Lloyd’s market insurer and reinsurer Novae said yesterday that it sees Marine, Aviation and Political risk (MAP) as one of its core sectors. Reporting its full-year numbers for 2016, Novae said that MAP premiums grew by 10.4% year on year (although this represented a 1.8% decline at constant rates of exchange).
Novae noted that in the past 12 months the MAP division had invested heavily “across all classes”, hiring lead underwriters in marine hull, war and cargo and establishing a new Renewable Energy unit. The division also hired Caroline Koczerzat as deputy divisional head.
Gross written premiums in MAP rose to £266.3m, from £241.2m in 2015, while net earned premiums declined to £182.4m, from £204.3m. The combined ratio improved to 83.8%, from 89.9%, benefiting from roughly equal declines in the expense and claims ratios. Novae’s MAP division accounted for 29.6% of the Group’s gross written premium in 2016, a fraction down on the 30.6% achieved in 2015.
The marine portfolio remains the largest component of the MAP division and represented 16.2% of the Group’s gross written premium for the year (2015: 14.1%). Constant currency growth was achieved across all direct marine classes.
However, Novae said that “in common with the wider market environment, some of the most significant rate reductions in 2016 were in Marine and Energy business, consistent with the continued market trend of heightened softening in classes that have benefited from recent benign claims experience.”
The MAP division as a whole saw rates reduce by around 6%. Marine lines suffered average rate decreases of around 3%. Energy rates have fallen by nearly 15%, driven by relatively low levels of large loss experience in recent years, increased capacity and carrier appetite, and reduced product demand resulting from suppressed oil prices. Aviation reinsurance rates fell by just over 8% as the industry continued to see a lower frequency of major losses. Rates in Political Risk and Credit lines of business declined by an average 5%. Terrorism, Kidnap & Ransom and Product Recall rates were also down by around 7% in aggregate.
The group as a whole reported GWP of £901.0m, up from £787.0m the previous year. Weighted average rates on renewal premium were off by 3.5%. The group’s combined ratio was 98.3% before the Ogden rate change, but 103.6% including Ogden. (The announcement on February 27th 2017 by the Lord Chancellor in conclusion to her review of the discount rate for personal injury claims resulted in the Ogden rate being revised from 2.5% to minus 0.75%).
Net investment income rose to £32.7m, from £6.8m the previous year, while pre-tax profit was £59.1m pre-Ogden; £23.7m including Ogden (2015 restated: £52.4m). The final dividend of 7.5p per share compared with 20.0p per share for 2015.
Novae derives about 8% of its revenues from the European Union. It said that it would “continue to work with Lloyd’s of London to position ourselves positively for a post-Brexit world.”