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Gable Holdings Inc (GAH)

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Monday 21 December, 2015

Gable Holdings Inc

Funding, trading update & rel. party transactions

RNS Number : 6832J
Gable Holdings Inc
21 December 2015
 

21 December, 2015

Gable Holdings Inc.

"Gable" or the "Company"

 

Funding arrangements, trading update and related party transactions

 

Further to statements made in an announcement on 17 August 2015 and in its Interim Results announcement dated 10 September 2015, Gable announces that it has entered into funding arrangements such that its wholly owned subsidiary, Gable Insurance AG ("GIAG"), meets the initial capital requirements on 1 January 2016 necessary to move into the Solvency II regime. These funding arrangements are subject to approval by GIAG's regulator, the Financial Market Authority Liechtenstein ("FMA").

These funding arrangements comprise a combination of quota share reinsurance and the issue of a new Convertible Loan Note Instrument under which Gable has raised £3.96 million led by its CEO, William Dewsall.  The funds raised through the Loan Note issue are being utilised by Gable to subscribe for CHF 6.0 million of new ordinary shares in GIAG, providing additional regulatory capital in that business.  Under the quota share reinsurance, Gable has entered into an agreement to cede a proportion of GIAG UK and Norwegian Gross Written Premium ("GWP") written in 2015 to Citadel Reinsurance Limited amounting to an estimated £15 million.  Whilst a reinsurance ceding premium is receivable the overall impact will be to reduce the reported profits of Gable for 2015 by approximately £2 million. 

Under the terms of the Solvency II European Directive, article 308b paragraph 14, allows insurers a two year transitional period to meet the Solvency Capital Requirements ("SCR") under the full Solvency II regime providing the insurer meets certain requirements on 1 January 2016.  These provisions have been implemented in article 270 of the new Liechtenstein Insurance Supervision Act which applies to GIAG. 

Whilst GIAG's regulator, the FMA, has ensured that the European Directive on Solvency II has been enacted within local legislation, this is not the case across the whole of Europe and recently Insurance Regulators have granted European Regulators a further 5 years to harmonise their practices across the EU.  This has added considerable uncertainty into the whole implementation process and has led to diverging practices across Europe.  It is entirely possible that the full implementation of Solvency II will face further delays.

Convertible Loan Note Instrument

The Convertible Loan Note Instrument has a term of three years under which Loan Notes may be issued up to a maximum aggregate value of £10 million.  A coupon of 7.5% p.a. is payable on a six monthly basis.  The Loan Notes may be converted into new ordinary shares at any time as follows:

·     At the noteholder's request at the lower of prevailing market price or 15p;

·     At the Company's request at the lower of a 10% discount to prevailing market price or 15p; or

·     At the Company's request if triggered by an external factor (such as a regulatory change) at the lower of a 20% discount to the prevailing market price and 15p.

In each of the situations above there is a minimum conversion price of 10p.

As noted above, the Company has issued Loan Notes amounting to £3.96 million under this Loan Note Instrument.  The subscribers for the Loan Notes include existing investors in Gable as well as certain directors of Gable:

Director

Position

Amount of Loan Note subscription

 

Current interest as a % of current issued share capital

 

William Dewsall

Chief Executive

£1,000,000

18.29%

Kevin Alcock

Non-executive Director

£400,000

6.36%

Andrew Trott

Non-executive Director

£100,000

0.00%

 

Related Party Transaction

Pursuant to Rule 13 of the AIM Rules for Companies, the participation by directors of Gable constitute related party transactions.  The independent directors of Gable consider, having consulted with its nominated adviser Zeus Capital Limited, that the terms of the transactions are fair and reasonable insofar as its shareholders are concerned.

Quota share reinsurance

The quota share arrangement is designed to take at least £15 million of GWP off the 2015 GIAG Income Statement together with associated insurance profit in order to reduce the capital requirement at 1 January 2016.  Whilst a reinsurance ceding premium is receivable the overall impact will be to reduce the reported profits of Gable for 2015 by some £2 million.  The exact impact will depend on the level of business written in the final months of the year, data for which is not yet available but we expect to update shareholders with further guidance early in 2016.

Commenting, William Dewsall, Chief Executive of Gable, said: "Whilst across Europe the implementation of Solvency II appears to be disjointed, the structure in Liechtenstein is clear and any fallout from the rest of Europe is only likely to be beneficial to Gable.  Meanwhile, I am delighted that we have secured the support of a top class A-rated reinsurance partner and a number of new and existing investors to enable us to move securely into the Solvency II regime and sharpen our focus on profitable business."

Enquiries:

Gable Holdings Inc.

William Dewsall, Chief Executive

Michael Hirschfield, Group Finance Director

John Bick, Investor Relations

 

Tel: +44(0) 20 7337 7460

Zeus Capital Limited

Nicholas How, Corporate Finance

Adam Pollock, Corporate Broking

Tel: +44(0) 20 3829 5000

Haggie Partners LLP

David Haggie

Peter Rigby

 

Tel : +44(0) 20 7562 4444

 

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, 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, which is delivered through the EU passporting mechanism.  Gable Holdings Inc is quoted on the London Stock Exchange's AIM market.   For further information please visit www.gableholdings.com.  

 

 

 


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