Novae will not go cheaply - Fosh

Novae chief executive Matthew Fosh will not allow his company to be sold cheaply given the work he and his team have put in to turn the company around.

In an interview with Insurance Times, Fosh’s comments come as Novae, seen by many as a takeover target, has turned the tables with its announcement today that it is conducting due diligence on fellow Lloyds insurer Omega.

“I have not worked here eight years with my colleagues for 12 hours a day to fix something someone says was unfixable just to give it to someone else for one-times book,” Fosh told Insurance Times.

“If someone wants to come in and pay my shareholders a substantial premium for the patience they have shown for eight years in building this business, then I’m sure they’d want a conversation. But until that happens, my focus is to generate returns for my shareholders and deliver to them a valuation in the stock market that is up there with the best,”

He added, however, that shareholders would ultimately decide whether Novae is bought.

Novae, formerly known as SVB Syndicates, has struggled with low stock market valuations in recent years, first because of the loss-making US casualty business it wrote in the late 1990s, then because of excess capital in its separate UK insurance company, which was dragging down return on equity (ROE).

The company has recently drawn a line under both these problems. In October it folded the UK insurance company into its Lloyd’s operation, freeing up the excess capital and paving the way for a better ROE. In February this year it closed its two run-off syndicates.

However, the company still has work to do: its stock price is currently 369p, a substantial discount to its 2010 year-end net tangible assets a share of 449.7p.

Click here to read the full interview with Novae chief executive Matthew Fosh.