Premiums drop at Novae but profits up

Lloyd’s syndicate Novae has posted an 8.5% drop in GWP after planned reductions in reinsurance.

It wrote premiums of £361.8m in the six months to 30 June and improved its combined ratio to 91.6% (H1 2012: 93.2%).

Pre-tax profits climbed to £21.1m (H1: £12.5m), thanks in large part to favourable exchange rates.

Underlying profit before tax, foreign exchange on non-monetary items and non-recurring items dipped to £13.8m (H1 2012: £19.6m). The contribution to profits by investments dropped £9m to £4.4m.

Returns on target

Chief executive Matthew Fosh said: “Novae has delivered a solid set of results, despite a challenging period for fixed income investments. The business remains on track to deliver its targeted returns for the full year.

“The underwriting environment remains competitive, but the foundations of the business are strong and the work to build Novae into a more powerful, diversified specialty lines business is well under way.”

GWP from the insurance segment remained steady at £208m (H1 2012: £205m). Growth in UK and US specialty property, emerging market credit and marine liability were offset by planned decreases in bloodstock and the non-recurrence of a large political risk exposure written last year.

Reinsurance GWP down

GWP from the reinsurance segment was £153.8m (H1 2012: £190.6m).

“Planned reductions in revenue saw the engineering treaty and motor pro-rata units discontinued in their entirety. There were also significant reductions in motor excess, international property catastrophe, and credit and surety, as each of these classes was repositioned,” the group said in a statement.

According to Novae, rates remained flat across the majority of liability classes, although “active portfolio management” was required to protect the profitability of motor and international liability lines, which came under rating pressure.

The board announced an interim dividend of 6.0p, up 9.1% on the 2012 interim dividend of 5.5p.