Towergate's Liechtenstein-based capacity provider bolsters solvency

Gable plans to increase its solvency capital and expand into new business classes after raising £10.7m from a new share placement.

In its first funding round since floating on the Alternative Investment Market (AIM) in 2005, Gable will place 17.69 million ordinary shares at a price of 55p per share, and a subscription of 1.764 million new ordinary shares also at 55p per share.

Chief executive William Dewsall said: “We have been delighted with the response from our existing shareholders and our new institutional and private investors whom we welcome to the company, and thank them for their support.

“With the additional solvency capital in place, Gable is in a strong position to benefit from a number of opportunities to grow the business.”

The placement was arranged by Panmure Gordon and FinnCap. The new shares are expected to admitted for trading on AIM on Monday morning.

The Liechtenstein-based unrated insurer revealed in its 2012 annual report that it was reserved at £15m below the best estimate recommended by Grant Thornton.

In the report, Dewsall said an independent review could “never fully capture the impact of the group’s niche underwriting strategy, tight policy wording and beneficial impact of a proactive and efficient claim handling process.

“The board has always been satisfied as to the adequacy of its reserves and for the above reasons, to differentiate between the niche underwriting strategy of the group and the estimates derived from market-level benchmarks.”

Towergate Underwriting signed a £70m five-year capacity arrangement with Gable in December, covering non-standard risks. The deal is Gable’s largest contract.