Endurance's former head of reinsurance, Gunther Saacke, will lead Novae Group plc.'s newly-former re/insurance unit Novae Re.

The new unit, which is made up of 12 senior, experienced underwriters and eight actuarial and support staff, will write new business with effect from the start of next year and will be integrated with the group's existing reinsurance business.

Novae Re will offer a materially expanded range of reinsurance products, including specialist classes such as agriculture and engineering, which have traditionally not come to the London market, further diversifying the group's product range, and shortening the tail of its book overall. In 2010, the unit is anticipated to write gross premium income of around £100 million, and will be looking to grow its premium income subject to market conditions.

In 2009, the incremental cost of the new unit, including establishment and other items, is not expected to exceed £3 million. For 2010 and subsequent years, the annual core cost impact at a group level is expected to be around £7 million. The formation of the new unit remains subject to Financial Services Authority and Lloyd's approval and the group expects to fund Novae Re from a combination of existing resources and new debt facilities.

Matthew Fosh, Novae's chief executive, said: "The formation of Novae Re brings a combination of strategic benefits. It diversifies our product range; it allows more efficient allocation of capital and begins to utilise the surplus capital across the group. It also shortens the tail of our business overall."