Standard & Poor's has it raised its Lloyd's Syndicate Assessment (LSA) on Novae – Syndicate 2007 to '2+' from '2'. The outlook is stable.
"The upgrade reflects that the potential impact from the run-off of the liability business written between 1997 and 2001 is materially reduced, and that the probability of the run-off being within expectations has improved," said credit analyst Matthew Day. "We do not, however, consider that finality has been achieved at this point," he added.
The run-off issues have also limited the financial flexibility of Novae Group, in recent years, but recent improvements have been made. The impact from the legacy issues is also mitigated by the syndicate's good underlying operating performance, improved capitalization, and strong competitive position, which includes the strong financial strength of Lloyd's (A/Positive).
The stable outlook reflects Standard & Poor's expectation that the syndicate will continue to manage down the risk from the legacy issues, and that the ongoing operations will continue to produce strong operating performance.
Standard & Poor's expects that Novae's strong capital adequacy ratio will be improved as profits emerge from the open years of business, and that the quality of capital will improve as the level of reserves for run-off business is reduced.
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