Concerns about London?s ability to compete with Bermuda have contributed to the exodus of UK company Omega Underwriting Holdings to Bermuda joining peers Catlin and Hiscox.

Omega is the second Lloyd?s of London insurer in a week to announce a move to the Island in order to benefit from the lighter regulatory and tax regime, following the domicile change of Hiscox, which confirmed its plans last Monday.

Omega also announced a 10.2 percent increase in first-half pretax profit and said the company plans to raise ?35 million ($66 million) via a share placing to fund a new US subsidiary.

Omega will operate under Bermudan holding company Omega Insurance Holdings with shares in the new firm to be listed on London?s junior AIM market.

It said the move, approved by UK authorities, was expected to be complete by mid-November.

?Establishing Omega US and operating in the future under a Bermudian holding company will position us to grow and develop our business significantly,? chief executive Richard Tolliday said in a statement.

?The redomicile to Bermuda is very much linked to Omega?s plans to source more business from the US,? John Coles, Threadneedle Communications added.

?Already around half of their business comes from the US and around 70 percent of their premiums are in US dollars.

?They are opening an office in the US to source business which is not seen by the Lloyd?s market.

?Bermuda is without doubt a premier centre for insurance and reinsurance and the domicile for many companies writing business in the US.

?It is a therefore a logical move for the group. It is important to mention that they have received consents from the UK Treasury and Revenue who of course consider the commercial rationale.

?Omega remain committed to Lloyds of London and will continue to manage Syndicate 958 as they have done for 26 years.

?The focus is on Omega becoming an international insurance and reinsurance group with operations in London, the USA and Bermuda.?

The UK?s insurance giants are unlikely to follow in the footsteps of smaller players like Omega ? with a market capitalisation of around 168 million pounds ? while smaller peers may find costs outweigh the benefits.

Concerns that London-based insurers are at a competitive disadvantage have prompted the chairman of insurance market Lloyd?s, Peter Levene, to call for lower corporate tax.

In November 2005, Omega announced plans to raise ?90 million ($156.8 million), both to increase syndicate capacity and to support the establishment of a new Bermuda-based insurer and reinsurer ? Omega Specialty Insurance Company Limited.

Omega was licensed by the Bermuda Monetary Authority to join the Bermuda insurance market on January 27.