Omega shares to raise £130m

Lloyd’s syndicate owner, Bermuda-based Omega Insurance is to raise £130m in an AIM share issue to fund underwriting. The company intends to apply for admission to the Official List and to trading on the London Stock Exchange’s main market during the first half of 2009.

Omega says its share issue is supported by a number of existing and new institutional investors.

The company said the Lloyd’s subscription model was ideally placed to take advantage of hardening insurance premiums, as the industry looks for diversified cover for risks.

“Commercial insureds and reinsureds will be seeking greater diversification of cover in their approach to risk management. This plays to the strengths of subscription market players and companies with long-standing trading reputations,” the company said.

Walter Fiederowicz, chairman of Omega, said today: “As a result of this fundraising, the group is now able to seize a significant market opportunity to grow the underwriting book in our existing business areas over the next 12 to 18 months. During this time we foresee a hardening of rates and an improvement in terms and conditions in the group's core lines of business. Our conservative investment policy and short-tail account mean we will be focused on the future and its opportunities and not dealing with legacy issues from 2008 and prior years that will be preoccupying so many in the industry.”

Chief executive Richard Tolliday said: “We expect to see a progressive and significant improvement in market conditions over the next 12 to 18 months. The insurance industry environment is very different today from the conditions seen following Hurricane Andrew, 9/11 and the 2005 hurricane season, because of the number and nature of the factors that are profoundly affecting the industry. This creates exciting opportunities for a group as well positioned as Omega is. The severity of capital constraints being felt in the industry means we are confident we can utilise our enlarged balance sheet to grow our Bermudian operations and our surplus lines carrier in the US, essentially by writing more of the same type of business we have written so successfully for the past 29 years.”

Omega has licensed trading operations in Bermuda, US, Lloyd’s and Cologne:

• Bermuda (Omega Specialty rated “A–” (Excellent) by A.M. Best);
• US (Omega US rated “A–” (Excellent) by A.M. Best);
• Lloyd’s (Syndicate 958 rated “A” (Excellent) by A.M. Best);

The company will hold a special general meeting at 9am (Bermuda time) on 8 January 2009. The first day of dealings in the new shares on AIM is expected to be 30 January 2009.

The company also said: “It is our current intention to pay existing shareholders a proposed special interim dividend conditional upon the placing in an amount to be based on the estimated profitability (if any) of the group during the second half of the company’s 2008 financial year in lieu of what would otherwise have been the final dividend for the year ending 31 December 2008.”