

Foreign currency translation

Transactions in foreign currencies are translated into sterling at the exchange rate ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the exchange rate ruling at the end of the reporting period, and the resulting foreign exchange gain or loss is recognised in the income statement.

Non-monetary assets and liabilities are translated using the exchange rate at the date of the transaction; no exchange differences therefore arise.

Underwriting transactions

The results for all classes of insurance business are determined on an annual basis whereby the incurred cost of claims, commission and related expenses are charged against the earned proportion of insurance, net of reinsurance as follows:

1. Premiums written comprise the premiums on contracts incepting in the financial year, together with any differences in premiums between booked premiums for prior years and those previously accrued, and include estimates of premiums due but not yet receivable or notified, less allowance for cancellations;

2. Unearned premiums represent the proportion of the premiums written in that year that relate to unexpired terms of policies in force at the end of the reporting period. For ATE business, premium is earned at inception where the premium is fixed, or on the determination of the event where the premium is variable and dependent on the outcome of such a future event such as a court award of damages. Where the amount of such a premium is variable, a best estimate of the amount expected to be received is recognised;

3. Reinsurance premiums and any related reinsurance recoveries are accounted for in the same accounting period as premiums and claims incurred. Reinsurance premiums are earned over the period in which premiums on the related policies are earned;

4. Acquisition costs, which represent commission and other related expenses, are deferred and recognised over the period in which premiums from the related policies are earned;

5. Claims incurred represent claims and related expenses paid in the year and changes in the provisions for outstanding claims, including provisions for claims incurred but not reported and related expenses, together with any adjustments to claims from prior years. Where applicable, recoveries due from reinsurers are disclosed separately;

6. Claims outstanding represent the estimated ultimate cost of settling all claims (including direct and indirect claims settlement costs) arising from events that have occurred up to the end of the reporting period, including provisions for claims incurred but not reported, less any amounts paid in respect of those claims; and

7. Provision for the cost of handling future claims is only made if this cost materially exceeds future investment income from the claims fund maintained.

Expenses incurred in insurance activities and other operating expenses

Expenses incurred in insurance activities and other operating expenses are recognised on an accruals basis.

Taxation

The tax expense represents the sum of the tax currently payable and any deferred tax provided. The tax payable is based on the taxable income for the year. Taxable profit differs from profit for the year as reported in the income statement because it excludes items of income and expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates applicable at the end of the reporting period.

Deferred income tax is generally provided on temporary differences arising between the tax bases of assets and liabilities and the carrying value in the financial statements. However, if the deferred income tax arises from the initial recognition of goodwill, or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for.

Deferred income tax is determined using tax rates enacted or substantively enacted at the end of the reporting period and expected to apply when the related deferred tax asset or liability is realised or settled.

Deferred income tax assets are recognised to the extent that future taxable profit will be available against which the temporary differences can be used.

Deferred income tax is provided on the temporary differences arising on the investments in subsidiaries, except where the Group controls the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset only where there is a legal right of offset and the deferred taxes relate to the same fiscal authority.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any impairment. Depreciation is calculated to write off the cost of tangible fixed assets over the estimated useful lives as follows:

IT systems and software: 20% per annum

Motor vehicles 20% per annum

Furniture and fittings: 20% per annum

Leasehold improvements remaining term of lease, up to a maximum of 10 years

The gain or loss arising on the disposal of an item of property, plant or equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the income statement.

Impairment of assets

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Impairment reviews are carried out more frequently if there is an indication that the asset may have been impaired.

The recoverable amount is the higher of fair value less cost to sell and value in use. In assessing value in use, the current estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash generating unit) is reduced to its recoverable amount. An impairment loss is recognised in the income statement immediately. Except for goodwill where impairment losses cannot be reversed, where an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior years. A reversal of the impairment loss is recognised immediately.

Financial instruments

Financial assets comprise solely trade and other receivables and cash and cash equivalents. Financial liabilities comprise solely trade and other payables (classified as held at amortised cost).

Trade receivables and payables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment in the case of receivables. Cash and cash equivalents are carried in the consolidated balance sheet at amortised cost and include cash in hand, deposits held on call with banks and other short-term highly liquid investments with a maturity of three months or less at the date of purchase.

Provisions and contingencies

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Where a reimbursement is expected, this is recognised only when it is virtually certain that the reimbursement will take place and the amount to be reimbursed is known.

Contingent liabilities are liabilities that represent a possible obligation arising from a past event whose existence is dependent on one or more uncertain future events not within the control of the Group or a present obligation where it is not probable that an outflow will be required for settlement of the obligation.

Contingent liabilities are not disclosed where the likelihood of the uncertain future event is remote, unless the disclosure of the contingent liability adds clarity to the financial statements.

Contingent assets, which relate to possible assets and depend on the outcome of uncertain future events, are not recognised. Such an asset is disclosed only where the inflow of economic benefit is virtually certain.

Segment information

A business segment is a component of an entity whose results are regularly reviewed by the entity's chief operating decision maker and for which discrete financial information is available.

Share based payments

Options

The Group issues equity-settled share-based awards to certain employees (including directors). Equity-settled share-based awards are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based awards is expensed on a straight-line basis over the vesting period, together with a corresponding increase in equity, based upon the Group's estimate of the shares that will eventually vest. Fair value is measured using the Black-Scholes model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. No adjustment is made to the expense recognised in prior periods if fewer share options are ultimately exercised than originally estimated. Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up to the nominal value of shares issued are allocated to share capital with any excess being recorded as share premium.

Warrants

The Group has also issued equity settled share-based awards in respect of services provided. The share-based award is measured at fair value of the services provided at the grant date. The expense is allocated on a straight-line basis over the vesting period.

Critical accounting estimates and judgements in applying accounting policies

The preparation of financial information requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities. Estimates and judgements are continually evaluated and based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances.

The most critical accounting estimate made by the Group is the estimate of the ultimate claims liability under insurance contracts underwritten. The estimation of the liability considers historical data, with most relevance given to recent data, of claims experience. The ultimate cost of outstanding claims is estimated based on experience and current business conditions. Whilst claims need to be notified without delay, the settlement of claims and accordingly the ultimate cost of such claims cannot be known with certainty at the end of the reporting period. In particular, estimates of technical provisions inevitably contain inherent uncertainties because significant periods of time may elapse between the occurrence of an insured loss, the reporting of that claim, payment of the claim and the receipt of reinsurance recoveries. While the Directors consider that the estimate of claims is fairly calculated, on the basis of the information currently available to them, the ultimate liability remains inherently uncertain and may change as a result of subsequent information and events which may result in the eventual cost of settling these liabilities being higher or lower than the amount calculated. When estimating the required level of provisions, management will consider the results of a variety of actuarial techniques. The projections given by the various methodologies assist in setting the range of possible outcomes and facilitate management's selection of the most appropriate estimation technique taking into account the development of the Group's book of business.

Any subsequent inadequacies or surpluses are adjusted and recognised in the income statement in the year in which they occur.

Over the last few years, GIAG has launched a number of new products in Europe, which remain at early stages of development, both in premium written and claims experience. In respect of the former in relation to ATE business, the Directors make assumptions as to the best estimate of any variable premium, which in the future may be higher or lower than the amounts recognised. Judgement is also required in selecting an appropriate accounting policy for fixed premiums on ATE business which only become payable when the underlying litigation is resolved. The group takes the view that these premiums are earned when the policy is written because the risk that is being insured has already occurred. If a different policy were applied, for example treating such premiums as earned only when the underlying litigation is resolved, premiums and associated profits would be recognised in later periods and net assets would be reduced. With regard to claims experience, the Directors have made a number of assumptions as to what the ultimate claims experience might be. Estimates of potential future settlements levels for open claims are based on the experience of the underwriting years to date. Taking these factors into account there is the potential that the amount at which claims will be settled in the future may be substantially higher or lower than the amounts currently provided in the financial statements. Having regard to this significant uncertainty inherent in the business of the insurance subsidiary and in the light of the information presently available, in the opinion of the Directors the provisions for outstanding claims and IBNR in the Group financial statements are fairly stated.

3. RISK MANAGEMENT

The principal activity of the Group is that of an insurance company. As such, there are a number of specific risks that attach to such an undertaking. Insurance in its simplest form is the acceptance by an insurer of the risk to pay future claims, the compensation for which is an insurance premium. As such, the insurer must manage its risk in a number of specific areas.

Of the risks identified and managed by the Group, those of most significance at the current stage of the Group's development as identified by the Board and company management are capital adequacy, claims reserving and reinsurance.

Claims reserving and significant uncertainty

GIAG monitors the claims development of all products from their respective launch and uses this analysis and the management expertise available to it to develop what the directors believe to be a reasonable reserving position at each year end. Continued monitoring of the position has been and will be carried out for each underwriting year.

During the last five years, GIAG launched a number of new products and has, therefore, begun the process of claims monitoring for these products. In addition, in accordance with Lichtenstein regulations, GIAG has an Appointed Actuary responsible for undertaking an actuarial review of its year end reserving position and has commissioned an independent actuarial peer review of this work. The peer review is currently performed by Grant Thornton. The Appointed Actuary's Report evaluates the reserving position of GIAG for its products and markets based on the information provided by GIAG and provides a range of possible ultimate loss outcomes based on experience of the Company and of the market as a whole. The Board believes that GIAG's focus on niche areas of business and tight underwriting policies expose the company to lower ultimate loss ratios than the market as a whole. Whilst its reserving position is below that which might be appropriate for a much larger business facing whole market risks, the Board believes that its carried reserves are adequate. Nevertheless, the Board recognises that projecting ultimate claims is inherently judgmental and that any estimate of future claims can be different from the eventual outturn. The Board fully believes that its niche underwriting strategy will continue to demonstrate loss ratios which outperform the wider market. During 2014 GIAG set aside additional reserves to reduce the gap between the reserves carried by the company and that of the actuarial best estimate to £7.5 million (2013: a gap of £13.8m).

At the date of these financial statements, GIAG's claims experience for all products, even those launched in the UK in 2006 following the foundation of the business, has been developed over a short period of time. For those launched more recently and, in particular, in the last financial year the claims development experience carries an even higher degree of uncertainty. For any insurance entity, it takes a reasonable period of time, firstly, to determine an actual result for a particular underwriting year and, secondly, and more importantly, to develop an experience of a particular book of business such that claims reserving trends can be identified and applied. Whilst specific underwriting years may be close to establishing a result (i.e. 2006), it takes a much longer period to draw definitive conclusions against which future underwriting years may be judged. The Directors believe that a reasonable approach has been taken to reserving, as described in Note 13, for each of GIAG's underwriting years but in doing this, acknowledge that the significant uncertainty outlined above will remain with the Group's reserving conclusions for the immediate future. The conclusions drawn by the Directors rely on a number of assumptions. These, inter alia, include an assumption that future claim settlements will follow a similar trend to those experienced on settled claims to date. In addition, the performance of the new products launched in the year is dependent on a future claims development profile. Whilst the Directors believe that a reasonable approach has been taken in this first period of account for these products, the ultimate claims experience will have a high degree of uncertainty until the claims experience has developed further. A 1% movement in the net loss ratio for the current underwriting year will increase/decrease profit by £513,900 (2013: £420,240).

Claims development information is disclosed in order to illustrate the sources of significant uncertainty outlined above. The table compares ultimate claims estimates with the payments made to date. The first section of the table shows current estimates of cumulative claims and demonstrates how these claims have developed at subsequent year ends. As the Company has made additional provisions to move its cumulative claims provisions towards actuarial best estimate, the table below has been presented using actuarial best estimate figures for each period to show how the account has developed over time on a basis consistent with the management's long term objectives. Given that 2014 is only the ninth year of underwriting and volume / business mix has changed as the Group has grown, users of the financial statements are cautioned against extrapolating the below as representative of future claims development.

The Board believes that the estimate of total claims outstanding at 31 December 2014 is adequate.

Reinsurance

GIAG manages its potential loss exposure by purchasing suitable reinsurance programmes for its products which are designed to mitigate financial losses. GIAG purchases an annual reinsurance programme running from 1 July to 30 June with international and global reinsurers of a credit rating of A or above. The reinsurance programmes are placed by our brokers AON and Arthur J. Gallagher.

The Group recognises that its reinsurance arrangements do not relieve it of its ultimate liability to policyholders and as such the Group is exposed to credit risk to the extent that any reinsurer is unable to meet obligations assumed under such reinsurance arrangements. As at 31 December 2014 the balance due from reinsurers was £3.2 million (2013: £nil million).

Underwriting

Underwriting risk comprises both the risk profile and the financial scale.

Each proposed insurance contract is either generated through GIAG's internet-based quotation system or by the completion of detailed proposals. This process is designed to ensure that all relevant information is collated to enable the underwriter to make a fully informed decision as to the risk profile of a particular client and the appropriate pricing. This is particularly relevant to construction-related risks, which cover a wide range of different business services. GIAG's systems tailor the information required to each particular circumstance dependent on factors such as claims experience and industrial specialism. An insurance quotation is unable to be provided until all relevant information has been provided.

GIAG has, through its underwriting and premium pricing policy, sought to write profitable business rather than to build a book of premium. Management control has been exercised by:

· regular reporting of premium written;

· analysis of quotations not won; and

· monitoring of industry exposure and risk profiles.

In conjunction with its monitoring of industry exposure and risk profiles, management also determines potential insurance concentrations, which it seeks to mitigate by the introduction of new products and jurisdictions.

Claims

The claims risk is to ensure that an insurer settles only valid claims at appropriate settlement levels.

GIAG has implemented a rigorous system for the handling and settlement of claims which fall due. Under each insurance contract the insured is required to notify GIAG (by way of its appointed agent in the relevant jurisdiction) of any event, which may give rise to a claim. Such notification must be made within a specific period of the event. On receipt of a claim, GIAG makes an initial determination of its contractual liability and, where relevant, engages external experts to provide it with loss information. For all valid claims, GIAG will seek to agree and settle a claim as expeditiously as possible.

Credit risk

There are two principal elements to the Group's credit risk exposure:

· non-payment of insurance premium by insured, including for ATE business where the premiums only become payable when the underlying litigation is resolved: premium outstanding is monitored on a regular basis and each insurance contract contains a specific warranty as to requisite payment period; and

· non-payment of reinsurance recoveries: for its reinsurance programmes, all reinsurers must have a credit rating of A or above.

The Group has insurance receivables that are past due but not impaired at the reporting date. An aged analysis of the carrying amounts of these receivables net of provisions is disclosed below:

The ageing of debtors reflects the payment terms on the products offered. As part of its debtor management procedures, the Directors monitor past due debtors and undertake all requisite actions to recover these amounts. The Directors have, therefore, made certain assumptions in respect of the recoverability of long-term debtors, which they consider to be reasonable. In respect of premiums receivable the Group holds an impairment provision of £1.1m (2013: £1.0m). In order to mitigate counterparty risk on bank deposits, the Group maintains a policy of holding not more than £7.5m (2013: £7.5m) in any one banking group. The following table shows movements in impairment provisions in the year:

Currency risk

GIAG retains its policy income and settles claims in the currency in which the contract is made and, therefore, mitigates currency risk by matching assets and liabilities in the currency in which they originate. For the year ended 31 December 2014 and 2013, all premium income was denominated in GBP, Euro, Danish Kroner or Norwegian Kroner and claims arising therefrom will be settled in each relevant currency. Due to Gable Insurance AG being a Liechtenstein registered company, certain monetary assets are denominated in Swiss Francs.

The sterling equivalent of monetary assets and liabilities held by the Group denominated in Euro, Norwegian Kroner and Swiss Francs at the year-end were as follows:

A 10% increase/decrease in the exchange rates applied to convert the currencies above against GBP would impact the value of the Group's net assets and its profit as at 31 December 2014 by approximately £2,701,000 (2013: £1,827,000). In addition, indirect foreign currency exposure exists from policies where the insured events are settled in other currencies.

Interest rate risk

The Group's main exposure to fluctuations in interest rates arises in its effect on the yield that is received on its short term deposits. When placing funds, consideration is given to achieving a competitive return on the amount invested. An increase or decrease of 10% in interest rates would decrease/increase Group profit by less than £10,000 (2013: £15,000).

Liquidity risk

Net premium income received by GIAG is retained in its base currency and placed on short term deposit with recognised banking institutions. As the business develops, premium is written and claims experience develops, the Group will seek to extend the period of its deposits, whilst retaining a range of maturity dates to ensure that financial resources are available to meet its known financial requirements and provide the ability to meet efficiently potential loss liabilities.

Regulatory and Capital risk management

GIAG is regulated by the Financial Market Authority in Liechtenstein and is subject to its regulatory requirements. Failure to comply may lead to sanctions being placed on GIAG and, therefore, affect its ability to conduct business. GIAG is also reliant on the continued existence of legislation allowing EEA based companies to passport into the EU.

The Directors have overall responsibility for managing the Group's capital base with the principal objective of maintaining sufficient capital to satisfy regulatory requirements. The Directors also recognise the need to maintain a strong capital base that provides the necessary protection to policyholders and creditors and at the same time generating sufficient returns to create shareholder value.

GIAG is a regulated insurance company in Liechtenstein. Liechtenstein regulations require insurance companies to meet the solvency requirements in that jurisdiction and to hold reserves set at an actuarial best estimate or otherwise be in technical breach of the regulations.

GIAG historically held reserves set at a management best estimate which, over time, have diverged from the actuarial estimate for the reasons set out elsewhere in these accounts. These have historically been, and continue to be, accepted by the regulator. As explained earlier in this note, the Company has made additional provisions in 2014 to reduce the gap between management and actuarial best estimate to £7.5 million. Whilst this has had a material adverse impact on the reported result for the current year, uncertainties relating to the financial performance and position arising from carrying a reserve different from that determined by actuarial assessment have been greatly reduced.

As at 31 December 2014, the solvency ratio of GIAG calculated on the basis of the figures within these accounts and as submitted to the regulator was 108% (2013: 169%). The company meets with the regulator on a regular basis and reviews capital plans for future years on a regular basis. With the proposed implementation of Solvency II, the Board and management have instigated the process of conforming both to the proposed capital requirements and also the proposed risk management and reporting requirements.

Going concern

Whilst Solvency II will not come into force until 1 January 2016, the Board has already commenced the process of assessing the impact of Solvency II on the business and, given the Board's expectation of continuing strong growth, assessing the required capital to support those levels of income. To this end, the Board has held discussions with providers of quota share reinsurance and structured debt products. Whilst there can be no certainty that negotiations with these and similar parties will be successfully concluded based on these discussions, the Board is confident that sufficient capital will be in place in advance of the commencement of Solvency II to support its ambitious plans. Failure to raise sufficient regulatory capital would hinder the company's growth plans and could also lead to sanctions being placed on GIAG and therefore on its ability to conduct future new business. This indicates a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern.

Depreciation is charged to other operating expenses.

The insurance reserves carried by the Group are calculated using a number of methods to project gross and net insurance liabilities:

· a case by case review of notified claims; and

· actuarial techniques such as the chain-ladder method and the Bornhütter-Ferguson method.

The Group has undertaken an actuarial assessment of its reserves which has been independently peer reviewed by Grant Thornton, to ensure that the reserves included in the year end results are within a range of possible outcomes.

The major assumptions underlying the reserves established by the Group are:

· The Group's claims experience for the nine years ended 31 December 2014 can be used to project future claims development factors;

· Benchmarking exercises used in the assessment of ultimate claims provide a reasonable basis to compare against the Group's reserve position (after adjusting for differences in the business underwritten and the relevant factors); and

The aim of these assumptions is to arrive at an estimate of the possible future obligations and cash outflow of the Group.