Novae Group PLC Novae Group Plc : Trading Update For The Period Ended 31 March 2017

 
TIDMNVA 
 
 
 
   10 May 2017                                                                                                   For immediate release 
 
 
   Novae Group plc 
 
   Trading Update for the period ended 31 March 2017 
 
   Novae Group plc ("Novae" or "the Group"), the specialist Lloyd's 
insurance group, today releases its Trading Update for the period ended 
31 March 2017. 
 
 
   -- GWP of GBP354.9 million (Q1 2016: GBP282.8 million); 13.8% growth at 
      constant rates of exchange 
 
   -- Rates on renewal business down 2% across the whole account 
 
   -- Underwriting transformation completed with our exit from four Casualty 
      classes, where future profitability is unsustainable 
 
   -- Claims performance across core lines was broadly in line with 
      expectations, whilst those classes exited or in run-off are expected 
      negatively to impact performance, making it unlikely that the Group will 
      achieve a combined ratio below 100% for the financial year 
 
   -- Q1 Investment return: 0.7% (Q1 2016: 1.2%), ahead of target return 
 
 
   Commenting today, Group Chief Executive Matthew Fosh said: 
 
   "We have completed the underwriting transformation of Novae into a 
focussed Lloyd's business, which has included the withdrawal from 
certain Casualty classes where we deem future profitability to be 
unsustainable. The soft market, several years in the making, is now 
entrenched, and combined ratios above 100% will be commonplace. 
Establishing a point of differentiation in today's market is critical - 
the Group's strategy over the past three years has been to pursue that 
goal." 
 
   Operational changes 
 
   The transition of Novae's portfolio to focus on classes where it retains 
a demonstrable competitive advantage was completed in the first part of 
the year. The Group has withdrawn from the following four Casualty 
classes where the outlook for future profitability was deemed 
inadequate: Financial Institutions, Professional Indemnity, General 
Liability Reinsurance and Motor Reinsurance. 
 
   Going forward the Group's market leading Cyber and US XS Casualty units 
will be reported as part of an expanded  Marine, Aviation, Political 
Risk and Specialty Division (MAPS). The UK General Liability and Medical 
Malpractice units offer specialist property & casualty package products 
and will be reported as part of the Property Division. These changes 
have resulted in the closure of the Casualty Division. 
 
   Financial update 
 
 
 
 
 
Gross written premium to 31 March (GBP'millions)     2017    2016    % change 
Property                                            183.2   145.9       25.6% 
Casualty                                             69.0    60.7       13.7% 
MAP                                                 102.7    76.2       34.8% 
Total                                               354.9   282.8       25.5% 
 
 
   Gross written premium for the three months to 31 March 2017 was GBP354.9 
million (Q1 2016: GBP282.8 million), an increase of 25.5% or 13.8% at 
constant rates of exchange. Rates on renewal business remained under 
pressure during the first quarter of 2017 and were down 2% across the 
whole account. 
 
   Premium growth was achieved across all divisions, particularly in those 
classes which benefitted from the investment in new underwriting teams 
and from initiatives the Group has taken over the last three years. The 
most significant area of growth was in US Excess and Surplus lines, 
supported by the Group's Special Purpose Arrangement with Securis 
Investment Partners LLP. 
 
   The Group has decisively reduced income or exited from a number of 
poorer performing classes in the Casualty and Property divisions. The 
most significant reductions compared to the first quarter of 2016 were 
in the International Direct & Facultative, Professional Indemnity and 
General Liability Reinsurance units. 
 
   Claims experience from the Group's continuing classes of business was 
broadly in line with expectations. However, the performance of those 
classes exited or in run-off had an adverse impact on the Group's 
performance in the first quarter, notably from the Financial 
Institutions, International Direct & Facultative and Credit & Surety 
reinsurance units. As a result of this, and despite the performance of 
the core classes, the Group is unlikely to achieve a combined ratio 
below 100% for the financial year. 
 
   Investment return for the first three months of 2017 was GBP10.3 million 
on average assets of GBP1,472.5 million, equivalent to a return of 0.7% 
on average assets (Q1 2016:  GBP15.0 million, on GBP1,286.3 million and 
1.2% respectively). Returns in the period benefitted from a strong 
performance in the fixed income portfolio. The asset allocation remains 
in line with target. 
 
   Disclaimer 
 
   The financial information contained in this release is based on 
unaudited management information.  Certain statements made in this 
trading update are forward-looking. They are based on current 
expectations and are subject to a number of risks and uncertainties that 
could cause actual events, results or outcomes to differ materially from 
any expected future events, results or outcomes referred to in these 
forward-looking statements. 
 
   For further information: 
 
   Matthew Fosh/Reeken Patel - Novae Group plc - 020 7050 9000 
 
   David Haggie/Rebecca Young - Haggie Partners - 020 7562 4444 
 
   This announcement is distributed by Nasdaq Corporate Solutions on behalf 
of Nasdaq Corporate Solutions clients. 
 
   The issuer of this announcement warrants that they are solely 
responsible for the content, accuracy and originality of the information 
contained therein. 
 
   Source: Novae Group plc via Globenewswire 
 
 
  http://www.novae.com/home.aspx 
 

(END) Dow Jones Newswires

May 10, 2017 02:00 ET (06:00 GMT)

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