Fosh: Novae will acquire if targets fit strategy

Novae will consider acquisitions if the targets accelerate the Lloyd’s insurer’s strategy, according to chief executive Matthew Fosh.

However, he has insisted that the Lloyd’s insurer is not on an acquisition trail and is hoping for “steady” GWP growth after growth after 2013’s cutbacks.

Speaking to Insurance Times after Novae released its 2013 results, Fosh said that Novae’s core strategy was delivering consistent results through a combination of speciality underwriting and “proactive” capital management.

He said: “Where an M&A opportunity fits with and can potentially accelerate that strategy then we will consider it.

But he added: “[An acquisition] needs to meet very strict criteria and there is no sense we are on some acquisition trail.”

Novae was rumoured to be interested in buying fellow Lloyd’s insurer Antares, but Antares was snapped up by Qatar Insurance Company in February.

Novae has previously been considered a takeover target because of its small size compared with the other listed insurers and the fact that its share price was trading below net tangible assets per share.

However, Novae’s share price is trading at 610p, 1.24 times the Lloyd’s insurer’s 2013 net tangible assets per share of 491.1p.

Fosh did not comment directly on whether Novae was still a potential seller as well as a buyer, but said: “We are here to make money for shareholders.”

Steady progress

Novae is still small relative to its listed Lloyd’s peers, but Fosh is hopeful it can grow in 2014.

Novae’s gross written premium (GWP) fell 3.5% to £590.3m in 2013 (2012: £612m) after the company exited engineering and motor reinsurance.

However, the reduction was smaller than expected. Novae had originally forecast GWP to fall to £560m.

The company enjoyed GWP growth of 6% in the second half of the year.

Fosh said: “I hope we can maintain that momentum. I am anticipating that we will maintain the steady momentum we had in the second half of 2013.”

He added that the company would expand cautiously. He said: “You are not seeing great opportunities across the board. You have got to be very selective. You have got to work with the brokers, look at what they are trying to achieve and be very selective as to what fits your portfolio and gives you exposures in areas you want.

“You have got to tiptoe your way through a few minefields.”