Lloyd's insurer expects lower 2016 underwriting profit

Novae Group said its full year 2016 underwriting profit will be lower than previously expected, with its combined operating ratio ending the year in the range of 98-100%.

The specialist Lloyd’s insurer said the second half of the year has seen “a continued prevalence of larger individual risk and catastrophe losses”.

Novae reported first half COR of 96.1%, hit by large scale catastrophe losses. Full year 2015 COR improved to 90.8% from 91.0% in 2014.

It said the attritional loss ratio has remained steady despite trading pressures. Investment performance “remains strong”, though the bond market sell-off following the US elections has hit the company’s fixed income portfolio value.

Novae added that a review of accounting policies is expected to result in a write down of the deferred acquisition cost asset in the opening balance sheet by approximately £17m and an increase in the deferred acquisition cost charge for 2016, included in the anticipated combined ratio, of about £5m.

Full results for 2016 will be announced in March.