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Omega syndicate rides out KRW to post 2005 profit

Omega Insurance Holdings Ltd Lloyd’s Syndicate 958 has withstood the impact of hurricanes Katrina Wilma and Rita to post a profit for 2005, maintaining its pedigree of a pure underwriting profit in every year it has traded since its launch in 1980.

The Syndicate’s closed the 2005 underwriting year with a profit of 8.75 percent of its £224mn capacity, up from the previous mid-point forecast of 7.5 percent.

Analyst Nick Johnson of Numis Securities said: “Syndicate 958 remains one of only two syndicates at Lloyd’s never to have made a loss. The robust outcome of the hurricane impacted 2005 underwriting year reinforces Omega’s reputation for superior underwriting quality.”

The group increased the mid-point of its 2006 forecast to 16.5 percent of capacity and gave an initial range of 7.5-17.5 percent of capacity for last year.

Omega CEO Richard Tolliday said: “We are delighted that Syndicate 958 has continued its unbroken record of underwriting profitability. As always, our focus remains on writing short tail property insurance and reinsurance for small to medium sized insureds and reinsureds which allows us to produce relative consistency and low volatility of results and to generate market out-performance over the cycle.”

In February, Omega confirmed it is a possible M&A target and has been in talks with a “number of parties” over a potential takeover.

The Bermudian-domiciled group also said it has appointed JPMorgan to advise on a potential sale.

Johnson added: “We expect the group to report strong earnings per share growth at its full year 2007 results on 13 March, reflecting recent premium expansion. With the share price reflecting the ongoing bid talks, we retain our HOLD recommendation.”

Meanwhile Kiln Ltd’s managing agency reported that its flagship Syndicate 510 had returned a small profit of 0.3 percent of capacity for 2005.

The managing agency’s CEO Charles Franks, said: “I am delighted to report another strong performance by Kiln syndicates. In particular, for Syndicate 510 to deliver a profit for the 2005 year of account is an excellent achievement and is a result of high quality, disciplined underwriting by the Kiln teams.”

Kiln’s Syndicates 557 and 807 fell to losses of 13.9 percent and 2 percent of capacity for 2005, while its life Syndicate, 308, returned a profit of 18 percent.  

Kiln increased the profit forecasts for all its Syndicates for 2006 to mid points of 14.5 percent of capacity for 510, 23.8 percent for 557, 13 percent for 807 and 8.7 percent for 308.

The initial forecasts for 2007 were for another profitable year on all four Syndicates, with mid points of 8.7 percent of capacity for 510, 9.9 percent for 557, 12.9 percent for 807 and 5.2 percent for 308.

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