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Hitt og þetta 25. júlí 2007

CORRECT: Q2 2007 syndicate forecasts and current trading

Novae Group plc Q2 2007 syndicate forecasts and current trading Correct: The run off year of Syndicate 1241 was inadvertently stated as being in respect of Syndicate 2147. The forecasts for Syndicate 2147 relate solely to the later years (2005 and 2006). The full corrected version of the release is set out below. Novae Syndicates Limited, the Lloyd's managing agency owned by Novae Group plc, today announces updated forecasts for its managed syndicates for the 2005 and 2006 underwriting years and for the 2002 and prior run off years. * Forecasts either unchanged or improved * Utilisation of provision for discontinued units in first half 2007 £4 million (first half 2006: £7 million) * Rating environment remains competitive consistent with our expectations (underlying overall rate reduction around 5%) 2005 year of account +-------------------------------------------------------------------+ | Syndicate | Capacity | Aligned | Current | Previous | | | £m | % | forecast | forecast | | | | | % | % | |-----------+----------+---------+----------------+-----------------| | | | | | | |-----------+----------+---------+----------------+-----------------| | 2147 | 286.0 | 100.0 | (12.5) - (7.5) | (12.5) - (7.5) | |-----------+----------+---------+----------------+-----------------| | | | | | | |-----------+----------+---------+----------------+-----------------| | 1007 | 151.0 | 81.6 | 11.0 - 16.0 | 10.0 - 15.0 | +-------------------------------------------------------------------+ The forecast for Syndicate 2147 continues to reflect the severity of windstorm losses during the year, as well as the transfer of certain business to the Group's insurance company. The net incurred loss ratio at 30 months is 109% (2004 55%; 2003 32%). In the case of Syndicate 1007 the forecast reflects the more favourable claims experience for Specialty classes, evident in a net incurred loss ratio at 30 months of 22% (2004 27%; 2003 12%). 2006 year of account +-------------------------------------------------------------------+ | Syndicate | Capacity | Aligned | Current | Previous | | | £m | % | forecast | forecast | | | | | % | % | |-----------+----------+---------+-----------------+----------------| | | | | | | |-----------+----------+---------+-----------------+----------------| | 2147 | 240.0 | 100.0 | 9.0 - 14.0 | 7.5 - 15.0 | |-----------+----------+---------+-----------------+----------------| | | | | | | |-----------+----------+---------+-----------------+----------------| | 1007 | 120.0 | 81.6 | 10.0 - 15.0 | 7.5 - 15.0 | +-------------------------------------------------------------------+ For the 2006 year, the more benign claims experience is evident within Syndicate 2147 from a net incurred loss ratio at 18 months of 23% (2005 105%; 2004 33%). For Syndicate 1007 early experience has been satisfactory, with an overall net incurred loss ratio of 12% (2005 10%; 2004 11%). Consistent with normal practice we have narrowed the forecast ranges at this stage. 2002 run off year of account +-------------------------------------------------------------------+ | Syndicate | Capacity | Aligned | Current | Previous | | | £m | % | forecast | forecast | | | | | % | % | |-----------+----------+---------+-----------------+----------------| | | | | | | |-----------+----------+---------+-----------------+----------------| | 1007 | 150.8 | 55.4 | (15.0) - (5.0) | (15.0) - (5.0) | |-----------+----------+---------+-----------------+----------------| | | | | | | |-----------+----------+---------+-----------------+----------------| | 1241 | 168.9 | 99.7 | (95.0) - (80.0) | (95.0) - | | | | | | (80.0) | +-------------------------------------------------------------------+ Progress continues to be made in dealing with legacy issues. The population of open claims on business led by the Group, which fell by 25% in 2006, fell by a further 18% in the first half of 2007, equivalent to a further 14% reduction by value. For the first half of 2007 utilisation of the provision for discontinued units was £4 million (H1 2006: £7 million). The pace of slowdown in utilisation of the provision has continued into 2007 and £9 million of the provision remains unutilised. Transactional solutions to the run off book consistent with the best interests of shareholders remain under permanent consideration, whether via a single transaction or large individual commutations. Current trading and prospects Some 12 months ago we highlighted the length of time that markets had remained favourable, and sounded a note of caution. A year on the softening of rates continues. In the first six months of 2007 rate reductions on renewal business across the Group averaged 3%. If weighted by business plan this would be of the order of a 5% reduction, albeit from high levels. Our response to the softening rating environment, whereby premium income of existing classes is generally reduced and complementary teams of new underwriters are added, was set out in detail in the annual report. This remains the Group's strategy in a challenging market. The most notable feature of claims experience so far in 2007 is the extensive flooding seen in England. It is too early to arrive at an accurate quantification of the cost to Novae but, based on information available at this stage and subject to other aspects of claims experience in the balance of the year, our current assessment is that this does not imply any material change to the likely outcome envisaged for the year as a whole. ENDS For further information: Matthew Fosh - Novae Group plc 020 7903 7300 Nick Miles - M:Communications 020 7153 1535 ---END OF MESSAGE---