Like its rivals, the reduction in the Ogden discount rate for personal injury awards overshadowed 2016 results for insurer Novae (NVA). The new rate eroded pre-tax profits and pushed up the combined ratio (of claims and expenses to income), which would have been 98.3 per cent prior to the change. Overall, while gross premiums were up, net claims also increased. This meant a claims ratio of 57 per cent (from 48 per cent in 2015).
Nevertheless, the core property division, which accounts for almost half of group business, put in a solid performance. Gross written premiums were up 12 per cent at constant exchange rates to £439m, and were particularly strong in US 'excess and surplus' business - in layman's terms, speciality property insurance against high-hazard risks. Novae established a special purpose agreement - a syndicate - in partnership with Securis Investment Partners to target this market. However, catastrophes including Hurricane Matthew and the Alberta wildfires pushed up the divisional claims ratio to 52 per cent from 44 per cent.
A reduction in poorer performing businesses in the professional indemnity unit, plus management's decision to withdraw from writing international liability in the final quarter, weighed on casualty business. Gross written premiums declined 1 per cent on a constant currency basis.
Analysts at Shore Capital expect adjusted net tangible assets of 530p a share at December 2017, up from 500p a year earlier.
NOVAE (NVA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 628p | MARKET VALUE: | £393m | |
| TOUCH: | 628-629p | 12-MONTH HIGH: | 877p | LOW: 570p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 514p | COMBINED RATIO: | 104% | |
| Year to 31 Dec | Gross premiums (£m) | Pre-tax profit (£m) | Investment income (£m) | Dividend per share (p)* |
|---|---|---|---|---|
| 2012 | 612 | 39.9 | 25.8 | 18 |
| 2013 | 590 | 42.8 | 11.1 | 22.5 |
| 2014 | 639 | 62.6 | 14.3 | 24.8 |
| 2015 | 787 | 52.4 | 6.8 | 27.3 |
| 2016 | 901 | 23.7 | 32.7 | 15.0 |
| % change | +14 | -55 | +381 | -45 |
Ex-div: 20 Apr Payment: 19 May *Excludes special dividends of 20p in 2013 and 2014, and 22.5p in 2015 | ||||
