Companies: NVA   

Specialist insurer Novae Group says it will step up diversification after increasing interim pre-tax profits 8 per cent to £16.8 million.

The fully listed company increased gross written premiums 7.5 per cent to £186 million in the six months to June, despite the ‘challenging circumstances’ created by weakening premium rates. Novae, which manages and supports Lloyd’s Syndicate 2007 and operates Novae Insurance Company, last year emerged from a legacy of losses from a previous management era and is now paying a 2.5p interim dividend per share, as against nothing last time.

Chief executive Matthew Fosh says the underwriting result for 2008 as a whole will depend on the extent of catastrophic losses in the second half year, with the US windstorm season now begun, while Novae’s aviation reinsurance side ‘has the potential to generate significant losses as well as profits’. He says rates in some classes of business, including property, have been easing for four years and warns this could continue into 2009.

That is why he stresses the need for continued underwriting discipline and the benefits of diversification into less cut-throat areas. Fosh speaks of ‘excellent progress’ here, with new bloodstock and motor units expected to make a healthy contribution this year and says there is further scope for Novae to develop in this way.

Shares in Novae, which were recently consolidated, have fallen far from last year’s 425p peak, in line with the premium rate cycle, though at 255p they have at least bounced up from a recent 12-month low of 239p. They should fare better than several sector peers.

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Novae Group	LSE	£239.43m	327.00p	-4.50p
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