Novae to return £32.9m to shareholders

Lloyd's insurer Novae will return £32.9m to shareholders following the transfer of liabilites from its FSA-regulated insurance company, Novae Insurance Company Limited (NICL), to its Lloyd's syndicate.

The amount, which equates to 45 pence a share, will be returned through an issue of B and C shares, combined with a consolidation of existing ordinary shares. Shareholders willl receive 1 B share or 1 C share plus 8 new ordinary shares for each 9 existing ordinary shares they hold.

The B shares entitle holders to 45 pence a share in cash on redemption, while holders of C shares will receive a special dividend of 45 pence a share, payable on 21 january 2011. Shareholders can opt to receive just B or C shares or a combination of both. Neither will be traded on the London Stock Exchange.

The new ordinary shares will have a nominal value of 112.5 pence each. The B shares wil have a value of 45 pence, while the C shares will have a value of 1 pence.

Novae calculated that it had roughly £60m of surplus capital in NICL at 31 December 2009.

The redeployment of NICL's surplus capital is one part of a four-stage plan to improve Novae's return on equity. The others are cutting reinsurance spend by £10m in 2010, £12.5m in 2011 and £15m in 2012; achieving annualised pre-tax cost savings of £2m by 2011; and seeking a third party to assume responsibility for the run-off of Novae's 2002 and prior years' underwriting.