Omega buys more reinsurance as losses mount

Lloyd’s insurer Omega bought $3m (£1.9m) more reinsurance in the third quarter because of rising loss estimates and new claims.

Loss estimates for previously-reported  2011 catastrophe losses increased by $6m - though this was much lower than increases reported by some of its peers.

The company also reported that attritional losses had worsened by $9m because of unusually high occurrence of smaller US and international catastrophe losses.

New losses from third-quarter events, such as Hurricane Irene, the Texas wildfires and the Slave Lake fire, totalled $10m. Omega does not expect material losses from the Thailand floods.

However, thanks to the re-underwriting of its book, Omega is expecting future catastrophe burdens to be lighter.

“Our catastrophe exposures are now aligned to our revised risk appetite and we do not expect the level of legacy cat losses, which has materially affected results, to recur,” the company said in its third-quarter interim management statement.

Omega also revealed in the statement that Bermudan investment firm Haverford’s offer to buy 25% of the company has been put to shareholders and is now awaiting final regulatory approvals. The company expects costs from corporate activity in the year, including the Haverford deal, to total $5m.

Omega’s gross written premium (GWP) for the first nine months of 2011 dropped 16% to $285.5m (9M 2010: $308.5m).

GWP related to the company’s participation on Lloyd’s Syndicate 958 dropped 9% to $188m because of previously-announced exits from marine energy and retrocession.

Bermuda-based reinsurance unit Omega Specialty saw GWP drop 53% to $31.6m (9M 2010: $67m) because of the change in underwriting strategy of the direct business written in Bermuda.

Omega US was the only one of the three units to grow, increasing GWP by 11% to $38.9m (9M 2010: $35.1m). This was because of improving excess and surplus lines rates in the US. Omega says the unit has further growth potential now it is licensed in al US states, and expects rate rises to continue in 2012.

Omega also reported that rates are improving in two of its largest classes: property-catastrophe and small US commercial property.