Bermuda-based insurer Omega Insurance Holdings Ltd has been approached by Lloyd’s market rival Canopius Group Ltd about a possible takeover.Omega’s board of directors announced the news in a press statement yesterday, just as Canopius was announcing the establishment of a new reinsurance operation in Switzerland.Omega said privately-held Canopius, which is based in Guernsey, is offering a mixture of cash and unquoted shares without giving further details.Omega also said yesterday that it had raised its estimated loss for last September’s New Zealand earthquake to $18.9 million, more than two-and-a-half times the previous projection of $7 million in November.“In most cases, this represents exhaustion of the limits for the event,” a statement from Omega read.“Over recent weeks, both primary cedants and reinsurers have been revising their estimates of the New Zealand loss.”Commenting on the approach by Canopius, Omega stated: “There is no certainty that an offer will be forthcoming, nor as to the terms of any such offer. Whilst any approach which may be in shareholders’ interests will be duly considered, the board continues to build the business.“The board has consulted with Invesco Perpetual, the company’s largest shareholder, who is supportive of that position. A further announcement will be made if appropriate.”Invesco owns 29.7 percent of the insurer, according to data compiled by Bloomberg.Canopius is 87 percent owned by Bregal Capital LLP, a private-equity firm with 2.5 billion euros ($3.2 billion) under management. The rest of the company is owned by its management, led by chairman Michael Watson.For the first nine months of 2010, Omega had gross written premiums of $308.5 million. In 2009, Canopius wrote gross written premiums of £592 million ($920.4 million).The news marks the second effort to take over a Bermuda-based Lloyd’s insurer in recent weeks after Hardy Underwriting Bermuda Ltd rejected two offers from Dublin-based Beazley, which ended talks on a possible deal last month.Some industry observers expect to see more mergers and acquisitions in the industry this year. Many re/insurers have built up a large amount of surplus capital, causing rates to decline.With its new Swiss unit, known as Canpoius Europe and to be based in Zurich, Canopius Group will have its fourth underwriting platform, one of which is in Bermuda.Susan Patschak, chief executive officer of Canopius Bermuda Ltd, told The Royal Gazette that the expansion into Europe would have no impact on the Bermuda business.“The operation will mainly write reinsurances in the local market which do not tend to come to the London market,” she said. “This makes it complementary to the business we currently write in our syndicate. Also, with the team writing on behalf of the syndicate additional capital will not be required to set up the operation.”Ms Patschak had no comment on her company’s approach to Omega.In a press release, Canopius said the European unit were part of the company’s plan to “extend its international footprint”.Canopius has recruited Eric Gutiérrez, currently senior vice-president, Ace Tempest Re International and general manager, Ace Reinsurance (Switzerland), to head the new unit. It is expected to start writing business by the middle part of this year.The new operation will initially have a dedicated focus on European treaty reinsurance business and will underwrite on behalf of Canopius Group’s Syndicate 4444 at Lloyd’s.Canopius chairman Michael Watson said: “Zurich is a major financial centre and has become a well supported and established reinsurance hub, making it an ideal location for our expansion into Europe.“The creation of Canopius Europe complements our existing activities in London, Bermuda and Singapore and supports the growth of our global reinsurance portfolio.”