5th Mar 2014 11:20
LONDON (Alliance News) - Novae Group PLC Wednesday reported higher annual pretax profits after a strong underwriting performance, continuing a good earnings season for UK specialist insurers due to a relatively benign year for catastrophe losses.
Pretax profit rose to GBP42.8 million in 2013 from GBP39.9 million in 2012. However, total revenue fell to GBP513.8 million from GBP544.8 million, meaning the increased profitability was a result of a fall in costs, mainly net claims which dropped to GBP263.0 million from GBP294.1 million.
The decline in revenue was the result of a 2.7% fall in net earned premium to GBP502.1 million, but that wasn't helped by net investment income more than halving to GBP11.1 million as insurers continue to rely more on underwriting performance in the current low interest-rate environment.
Novae declared a 20.0 special dividend on top of a 2.5 pence increase in the full-year dividend to 22.5 pence.
"I am delighted with our result for 2013, which for the third time in four years has produced a record underwriting performance and is testament to the discipline and judgement of our team. Maintaining this consistency of performance from a combination of specialist underwriting and sound capital management is central to our strategy," Matthew Fosh, chief executive, said in a statement.
Fosh also said Novae's transition to become a diversified property and casualty insurance and re-insurance business in now complete. The next stage of the company's strategy will see it streamline the the number of its committees and sub-committees so as to deliver greater efficiency and scalability, while ensuring the right balance between control, communication, risk and compliance. Fosh also said Novae's underwriting will be managed in three trading divisions, rather than two, from 2014.
"This new divisional structure provides greater visibility around the performance of our major classes of business, it assists in the development of new sub-classes, it facilitates more efficient reinsurance buying, and it supports organic growth. Each trading division will be led by a senior member of Novae's underwriting team, each of whom sit on our executive committee," Fosh said.
Jonathan Butcher, director of underwriting, will lead the Casualty division. Ian Burford and Robert Forster, joint active underwriters, will lead the Property and MAP divisions respectively.
Property, Casualty and Marine, Aviation & Political will replace the current Insurance and Reinsurance.
Chairman John Hastings-Bass said the outlook for 2014 is challenging, with rating pressures and low investment returns set to be a continuing theme, but he said he is confident Novae has the strategy and team to prosper.
Novae shares were Wednesday quoted at 580.87 pence, up 3.8%.
By Samuel Agini; [email protected]; @samuelagini
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