Gamble of the week: a niche insurer

By Author Charlie Gibson Mar 02, 2006

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Gable Holdings (AIM:GAH, 20p) is a former shell company that promises to become “a major force underwriting construction risks in the UK and Ireland”, filling the void left when the major insurers stopped insuring contractors, says Timon Day in Shares. As a result, competition is “minimal” and rates stable or rising.

In addition, Gable has very low costs. Run by a veteran of the business with 25 years of experience, Gable is one of a “new breed” of internet insurers, employing just six people. Everything else, “including handling of claims and settlement of disputes”, is contracted out.

According to independent analyst William Vincent, premiums written will rise from £30m this year to £40m in 2007 and £53m in 2008. Claims and reinsurance will account for about half of this income; brokers’ fees and so on another quarter; and operating costs a further 3%, leaving “a very healthy pre-tax profit of some 24% of gross premiums”.

This translates into profits of £3.5m in 2006, £9.3m in 2007 and £12.5m in 2008, compared with the company’s market value of just £22m. Buy, with a stop loss of 14p, says Day.

Published in Tips & advice | More articles by Charlie Gibson

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