27 February 2017 For immediate release
Novae Group plc
Statement in response to the Lord Chancellor's review of the discount rate for personal injury claims
Novae Group plc (the "Company") notes the statement made this morning by the Lord Chancellor in conclusion to her review of the discount rate (the "rate") for personal injury claims which is to be revised from 2.5% to - 0.75%. This change will have an impact on the results of the Company for FY 2016 primarily as a result of its exposure to motor reinsurance business.
Before adjusting for the new rate, the combined operating ratio ("COR") for 2016 was at the lower end of guidance of 98% - 100%, and profit before tax towards the higher end of consensus.
The standalone impact to the underwriting result of the rate change, before any release of reserve margin, is currently expected to be approximately £55m. Given the Company's strong reserving position, it holds sufficient reserve margin to absorb this impact. We expect that the effect of the rate change will be met in part through release of reserve margin and in part through a reduction in profits for 2016. The Board will also be considering the impact of this announcement when assessing the appropriateness of a final dividend. Given the non-recurring nature of this charge the Company expects no significant impact on the profitability of our ongoing business.
The Company has decided to defer its preliminary results announcement to 9 March 2017 to allow the orderly update of our audited results.
This announcement contains inside information.
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For more information please contact:
Novae Group plc
+44 (0)20 7050 9000
Matthew Fosh, Chief Executive Officer
Reeken Patel, Interim Chief Financial Officer
Haggie Partners LLP
+44 (0)20 7562 4444
David Haggie
Rebecca Young
Disclaimer
The financial information contained in this release is based on unaudited management information. Certain statements made in this trading update are forward-looking. They are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events, results or outcomes to differ materially from any expected future events, results or outcomes referred to in these forward-looking statements.
Note to editors
Novae is a diversified property and casualty (re)insurance business operating through Syndicate 2007 at Lloyd's and is listed on the London Stock Exchange. Established in 1986 Novae writes property, casualty and marine, aviation and political risk business between its offices in London and Bermuda.