GAH.L Regulatory News (GAH)

29 Jun 2009 07:30



29 June 2009

Gable Holdings Inc

("Gable" or "the Company")

 Results for the year ended 31 December 2008

Gable Holdings Inc (AIM: GAH), the insurance and reinsurance provider to commercial businesses across Europe, announces its audited consolidated results for the year ended 31 December 2008.

Highlights

Gross written premium of £5.9 million (2007: £6.0 million)

Net earned premium of £ 4.2 million (2007: £4.1 million)

Increase in net insurance margin to 22.5% (2007: 16.5%)

Profit before tax of £0.91 million (2007: £0.51 million)

Net assets at the year end were £9.7 million (2007: £9.3 million)

Basic diluted EPS of 0.74p (2007:0.45p)

Commenced writing business in France - more favourable rates, with lower levels of indemnity compared to the UK

Commenced writing business in Spain - new products developed for this market

New French broker appointed in June 2009 with an initial programme of €2.0 million of premium over the next three months

William Dewsall, Chief Executive, Gable Holdings Inc, commented: "Our strategy for 2008 was to develop the business into a European-wide insurance company and we have achieved this by expanding into the French and Spanish markets. Despite the very difficult trading conditions experienced by our client market in the UK, the combination of our UK, French and Spanish products have enabled us continue to write a profitable book of business.

"Moving forward Gable's geographic development will be the main focus of future growth, with the French market already performing ahead of expectations in the current year."

  Chairman's Statement

The 2008 financial year has been an important one for the implementation and development of the Group's strategy to build a pan-European insurer. From its launch in 2006, the Group initially sought to develop a strong base in the UK construction market. During 2008 the Group successfully launched Gable products into the French and Spanish markets. This European expansion is now the cornerstone of Gable's development strategy, offering products which fit the Group's expertise and offer sustainable profitable business.

The results achieved in 2008, notwithstanding the very testing worldwide economic conditions, are excellent and the Board is confident that the Group's growth strategy will enable it to build on this during 2009 and beyond.

Lance Ranger

Chairman

29 June 2008

Chief Executive's review

The Board of Gable Holdings Inc is pleased to present its audited consolidated results for the year ended 31 December 2008.

Business Review

The 2008 financial year has been an important milestone in Gable's development. Expansion into the French and Spanish markets is confirmation of the implementation of the Group's strategy to build a European-wide insurance company and this geographic development will be the main focus of future growth.

In broad terms, the premium written in 2008 was £5.9 million (2007: £6.0 million), of which amount 80 per cent was written in the UK and 20 per cent in new European markets. In premium terms the UK result has shown a decline in business written, reflecting clearly the very difficult trading conditions faced by the target SME market in the construction sector. However, this book of business remains profitable for Gable and its risk profile is such that there is limited exposure to the worst hit sectors of construction, namely house-building and significant standalone projects.

Gable commenced writing business in France in the first quarter of 2008, offering insurance products to contractors. One of these products is an artisan scheme, offered to businesses with up to 10 employees, which have a lower liability profile than larger project schemes. Rates in France are far more favourable and have lower levels of indemnity offered compared to the UK. As a result, the performance in our first year's trading in France was very encouraging and offset much of the decline in the UK.

Gable also launched products in the Spanish market in the second quarter of 2008.  Spain as a territory is experiencing a very difficult economic climate and as such the premiums written are lower than expected. However, working with its brokers, Gable has developed new products in this territory and early indications are very promising.  Gable's structure offers it the flexibility to write business in new markets and territories where our profit-ethos and service levels are not compromised.  

Results

A summary of the results are set out in the table below:

The reported result for the year shows a profit before taxation of £0.91 million (2007: £0.51 million) and basic and diluted eps of 0.74p (2007: 0.45p). At the end of the period net assets were £9.7 million (2007: £9.3 million) and cash balances were £4.3 million (2007: £4.9 million).

Solvency is always an important consideration for the Group and its growth strategy. The solvency position of Gable Insurance AG ("GIAG"), our Liechtenstein licensed insurance company, has always been very strong and this remains the case. As at 31 December 2008, the reported solvency capital was 315%. During the last financial year, the asset structure underlying our solvency capital was a major consideration for the Board, given the high profile collapses and problems of financial institutions worldwide. Gable has always adopted a prudent approach to this, holding its deposits in cash and, over the course of the last year, has sacrificed investment return for security. Whilst the Group has continued to make excellent progress in its European development during the last eighteen months, the short history of Gable as an insurance entity gives rise to a higher degree of inherent uncertainty in the assumptions relied upon by the directors in formulating these financial statements. Notwithstanding this the directors believe that the basis of preparation of the statements appropriately reflects the uncertainty.

In managing GIAG's risk exposure, reinsurance is a critical element to managing our insurance risk. The renewal of GIAG's annual reinsurance programme, in July, was largely unaffected by the economic environment and a further significant saving on the previous year's programme was achieved.

The Directors' objective is that the Group will declare its inaugural dividend to shareholders as a final dividend in respect of the current financial year ending 31 December 2009. In the meantime the Group will continue to focus on increasing the Group's solvency capital so as to provide it with the capacity to maintain its strong growth. 

Current Trading and Outlook

The 2009 financial year is one of great optimism for Gable. The UK market remains challenging and will do so for some time. However, this market has, and will, become increasingly less significant during 2009 as a result of the Group's expansion into other European markets. The French market is already performing ahead of expectations in the current year, and the Group is working closely with its representatives in Spain and has developed new products for this territory.

Now that the Group has been trading for three years, it has established a brand position and demonstrated, through its results, a prudent but profitable approach to writing insurance risk. The new business development opportunities being offered to Gable are a cause for great optimism. On 15th June 2009 Gable announced an arrangement with a French insurance broker which is expected to provide significant levels of property and liability related risk insurance.

As this report is published, there are further areas of new business expected to be implemented over the next three to four months, which will fundamentally change the position of the Group and its financial potential. These opportunities are related to new business launches in the UK, France and Norway and further information will be relayed to shareholders as soon as it is appropriate to do so.

The Directors, therefore, view the Group's prospects with great optimism.

William Dewsall

Chief Executive

29 June 2008

Consolidated Income Statement

For the year ended 31 December 2008

All operations are continuing.

  Audited Consolidated Balance Sheet

At 31 December 2008

  Consolidated Cash Flow Statement

For the year ended 31 December 2008

  Notes to the Consolidated Financial Statements

For the year ended 31 December 2008

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 UK Accounting Standards and apply the Companies Act 1985 when preparing its annual financial statements. For the period ended 31 December 2005, Gable adopted International Financial Reporting Standards ("IFRS") in its Group financial statements for the first time.

These financial statements have been prepared under the historical cost convention and in accordance with the requirements of International Financial Reporting Standards. The financial statements being sent to shareholders today contain explanations of the significant uncertainties which relate to the preparation of these financial statements. Notwithstanding this, the directors believe that appropriate assumptions have made in the preparing the financial statements and the basis of preparation is appropriate.

2. Profit and net asset value per share

The calculation of the basic profit per share is based on the net profit of £827,000 (2007: £506,000) divided by the weighted average number of shares in issue during the year of 112,200,000 (2007 : 112,200,000). 

The net asset value per share is calculated by dividing the shareholders' funds of £9,706,000 (2007: £9,291,000) by the number of shares in issue at the end of the period - 112,200,000 (2007: 112,200,000).

3. Reconciliation of loss for the period before taxation to net cash flows from operating activities

4. General information

The financial information for the year ended 31 December 2008 does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. Audited financial statements for the year ended 31 December 2008 will be sent to shareholders today.