Lloyd’s insurer’s loss ratio rises amid cats and soft rates
Lloyd’s insurer Novae plans reduce premium volumes across a number of units in 2012 unless pricing, terms and conditions improve.
“In the absence of such an improvement, the board currently expects the level of 2012 gross written premium across the group as a whole to be broadly similar to that in 2011,” the company said in its third-quarter interim management statement.
Novae reported that across its book, renewal rates had been flat for the first nine months of 2011 (9M 2010: +2%).
The company is targeting a 60% or better loss ratio. The loss ratio for the first nine months of 2011 was 73.5%, up 13.1 points on the 60.4% it reported for the same period last year.
The company attributed the increase to catastrophe losses and generally soft pricing.
Novae’s catastrophe loss estimates, emanating from global events such as the Australian floods and the New Zealand and Japan earthquakes, remained unchanged at between US$60m and US$80m.
“Despite unprecedented catastrophe losses in the first half, insurance rates have to date responded only selectively,” Novae chief executive matthew Fosh said in a statement. “Our planning for 2012 looks to the further rebalancing of our premium mix towards property and reinsurance classes while continuing to re-engineer the business by stripping out surplus costs and focusing capital where an acceptable underwriting margin exists.”
Novae wrote £516.4m of gross premium in the first nine months of 2011 (9M 2010: £473.3m). Reinsurance gross premiums written increased 75.7% to £214.5m, but primary insurance GWP dropped 32.6% to £301.9m.
Novae said its insurance book overall remained profitable, but the UK direct property book was still loss-making at the end of the third quarter thanks to the impact of severe weather claims in the first quarter.
The UK liability insurance account remained profitable despite increased claims activity in the third quarter.