Novae mulls UK exit

Lloyd’s insurer Novae is considering moving offshore as it faces the prospects of paying more tax, according to chairman John Hastings-Bass.

Following Novae’s restructuring and return to profitability in 2010, Novae has started using its accumulated tax losses.

However it expects these assets, and thus the cushion against its tax bill, to run out in a few years and so has started to consider its tax planning strategy.

“It is with a heavy heart that we face the likelihood of following our peer group in the creation of some sort of offshore structure,” Hastings-Bass said in a statement accompanying Novae’s 2010 results.

“It is a great disappointment that successive governments have not seen fit to address the needs of Lloyd’s vehicles and have done nothing to encourage the maintenance of UK domicile in a genuinely international and mobile industry.”

His comments come as Novae has posted improved 2010 results. Novae made a profit before tax of £35.1m in 2010, compared with £4.1m in 2009.

Underlying profit before tax, which excludes restructuring costs and foreign exchange losses on non-monetary items, was £36.2m in 2010, more than double 2009’s £17.7m.

However, profit after tax fell 7% to £24.6m from £26.4m. This was because Novae faced a £10.5m tax bill in 2010, compared with a tax credit of £22.2m in 2009.

This morning, Novae also said it would limit its dependence on mega-brokers.