Lloyd's insurer to expand Bermudan operations
Omega Insurance Holding plans to raise £130m from new shares in order to increase its underwriting capacity as rates rise.
The Bermuda-based insurance group plans to expand its operations on the island and grow its surplus lines business in the US.
The insurer expects to raise £123.7m after expenses.
The AIM-listed insurer will also apply to transfer to the London Stock Exchange’s main market in the first half of next year.
Omega, which specialises in property insurance and reinsurance, said the market turmoil and this year’s severe hurricane losses made the trading outlook positive for its main lines of business. It expects rates to increase across its lines of business over the coming months.
“We believe the industry losses from hurricanes Gustav and Ike and the erosion of capital from the industry through investment losses provide a catalyst for opportunities going forward,” the group said in a statement.
It anticipates a hardening of market conditions in US property insurance and reinsurance and marine offshore energy.
The group estimates the industry’s investment losses at more than $50bn (£33.7bn), excluding the AIG crisis.
Omega said that while the balance sheets of many of its competitors had been weakened, it remained in a strong position as it had no exposure to equities or asset-backed securities.
Gustav and Ike are estimated to have cost insurers between $20bn and $25bn. Omega predicts the overall impact to its earnings from the two hurricanes will be $34m.
In the share placing, more than 92.8m new shares will be issued at a price of 140p. Omega said the placing, which is underwritten by Numis, was supported by existing and new institutional investors.
Omega, which had gross written premium of $242.9m in 2007, redomiciled to Bermuda in 2006.
It has managed Syndicate 958 at Lloyd’s since 1980 and formed a Bermuda reinsurance company and a US business in 2007.
Walter Fiederowicz, Omega’s chairman, said: “Our conservative investment policy and short-tail account mean we will be focused on the future, not dealing with legacy issues from 2008.”