Novae profits dip on heavy claims

Lloyd's insurer Novae's 2009 pre-tax profits fell to £4.2m from £40.2m in 2008 as the impact of aviation reinsurance and trade credit losses in the first half of the year mounted.

The aviation reinsurance unit incurred losses of £19m, in the first half; and the trade credit and political risks unit £12m, of which £8m related to CIFS, the group's UK trade credit business.

Operating profit fell to £5.2m from £49.8m in the prior year. The group's GWP lifted to £404.4m from 367.1m.

Chief executive Matthew Fosh said: "The group delivered a robust performance in the second half, returning to profit after the aviation reinsurance and credit losses reported at the interim stage. Performance was underpinned by strong investment income. Looking forward, we expect to see selective rate increases in 2010 and will have the first year contribution from Novae Re. The restructuring of the Group's capital base, reduced reinsurance spend and elimination of expense inefficiencies announced in December 2009 are on track."

Underlying profit before tax was £17.7m (2008: £27.3m). Profit after tax fell to £26.4 million (2008: £37.1 million).

Novae Re, which began writing new business from January 2010, has estimated gross written premiums of £90-100m for 2010 across six underwriting teams.