Omega: ‘This Has Been A Difficult Year’
Bermuda-based Omega Insurance Holdings today [Mar.6] reported a $94.7 million loss before tax for 2011, more than double the $42.9 million it lost in the previous year.
The international insurance and reinsurance group also saw a 14.5% reduction in gross written premiums in 2011 to $304.6 million [2010: $356.1 million] and a deterioration in its combined operating ratio to 134.3% from 114.4% the previous year.
Omega, one of the smallest listed insurers operating in the Lloyd’s market, also cancelled its dividend.
The Bermuda-domiciled provider highlighted that of its 102.2% claims ratio 37.5% arose from catastrophe losses. The company revealed that in the year to 31 December 2011 it was hit by $85.6 million of catastrophe losses net of reinstatement premiums.
Richard Pexton, chief executive officer of Omega said: “This has been a difficult year, with an unprecedented frequency of large catastrophe losses, together with a frustrating corporate activity process.
“During 2011, we have continued the repositioning of our business which is now aligned with the board’s current risk appetite. We are seeing encouraging signs in the market with re-pricing in our core classes, with 60% of our portfolio showing increases of more than 5%.”
He concluded: “We remain a well capitalised business.
“The transformation of our business mix and positive pricing movements we are now seeing leave us in a good position to take advantage of market opportunities in 2012.
Omega, which rejected three takeover bids last year, provided no details of further acquisition interest alongside its 2011 results, stirring fears suitors might look elsewhere.
The company, which last year rebuffed offers including an 83 pence per share proposal from rival Canopius and in January turned down an approach from Barbican, described the failed takeover attempts as “unsatisfactory,” but did not say whether it had since come any closer to doing a deal.
“The risk remains that the longer this company is allowed to limp on as an independent entity the less there is that will be of value to a third party acquirer,” analysts at stockbroker Peel Hunt wrote in a note. “Independent shareholders should take decisive action to secure what little value is left.”
The stock has lost 50 percent of its value in the past year, having peaked at about 172 pence in 2008.
In 2011, insurers absorbed over $100 billion in claims from natural disasters including Japan’s Tohoku earthquake, making it the industry’s second-costliest year on record.
Smaller Lloyd’s players are seen as ripe for consolidation because persistently weak insurance prices have weighed on their shares, with proposed tighter capital requirements for European insurers adding further pressure.
Omega also received approaches last year from Lloyd’s rival Novae, as well as Bermuda-based reinsurer Haverford, which wanted to buy a 25 percent stake in the company at 74 pence per share.
