US E&S business drives growth at Novae but it warns on poor full year combined ratio
Novae Group enjoyed substantial growth driven largely by US excess and surplus lines in the first quarter of 2017 despite exiting a number of casualty lines of business where it has deemed rates unsustainable. But it also warned that these would still hit its profitability this year.
The company’s gross written premiums increased to £354.9 million in the first quarter – an increase of 25.5 percent on the year before or 13.8 percent at constant exchange rates.
The company noted that rates on renewal business are down 2 percent across the whole account but that the company has improved its portfolio partly by exiting four casualty classes, where, it said, future profitability is unsustainable.
Despite this, it also said that the classes exited or in run-off will still negatively impact performance, making it unlikely that the group will achieve a combined ratio below 100 percent for the financial year
It said that while 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.
But its most significant area of growth was in US Excess and Surplus lines, supported by the Group’s Special Purpose Arrangement with Securis Investment Partners.
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.”
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