Catastrophes propel Omega to £22m loss

Lloyd’s insurer Omega has said it expects to make a pre-tax loss of $35m (£22.4m) for the first half as a result of reserve strengthening and catastrophe losses. It intends to report its finalised first-half results on 31 August.

In addition to $29m in expected losses from the Chile earthquake, the sinking of the Aban Pearl rig and the Deepwater Horizon explosion, Omega said its book had been hit by the storms in Australia. Its reinsurance purchases were more weighted towards the first half than last year.

Omega had to add $12m to prior-year reserves during the first half, which it said reflected the claims experience in the second quarter as well as a more conservative view of loss development in longer-tail lines. The revised view is the result of an internal actuarial review using independent advisers.

The company’s first-half results were also hit by the fact that, although it has an increased share of Syndicate 958’s capacity for the 2010 underwriting year, it is yet to have a big impact on group results.

While the group’s first-half net written premium – $244m – is up 30%, only 19% of 2010’s account premium from the syndicate had been earned by the end of the second half. Omega expects this to rise to 65% by the year-end.

It also reported lower profit commissions from its managing general agency and a reduction in reinsurance profit commissions.