Novae closes run-off syndicates

Lloyd's insurer Novae has folded the 2002 and prior open years of run-off syndicates 1007 and 1241 into its 'live' syndicate, 2007.

"Ten years ago, in August 2001, Novae's legacy issues first emerged. Today, the closure of the 2002 and prior years of account brings this issue to an end," Novae chief executive Matthew Fosh said in a statement.

Lloyd's syndicates' underwriting years are typically kept open for three years under Lloyd's accounting, but can remain open for longer if there is material uncertainty about their ultimate financial condition. The 2002 and prior years of syndicates 1007 and 1241 would have been closed in december 2004 under normal circumstances.

Novae said closure of the years had long been a strategic objective, and says their size and volatility has fallen greatly over the years. The amount of regulatory capital needed to support the syndicates' run-off has fallen to £15m in 2011 from £38m in 2010.

The value of open lead claims from the 2002 and prior years fell to £88.8m at the end of 2010 from £378m at the end of 2005.

Although final closure terms will result in a small adjustment to reserves within the run-off syndicates, the Novae estimates that it will report 2010 profit before tax of not less than £34m when it announces its preliminary results on 3 March. This compares to analysts' consensus expectations of £30.2m.