22nd May 2009 07:00
OMEGA INSURANCE HOLDINGS LIMITED ("OMEGA")
AGM Statement
Friday 22nd May 2009
At its Annual General Meeting today in Bermuda, Walter Fiederowicz, Chairman of Omega will make the following statement:
"When we announced our capital raising exercise in December 2008, which raised £123.7 million (net of expenses), we described the market conditions we expected to see and the opportunities they would provide to grow the Group's underwriting. The key influences we identified were the ultimate market cost of Hurricanes Gustav and Ike, the erosion of industry balance sheets and liquidity through asset write-downs, thus reducing the availability of capacity, and the specific problems faced by certain major carriers. We held the view that these would drive a progressive hardening of the insurance and reinsurance markets throughout the course of 2009.
What we have witnessed in Omega's lines of business since then has confirmed our views. We believe that rate hardening will be more prolonged than past market adjustments, particularly due to the relatively limited amounts of fresh capital available, and will last into 2010. The major reinsurance renewals at 1 January and 1 April 2009 exhibited the first stages of this hardening and increasing demand. We expect the renewals at 1 June and 1 July to reflect still further progression. In line with our expectations, the strengthening of rates is neither universal nor consistent across all lines at this point in time. It is currently focused most particularly on both Gulf of Mexico catastrophe insurance and reinsurance and throughout the United States. Nonetheless, all of Omega's trading platforms, in Bermuda, London, Chicago and Cologne, are being presented with opportunities for profitable growth. In particular, Omega US Insurance is ideally positioned to benefit from the hardening in the surplus lines market. Insureds and reassureds have been spurred by events to seek not only quality of security but also diversity. This benefits Omega both as an operator in the subscription market and as a smaller, high-quality carrier.
Omega has maintained its conservative approach to the quality and liquidity of its investment portfolios with holdings in cash, treasuries and high quality bonds which continue to perform in line with expectations. While the investment returns on high grade assets such as these are limited in the current economic environment we remain of the belief that our shareholders should be protected from the more excessive volatility in the market place, with our role to manage insurance risk rather than to take investment risk.
We announced in December that we would be applying for admission to the Official List and to trading on the London Stock Exchange's main market for listed securities during the first half of 2009. That process is fully on track and we expect to make a further announcement early in June providing further detail.
The Company continues to adhere rigorously to its strategy and play to its key strengths that have underpinned Omega's remarkable record and we believe that our multi-platform structure is optimal from a marketing, operational and financial perspective. We therefore have great confidence for 2009 and beyond".
ENQUIRIES
Kreab Gavin Anderson
Byron Ousey Tel: 020 7554 1400
Michael Turner
Natalie Biasin
Notes to Editors:
Omega became the holding company of the Omega group of companies (the 'Omega Group') on 9 November 2006 when the scheme of arrangement of Omega Underwriting Holdings PLC (the Omega Group's previous holding company and now wholly-owned by Omega) ('OUH') became effective. On the same date the common shares of Omega were admitted to trading on AIM, the admission of OUH's shares to trading on AIM was cancelled and OUH was re-registered as a private limited company.
The Omega Group, through its wholly owned subsidiary, Omega Underwriting Agents Limited, acts as a Lloyd's managing agent for Syndicate 958 and in February 2006 established a new insurance and reinsurance business, Omega Specialty Insurance Company Limited ('Omega Specialty'), based in Bermuda. In September 2006 Omega incorporated a new surplus lines insurer, Omega US Insurance, Inc. ('Omega US Insurance'), in Delaware which is held under a Delaware incorporated intermediate holding company Omega US Holdings, Inc.
• Syndicate 958
Syndicate 958's capacity for the 2009 year of account is £249 million. The Syndicate has made an underwriting profit in every closed year of account since its inception in the 1980 year of account. The Syndicate has focused predominantly on short-tail, diversified property orientated insurance and reinsurance, with a focus on small to medium sized insureds, with whom the Omega Group has built long-standing track record.
On 27 May 2008, the A.M. Best Company, Inc. reaffirmed the Syndicate's Financial Strength Rating
of 'A' (Excellent) and an Issuer Credit Rating of 'a+' (Excellent).
• Omega Specialty
Omega Specialty received its license from the Bermuda Monetary Authority in February 2006 as a Class 3 insurer and has been reclassified as a Class 3B insurer. It was capitalised at US$172 million. Since then, Omega Specialty's premium income has been predominantly derived from its reinsurances of Syndicate 958 and the Omega Group's Lloyd's corporate member, Omega Dedicated, together with its increasing book of third party reinsurances where it seeks to underwrite business of a similar type and composition to be complementary to that underwritten by Syndicate 958.
On 27 May 2008, the A.M. Best Company, Inc. reaffirmed Omega Specialty's Financial Strength Rating of 'A-' (Excellent).
• Omega US Insurance
Omega US Insurance is an insurance company licensed in the state of Delaware and underwrites on a surplus lines basis in other US States. Omega US Insurance is currently eligible to write surplus lines business in 42 US jurisdictions (including on an admitted basis in Delaware) and applications are pending in further states. It was capitalised at US$50 million from the net proceeds of a share placing by OUH in October 2006.
On 3 December 2007, Omega US Insurance received a Financial Strength Rating from A.M. Best Company, Inc. of 'A-' (Excellent). The rating was reaffirmed on 3 February 2009.
NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements contained in this announcement may constitute forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and involve other factors that are in many cases beyond the Company's control. These forward-looking statements speak only as at the date of this announcement and are not an assurance of future performance. The Group's actual results of operations, performance, achievements, financial condition and liquidity, and the development and results of the industry in which the Group operates, may differ materially from those expressed or implied by the forward-looking statements contained in this announcement. Other than in accordance with the Company's obligations under any applicable legal or regulatory requirement (including the AIM Rules), the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this announcement.
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