16 May 2012 07:00
16 May 2012
Omega Insurance Holdings Limited
Interim Management Statement
Omega Insurance Holdings Limited ("Omega" or the "Company") today announces its Interim Management Statement (IMS) for the period from 1 January 2012 to date.
Financial data reflects the quarter to 31 March 2012.
Highlights
·; Group gross written premium in the first 3 months of 2012 totaled $120.6 million (Q1 2011: $129.4 million) reflecting:
o Premium increases in ongoing operating segments
§ Syndicate derived premium up 8% to $106.6 million (Q1 2011:$98.5 million)
§ Omega US up 16% to $13.3 million (Q1 2011:$11.5 million)
o Group participation on and reinsurance of Syndicate 958 of 61% for the 2012 year of account (51% for 2011)
o Non-renewal of third party business in Bermuda (Q1 2011:$19.4 million)
·; Rate increases continue in our core areas of US SME commercial and catastrophe business and the expectation is for this to improve incrementally throughout the year
·; Relatively benign quarter for catastrophes
·; Overall, no adverse change in net loss estimates from the 2011 and prior catastrophes
·; Investment return of .41% (Q1 2011: .28%)
Commenting on the Group's performance, Richard Pexton, Chief Executive of Omega, said:
"It is pleasing to report that gross written premium in our ongoing operating segments is up 9% on last year and that the reserves set for catastrophe losses at the year end have not changed. Rates in both US SME commercial property and US catastrophe accounts, our two largest classes of business, continue to improve and we envisage they will rise incrementally throughout the remainder of the year."
Group gross written premium
Segmental and class of business gross written premium for the three months to 31 March 2012 and the corresponding period in 2011 was as follows:
2012 Q1 Group gross written premium | Group participation on Syndicate 958 | Omega Specialty | US underwriting business | Total |
US$ million | US$ million | US$ million | US$million | |
Non-marine property insurance | 19.5 | 0 | 7.6 | 27.1 |
Property catastrophe treaty reinsurance | 28.9 | 1.9 | 0 | 30.8 |
Property per risk treaty reinsurance | 3.4 | (1.1) | 0 | 2.3 |
Professional indemnity insurance | 7.0 | 0 | 0 | 7.0 |
Motor insurance and reinsurance | 26.8 | 0 | 0.2 | 27.0 |
Marine insurance and reinsurance | 4.5 | 0 | 0 | 4.5 |
Liability insurance and reinsurance | 10.8 | 0 | 5.5 | 16.3 |
Other | 5.7 | (0.1) | 0 | 5.6 |
Total gross written premium | 106.6 | 0.7 | 13.3 | 120.6 |
2011 Q1 Group gross written premium | Group participation on Syndicate 958 |
Omega Specialty
| Omega US Insurance | Total |
US$ million | US$ million | US$ million | US$ million | |
Non-marine property insurance | 18.9 | 0.4 | 6.9 | 26.2 |
Property catastrophe treaty reinsurance | 28.0 | 16.5 | 0 | 44.5 |
Property per risk treaty reinsurance | 4.3 | 1.8 | 0 | 6.1 |
Professional indemnity insurance | 4.3 | 0 | 0 | 4.3 |
Motor insurance and reinsurance | 17.7 | 0 | 0 | 17.7 |
Marine insurance and reinsurance | 2.5 | 0.3 | 0 | 2.8 |
Liability insurance and reinsurance | 19.3 | 0 | 4.6 | 23.9 |
Other | 3.5 | 0.4 | 0 | 3.9 |
Total gross written premium | 98.5 | 19.4 | 11.5 | 129.4 |
Market Environment
Rates in our core underwriting lines of business continued to increase during the first quarter, primarily in the US SME Commercial Property and US Property Treaty accounts.
Premiums
Consolidated gross premium written for the first three months was $120.6 million (Q1 2011: $129.4 million) which reflects the change in the Group's risk profile and business mix during the past year. When compared to the same quarter in 2011, a decrease of $18.7 million is attributable to non-renewal of third party business in Bermuda. This has been offset by an increase in the Group's share of gross written premium by Syndicate 958 which was $106.6 million (Q1 2011: $98.5 million). The 2012 Syndicate premium is in line with the 2012 business plan which is approximately 7% less than the 2011 year of account. We remain ready to take advantage of further rate improvement during the remainder of the year. Omega US gross written premium has increased by 16% to $13.3 million (2011: $11.5 million) reflecting solid and steady growth.
Claims
The Group has benefited from benign catastrophe experience during the first quarter. Overall, there has been no adverse change in estimates for 2011 and prior catastrophes.
Investment Return
The Group's investment return for the three month period to 31 March 2012 is estimated at 0.41% reflecting our largely US dollar denominated portfolio and short duration high investment grade bonds. Investment returns for April are consistent with the first quarter 2012.
Corporate Activity
On 25 April 2012, the boards of Canopius Group Limited ("Canopius") and Omega announced that they had reached agreement on the terms of a recommended cash acquisition for the entire issued and to be issued share capital of Omega by Canopius (the "Acquisition").
Since their appointment in 2010, the new Omega Directors have actively considered options for meeting the requirement of Omega Shareholders and delivering stability in a very challenging market. The Omega Board has consulted frequently with Omega Shareholders about the future direction of the business and it has become clear that the majority of Omega Shareholders now wish the business to be sold. The Omega Board has, therefore, engaged with a number of parties since the beginning of 2011 regarding a potential transaction. The Acquisition represents the first all-cash proposal presented to the Omega Board that would allow all Shareholders to exit their shareholding in the Company. In light of the wishes of a clear majority of shareholders, the Omega Board is recommending the Acquisition to Omega Shareholders. As previously notified to Shareholders there will be a Special General Meeting on 7 June 2012. The acquisition is subject to Shareholder and regulator approvals.
Enquiries:
Richard Pexton, Chief Executive Officer 020 7767 3000
David Haggie/Juliet Tilley, Haggie Financial 020 7417 8989
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