After a long battle to buy Omega, Canopius chairman Michael Watson now has to live up to the market’s high expectations for its turnaround

Canopius has finally wrapped up its deal for Omega and no one will be more delighted than Michael Watson.

The Canopius chairman has been a long-term admirer of Omega and, two years ago, in Monte Carlo, he stated his ambition to buy the business.

But Watson has faced a battle in his quest for the underperforming Omega. In 2011, a three-way takeover battle for the Lloyd’s insurer ensued between Canopius, Barbican and Bermudian investment firm Haverford. Haverford’s 83p-a-share offer for 25% of Omega won, but the company did not complete the deal, blaming a deterioration in Omega’s financial position.

This cleared the way for Canopius to have another go at buying Omega, and Watson made a £164m offer in April 2012. Now that he has finally succeeded, the market will be waiting for the ‘Michael Watson effect’ to kick in.

Watson has a history of buying ailing businesses and reviving their fortunes, including Lloyd’s motor underwriter KGM. He bought the business in June 2010, despite the fact that KGM played a significant part in pushing its parent, Optimas, into a £3.5m loss in 2008. A year after the acquisition, KGM was out of the red to break even, as Canopius raised rates by about 20% and scaled back unprofitable business.

Watson has also turned Canopius into a well-oiled machine, notwithstanding the insurer’s first ever loss after tax in 2011 – £61m compared to a profit of £43m in 2010 – because of catastrophe claims.

The sale also ends a long-running saga for Omega, which has been trying to push through a deal for some time. In 2009/10 its shareholders voted to overhaul the board, and it was immediately confronted by several natural catastrophe losses, including the Japanese earthquake. The company will be hoping that Watson’s latest turnaround job will bring some much-needed stability.