With the insurer's rehab completed, Novae's chief executive talks about what lies ahead

After several years suffering the drag from its legacy liability business, Novae has turned a corner. It made an underlying profit before tax of £36.2m for 2010, up 105% from £17.7m in 2009. This follows the completion of its rehabilitation, which saw the company transfer the liabilities from its FSA-regulated insurance company into its Lloyd’s syndicate and closing its two legacy syndicates. Here, chief executive Matthew Fosh talks about the company’s future.

Q: With the rehabilitation out of the way, what is next for Novae?

A: Part of our growth story is our reinsurance business, Novae Re. The team’s arrival on 1 January 2010, writing £100m of new business, was a contributor to the 51% increase in gross written premium.

The reason Novae Re is able to grow in difficult markets is not because it is stealing a load of business from people at cheaper rates. Novae Re is a group of European underwriters that left their respective employers to set up their own independent reinsurance business. They brought their franchise, which is business they have had, and often led, for many years.

The other aspect is that our stock market valuation has been growing. A year ago, our shares were trading at 300p against net tangible assets of 430p, so it was 0.7 times book value on a good day. Now our valuation is 0.9 times book. That makes us much more able to participate in the changes and opportunities in the M&A market.

Q: Do you see yourself as a buyer or a seller?

A: It is not about whether I want to be an acquirer or acquired, it is what makes money for our shareholders. If we want to participate in M&A, we want to do it on our terms rather than someone else’s, which is why the valuation is so important to our shareholders.

Q: Are you planning to set up a sidecar reinsurer, as some have suggested?

A: Certainly not this year. We do not have unlimited capital. If the opportunities are there and it all stacks up, it is certainly something we will consider. We are watching developments carefully.

Q: Your chief underwriting officer, Peter Matson, left the company recently. How would you comment on his time at the firm?

A: The guy did a fantastic job. He was here so many years and toiled through the most difficult period of this company’s history. He arrived when we were absolutely flat on our back, and made bold, decisive underwriting decisions. We have solved the problems – what a great note to go out on.