Matthew Fosh, boss of insurance underwriter Novae Group , formerly SVB, is increasingly confident that the company’s metamorphosis will bring forth a butterfly.

The first half saw the launch of Novae Insurance Company (NVA), a non-Lloyds underwriting arm covering UK commercial and professional indemnity.

First half pre-tax profits fell to £16 million from £27.7 million thanks to restructuring costs and a mixed underwriting environment. That beat the consensus analyst forecasts of £14 million.

Gross premium income in the Lloyds underwriting arm is up 10%. No dividend was paid. The shares fell 0.5p to 27p.

But the real question is will the market re-rate the underwriter? Fosh points out that it is currently valued at just 0.9 of net tangible assets, compared to an average of around 1.5 times.

When Fosh took Novae on in 2003 overheads were high at Fusion and there were huge underwriting losses. Fusion, with its high overheads, was sold and Fosh seems confident that the £103 million set aside to cover old underwriting costs will prove adequate. The run off is now over six years old and Novae still has £20 million in the kitty.

NICL was launched in April. Fosh says he is ‘very happy’ with the numbers, but added: ‘The competition in commercial UK insurance is very tough. Rates for professional indemnity have fallen by 10%'.

He adds: ‘If a premium crashes from £10,000 to £3,000 we aren’t interested. This business is run by non-insurance people and we’re not chasing income’.