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Interim results

Interim results. Six months ended 30 June 2010. Disclaimer.

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Interim results

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  1. Interim results Six months ended 30 June 2010

  2. Disclaimer This document and the presentation to which it relates (“Presentation”) do not constitute or form part of, and should not be construed as, an issue for sale or subscription of, or solicitation of any offer or invitation to subscribe for, underwrite or otherwise acquire or dispose of, any securities of Novae Group plc (“Novae”) nor should they or any part of them form the basis of, or be relied on in connection with, any contract or commitment whatsoever which may at any time be entered into by the recipient or any other person, nor do they constitute an invitation or inducement to engage in investment activity under section 21 of the Financial Services and Markets Act 2000 (“FSMA”). This document and the Presentation do not constitute an invitation to effect any transaction with Novae or to make use of any services provided by Novae. By accepting this document and the Presentation you agree and acknowledge that this document and its contents are confidential and may contain proprietary information belonging to Novae. This document and the Presentation may contain forward looking statements in relation to certain of Novae’s plans and current goals and expectations, in particular but not limited to its future financial condition, performance and results. By their very nature, all forward looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond Novae’s control, including but not limited to insurance pricing, interest and exchange rates, inflation, competition and market structure, acquisitions and disposals, and regulation, tax and other legislative changes in those jurisdictions in which Novae, its subsidiaries and affiliates operate. As a result, Novae’s actual future financial condition, performance and results may differ materially from the plans, goals and expectations set out in any forward looking statement made by Novae. Novae has no obligation to update any forward looking statement contained in this document or the Presentation or any other document or any other forward looking statement Novae may make. Past performance cannot be relied upon as a guide to future performance. No representation or warranty, express or implied, is or will be made in relation to the accuracy, fairness or completeness of the information or opinions made in this document and the Presentation, which information and opinions should not be relied or acted on, whether by persons who do not have professional experience in matters relating to investments or persons who do have such experience. The information and opinions contained in this document and the Presentation have not been audited and are subject to change without notice. No responsibility or liability whatsoever is or will be accepted by Novae, its subsidiaries or affiliates or by any of its officers, directors, employees or agents for any loss howsoever arising, directly or indirectly, from any use of this document or its contents or attendance at the Presentation. This document is for distribution only in the United Kingdom and the Presentation is being made only in the United Kingdom to persons falling within Articles 19, 43, 47 and 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended), to persons who have professional experience in matters relating to investments or to persons in the United Kingdom to whom this document may otherwise be lawfully distributed. This document is being supplied and the Presentation made to you solely in that capacity for your information. This document may not be reproduced, redistributed or passed on to any other person, nor may it be published in whole or in part, for any purpose. By accepting this document and the Presentation, you agree to be bound by the foregoing limitations, undertakings and restrictions.

  3. Contents • Highlights Matthew Fosh • Financial review Oliver Corbett • Enhancing returns Matthew Fosh

  4. Highlights • Profit before tax and before FX: £13.6 million (H1 2009: loss of £2.1 million) • Profit before tax and after FX: £14.9 million (H1 2009: loss of £18.5 million) • Annualised investment return: 3.1% (H1 2009: 2.0%) • Net tangible assets per share: 429p (Dec 2009: 423p) • Interim dividend per share: 3.3p (H1 2009: 3.0p) • Measures to enhance the Group’s ROE

  5. Financial review Oliver Corbett

  6. Income statement

  7. Income statement

  8. Balance sheet

  9. Net asset and net tangible asset value per share

  10. Net asset value accretion since 2005H1 2010 NAV plus cumulative dividends: 475p * restated to reflect the share consolidation in May 2008

  11. Investment portfolio Novae has no exposure to sovereign debt issued by Portugal, Italy, Ireland, Greece or Spain

  12. Return on equity • Average shareholders’ funds: £316.3 million • H1 2010 profit before tax: £14.9 million • H1 pre-tax annualised ROE: 9.4% • H1 2010 profit after tax: £10.8 million • H1 post-tax annualised ROE: 6.8%

  13. Property/short-tail (55% of H1 GWP) • H1 gross written premium: £183m • 3,208 risks written in period • Sharp improvement in UK/emerging market credit • Chile loss <$10m (prev. $10-15m) • Limited exposure to Xynthia, Australian hailstorms and Haiti earthquake Gross written premium by class

  14. Liability/long-tail (45% of H1 GWP) • H1 gross written premium: £150m • 8,753 risks written in period • Strong results for D&O, GL, medical malpractice and PI • Deepwater loss <$10m • Aviation RI losses: Dulles, Tripoli, Jeddah Gross written premium by class

  15. Enhancing returns Matthew Fosh

  16. Key financial initiatives • Optimising business mix • Enhancing ROE • Continuing focus on enhancing returns

  17. Rate change (2000 = 100)

  18. Business mix – 2006-2010E

  19. Novae Re • Commenced trading on 1 January 2010 • 12 staff in Zurich and 8 in London • Original premium target: £90-100 million • Actual gross written premium to date: £77.5 million Gross written premium by class

  20. Enhancing return on equity • Release of NICL surplus capital; return of capital to shareholders • Targeted reductions in outwards reinsurance spend • Annualised pre-tax cost savings of £2.0 million by 2011 • 2002 & prior legacy

  21. Outlook • Rating environment • Investment outlook • Company-specific actions: positioning for upturn

  22. Q & A

  23. Appendices

  24. Summary segmental performance

  25. 2010 forecast income * as updated in July 2010

  26. Willingness to lose and realistic disaster scenarios

  27. Reserve releases(excluding Discontinued Units)

  28. Comparative six monthly moving averages of net claims incurred movement by year of account 1997 to 2001: at 30 June 2010

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