From seven listed independent underwriters at Lloyd’s of London there are now just three, following a £468m recommended offer for Novae (NVA) from Bermuda-based insurer and reinsurer AXIS Capital. The deal values Novae's shares at 700p, a 20 per cent premium over the price on the day before the announcement was made.
That implies a multiple of 1.5 times net tangible assets which might look cheap when compared with Catlin, sold at 1.6 times, and Amlin at 2.4 times. Indeed, chief executive Matthew Fosh has done a good job of transforming Novae from its previous underperforming guise as SVB. However, Novae is relatively small, and the business had to deal with weak investment returns and a benign claims environment. The latter means that premiums have been softening; thus writing profitable business has become that much harder.