Omega loss widens to $94.7m
Bermuda-based Omega Insurance Holdings took a huge hit to their bottom line in 2011, recording $85.6 million in catastrophe losses citing significant impact of natural disasters and “frustrating” corporate activity, having rejected several takeover bids. The insurer, which recorded a $55 million loss in 2010, rejected three potential suitors last year, including Lloyd’s rival Novae, Canopius and Bermuda-based Haverford, which wanted to buy a 25 percent stake in the company at 74 pence per share. In January the company also turned down an approach from Barbican, describing the failed takeover attempts as “unsatisfactory”. “This has been a difficult year, with an unprecedented frequency of large catastrophe losses, together with a frustrating corporate activity process,” said Richard Pexton, CEO of Omega. “We are seeing encouraging signs in the market with re-pricing in our core classes, with 60 percent of our portfolio showing increases of more than five percent.” The company cited their major loss events including the Japanese earthquake and tsunami, New Zealand earthquake, Hurricane Irene, storms and tornadoes in the US and flooding in Thailand and Australia. Omega didn’t give any indication that a potential buyer was on the horizon, which according to Reuters, sent the company’s shares lower. Omega closed in London yesterday at 49.07p, down 2.35 percent. According to Reuters, the stock has lost 50 percent of its value in the past year, having peaked at about 172 pence in 2008. “Corporate activity was intense and time consuming during the year with various approaches leading to one unconditional offer,” the company said in a statement. “The outcome of this process was unsatisfactory for shareholders, the Board and management who have invested considerable time and effort in trying to deliver value. Naturally, during this period, it has been difficult to look too far forward and grow the business.” The company wrote less business in 2011, recording $304.6 million in gross premium written as compared to $356.1 million in 2010. It also reported a combined ratio of 134.3 percent in 2011 compared to 114.4 percent in 2010. Omega also cancelled its dividend after its pretax loss more than doubled last year to $94.7 million because of surging catastrophe claims. Omega said it reshaped its underwriting portfolio, which no longer includes underwriting third-party reinsurance business in Bermuda and reduction of aggregate exposures. The company said it was also encouraged by their January renewal season where they saw increased rates on their US catastrophe account by five percent to 15 percent. Their US SME business also benefited from rate increases, particularly in catastrophe exposed areas, of between seven percent and 15 percent, saying these accounts make up over 60 percent of their portfolio.