Lloyd's insurer Novae (NVA) managed to steer a profitable path in what remained a tough trading environment in the reported period. Underlying pre-tax profit rose from £29m in last year's first half to a record £37.9m this term, while headline numbers were bumped up by sterling weakness turning the comparable period's £12.1m adverse adjustment into a profit of £25.9m.
Gross written premiums rose by 11 per cent, but rates on renewal business fell on average by 3.9 per cent. In the marine, aviation and political risk division rates fell by 7 per cent, while an increased number of claims, notably the Jubilee oil field loss, pumped up the claims ratio (of losses as a percentage of premium income) from 45 per cent to a still highly profitable 55.4 per cent.
In the property division, which accounts for around half the group's business, gross written premiums rose by 7.1 per cent to £258m, which offset a 4 per cent fall in premium rates. And premiums held up well in the casualty division, with significant demand for insurance against cyber attack.
Investment income was also sharply higher following a decision to lengthen the duration of the investment portfolio and include some growth assets. Consequently, the investment return rose from 0.3 per cent to an impressive 2.2 per cent.
Analysts at broker Peel Hunt forecast net tangible assets of 628p per share for the year to December 2016 (from 551p in 2015).
| NOVAE (NVA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 794.5p | MARKET VALUE: | £500m | |
| TOUCH: | 792.5-798p | 12-MONTH HIGH: | 885p | LOW: 700p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 589p | COMBINED RATIO: | 96.1% | |
| Half-year to 30 Jun | Gross premiums (£m) | Pre-tax profit (£m) | Investment income (£m) | Dividend per share (p*) |
|---|---|---|---|---|
| 2015 | 463 | 16.9 | 3.8 | 7.3 |
| 2016 | 513 | 63.8 | 28.4 | 7.5 |
| % change | +11 | +278 | +647 | +3 |
Ex-div: 1 Sep Payment: 3 Oct *Not including 22.5p special dividend paid in 2015. Capacity owned: 100 per cent | ||||
