Omega “striving” to finalise takeover as H1 losses hit

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Lloyd’s insurer Omega has hinted that its lengthy quest to find a buyer is growing more urgent as it announced an after-tax loss of $44.5m (£27.2m) in the first half of 2011.

The result compares with a loss of $32.3m in the same period last year, and a full-year 2010 loss of $42.8m.

Omega’s combined ratio came in at 133.2% (H1 2010: 128.3%) as $51.3m of net catastrophe losses added 41.9 points to the company’s loss ratio. The impact was slightly offset by reserve releases of $1m (H1 2010: reserve strengthening of $12m).

“As previously announced, Omega has received a number of approaches that may lead to an offer being made for the company, and the directors will continue to review these approaches in the context of the best interests of the business and all stakeholders,” said a statement accompanying Omega’s first-half results. “We are striving to conclude the process shortly.”

Omega confirmed in January this year that fellow Lloyd’s insurer Canopius had made an approach, but a deal has yet to emerge. Press reports have linked several other companies and names to Omega, including Novae and Barbican – though Novae has since pulled out.

More recently, the Telegraph reported that an investment group led by former Flagstone Re co-founder and chairman Mark Byrne is the favourite to take over Omega.

While it incurred heavy losses in the first half of 2011, Omega has repositioned its book of business to reduce the risk levels. "As a result of the actions we have taken over the past 12 months our catastrophe losses are now in line with our peers,” Omega chief executive Richard Pexton said in a statement. “These actions have included the significant reduction in the more volatile areas of our catastrophe account and the placement of a more effective reinsurance programme.”

Pexton said the company has bought additional reinsurance, “all of which remains intact for the US wind season.”

As a result of its re-underwriting activity, Omega’s gross written premiums dropped 15% to $206.6m (H1 2010: $244.1m)

At 30 June 2011 Omega held less than 0.29% of its investments in Italian and Spanish government bonds which were sold subsequent to 30 June 2011 and 0.44% in corporate bonds in those countries. It has no direct holdings in Greece, Portugal or Ireland.

Omega H1 2001 results in $m (compared with H1 2010):