The effects of the Ogden rate cut are being felt quickly across the insurance sector as another company announced its results today, strongly impacted by the unexpectedly sharp rate fall.
This time it was the turn of the Novae Group. The specialist insurer had positives to offer with gross written premiums climbing from £787 million last year to £901 million this time around – but that didn’t stop it from recording a substantial slip in profits.
This year its profits before tax stood at £23.7 million, down from £52.4 million in the previous year. With the impact of the Ogden rate removed, the company’s profits would actually have climbed to £59.1 million. In addition, its combined ratio was also hit – up to 103.6% including Ogden. However, even without the discount rate cut it still would have risen sharply – up to 98.3% from 91.3% in the prior year.
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Still Matthew Fosh, the company’s chief executive, was determined that the firm stay on track despite what he described as “short-term knocks.”
“Notwithstanding the challenges presented by market conditions, including the recent change in the Ogden discount rate, we continue to pursue our stated strategy of investing in those underwriting classes where we have demonstrable competitive advantage,” he said.
“Irrespective of short-term knocks, this strategy has steadily been transforming this business since 2013 - the journey is not yet complete, but the direction of travel is set.”
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