Gable Hldgs Share Discussion Threads

[battlebus2] 10/9/2015 18:19

Lol I knew it was a bit condescending when I posted it but felt it was needed even to read again myself.

[scottishfield] 10/9/2015 18:01

tks bb, still holding today. I think you're right; progress is being made (I did read the rns quite fully). Rgds

[battlebus2] 10/9/2015 17:59

Rapid European expansion helped Gable Holdings, the European non-life insurance company, to grow swifty in the first half of 2015 though increased overheads and substantial reserve provisions hit its pre-tax profits.

The company’s gross written premiums (GWP) increased to £51.7 million in the first half, a 33 percent increase on the £39 million it posted in the same period a year earlier on the back of rapid growth including in Europe where it started writing Italian fleet motor business and signed a quota share agreement with Swiss Re on new Danish commercial account in H1.

It made a pre-tax loss of £2.4 million in the period compared with a profit of £2.5 million a year earlier but stressed its underlying insurance profit improved by 11 percent to £6.3 million. It said its underlying profit before tax was £1.4 million compared with £4.9 million a year earlier, which included an additional reserve set-aside of £3.8 million (H1 2014: £2.4 million, Full year 2014 £6.3 million), which relates to 2012 and prior provisions.

“The results reflect continuing progress to eliminate the historical reserving gap entirely in H2 2015,” the company said.

[adyfc] 10/9/2015 08:02

Bill's fat pay isn't fictional though.

[topvest] 10/9/2015 07:52

This company is approaching insolvency in my view. What on earth is going on with the balance sheet - how can they possibly have £90m of debtors? Customers are supposed to pay for insurance up front but in this company's case they don't appear to pay at all. Certainly not what you would call a Buffet "free float"! Something is very wrong indeed. The P&L account is fictional as are the accounts if you look at all the qualifications in the audit report last year-end.

The issues are not just confined to the technical provisions and reserving.

The issues in my view are:
1. Loss making business.
2. Solvency II looks a big issue.
3. Contractual claims - look at last year's accounts; part of the debtor issue.
4. Customers are not paying their premiums on time - why?
5. Reserving policy is questionable - are they just under-cutting the competition?
6. They should be significantly cash flow positive with all this new business and they aren't.
7. No Chairman lined-up - who would take the job 3m before the cliff-edge?

[luckymouse] 10/9/2015 07:47

I have to admit - your a dab hand at spotting an honest broker

[battlebus2] 10/9/2015 07:37

Finn Cap reiterates their buy stance.

[stegrego] 10/9/2015 07:12

Looks like much of loss due to FX adjustments, but was hoping for more concrete developments on funding.
Hoped the risks would be lowered, but they aren't.
Was only in for a punt and turned a small profit having sold this am.

Good luck

[battlebus2] 10/9/2015 07:12

If your thinking of selling have a look at this paragraph first.......read it as you will and good luck to those who sell..

Additional reserve set-aside: Our claims experience during the first half of 2015 has been broadly in line with actuarial expectations and our policy is to set aside provisions at actuarial best estimate to ensure that we carry sufficient reserves to meet claims as they fall due. During the period we increased claims provisions by over GBP11 million. This includes GBP3.75 million of additional reserve set-aside provision which represents half of the remaining historical gap between carried reserves and actuarial best estimate relating to 2012 and prior periods, previously disclosed at GBP7.5 million at the end of 2014, and which will be eliminated entirely in the second half of 2015.

It should be noted that Gable recorded an unusual claims experience in 2014 from a few individually material claims and a spike in attritional claims in the European market, particularly France, which produced an increased actuarial reserve requirement, the full effects of which were felt in the second half of 2014. Our continued growth will help provide scale to ride out similar events in the future and our reinsurance program has been tightened to reduce our net limits and provide additional protection for our balance sheet. We regularly review our risk profile to consider ways to protect our balance sheet through underwriting limits, policy terms and conditions and reinsurance protection.

IAS 21 historical rate adjustment: The IAS 21 historical exchange rate adjustment has become a material adjustment in the current period. This adjustment arises as a result of applying International Financial Reporting Standards (which the Company applies in the same way as all other insurance companies) to all business conducted in currencies other than its "functional" currency which is Sterling. In simple terms, it:

-- arises because unearned premium reserves and deferred acquisition costs (which are deemed "non-monetary items") are carried at historical exchange rates whilst the corresponding earnings of these, spread over the life of the policy in question, are treated as monetary items and translated at prevailing rates;

-- can lead to potentially large accounting adjustments being reported in a set of accounts particularly where there is a prolonged trend movement in rates; but

-- is a non-cash foreign exchange accounting adjustment which only affects the presentation of results and does not affect the business fundamentals

The IAS 21 historical rate adjustment has become a material item in the first half of 2015 because:

-- firstly, European currencies have suffered a severe and prolonged decline against Sterling during the period (in the last year the Euro and Danish Kroner have declined 13%, the Swedish Kroner has declined by 17% and the Norwegian Kroner by 24%, with a large proportion of this in the last six months);

-- secondly, the proportion of the Group's non-Sterling business has increased to 57.7% of total GWP from 46.6% in 2014; and

-- thirdly, the underlying business has also grown strongly, meaning the corresponding balances have also grown accordingly, magnifying the issue

This item has consequently had a material impact on our reported earnings during this period. The Group seeks to reduce the impact of exchange rate movements by balancing foreign currency monetary assets and liabilities, converting excess assets or liabilities into Sterling on a periodic basis, and by using income received in foreign currencies to pay commission and costs arising in the same currencies, with the net margin converted to Sterling. We do not seek to mitigate the reported impact of IAS 21 on non-monetary items as it is merely an accounting adjustment. We regularly review our procedures and practices and investigate potential protective solutions and will take steps to put in place such protective measures as we think appropriate where the potential benefits outweigh the risks.

[adyfc] 10/9/2015 07:03

You don't understand. The day this company turns over less than the year before the myth is exposed.

[battlebus2] 10/9/2015 06:57

Well i'm happy to hold, growth will over time be reflected in profits imv and new appointments also make me confident. No one wants to see a loss but it was expected. Solvency is still work in progress but will be completed.

[adyfc] 10/9/2015 06:48

Awful again. I'd be amazed if this stays above 20p today.

[luckymouse] 10/9/2015 06:39

yep - the mkt always likes a -200% drop in profits - a CEO statement that shamelessly blanks the main issue - & no bond (which you have to secure & pay back unlike stks) to cover the reserving.

[battlebus2] 09/9/2015 18:02

Fingers crossed the market likes what they say.

[adyfc] 09/9/2015 17:07

Don't forget jam tomorrow.

[battlebus2] 07/9/2015 08:26

Results on Thursday should be interesting reading and will hopefully reassure the market.

[battlebus2] 28/8/2015 18:16

Good finish to the week here.

[valhamos] 24/8/2015 12:00

EezyMuny

"Could I take that as a "I don't really know what they plan and what it means for the equity"?"

No because that would be incorrect.

We do know what it means for equity because the company has said that in order to meet Solvency II the preparations "will not include an approach to the market to raise equity capital."

[eezymunny] 24/8/2015 11:42

Could I take that as a "I don't really know what they plan and what it means for the equity"? In which case perhaps it would be possible to tone down the "Expecting these to continue upwards to around 40p" stuff? I mean you might be right, but you most certainly might be wrong, no?

[the shuffle man] 24/8/2015 11:30

Eezy

The way I see it the market was worried that GAH would have to raise more capital via an equity placing to support current business and future business based on the new tighter capital requirements under the new Solvency II requirements.

The company have stated that they are not going to issue equity and may raise debt and use more reinsurance contracts to satisfy the requirements hence the bounce in the share price last week.

IF the provisioning is now correct they should make a decent profit next year and the shares IMO look cheap at current levels.

Anyway all should be revealed when the results are released on the 10th Sep.

TSM

[battlebus2] 24/8/2015 11:27

EezyMunny it's self evident what do you want me to say...i'm not privy to the specifics on how the co will comply, what matters is they are going some way to comply thus elevating the risks to all.

[eezymunny] 24/8/2015 11:19

Nice bit of cut and pasting bb!

Please explain it, as YOU understand it in the context of GAH and its equity, in laymans' terms!

[battlebus2] 24/8/2015 10:56

UK insurers are required to hold a solvency margin or buffer to cover the risk of their assets not being sufficient to cover their liabilities. Under Solvency II the main capital requirement is the Solvency Capital Requirement (SCR). There is also a lower Minimum Capital Requirement (MCR). Under current FCA and PRA rules the margin held is known as ‘capital’;. Under Solvency II, capital is called 'own funds' and divided into 'basic own funds' (e.g. on balance sheet amounts) and 'ancillary own funds' (such as letters of credit and guarantees)
Sub debt is specifically constructed to be a hybrid instrument between debt and equity. As such, an issuer receives all the benefits of debt (tax deductible, fixed rate, long term but finite) without the drawbacks of equity (dilution of control, expensive, high administration, non flexible). In addition, under Solvency II guidelines sub debt instruments are designed to alleviate financial pressure in times of stress.

[eezymunny] 24/8/2015 10:40

If you're bullish bb, which may or may not be right (I offer no opinion), perhaps you could tell us what you think "We are making good progress with our solvency capital preparations for Gable, which will be satisfied by focussing on structured debt and insurance products" means?

[battlebus2] 24/8/2015 10:21

Thanks GHF, just taken a few more after profit taking in a few winners, better % upside here imv, as ever dyor etc....