Fosh dubs 2012 a ‘defining year’ as Novae returns to profit

Lloyd’s insurer Novae made a 2012 profit after tax of £27.7m compared with 2011’s loss of £7.4m.

Profit before tax was £39.9m (2011: loss of £6.3m) and the combined operating ratio improved 11 percentage points to 90.5% (2011: 101.5%).

Novae’s 2011 loss was caused by the heavy burden of natural catastrophes that hit during that year.

The positive result in 2012 came despite losses from the Costa Concordia cruise ship disaster.

Chief executive Matthew Fosh said: “For Novae, 2012 was a defining year during which the group began to deliver on the objectives set in 2009.”

Fosh added, however, that Novae remained at a scale disadvantage to many of its peers, and re-iterated his medium-term objective to write annual gross premiums of between £700m and £750m.

In 2012, Novae’s gross written premium was £612m, down 2% on 2011’s £624m.

Fosh acknowledged that growth in the current conditions would require “careful handling”.

He said: “To this end our strategy needs to evolve from that which has guided our hand in the past three years and which has set us on the road to improving returns. We must now take our business, with its core of 20 units across insurance and reinsurance, and explore every aspect of its growth and efficiency potential.”

Staff exodus

During 2012 Novae was hit by the defection of most of its reinsurance team, led by Gunther Saacke, to Qatar-based reinsurer Q-Re.

Fosh conceded that this was “unwelcome distraction”.

He added, however: “A distraction was all that it proved. Novae moved quickly in the summer to re-staff in those reinsurance classes that it wished to retain following these departures, and discontinued or reduced those classes that were not meeting return objectives.

“We are delighted with the quality and experience of the new unit heads and deputies appointed and, with support from the broker community, we were able to employ proven, experienced underwriters, and to compete in the normal way for our 2013 renewal book.”