Companies: GAH   

In the business of non-life insurance, it is comparatively easy to build up your business by writing as many risks as your capital backing will support. But that is not how Bill Dewsall, chief executive officer of entrepreneurial AIM-quoted insurer Gable Holdings, plans to grow his company.

Dewsall, who has operated in the insurance market for 24 years, has seen too many others chase growth by agreeing to write business on unduly generous terms, only to be wiped out in due course by the inevitable claims. He is anxious to grow Gable, which provides packages of contractors’ risk, public liability and employers’ liability cover to medium-sized construction companies, but insists he will sacrifice premium income rather than write policies on insufficiently tough terms.

He is also interested in acquiring companies or teams of key people to accelerate the growth of Gable, where he holds 17 per cent. The company, which floated as a shell at the beginning of 2005 and is backed by ambitious Andrew Regan’s Corvus Capital as well as John Duffield’s New Star Asset Management, took shape in its present form in December.

Dewsall reversed his Liechtenstein-based insurance group Brown Duke into Gable, which is based in the Cayman Islands, and raised £4.5 million in a placing at 12.5p. Killik & Co and formidable Lloyd’s insurance veteran Ron Brown are also shareholders of Gable.

The company sources business through Hogarth Underwriting Agencies, which Dewsall set up in 2000. At present Hogarth is a free-standing company and has a profit deal with Gable, but soon it will come in as part of the Gable group.

According to Dewsall, Gable quotes premium rates based on clients’ turnover, fixed with the help of a sophisticated proprietary computer programme, with an upper limit of £5 million per policy on construction and public liability and £10 million on employers’ liability. He adds, ‘I am ready to be vicious with clients who look like costing us money.’

Gable, which deals through specialist insurance brokers, will not write catastrophe insurance, excess cover or reinsurance, though it has its own reinsurance from others in place. Rates have been easing, but they are still well up on three or four years ago, helped by the impact of massive payouts for US hurricanes.

Until the Brown Duke deal brought Dewsall and his business aboard, Gable had virtually no business and lost £576,000 between its incorporation in November 2004 and last December. That deal brought £4.8 million cash into the business and net assets of £8.9 million.

That compares with a market value of £22.3 million with the shares at 20p. Dewsall would like to see Gable write £30 million of premiums this year, but only if the terms are right, and the company has already quoted on £40 million of ‘high calibre’ risks so far.

Acquisitions of companies, subject to due diligence ensuring no claims nasties are on the way from past underwriting, should swell growth. Analysts at City Capital Corporation reckon Gable could make £3.5 million pre-tax this year on £30 million gross written premiums.

They believe £9.3 million pre-tax could be on the cards for 2007, with first premiums in but before claims have had time to arise. For 2008, City Capital envisages £12.5 million pre-tax on £52.7 million premiums.

If Dewsall’s strategy is adhered to and works, there could be scope for ample future growth.

Gable Holdings	AIM	£7.16m	6.38p	-0.38p
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