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Novae Group P.L.C. formerly Lloyd's insurer SVB Syndicates Ltd., has posted an operating profit of £22.9 million (€34 million) for the first six months of 2006, down from the £39.6 million in the first half of 2005.
Gross premiums were £147.6 million, slightly down on the £154.2 million posted in the first half of 2005. The combined ratio deteriorated 11.9 percentage points to 83.8% at the first half 2006.
In March, the company restructuredrelaunching as Novae and established a non-Lloyd's United Kingdom-regulated insurance company. Under the restructuring, Novae's exposure to previous years' liability business written at Lloyd'swhich has required reserve increases in recent years for United States liability business written between 1997 and 2000is ring-fenced.
However, the company did experience a further deterioration in its liability business in runoff, although this was at a lower level than in previous six month periods.
Novae's discontinued liability business made a £6.9 million loss in the first half of 2006, compared with a £12.4 million loss in the same period of 2005. During the first half of the year, Novae reviewed nine of the 19 large contracts in runoff and three of these contracts were responsible for the reserve deterioration in the first half of 2006.
Novae still has £20.2 million set aside for any further deterioration. The cumulative impact of reserve increases since 2001 is £187.1 million.
The company, which specializes in liability lines such as financial institutions and professional indemnity, said in a statement that it had been "reassured" by the liability rating environment, including specialty lines which had shown "greater stability" since 2005. "Specialty and liability saw overall rate easing," Novae said in a statement.
Matthew Fosh, chief executive of Novae said: "It has been an important six months for us, during which we have turned Novae into a forward-facing business, no longer dominated by the debilitating legacy of its past. The formation of our new Financial Services Authority-regulated insurance company achieved our goal of platform diversification. We are delivering profits in line with our expectations. Subject to catastrophe loss experience in the second half, we remain upbeat about the prospects for the year."