With 2011's painful catastrophe losses now in the past, Lloyd's insurer Novae delivered a solidly profitable half-year combined ratio (of claims to premiums) of 93 per cent - a big improvement on the loss-making 111 per cent ratio in the first half last year. Yet the shares, which trade below brokers' estimates for full-year net tangible assets, remain churlishly rated for the sector.
Indeed, Novae's return on equity rose to 14.5 per cent - a big improvement on the single-digit figures seen a few years back - and premium rates grew 1 per cent overall. Within that, the property reinsurance book saw rates rise 3.6 per cent, while the reinsurance general liability and motor account grew rates 4.1 per cent., although most other business lines did experience some modest rate slippage. The investment book looks in reasonable shape, too - despite being focused entirely on safe-looking bonds and cash, it managed an annualised yield of 2.3 per cent.
Broker Peel Hunt expects full-year pre-tax profit of £25.3m, adjusted EPS of 28.7p and net tangible assets (NTA) of 413.8p.
NOVAE (NVA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 364p | MARKET VALUE: | £234m | |
| TOUCH: | 360-367p | 12-MONTH HIGH: | 381p | LOW: 281p |
| DIVIDEND YIELD: | 5.1% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 427p | COMBINED RATIO: | 93% | |
| Half-year to 30 Jun | Net premiums (£m) | Pretax profit (£m) | Investment return (£m) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 250 | -29.7 | 11.4 | 5.00 |
| 2012 | 263 | 12.5 | 13.4 | 5.50 |
| % change | +5 | - | +18 | +10 |
Ex-div: 5 Sep Payment: 3 Oct Capacity owned: 100% | ||||
