LONDON (Reuters) - Bermuda-based property and casualty insurer Omega Insurance sank into the red in the first half of the year, weighed down by a string of costly natural disasters including the Chilean earthquake.

"These catastrophe losses, together with the lag that currently exists in 2010 premium earnings, have had a major effect on our half-year results," chief executive Richard Pexton said yesterday.

The outlook for the second half depends very much on the level of hurricane activity, with Omega likely to suffer in the event of a large natural disaster even as some insurers benefit.

"In the absence of a significant catastrophe, we would expect to break even at the end of the year, if there is a very large cat, that will be a struggle," he added.

Omega swung to a pretax loss of $34.2 million in the six months to June 30 from a profit of $22.9 million a year earlier, in line with its profit warning this month indicating it was on course for a loss of $35 million. Omega blamed a high level of claims stemming from catastrophes including the Chilean quake, the BP oil spill in the Gulf of Mexico and hailstorms in western Australia.

But the insurer said it remained confident of its future prospects and held its interim dividend at six cents per share.

It said that the time lag on premium flows, which dented first-half profits, will even out in the second half.