Novae Share Discussion Threads

[jancarl1] 16/3/2007 11:24

Encouraging results indeed although NICL seems to have underperformed the original business plan (60m premium in 2006). I would expect 2007 EPS upgrades as a result.

[welsheagle] 16/3/2007 07:42

Novae swings to FY pretax profit 32.8 mln stg vs 13.9 mln loss


LONDON (AFX) - Novae Group PLC, the Lloyd's insurer and reinsurer, swung to
full-year pretax profit of 32.8 mln stg in the period to end-December from a
loss of 13.9 mln in 2005, thanks to a rise in specialty insurance profits, as
well as a strong insurance pricing environment helped by a benign hurricane
season.
The result beat analysts' expectations of 28.5 mln stg.
"This is the highest-ever level of profitability," chief executive Matthew
Fosh told AFX News.
Gross written premiums fell to 306.9 mln stg from 367 mln stg following the
sale of UK property subsidiary Fusion in 2005.
Combined ratio - cost and claims expenses expressed as proportion of premium
income - improved to 81.4 pct from 104 pct in 2005.
Specialty Lines contributed 43.4 mln stg of underlying underwriting profit
to the business.
Fosh said the immediate outlook for 2007 "remains encouraging."
There was no dividend, due to Novae's past year problems when it existed as
SVB Holdings PLC.
Novae also said that its chairman Paul Selway-Swift is to step down after
the insurer's AGM in May.
There was also good news about some of its legacy problems. In 2004 Novae
set up a 103 mln stg provision to deal with past-year US liabilities. At
year-end 2006 they still have 14 mln stg left of it, and Fosh is bullish about
the future.
"The original submission that it would take until 2006 to get some stability
in the back years has been borne out by events," he said.

[janeann] 16/3/2007 07:42

yes looks good. Pity its 1.5-2 yrs still they start paying a dividend tho.

whats wrong with friday?

[18bt] 16/3/2007 07:41

Results read as a complete re-presentation of the Group after 6 years of turmoil. They seem very confident that the past is just that.

Observations:
- Dividend forecast for 2007
- Insurance co must have written c£30m premium, all in the second half
- Interesting discussion on the amount of capital required to support the DBU: this raises the question of when the capital will be released as it would enable a lot more premium to be written.
- It appears they have capital to write over £400m premium - £338 at Lloyd's at £70m (or could write more) in NICL
- 18 months after a rights issues they appear to be flagging up excess capital - £41m of Group cash: v positive in many ways
- Big cash inflow from reinsurance collections


All in all: print this out and keep the results as a great summary of the business. It will bear many hours of analysis I would hope the market will respond favourably to a very positive statement.

[18bt] 16/3/2007 07:16

Results out: why do they go for a Friday. At first glance they look excellent. Market forecasts met after the exceptionals. Needs further analysis.

[jancarl1] 28/2/2007 13:25

Good to see the share price is holding up quite nicely in this big sea of red. Chart looks good, still.

[jancarl1] 21/2/2007 21:16

Tide is turning. Consistent show of good company specific news as of late. This will add some colour to the upcoming results season starting beginning of March with all the big guys like Amlin, Catlin, Brit, Kiln expected to announce stellar profits. A bit of catching up with sector share price performance still in it for NVA.

[red army] 20/2/2007 19:27

S&P have upgraded to 2+ today.

[18bt] 19/2/2007 16:59

Novae in D A Constable and Ace swoop

Monday 19th February 2007: 13:43

London market insurer Novae has hired two new underwriters to write a new international liability book.

The revamped Lloyd's and company market outfit has confirmed a swoop for two international liability underwriters from its competitors.

[jancarl1] 14/2/2007 09:16

In which case even the 2006 consensus forecast of 3.7 EPS turns into 5.4p. Good to see, that the rise continues with massive volumes.

[18bt] 13/2/2007 20:40

HMRC may dispute some the losses being used if the business is renewed into the insurance company or if it used against different classes of business, but no reason why some of losses shouldn't reduce tax rate/wipe it out for this year at least.

[jancarl1] 13/2/2007 13:23

jhan66, correct 145.2mn negative retained earnings on the books should be convertible into some tax credits. However, at half-year stage 4.8mn tax was calculated on 14.5 PBT, hence I used 33%. Accounting experts with a view anywhere?

red army: I thought we had cleared the big sellers? Who do you have in mind?

[red army] 13/2/2007 12:16

A big seller at 37p needs to get away first

[jhan66] 13/2/2007 11:55

jancarl1, any chance the tax rates might be lower? I'm not very conversant with SVB/Novae situation but hoped there might be historic tax losses

[jancarl1] 13/2/2007 11:40

Let us have a look at it again. 2006: 29 mn pre-tax times 0.7 tax rate divided by 549mln ((366+732)/2) shares average equal 3.7p EPS. 2007: 34mn pre-tax times 0.7 tax divided by 732mn shares equal 3.27 EPS, one quarter of which is expected to be distributed = 0.87p, yielding 2.4 % at current share price

As pointed out earlier 29mn pre-tax 2006 to me would be a disappointment, since we already had 16 at half-year for the old business alone (minus 1.5 mln. one-offs). The second half must have been much stronger due to the total lack of storms. Therefore 29mn 2006 in my view is a conservative forecast for the old SVB 100mln capital business. No credit to the new Novae 100mln capital business. Therefore I think it would be reasonable to expect the new business to generate 20mn pre-tax p.a. (=20%ROE) = 10mln for a half year. Therefore 40mn this year and 50 mln next year with EPS 3.7 (tax rate 33%, 732mn shares) and 4.6 are my investment case (1-1.5p dividend = 2.7-4% yield). Hence, in my book a 2007 PE of 8, current book value of 34p and expected yield of 3%+ look like a strong buy. PE of 11 and yield of 2.4% look no better than a hold.

All imho.

[18bt] 13/2/2007 09:33

According to Digital Look, there are now 4 brokers covering NVA up from 2 this time last year. Of these 2 have strong buy recs. However, 2007 forecasts seem to have drifted a bit lower at 3.27p earnings. However, slightly improved dividend expectations for this year. On an earnings basis this stock looks expensive, but on NAV cheap. Suspect the only thing which will get this moving is an early return to the dividend list or good noises coming out of the insurer.

[jancarl1] 12/2/2007 09:20

Good stuff. No nasties, only upward revisions. Run-off book finally under control. Old SVB is in excellent shape indeed. Agree with you 18BT about lack of quantifyable results from new Novae. I guess we will have to wait until end of March, then. In the meantime, a break-through at 37p on the basis of those forecasts seems entirely possible.

[18bt] 12/2/2007 08:21

Seems to have been well received on initial reaction.

[18bt] 12/2/2007 07:23

Syndicate results out. Surprises now on the upside with abit more confidence in the tone of the comment . Syn 1007 forecast for 2005 looks very conservative and 2006 could be v profitable in the catastrophe syndicate. Pity there is no comment on the amount of business written in the insurance company. Should provide some share price support this morning.

[iroll] 11/2/2007 09:21

Sunday Times - 11th February.......

NOVAE, the Lloyd's insurance group, is set to reveal a sharp improvement in its finances. It was laid low by a disastrous push into the American market in the late 1990s and forced to set aside £103m to cover claims as they came in over subsequent years. But in a trading statement tomorrow Novae is expected to say that fourth-quarter claims could be as low as £5m.

[jancarl1] 09/2/2007 14:53

Quite some remarkable volume today. To me this continues to look like a gathering of momentum for the overdue breakout through 37p. The Q4 2006 syndicate results should be out any time soon (last year it was Feb 10th) followed by final results end of march. 33m pre-tax consensus estimate to me look a little weak since it does not seem to give credit to the new business at all, i.e. 100m at work for half a year in a highly profitable business. We had 16m in the stand-alone old business by half year minus 1.5m for the scheme of arrangement. If the second half was just the same, 30.5m should be attributable to old and the 100m fresh capital would have brought in 2.5m, which translates into 5% annualised pre-tax (dismal) return. I would certainly expect 15%-20% annualised and a 40m total pre tax translating into 3.7 EPS (assuming 33%tax rate and 732m shares) 2006 and 4.6 EPS 2007 giving forward PE sub 8 and thus a short term price target of 50p.

But that is just imho.

[janeann] 09/2/2007 14:14

some trading going on today. something afoot???

[18bt] 06/2/2007 07:27

No statement today

[jancarl1] 05/2/2007 17:59

Chart breakout on the cards. Statement would help enormously.

[18bt] 05/2/2007 17:37

Something's perked up. I suppose we might be getting a statement on the year end, but I'm not aware of anything.