String capital and conservative investments show “solid” firm
Fitch Ratings has given Novae Insurance an insurer financial strength (IFS) rating of A- and has assigned Novae Group plc (Novae) an issuer default rating of BBB and its £100m subordinated notes BB+. The outlooks for the ratings are stable.
Fitch said: “The ratings reflect Novae's favourable financial profile, characterised by a strong capital position, disciplined underwriting and conservative investment portfolio. These strengths are offset by the weak historical operating performance of the group, which was largely caused by legacy issues relating to certain lines of liability business written by the Lloyd's syndicates in the late 1990s and since discontinued. Novae's ability to demonstrate stability in its reserving is viewed by Fitch as a key rating driver in the near- to medium-term.
“Novae's capital position is considered to be strong and provides considerable support to the current ratings. Fitch believes that Novae has no current requirement to raise additional external funds and therefore could hold an advantageous position over some peers in developing new business opportunities as they arise.
“Fitch anticipates that Novae will report another solid, if weaker, set of results for full year 2008, reflecting the more challenging operating environment being faced by certain business lines.
Fitch also praised the firm’s conservative investment strategy”.
