A healthy contribution from new underwriting teams helped to deliver record underwriting profits of £27.9m for Lloyd's insurer Novae (NVA) in the first half. Gross written premiums jumped by over 23 per cent to £463m, after adjusting for exchange rate movements, and even without the new teams, gross premiums rose by 7.7 per cent on a like-for-like basis.
While those currency movements knocked statutory pre-tax profits, business was particularly strong in the property division, where gross premiums written were up 36 per cent, although premium rates remained stubbornly flat. In the casualty division, which includes general liability and motor reinsurance, premiums written were up by over a quarter. This was despite a decision to withdraw from writing direct motor insurance business and scaling down its exposure to professional indemnity risks as a result of the unattractive premium environment.
A benign claims environment helped the proportion of claims to premium income improve from 91.8 per cent to 89.8 per cent, but also put pressure on renewal premiums, which were down by 3.3 per cent. Investment income nearly halved to £3.8m, which represents an investment return of just 0.3 per cent net of fees, and Novae has changed its investment strategy to increase exposure to higher risk categories with a better return.
Analysts at Numis are forecasting full-year pre-tax profits of £43.4m and EPS of 59.3p (from £62.6m/78.2p in 2014).
| NOVAE (NVA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 728p | MARKET VALUE: | £469m | |
| TOUCH: | 726-729p | 12-MONTH HIGH: | 760p | LOW: 501p |
| DIVIDEND YIELD*: | 3.5% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 502p | COMBINED RATIO: | 89.8% | |
| Half-year to 30 Jun | Gross premiums (£m) | Pre-tax profit (£m) | Investment income (£m) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 363 | 21.3 | 7.4 | 6.6 |
| 2015 | 463 | 16.9 | 3.8 | 7.3 |
| % change | +28 | -21 | -49 | +11 |
Ex-div: 3 Sep Payment: 1 Oct Capacity owned: 100 per cent *Excludes 2014 special dividend of 20p | ||||
