Profits warning after series of financial mishaps
GoshawK's share price tumbled by nearly 30% last week and the company put itself up for sale, after warning that profits would fail to meet expectations.
The Lloyd's-based group, which last year launched a reinsurance arm in Bermuda, was hit by the collapse of ambulance chaser The Accident Group (TAG) and a $10m marine cargo policy on the space shuttle.
The Columbia was destroyed in February with the tragic loss of its crew.
Insurance Times reported at the time of the disaster concerns that the marine classification would exacerbate the loss, because it would have been sold for a fraction of the cost of a space risk.
Dresdner Kleinwort Wasserstein has been appointed to help it consider all options including a sale, although Fagan said selling was not his favoured solution.
He said: "Putting out a statement like this, which we recognise won't be welcomed with open arms by our shareholders, means that we have to very carefully look at ways to maximise value."
GoshawK's shares tumbled to about 75p from 108p, suggesting a valuation of £132m.
But analysts were sceptical that other insurers would buy GoshawK, particularly while it was still working to quantify its exposure to TAG for whose customers GoshawK provided legal expense insurance.
"While this [sale news] may soften the likely impact on the shares today, we do not believe that shareholders should expect either a quick sale or a significant premium to be achieved to net asset value," said CAI Cheuvreux analyst Barrie Cornes.
"Other Lloyd's insurers are not awash with capital and should avoid buying others' problems."
Other industry commentators suggested that fellow insurers would prefer to pick off Goshawk's business, if the group continues to founder.
AM Best on Tuesday downgraded Syndicate 102, managed by GoshawK, to A- from A in a move unlikely to boost customer confidence.
Strategies under consideration included expanding Bermuda-based GoshawK Re or pulling out of some of Syndicate 102's business.
Fagan said: "We have a good business which is going to make slightly less than the market has estimated."
He said GoshawK would make provisions for its TAG exposure at its September interims and blamed the no-win, no-fee firm for failing to exercise tight controls.
Full year pre-tax profits of between £28m and £36m have been revised down to between £16m to £18m.