Gable Hldgs Share Discussion Threads

[topvest] 14/12/2015 13:34

They are leaving it very late. Wouldn't be surprised if this Group has some ugly messages up their sleeve. Beware!

[ramridge] 14/12/2015 12:35

Garbetkld -
you should add Solvency II to your list of red flags. The company was very late in its preparation for SII which comes into effect on 1/1/16.
It isn't just putting up more regulatory capital but also making major changes to the organisation in terms of risk management and reporting.
The general talk is that large insurers are well prepared and have bolstered their capital, but medium / small insurers are/ will struggle. So expect more M&A in 2016 specifically due to the impact of SII.
I would put Gable in that last category. Another straw on the camel's back....

[garbetklb] 12/11/2015 16:37

cfro - not something I was aware of! But it was quite a time ago & things move on.....!

[cfro] 12/11/2015 13:52

There are a fair number of over-priced shops in Lime Street to service the people working there...


Hence my point in previous post! ;-)

[garbetklb] 12/11/2015 11:07

I'm certainly not lining up to defend Gable - I also think they probably have terminal problems, but suspect they will keep going for a bit longer, with Billy drawing his ludicrous salary.

I don't know anything about Gable Comms & Jamie's comments would be worth putting to Gable.

But, I'm pretty certain that they ARE a real company and NOT the next Globo - albeit they are a pretty awful company.

The Lime St issue is a red herring - Lime St is the centre of the London insurance market & 34 is a stone's throw from Lloyd's. I'm trying to remember if it was 34 that I started my career in....... There are a fair number of over-priced shops in Lime St to service the people working there - sandwiches, shirts, dry cleaning etc. The floors above & behind the dry cleaners will have insurance underwriting offices - Gable's is labelled a "contact office" because they are acting for Gable Lichtenstein as a contact office, rather than a branch/subsidiary. As such, they are not supposed to actually undertake business - in reality, it's probably Gable Lichtenstein that's effectively the brass plate, whilst things happen in London, but in a way that satisfies the rules. It's quite common in insurance/reinsurance and IN ITSELF nothing to get too excited about.

Much more the worry that they are registered in Lichtenstein - where one might wonder what the regulator knows about Europe-wide insurance? Certainly, when I last looked, he had very few (if any) other similar insurance companies to regulate. Why did they choose Lichtenstein at a time where people were flocking to Gibraltar to set up similar companies? Gib used English law (and language) and was (supposed to be) regulated to the same standard as the UK with the Gib regulator having a link to the FSA. Maybe Dewsell wasn't impressed by FSA - google William Dewsell FSA. Certainly I didn't find Gib regulation to be all it was said to be - but then FSA were pretty hopeless, independent Insurance not being their finest moment.

A major worry would be the lack of insurance expertise in terms of the people mentioned on Gable's website - in pretty much any capacity.

Luckymouse - I hate to disillusion you, but you'd not recognise your last paragraph if talking to most small insurers, and I'd be astonished if Gable are different. That sort of pricing/underwriting is likely to be being done largely by gut feel & experience of the underwriters. And experienced underwriters is something that Gable should be being pushed very hard by its shareholders on - again, last time I looked at their website, I couldn't see any beyond Billy. And I'd be very very worried to be relying on him.

The debts piling up have a plausible reason - ATE, After The Event legal expense insurance. This is where Gable are basically betting on a legal case of some sort (I don't know what sort of business they wrote) - if they win, they get paid a chunky premium, probably being a basic premium plus success fee; if they lose, they pay the costs of the case plus they probably pay (as part of the claim) the basic premium to themselves....... But, either way, I believe they don't collect the premium until the case is resolved, hence collectibles piling up - but I could be wrong.

I understood insurance accounting pretty well - but always had to take a deep breath before looking at ATE accounts. I did look at their report & accounts a while back (not, I hasten to add, with any view to investing) and seem to recall being more concerned by the ATE underwriting risk (would the cases turn out the way Gable are hoping - especially a v big one, which is mentioned separately) and the ATE revenue (and anticipated profit) recognition policy.

Complete bargepole stock for me with too many red flags.

Garbetklb

[cfro] 12/11/2015 09:16

Really fantastic research you have undertaken Jamielein, well done!

It wouldnt surprise me if thats a knocking shop above the laundry! LOL :-)

As you say GAH is completely uninvestable.

[adyfc] 09/11/2015 07:46

Problem is when you try and look at Gables accounts you end up with a headache, it's much easier to look at Dewsall's history and then all becomes clear.

[saucepan] 08/11/2015 20:36

jamielein: excellent research (post 3010) and some very disturbing findings.

I have not been invested in GAH for a long time, but follow it with morbid curiosity to see how it all pans out - despite me regarding it as a "bargepole" stock.

I agree, anyone currently looking at GAH would do well to go back through the thread and study garbetklb's forensic analysis.

[jamielein] 08/11/2015 01:26

Yep, not sure what made me re-look at them as I decided they weren't for me a while back. More curiosity than anything.

I'll admit I did hold them briefly ages ago and sold out when they restated their accounts. I hadn't really done much research and was just looking at the EPS growth back then.

I personally think they'll end up at zero but it could take a long time to get there. Depends how much cash they need to pay claims and if anyone is willing to give it to them.

This company is not at all transparent and the RNS releases look more like a PR exercise. It's uninvestable.

I honestly hope I'm wrong and nobody here loses any money though.

[battlebus2] 07/11/2015 23:26

Jamie steer well clear, registered in Lichtenstein or somewhere like that. Lots of big questions that won't be answered at least by email. Got to the stage I don't care anymore and hope that at 21p they maybe able to salvage something. Garbetlb knows the industry inside out so read his comments a few posts back. Very high risk imv.

[jamielein] 07/11/2015 23:05

I've been taking a look at Gable and all I have is lots of questions. I am doubting whether they're actually a real company. Maybe that's just because of the recent AIM disasters like Globo. You can't really trust NOMADs or auditors to do their job properly.

The company's registered address in the UK is 34 Lime Street - which isn't even a proper office. It's actually a dry cleaning shop but appears to also be a virtual address for lots of companies.

It's the same address on the Gable Communications website. It looks like they've badly photoshopped the address onto a window.
www.gablecommunications.com
I'm not even sure how this business relates to Gable. It's owned by two directors Justine James and John Bick. It isn't mentioned in their final results apart from under the "Enquiries:" section. They're some sort of PR adviser to Gable it appears.

John Bick has been CEO of Gable Communications and on his Linkedin page, that's the only position he's ever held. As a public relations person you'd have thought he'd have a better Linkedin page? Gable Communications has had the same negative £133k net assets for the last few years, though cash, assets, and liabilities have fluctuated. Are they a real PR business? You'd have thought their net assets would move by at least £1 each year if they were doing business.

Also, why did Gable change from Numis to Zeus Capital for NOMAD?

They now seem to get their PR from Haggie Partners LLP instead of Gable Communications (their Half Yearly Report) but their website still lists Gable Communications hxxp://www.gableholdings.com/investor/advisers

There's something that doesn't feel quite right about GAH in general.

At the moment there are too many questions and red flags for me.

[topvest] 01/11/2015 15:32

Think you guys need to be very careful with this one. It's a pack of cards in my view. Never quite seen an insurance company like it. My view is that it will be bust within a year.

[luckymouse] 30/10/2015 21:40

Tks Shuffle - I remain a bit sceptical but wish holders well

[battlebus2] 30/10/2015 15:36

Added a few more to the portfolio .... insanity setting in.... Very high risk so dyor etc.

[the shuffle man] 30/10/2015 04:36

LMI don't suspect something fishy and expect to see the debtor figure come down and cash figure go up in the next set of results.Part of the debtor relates to ATE insurance where it takes a while for the actual premium to be converted to cash. GAH have stopped writing this business so over time will become much less of an issue.I also believe the company still thinks that the extra provisioning they have had to provide will ultimately be proved way too conservative and that there will be a large surplus to bring back maybe sometime in the future.Next years figures will be the first set of clean numbers without the extra provisioning which will show a big jump in profits and cash collection which will hopefully lead to a re-rate for the share price.I am holding on this belief. Hopefully I am right ?

[battlebus2] 16/10/2015 22:26

Maybe you could read the link i posted Garbetklb, your views as ever appreciated..

[garbetklb] 16/10/2015 22:14

Hi topvest

The £90m of debtors is a v good question - the answer is partly in Note 15 in the 2014 full year report & accounts (when the number was £60m plus £5m of other debtors - I'd be v curious as to who / what these other debtors are). It's split roughly in half :

ATE
ATE = After The Event legal expense insurance which is effectively litigation funding. And this is where it gets confusing.... I was pretty savvy about insurance admin as I started off running an admin unit but, when I was talking to ATE insurers, I had to take regular reality checks as it can be real Alice in Wonderland stuff. In essence, they are insuring the result of a legal process in respect of something that has already happened; part of the process is that their insured is commonly obliged to pay the premium out of what he receives as an award and (if all goes well), the award is made on the basis that this premium is part of our insured's financial loss - on top of what he is claiming for. As I remember it (and I stress REMEMBER as my involvement was around 10 years ago), there's typically a fixed element of premium, plus a percentage success fee which will have been negotiated at the outset of the policy. As the litigation progresses, there will often be adjustments to what was agreed to reflect various sort of developments. At any given time prior to conclusion of the case, the insurer probably won't have received ANY premium - but will be calculating a mixture of what they know will be coming their way and their best guess of what they will ultimately end up with. Gable make comment about a very large case they have running, where the premium receivable is £7m+. If they lose, I THINK they end up booking the basic premium, but with a corresponding claim to wipe out the premium plus the legal fees and other costs incurred.
Because these can be huge, very individual policies / cases, it's pretty difficult to build any sort of standardised accounting / reserving.
Given the pretty lamentable standard of auditing knowledge / understanding that I witnessed on easy to understand business, I'd be reasonably confident that the auditors would have very little clue as to what's going on beyond what Gable tell them. If I'd been wanting to make the accounts transparent, I'd have shown their business as 2 segments : ATE & "normal" business.........

Other business
Premiums due of £30m on total annual premiums for non ATE business of somewhere around £70m - £75m (guessing that ATE might be £5m+?). So a bit under 6m to collect premiums - pretty unimpressive. And looks worse at 30/06/15 - probably mainly due to the new Italian business.

A couple of other observations on things I noticed whilst skimming though the annual report :

Billie's bonus - P20 "The service agreement with William Dewsall provides
for a performance related bonus of £110,000 per quarter" He earned the full £440k - despite it having become clear that they were pretty hopelessly reserved and the company declaring a loss of £5.4m before tax. And that bringing reserves up to best estimate would pretty much wipe out all the profits they had declared since starting out.... Pretty low performance threshold, I feel!

ATE premium earning. Sorry, back to the baffling subject of ATE accounting.I think it's worth reading the (long) bottom right hand paragraph on P28 carefully. I might be wrong, but what it seems to say is :
- we get a fixed ATE premium (fine)
- plus a variable ATE premium depending on outcome in years to come (fine)
- we'll make assumptions about the outcome of the business (fine), which will drive future variable premiums (yes, but....)
- we'll book all these premiums that we may or may never receive as already fully earned (now some people may find this a tad confusing......) Especially as some of the premiums may never arrive and have to be reversed - and they can be very big.
- and not identify what has been accounted this way, and what has been accounted "normally" (yikes - now I really can't see how anyone could understand the overall numbers)

Claim progressions
Page 30 is pretty interesting. Again, it could be a lot more interesting & informative if they chose to give a bit more info - like showing the premiums for each year, breaking down the claims outstanding by year the biz was written (underwriting year) & (most interesting) how the reserve strengthening is being split between the years. It should be compulsory reading for anyone who waves away the reserve strengthening and focuses on "underlying results". As, chaps, the reserve strengthening is PART of the underlying business, just rather late recognised........ Look at how volatile the estimated ultimate claims are.

I didn't mean to write so much and really don't want to spend loads of time on something I'm never going to invest in - and, no, I don't go short.

Just pause to think :
- This business has never made any money - it might if it turns out that the claim best estimates are over-conservative. But, using best estimates, all the profits to date are wiped out by the reserve strengthening.
- It's run by someone who gets 100% bonus in the year it's realised that all the past profits were an illusion. What a gig to be on.....
- Do you honestly understand the accounts?

Any questions?!

[battlebus2] 16/10/2015 22:13

Worth a read topvest....

[topvest] 16/10/2015 18:49

This is a disaster waiting to happen - it doesn't make any money and can't even collect it's premiums. Something is very wrong.

[the shuffle man] 16/10/2015 11:04

I should have added apart from:

Large debtor balance
Solvency II issues
Reserving policy
Long tail risk

[ed 123] 16/10/2015 10:31

Hi The Shuffle Man.

I'd suggest you read the posts written by Garbetklb on this board.

ATB

[the shuffle man] 16/10/2015 10:02

I am in the process of doing some more analysis on this company so it would be nice to know what peoples main concerns are.

TIA

[topvest] 10/9/2015 18:35

Before you buy any more I would suggest you ask the question why they have debtors of £90m on their balance sheet? Insurance companies should not have high debtors - no explanation given!

[scottishfield] 10/9/2015 18:20

Quite open to buying a few more also, in due course :)