Novae Q1 loss ratio drops to 59% on lower cat losses

Lloyd’s insurer Novae’s net claims ratio has improved 39 percentage points to 69% in the first quarter of 2012 (Q1 2011: 98%) after lower catastrophe losses.

A large proportion of 2011’s catastrophes occurred in the first quarter of the year, including the earthquakes in Japan and New Zealand. Catastrophe losses in the first quarter this year have been relatively modest.

Novae chief executive Matthew Fosh said: “A year ago the high incidence of catastrophe losses obscured the substantive changes underway at Novae. In Q1 this year the effect of these changes has gained momentum, building towards the 13-15% pre-tax returns on equity that we have targeted.”

Changes made by Novae in 2011 include a share buy-back programme and the closure of two run-off syndicates.

Novae said that renewal rates were “modestly positive” in the first quarter, driven by price improvements in loss-affected classes of business. This compares with a 2% decrease in rates last year. However, the company added: “There is little evidence in the first quarter of a broadly-based market turn.”

Novae’s first-quarter 2012  gross written premium increased 5.7% to £231.1m (Q1 2011:£218.7m). The amount written in the first quarter represented 37% of the business Novae expects to write in 2012 (Q1 2011: 34%).

The company also reported an 86% jump in investment return to £6.9m (Q1 2011: £3.7m).

The company’s bond issue in March generated a pre-tax gain for the company of £4.9m.

“Although a significant proportion of the year remains on risk, performance to date in 2012 has been much more satisfactory than at the same stage last year,” the interim management statement read. “Rating across the whole account is modestly positive with further momentum expected in the second quarter which includes the important 1 April renewal date.”