Orascom Inv Regulatory News (OIH)

18 Sep 2007 07:01

Omega Insurance Holdings Limited18 September 2007 Omega Insurance Holdings Limited Interim results for the six months ended 30 June 2007 Highlights Financial •Profit before tax up 119% to $20.4 million (2006: $9.3 million) •Profit after tax up 147% to $16.3 million (2006: $6.6 million) •Earnings per share up 120% to $0.11 per share (2006: $0.05) •Combined ratio of 82% (2006: 86%) •Effective tax rate 20% (2006: 29%) •Interim dividend of US 7.7cents per share Operational •Syndicate 958 continuing 27 year record of unbroken underwriting profit •Group corporate restructuring completed on 16 March 2007 with the transfer of Omega Specialty Insurance Company Limited to Omega Insurance Holdings Limited •Omega US licensed by Delaware and eligible to write surplus lines business in 11 US states •Senior recruitments in Omega Specialty and Omega US •Outlook positive for the full year 2007 and for 2008 and beyond Richard Tolliday, Chief Executive of Omega, commented: "These are excellentresults ahead of expectations. With the very substantial growth in profits weare beginning the delivery of the earnings potential of the Group's newstructure and operating units. The Group has potential for long-term profitablegrowth and the dividend we have declared is a clear indication of our confidencein Omega's future prospects as we build upon 27 years of underwritingexcellence". Enquiries: Omega Insurance Holdings Limited +1(441) 294 6610Richard Tolliday, CEO John Coles, Threadneedle Communications +44 (0)20 7936 9604 Overview We are very pleased to report an excellent set of first half results. Theconsiderable growth in profit is tangible evidence of the start of the deliveryof the Group's earning potential and the successful execution of the Group'sstrategic and operational plans over the last two years. The profit after tax of$16.3 million is an increase of 147% over the first half of 2006 ($6.6 million). With the completion of the final stage of the Group's corporate reorganisationon 16 March 2007, we believe Omega now has in place the optimal corporatestructure from a strategic, operational and financial standpoint. The structuresupports our strategy as an international insurance and reinsurance underwritingoperation developing and growing businesses that are complementary to theGroup's Lloyd's platform. The Group now consists of the following operatingunits: •Bermudian AIM listed holding company, Omega Insurance Holdings Limited ("Omega Insurance Holdings") •Bermudian insurance company, Omega Specialty Insurance Company Limited ("Omega Specialty") •US insurance company, Omega US Insurance, Inc. ("Omega US") •Lloyd's managing agent managing Syndicate 958, Omega Underwriting Agents Limited ("Omega Underwriting Agents") •Lloyd's corporate member supplying capital exclusively to Syndicate 958 , Omega Dedicated Limited (" Omega Dedicated") •Company dedicated to the development of European and International business through Syndicate 958, Omega Europe GMBH ("Omega Europe") The development of these platforms enables the Group to deploy its capitalthrough businesses that extend Omega's reach into markets from which it alreadysources business for the Syndicate. The Group is gaining a greater share ofbusiness of the type we have always written, applying the same long establishedunderwriting discipline and focus that we always have. These results reflect the quality of Omega's underwriting and the focus that hasbeen maintained during a period of corporate transformation. Syndicate 958 isforecast to continue a wholly remarkable 27 year record of unbroken underwritingprofitability. The Syndicate anticipates underwriting gross premiums for 2007 of$605m. From a financial perspective, the Group's profit before tax for the six monthsto 30 June 2007 is $20.4 million, a growth of 119%. The largest component ofthis profit is from Omega Specialty which contributed $16.3m. This result isdriven by Omega Specialty's underwriting, including its quota share reinsurancesof Omega Dedicated and Syndicate 958's 2006 and 2007 years of account. The Group profit after tax of $16.3 million reflects a drop in the Group'seffective tax rate as result of the reorganisation. It is expected to fallfurther in the second half of 2007. Gross written premiums in the first half of 2007 were $173.1 million, up 113% onthe same time last year (2006 $81.3 million). Net earned premiums of $66.8million are an increase of 168% on 2006 ($24.9 million). Forecast writtenpremiums for the full year 2007 are in line with initial expectations. Whilstthe Group's underwriting exposure is weighted towards the second half of theyear, the first half of 2007 has proved extremely benign for Omega in terms ofloss exposure. We had previously reduced very materially our exposure tounder-priced non-US business and therefore have had minimal exposure to eventssuch as the UK Floods. The result of this is a Group combined ratio of 82% and apositive outlook for the full year. Market conditions remain strong in the key areas of Omega's underwriting and weenvisage that continuing into 2008. The development and growth of OmegaSpecialty in Bermuda and Omega US afford the prospects of profitable growth forthe Group's underwriting in 2008 and beyond, with no compromise to Omega'srigorous standards of underwriting. We have made important senior recruitments in both of those operating units.Andrew Stapleton has been appointed Chief Underwriting Officer of OmegaSpecialty to succeed Stephen Edwards who will be returning to the UK following aperiod of handover. Andrew has twenty years experience in the industry and hasworked most recently in the Bermudian market. Earlier in 2007 we appointed JohnCurry to the position of Chief Underwriting Officer of Omega US. John has overthirty years of experience in the US insurance industry. In August Wayne Batesjoined Omega US as Chief Operating Officer. Wayne has nineteen years experiencein the insurance industry, the last eight working for one of the largestindependent managing general agents in the US. A key focus now is the operational growth and development of our Bermuda and USoperations in line with Omega's proven and established approach to underwritingand risk management. These operations will increase the Group's share ofbusiness of the type it has historically underwritten. Omega Specialty issuccessfully developing its account of reinsurance clients and employingselection criteria similar to those of Syndicate 958. Omega US is the Group's USsurplus lines insurance operation and is targeting the same type of smallcommercial property risks as those that Syndicate 958 has historicallyunderwritten and continues to insure. Like Syndicate 958, it will seek ageographic spread of a portfolio of small property risks, de-emphasisingcatastrophe exposed zones. The development of its account will increase furtherthe diversity and balance within the Group's own underwriting portfolio. Dividend Notwithstanding the expectation of future growth for the Group, in view of thestrong half-year results and the positive outlook for the full year, the Boardis pleased to be able to declare an interim dividend of US 7.7cents per share.This represents a distribution of approximately 70% of the Group's profit aftertax for the first half of 2007. The Board's current expectation is that thefinal dividend for 2007 will equate to a similar level of distribution of theprofits for the second half of the year. We have stated on previous occasions the Board's intention to engage in theactive management of the Group's capital base. We have said that, as an elementof that capital management, the Board intends that a substantial part of Omega'sprofits be paid out as dividends. This dividend is demonstration of ourcommitment to this statement. Going forward for 2008 and beyond, in assessing the appropriate level of eachdistribution, the Board will always have regard to the overall financialrequirements of the Group and the opportunities for the profitable deployment ofits resources at that time. The interim dividend of 7.7cents per share will be payable on 16 November 2007to those shareholders on the register as at 26 October 2007. The dividend ispayable in US dollars but those shareholders wishing to receive the dividend inpounds sterling may elect to do so and should contact the Company's registrarson +44 (0)1534 632312. Dividends paid in pounds sterling will be converted atthe rate prevailing on 26 October 2007. Market Conditions Market conditions continue to be strong and offer attractive margins in the coreareas of Omega's underwriting account. Pricing for US catastrophe reinsurancehas remained firm and the market has continued to exhibit discipline, aided bythe continuing relative scarcity of appropriately structured retrocessionalcover for non-marine catastrophe risks from acceptable security. Rates andconditions for non-US reinsurance business remain broadly unattractive as aresult of the relatively undisciplined and ill-conceived stampede for diversity,apparently at any cost, being engaged in by some reinsurers. Omega has for twoyears now been cutting back its exposures in the under-priced areas such asAustralia, Japan and some UK programmes. Omega's non-marine property insurance account is focused on smaller commercialrisks, particularly in the US. Rates and conditions remain attractive in thisbusiness that is below the thresholds of scale and volume imposed by many largeinsurers. Omega US is receiving strong indications of support from Omega'sexisting distribution channels and we are confident of the opportunities for itssuccessful and profitable development and growth. The development of the offshore energy account continues to be pleasing. Rateshave declined only modestly from 2006 which itself had seen a dramatic repricingand restructuring of the class. Outlook Omega has made a strong start to 2007 with market conditions very much asexpected. The outcome of the full year will of course be dependent upon theextent of any major losses in the second half of the year. Whilst market conditions vary considerably across the market by both class ofbusiness and geography, Omega's portfolio and, importantly, the planneddevelopment of Omega Specialty and Omega US are inherently weighted towardsthose areas where rates continue to remain near historic peaks and where weexpect sustained robust margins. Additional selective underwriting should ensurea positive outlook into 2008 and beyond. As we develop and grow the Group's operations in Bermuda and the US we benefitgreatly from the Group's respected franchise and long-established relationships.Given this together with the Group-wide focus on Omega's proven underwritingdiscipline and Omega's unbroken record of profitability throughout theindustry's cycles, we approach the future with optimism and confidence inOmega's ability to create and seize opportunities and to meet the challengesthat await us. Review of operations and financial results June June December 2007 2006 2006 US$'000 US$'000 US$'000 Net earned premium 66,773 24,869 67,085Investment return 6,566 4,872 11,480Other income 10,188 6,245 11,787Profit before tax 20,445 9,292 22,589Profit after tax 16,262 6,559 15,491Earnings per share (fully diluted) US$0.11 US$0.05 US$0.12Net assets per share US$1.92 US$1.72 US$1.80Dividend per share US 7.7cents - GBP 4.1p The principal income stream for the Group comes from the deployment of theGroup's capital to support its own underwriting through Omega Specialty. As wellas a growing book of third party business in Omega Specialty, the Group'scapital supports 15.2% of the capacity of Syndicate 958 via its corporate memberOmega Dedicated. The majority of this share has been reinsured to OmegaSpecialty. In addition Omega Specialty reinsures a 17.5% share of Syndicate958's 2007 year of account through whole account quota share. Omega Specialtyhas also underwritten a 10% qualifying quota share of Syndicate 958's 2007 yearof account. This latter contract had the effect of increasing the effectivecapacity of the Syndicate from $249million to $274million. As a resultperformance of the Omega group for 2007 is closely aligned to that of theSyndicate. The Group's net earned premium income has grown by 168% over the same period of2006, however these arrangements mean much of the growth is linked to Syndicate958's mature well-diversified book of business with a proven track record ofprofitability. The Group's other income of $10.2m is predominantly composed of the profitcommission earned by the managing agency on the open years of account. Omega Specialty Insurance Company Limited June 2007 June 2006 December 2006 $'000 $'000 $'000Gross premium written 165,712 74,319 104,898Net premium written 136,004 67,334 84,972Net premium earned 64,301 21,931 61,753Technical result 13,206 2,907 13,562Claims ratio 53% 61% 49%Expense ratio 29% 26% 32%Combined ratio 82% 87% 81% The comparative results of Omega Specialty run from 15 February 2006 to 30 June2006 and 15 February 2006 to 31 December 2006, respectively. The impressivegrowth in income and profit is the direct result of the Group's strategy ofincreasing its own underwriting involvement, combined with the excellentunderwriting performance of Syndicate 958. Omega Dedicated As a Lloyd's underwriting member, for the 2007 year of account, OmegaDedicated's share of Syndicate 958 has remained at 16.4 percent of which 14.7percent is reinsured to Omega Specialty. Year of account 2007 2006 2005 £'000 £'000 £'000 Total Capacity Syndicate 958 249,432 249,432 223,975Effective capacity 274,375 - -Omega Dedicated participation 40,947 40,947 29,000Third party via Omega Dedicated 2,850 2,979 3,558Aspen participation via Omega Dedicated - - 24,303 Syndicate 958 Underwriting Performance June June December 2007 2006 2006 $'000 $'000 $'000 Gross premiums written 412,177 321,629 462,755Net premiums written 273,876 250,221 309,313Net premiums earned 166,480 157,853 339,862Technical result 47,451 34,946 96,038Claims ratio 51% 45% 41%Expense ratio 28% 32% 31%Combined ratio 79% 77% 72% Estimated results for underwriting years of account 2006 and 2005 for theSyndicate can be summarised as follows: 2006 2005 £'000 £'000 Capacity 249,432 223,975Profit after standard personal expenses (forecasts) 12.5% - 20% 5% - 10% The Syndicate's growth in capacity is largely driven by the development of newlines of business such as the new offshore energy book. This is fully consistentwith the Syndicate's strategy to write for profit rather than growth,emphasising those areas where margins are robust and reducing in others whenrate pressure suggests contraction is appropriate. Through this approach theSyndicate has maintained its profitability despite strong growth over the pastfew years. Looking forward, in line with the Group's strategy Omega intends tocontinue to increase or decrease the Syndicate's capacity and premium incomeaccording to its judgement of the insurance cycle and the margins ofprofitability afforded by market conditions. Forecast profitability on both 2005 and 2006 year of account remain consistentwith previous estimates. At this stage the Syndicate business plans suggestscapacity for 2008 at a similar level to 2007. Omega Underwriting Agents - other income Other income consists primarily of income generated from the management of theSyndicate through fixed management fees as a percentage of capacity undermanagement and profit commission accruing to the years of account undermanagement. June June December 2007 2006 2006 US$'000 US$'000 US$'000 Profit commission 6,550 3,365 7,588Managing agents fees 2,911 2,581 3,218 Investment Return The Group's investments comprise directly owned investments supporting theunderwriting business - its corporate assets, and the Group's share of theSyndicate's investments. We reiterate our confidence in the quality of our investment portfolio asexpressed in our announcement of 23 August 2007. Omega operates a conservativeinvestment strategy designed to avoid fluctuations in the non-underwritingresults. The strategy seeks to provide satisfactory returns but only to theextent consistent with the principal aims of diversification of risk, thepreservation of capital and liquidity of funds. Investments are primarily inshort-duration, high-grade, fixed-income securities. The Group holds noinvestments in equities. The majority (91% at 31 July) of Omega's corporateassets are currently in cash or fixed income bonds rated AAA. Omega's only investments in the mortgage related securities are limited to AAArated government sponsored organisations who fund mortgage providers in the US. Funds Annualised At 30 June 2007 Income Average Return US$'000 US$'000 % Omega Specialty Bermuda 187,840 4,002 4.58Corporate funds 75,004 1,755 4.73Syndicate funds 70,874 809 4.06 ---------- ---------- 333,718 6,566 ---------- ---------- Taxation The effective tax rate for the 6 months to 30 June 2007 was 20% compared to therate of 31% for the full 2006 calendar year. Omega Specialty was transferred bydividend in specie to Omega Insurance Holdings on 16 March 2007. A provision hastherefore been included for a UK tax liability on the profits of Omega Specialtyup to that date. The directors expect the Group's effective rate to fall furtheracross the remainder of 2007. Richard TollidayChief Executive Officer17 September 2007 Condensed Consolidated income statementfor the six months ended 30 June 2007 ------------------ ------ ---------- ----------- ------------- Notes Six months Six months Year ended ended ended 30 June 2007 30 June 2006 31 December 2006 US$'000 US$'000 US$'000 (restated) (restated)---------------------- ------ ---------- ----------- -------------IncomeGross premiums written 173,125 81,309 115,619Outward reinsurancepremiums (32,598) (12,355) (26,680) ---------- ----------- -------------Net premiums written 140,527 68,954 88,939 Change in gross provision for unearnedpremiums (91,261) (45,928) (15,997)Reinsurers share ofchange in the provision for unearned premiums 17,507 1,843 (5,857) ---------- ----------- -------------Net earned premium 66,773 24,869 67,085Investment return 6,566 4,872 11,480Other income 2 10,188 6,245 11,787 ---------- ----------- -------------Net revenue 83,527 35,986 90,352 ---------- ----------- -------------Expenses Insuranceclaims (37,097) (25,720) (52,360)Insurance claimsrecoverable fromreinsurers 1,423 11,241 20,208 ---------- ----------- -------------Net insurance claims 3 (35,674) (14,479) (32,152)Net acquisition costs (16,350) (4,562) (15,504)Other underwritingoperating expenses (2,452) (2,391) (5,224)Other corporateexpenses (8,085) (4,942) (13,775)Finance costs (521) (320) (1,108) ---------- ----------- -------------Total expenses (63,082) (26,694) (67,763) ---------- ----------- -------------Profit before tax 20,445 9,292 22,589Income tax 4 (4,183) (2,733) (7,098) ---------- ----------- ------------- ---------- ----------- -------------Total recognised profit for the period attributable to equityholders of theparent company 16,262 6,559 15,491 ---------- ----------- ------------- ---------- ----------- ------------- Earnings per share - basic 6 US$0.11 US$0.05 US$0.12Earnings per share -diluted 6 US$0.11 US$0.05 US$0.12 On 17 September the board approved a dividend of US 7.7cents per share. Condensed Consolidated Balance Sheet As at 30 June 2007---------------------- ------ ------- -------- -------- Notes 30 June 2007 30 June 2006 31 December 2006 US$'000 US$'000 US$'000 (restated) (restated)---------------------- ------ ------- -------- --------ASSETSCash and cashequivalents 95,522 148,839 81,348Financial investments 238,196 32,851 223,286Deferred acquisitioncosts 25,706 12,402 8,570Reinsurance assets 176,858 78,216 61,466Insurance receivables 35,742 23,662 15,688Prepayments and accruedincome 14,482 8,775 5,992Other debtors 7 11,272 55,559 16,294Current incometax assets - 392 -Deferred tax assets 1,565 377 742Property and equipment 245 73 211Intangible assets 149 149 149 ------- -------- --------Total assets 599,737 361,295 413,746 ------- -------- --------EQUITYCalled up share capital 14,759 10,392 14,736Share premium account 147,694 170,471 247,641Contributed surplus 100,000 - -Own shares (49) (85) (98)Foreign exchangereserve 1,703 2,712 1,162Profit and loss account 19,538 22,082 1,960 ------- -------- --------Total equityand reserves 283,645 205,572 265,401 ------- -------- --------LIABILITIESInsurance contracts 8 239,341 118,787 103,155Trade and other payables 66,792 33,311 38,520Current income taxliabilities 9,242 3,503 1,629Deferred tax liabilities 717 122 5,041 ------- -------- --------Total liabilities 316,092 155,723 148,345 ------- -------- --------Total liabilitiesand equity 599,737 361,295 413,746 ------- -------- -------- Net asset per share US$1.92 US$1.72 US$1.80---------------------- ------ ------- -------- -------- Condensed consolidated statement of changes in equitySix months ended 30 June 2007 Share Share Contributed Own Foreign Profit Total capital premium surplus shares exchange and loss reserve US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000Balance at 1January 2007 14,736 247,641 - (98) 1,162 1,960 265,401 Currencytranslationdifferences - - - - 541 - 541Tax on itemstaken directlyto or transferredfrom equity - - - - - 469 469 ------ ------- ------- ------ ------- ------- ------Total incomeand expensefor the periodrecogniseddirectly inequity - - - - 541 469 1,010Profit for theperiod - - - - - 16,262 16,262 ------ ------- ------- ------ ------- ------- ------Total incomeand expensefor the period - - - - 541 16,731 17,272 Vesting of ownshares - - - 49 - (49) -Issue of newshare capital 23 576 - - - - 599Share basedpayments - - - - - 896 896Conversion ofshare premium - (100,000) 100,000 - - - -Reorganisationand listingcosts - (523) - - - - (523) ------ ------- ------- ------ ------- ------- ------Balance at 30June 2007 14,759 147,694 100,000 (49) 1,703 19,538 283,645 ------ ------- ------- ------ ------- ------- ------ Six months ended 30 June 2006 (restated) Share Share Own Foreign Profit Total capital premium shares exchange and loss reserve US$'000 US$'000 US$'000 US$'000 US$'000 US$'000Balance at 1January 2006 10,392 170,471 (127) - 14,391 195,127 Currencytranslationdifferences - - - 2,712 - 2,712 -------- -------- -------- -------- -------- --------Total incomeand expensefor the periodrecogniseddirectly inequity - - - 2,712 - 2,712Profit for theperiod - - - - 6,559 6,559 -------- -------- -------- -------- -------- --------Total incomeand expensefor the period - - - 2,712 6,559 9,271 Vesting of ownshares - - 42 - (42) -Share basedpayments - - - - 1,174 1,174 -------- -------- -------- -------- -------- --------Balance at 30June 2006 10,392 170,471 (85) 2,712 22,082 205,572 -------- -------- -------- -------- -------- -------- Condensed consolidated statement of changes in equity Year ended 31 December 2006 (restated) Share Share Merger Own Foreign Profit Total capital premium reserve shares exchange and loss reserve US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000Balance at 1January 2006 10,392 170,471 - (127) - 14,391 195,127 Currencytranslationdifferences - - - - 5,166 - 5,166 ------ ------- ------- ------ ------- ------- ------Total incomeand expensefor the yearrecogniseddirectly inequity - - - - 5,166 - 5,166Profit for theyear - - - - - 15,491 15,491 ------ ------- ------- ------ ------- ------- ------Total incomeand expensefor the year - - - - 5,166 15,491 20,657 Vesting of ownshares - - - 42 - (42) -Issue of newshare capital 2,493 63,308 - - - - 65,801Costs of issue - (3,808) - - - - (3,808)Share basedpayments - - - - - 2,158 2,158Specialinterimdividend of4.1 pence perordinary share - - - - - (9,337) (9,337)Groupreorganisation (12,885) (229,971) - 85 - 242,771 -Establishmentof OmegaInsuranceHoldingsLimited 14,736 393,329 (140,491) (98) (4,004) (263,472) -Reorganisationand listingcosts - (5,197) - - - - (5,197)Transfermerger reserve - (140,491) 140,491 - - - ------ ------- ------- ------ ------- ------- ------Balance at 31December 2006 14,736 247,641 - (98) 1,162 1,960 265,401 ------ ------- ------- ------ ------- ------- ------ Condensed Consolidated cash flow statementSix months ended 30 June 2007 Notes Six months to Six months to Year to 31 30 June 2007 30 June 2006 December 2006 US$'000 US$'000 US$'000 (restated) (restated)Cash flows from operatingactivityCash generated fromoperations 9 29,568 (27,091) 47,399Interest paid - - (455)Income tax paid (1,308) (184) (1,547) -------- -------- --------Net cash inflows/(outflows) fromoperating activities 28,260 (27,275) 45,397 -------- -------- --------Cash flow from investingactivitiesNet proceeds of investments 232 16,425 -Net purchase of investments (15,106) - (173,900)Purchase of tangible fixed assets (64) - (193) -------- -------- --------Net cash (outflow)/inflow frominvesting activities (14,938) 16,425 (174,093) -------- -------- --------Cash flows from financingactivitiesEquity dividends paid - - (9,337)Issue of share capital 599 - 65,801Costs of issue - - (3,808)Reorganisationand listing costs (523) - (5,197) -------- -------- --------Net cash inflow fromfinancing activities 76 - 47,459Net increase /(decrease) in cash and cashequivalents 13,398 (10,850) (81,237)Cash and cash equivalents at start of period 81,348 156,929 156,929Foreign exchange currencymovements 776 2,760 5,656 -------- -------- --------Cash and cash equivalents at end of period 95,522 148,839 81,348 -------- -------- -------- Notes to the interim financial statements 1. Basis of Preparation For the year ended 31 December 2007, the Group will be adopting IFRS for itsconsolidated financial statements and consequently this condensed interim Reporthas been prepared in accordance with accounting policies that are to be used inthe Annual Report. These accounting policies have been published on the Group'swebsite (www.omegauw.com). The financial information for the year ended 31 December 2006 in this condensedInterim Report does not constitute statutory accounts for that period. Thesehave been restated for the adoption by the Group of International FinancialReporting Standards ("IFRS") and therefore differ from the results reported inthe Group's published statutory accounts. The independent auditors have reportedon the Statutory Report and Accounts for the year ended 31 December 2006prepared under UK GAAP, their report was not qualified. The auditors have alsoaudited the restatement of these figures under IFRS and issued a special purposeaudit report. Their report was included in the restated financial informationthat was published on 19 July 2007 and is available on the Group's websitewww.omegauw.com. The interim consolidated financial statements for the 2007 and 2006 half yearsare unaudited but have been subject to a review by the independent auditors. Omega Insurance Holdings Limited was formed in August 2006 and became the newparent company of the Group as a result of the Group reorganisation in November2006. Comparative figures for the six months ended 30 June 2006 incorporate theaccounts of the previous Group parent company, Omega Underwriting Holdings PLC,and all its subsidiary undertakings. 2. Other income Six months Six months Year ended 31 ended 30 June ended 30 June December 2007 2006 2006 US$'000 US$'000 US$'000 Profit commission 6,550 3,365 7,588Fees 2,911 2,581 3,218Management charges toSyndicate 615 346 967Miscellaneous 112 - 61Foreign exchange - (47) (47) ---------- ---------- ----------Total other income 10,188 6,245 11,787 ---------- ---------- ---------- 3. Net insurance claims Six months Six months Year ended 31 ended 30 June ended 30 June December 2007 2006 2006 US$'000 US$'000 US$'000 Claims paid 19,466 21,598 41,311Reinsurers' share of claims paid (9,600) (19,389) (34,975) ---------- ---------- ----------Net claims paid 9,866 2,209 6,336 Movement ininsuranceliabilities 17,631 4,122 11,049Reinsurers' share of movement ininsuranceliabilities 8,177 8,148 14,767 ---------- ---------- ----------Net movementin insuranceliabilities 25,808 12,270 25,816 ---------- ---------- ----------Net insuranceclaims 35,674 14,479 32,152 ---------- ---------- ---------- 4. Income tax Six months Six months Year ended 31 ended 30 June ended 30 June December 2007 2006 2006 US$'000 US$'000 US$'000Current tax:On profits subject to UK tax 8,857 2,924 2,675Deferred tax:Originationand reversalof temporarydifferences (4,674) (191) 4,423 ---------- ---------- ----------Total tax charged to incomestatement 4,183 2,733 7,098 ---------- ---------- ---------- 5. Dividends Amounts recognised as distributions to equity shareholders in the period: Six months Six months Year ended ended 30 June ended 30 June 31 December 2007 2006 2006 US$'000 US$'000 US$'000 2006 special interimdividend of 4.1pence perordinary share - - 9,337 6. Earnings per share Earnings per share are based on the profit attributable to shareholders and theweighted average number of shares in issue during the period. For the dilutedearnings per share the weighted average number of shares in issue is adjusted toreflect the dilutive effect of the future exercise of share options. Six months Six months Year ended 31 ended 30 June ended 30 June December 2007 2006 2006 Profit for the period in US$'000 16,262 6,559 15,491Weighted average numberof shares in issue 146,626,728 119,602,451 124,817,278Dilutive average numberof shares in issue 150,904,756 122,539,650 127,868,344Earnings per share:Basic (US$) 0.11 0.05 0.12Diluted (US$) 0.11 0.05 0.12 7. Other Debtors As at As at As at 30 June 30 June 31 December 2006 2007 2006 US$'000 US$'000 US$'000Syndicate loan - 50,000 -Other debtors 11,272 5,559 16,294 ---------- ---------- ----------Total other debtors 11,272 55,559 16,294 ---------- ---------- ---------- The Syndicate loan was made from Omega Specialty to Syndicate 958 for the 2005year of account. The loan was made under normal commercial terms and wasrepayable on demand. 8. Insurance Contracts As at As at As at 30 June 30 June 31 December 2007 2006 2006 US$'000 US$'000 US$'000 Unearned premium 134,304 60,339 33,630Loss reserve 105,037 58,448 69,525 ---------- ---------- ----------Total insurance contracts 239,341 118,787 103,155 ---------- ---------- ---------- 9. Cash generated from operations Six months Six months Year ended 31 ended 30 June ended 30 June December 2007 2006 2006 US$'000 US$'000 US$'000 Profit before taxation 20,445 9,292 22,589Adjustments for non cash items- Depreciation of tangible assets 32 10 69- Realised and unrealised gainsand losses (36) (351) (461)- Charge in relation to financing 522 310 1,104- Foreign exchange adjustments (177) (47) (423)- Charge in relationto share option awards 896 1,174 2,158Changes in operating assets andliabilities- (Increase)in deferredacquisition costs (17,136) (7,714) (3,882)- (Increase)inreinsurance assets (115,392) (35,912) (19,176)- (Increase)ininsurance receivables (20,054) (8,756) (782)- (Increase)in prepaymentsand accrued income (8,490) (3,815) (1,032)- Decrease/(increase) in other debtors 5,022 (42,769) (3,504)- Increase ininsurance payables 136,186 48,945 33,623- Increase in trade andother payables 27,750 12,542 17,116 ---------- ---------- ----------Cash generated from operations 29,568 (27,091) 47,399 ---------- ---------- ---------- 10. Interim report Copies of this interim statement are available from the Company's registeredoffice at Clarendon House, Church Street, Hamilton HM11, Bermuda, and on theCompany's web-site (www.omegauw.com). 11. Explanation of transition to IFRS A statement on the transition to IFRS was issued on 19 July 2007. This statementprovided detailed adjustments for the Group's balance sheet and income statementfor the year ended 31 December 2006. It is published on the Group's website(www.omegauw.com). The following tables show the detailed adjustments that have been made to theGroup's UK GAAP balance sheet as at 30 June 2006 and to the income statement forthe six months ended 30 June 2006. The financial statements for 30 June 2006were originally published in £ under UK GAAP. These statements were restatedinto a US$ functional and presentational currency to provide the opening UK GAAPcolumns in the tables below. Detailed reconciliation of the consolidated balance sheet as at 30 June 2006from UK GAAP to IFRS UK GAAP Investment Derivative Syndicate Foreign Tax IFRS valuation financial capacity currency instruments US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000ASSETSCash and cashequivalents 148,839 148,839 Financialinvestments 32,781 (13) 83 32,851 Deferredacquisition costs 12,469 (67) 12,402 Reinsuranceassets 78,285 (69) 78,216 Insurancereceivables 23,662 23,662 Prepaymentsand accruedincome 8,775 8,775 Other debtors 55,559 55,559 Current income tax assets 392 392 Deferred taxassets 510 (133) 377 Property andequipment 73 73 Intangibleassets 16 133 149 ------- ------- ------- ------- ------ ------- -------Total assets 361,361 (13) 83 133 (136) (133) 361,295 ------- ------- ------- ------- ------ ------- -------EQUITY Called upshare capital 10,392 10,392 Share premiumaccount 170,471 170,471 Own shares (85) (85) Foreign exchangereserve 2,712 2,712 Profit andloss account 21,757 (4) 83 133 246 (133) 22,082 ------- ------- ------- ------- ------ ------- -------Total equityand reserves 205,247 (4) 83 133 246 (133) 205,572 ------- ------- ------- ------- ------ ------- -------LIABILITIES Insurancecontracts 119,206 (419) 118,787 Trade andother payables 33,283 (9) 37 33,311 Current incometax liabilities 3,503 3,503 Deferred taxliabilities 122 122 ------- ------- ------- ------- ------ ------- -------Total liabilities 156,114 (9) - - (382) - 155,723 ------- ------- ------- ------- ------ ------- -------Total liabilitiesand equity 361,361 (13) 83 133 (136) (133) 361,295 ------- ------- ------- ------- ------ ------- ------- Detailed reconciliation of the consolidated income statement for the six monthsended 30 June 2006 from UK GAAP to IFRS UK GAAP Investment Derivative Syndicate Foreign IFRS valuation financial capacity currency instruments US$'000 US$'000 US$'000 US$'000 US$'000 US$'000Income Gross premiums written 81,309 81,309 Outwardreinsurancepremiums (12,355) (12,355) -------- ------- ------- ------- ------- -------Net premiumswritten 68,954 - - - - 68,954 Change ingross provisionfor unearned premiums (46,454) 526 (45,928) Reinsurers share of change inthe provisionfor unearnedpremiums 2,044 (201) 1,843 -------- ------- ------- ------- ------- -------Net earnedpremium 24,544 - - - 325 24,869 Investmentreturn 4,518 3 351 4,872 Other income 6,245 6,245 -------- ------- ------- ------- ------- -------Net revenue 35,307 3 351 - 325 35,986 -------- ------- ------- ------- ------- -------Expenses Insurance claims (25,720) (25,720) Insurance claimsrecoverablefrom reinsurers 11,241 11,241 -------- ------- ------- ------- ------- -------Net insurance claims (14,479) - - - - (14,479) Net Acquisition costs (4,497) (65) (4,562) Other underwritingoperating expenses (2,391) (2,391) Other corporateexpenses (4,955) 13 (4,942) Finance costs (308) (12) (320) -------- ------- ------- ------- ------- -------Total expenses (26,630) - - 13 (77) (26,694) -------- ------- ------- ------- ------- -------Profitbefore tax 8,677 3 351 13 248 9,292 Income tax (2,553) (1) (105) (4) (70) (2,733) -------- ------- ------- ------- ------- -------Total recognisedprofit forthe period 6,124 2 246 9 178 6,559 -------- ------- ------- ------- ------- ------- INDEPENDENT REVIEW REPORT TO OMEGA INSURANCE HOLDINGS LIMITED Introduction We have been instructed by the company to review the financial information for the six months ended 30 June 2007 which comprises the Condensed Consolidated Income Statement, Condensed Consolidated Balance Sheet, Condensed Consolidated Statement of Changes in Equity, Condensed Consolidated Cash Flow Statement and the related notes 1 to 11. We have read the other information contained in theinterim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the company having regard to guidance contained inBulletin 1999/4 'Review of interim financial information' issued by the Auditing Practices Board. To the fullest extent permitted by the law, we do notaccept or assume responsibility to anyone other than the company, for our work,for this report, or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report as required by the AIM Rules issued by the London Stock Exchange. As disclosed in note 1, the next annual financial statements of the group will be prepared in accordance with IFRSs. This interim report has been prepared in accordance with the requirements of IFRS 1, "First Time Adoption of International Financial Reporting Standards" relevant to interim reports. The accounting policies are consistent with those that the directors intend to use in the next financial statements. Review work performed We conducted our review having regard to the guidance contained in Bulletin 1999/4 'Review of interim financial information' issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data, and based thereon, assessing whether the accounting policies and presentation have been consistently applied, unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with International Standards on Auditing (UK and Ireland) and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2007. Ernst & Young LLP1 More London PlaceLondon SE1 2AF 17 September 2007 This information is provided by RNS The company news service from the London Stock Exchange