Formation of Novae Re, to diversify its product offerings

UK-based non-life insurer, Novae Group has formed a new international reinsurance unit, Novae Re, to diversify its product offerings – reported Reuters.

According to the company, the new unit intends to offer reinsurance products, including specialist classes such as agriculture and engineering, that have traditionally not come to the London market.

Novae, which has a 80:20 mix of direct insurance versus reinsurance, is launching Novae Re to build its reinsurance side and to take the mix to 60:40.

The company, which already covers two areas of reinsurance – property and aviation, will additionally cover energy, liability, agriculture, engineering and property outside the US through the new unit.

Novae Group expects the unit to write gross premium income of about GBP100 million ($165.2 million) in 2010. According to the company, the incremental cost for the new unit was not expected to be more than 3 million pounds in 2009, and that it expected to fund Novae Re from a combination of existing resources and new debt facilities.

Novae Re will write new business from January 1, and shall be integrated into the company’s existing reinsurance business.