SVB Holdings To Relaunch As Novae

Listed Lloyd’s vehicle SVB Holdings is going ahead with a previously announced plan to reinvent itself as Novae Group and form a new company, NICL, outside Lloyd’s.

Listed Lloyd’s vehicle SVB Holdings is going ahead with a previously announced plan to reinvent itself as Novae Group and form a new company, NICL, outside Lloyd’s.

NICL will be regulated by the U.K. Financial Services Authority and capitalised through a £103.2 million ($179.5 million) rights issue. The company will focus on U.K. commercial lines business – especially employers’ liability and credit insurance.

A new listed holding company, Novae Group, will be formed through a scheme of arrangement. Under the scheme, SVB shareholders will receive one new Novae share for each SVB share they own, and SVB will become a subsidiary of Novae.

Following the completion of the scheme and rights issue, Novae will have two operating businesses, SVB and NICL. NICL’s assets will be held separately from those supporting the Lloyd’s business.

One reason SVB gives for setting up outside Lloyd’s is the costs imposed by the market, including the New Central Fund and other levies, which would “place SVB at a competitive disadvantage compared to those [costs] of a standalone insurance company”.

SVB adds that the pricing of U.K. regional commercial lines business is inherently less volatile than London market business. The company therefore believes that the formation of a dedicated U.K. regional commercial lines business provides a complement to the more volatile business it writes at Lloyd’s.

SVB forecasts that NICL will write gross premiums of £63 million in its first full year of trading. Its business plan anticipates ceding up to 30% of its gross premium to reinsurers, limiting its modelled net exposure to any single catastrophe event to £16 million.