Omega shares plunge 18% after record loss
Shares of Bermuda-based insurer Omega Insurance Holdings Ltd plunged nearly 18 percent yesterday after the firm posted a record loss.
Omega said it lost $42.8 million last year, compared with a profit of $43.6 million in 2009, mainly because of claims from natural disasters.
The company's shares fell 18p to 82.75p in London Stock Exchange trading.
“Clearly this is a disappointing result and one that must not be repeated,” chief executive officer Richard Pexton said yesterday. “The performance was driven by the level of catastrophe and large single-risk loss events including the earthquakes in Chile and New Zealand, the explosion of the Deepwater Horizon oil rig, Australian floods and Aban Pearl submersible amongst others.
“This was exacerbated by rating reductions putting pressure on margins in other lines of business as the market softens, reflected in the increase in attritional loss ratios and some strengthening of reserves at the half year.”
Changes made since March would leave Omega “less exposed to losses of this nature”, he added.
Omega is currently considering a takeover bid from rival Canopius Group Ltd, a Lloyd's insurer which has an underwriting platform in Bermuda. Omega has been through a year of upheaval after it ousted directors including chairman Walter Fiederowicz in May at the request of its biggest shareholder, Invesco Asset Management Ltd.
The company significantly increased the amount of gross premium it wrote last year to $356.1 million compared to $265.8 million in 2009.
Its combined ratio of 114.4 percent indicated an underwriting loss compared with 81.4 percent in 2009. Omega's investment return fell to 1.9 percent from 2.8 percent.
Omega, which paid an interim dividend of six cents per share earlier last year, opted not to pay a final dividend for 2010.