European non-life insurer Gable (GAH:AIM) leaps 5.6% to 82.6p on a combination of strong figures for 2013 and a positive outlook for the year ahead.
The commercial underwriter saw its pre-tax profits almost double (99%) during 2013 to £11.4 million, the result of writing 63% more premiums than a year earlier at £58.9 million.
Gable expects to exceed earlier estimates by some margin following strong trading in all its territories in the year to date, although it does not provide exact figures.
It intends to build on momentum through moving into new EU markets this year as well as launching new niche motor lines in the UK and Italy. This comes on top of the new underwriting agreements it has struck with Aon, Arthur J. Gallagher and Jardine Lloyd Thompson (JLT).
The insurer is in good shape with a 72% combined ratio – its premiums to its claims – highlighting that it is making an underwriting profit. It also has £27 million cash, partly the result of a £10.7 million share sale.
Barrie Cornes at Panmure Gordon believes the company is heading for a good year and updates his pre-tax profit forecasts for the year to £12.3 million.
‘The capital raise in 2013 means that Gable is in an excellent position to participate in a number of growth opportunities that it is increasingly being sought out to participate in,’ he says.
Finncap analyst Duncan Hall reiterates his 100p price target and 'buy' rating. He comments: 'With regulatory clearance to write motor policies in Italy and the UK, Gable is entering enormous insurance markets, although the ambition will be to pursue niche underwriting opportunities. Post the fund raise the group has sufficient capital available to underwrite new business and underlying business has a natural momentum from new business initiatives driving gross written premiums, but Gable is clearly aware of the demands longer-term opportunities may present.
Hall adds: 'Shorter term, the insurance market adopts a cautious view on premium growth but is looking for signs of improvement. Core lines (motor/household) are expected to remain under pressure into 2015. A strengthening balance sheet will support Gable’s position with major broking groups as is becoming evident, as will Gable’s broader European exposure.'