The life in­surer with a dif­fer­ence

GBGI op­er­ates in niche mar­kets and has a heavy­weight part­ner

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Guernsey-head­quar­tered GBGI (GBGI:AIM) is a life in­sur­ance com­pany that also of­fers cover for pri­vate med­i­cal treat­ment, dis­abil­i­ties and travel. Its global foot­print makes this com­pany stand out; An­gola is one of its strong­est mar­kets and it op­er­ates in 120 ju­ris­dic­tions via a global net­work of rep­re­sen­ta­tives.

GBGI is a mix of in­surer and man­ag­ing gen­eral agent, the lat­ter mean­ing it writes un­usual lines of in­sur­ance which re­quire spe­cialised ex­per­tise.

Us­ing an­a­lyst Canac­cord Ge­nu­ity’s fore­casts, GBGI trades on 9.4 times 2018’s 18.7p of earn­ings while pay­ing a div­i­dend yield of 6.4%.

GBGI’s cash po­si­tion more than dou­bled be­tween 2014 and 2016 from $24.6m to $53.8m re­spec­tively. Canac­cord con­cludes that ‘the his­tory of GBGI’s cash flow im­plies that con­ver­sion of prof­its to cash has been fairly high and con­sis­tent’. This pro­vides con­fi­dence on the div­i­dend.

Given its prod­uct di­ver­sity and ge­o­graph­i­cal spread, there are also plenty of growth op­por­tu­ni­ties for the com­pany. It could ben­e­fit from trends such as global labour mo­bil­ity and in­creas­ing mid­dle classes in emerg­ing mar­kets for ex­am­ple.

French in­sur­ance gi­ant AXA part­ners with GBGI act­ing as the com­pany’s rein­surer for its health busi­ness and will also cover life and dis­abil­ity from Jan­uary 2018.

In ex­change for GBGI’s rein­sur­ance busi­ness, AXA has agreed to cross sell busi­ness back to the com­pany, act as a fronting part­ner and as­sist­ing the com­pany in get­ting up­graded by in­surer rat­ing firm AM Best.

Canac­cord has a price tar­get of 200p, im­ply­ing about 14% up­side at the cur­rent 175.5p. (DS)

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