Omega gets bid approach

SHAREHOLDERS at Lloyd’s of London insurer Omega Insurance are mulling a takeover bid from private equity-backed rival Canopius, it was confirmed yesterday.

Omega said it had received an unsolicited approach proposing an unspecified mixture of cash and unquoted shares but an offer would not necessarily be forthcoming.

Omega’s board would continue to focus on growing the business, it said, and its largest shareholder, Invesco Perpetual, “is supportive of that position.”

But weary shareholders, who have endured a torrid past year in which a boardroom battle led to the sacking of five directors, may be looking for an exit, sources told City A.M. The firm posted a first-half loss of $34.2m (£22m) in August.

“I don’t think this proposal would have seen the light of day if shareholders were not keen,” one said, adding that Omega remains undervalued as its turnaround strategy is failing to show results yet.

It is thought that an offer of 120p per share will gain shareholder support. Omega’s share price has fallen from 140p in 2008 to a low of 83p in August. Shares closed up 6.25p to 102.75p on news of the approach.

RICHARD TOLLIDAY
FORMER OMEGA CHIEF EXECUTIVE

OMEGA still has to come to an agreement over compensation for the ousting of its former chief executive Richard Tolliday last year.

Analysts estimate Tolliday is claiming around $11m (£7.06m) in total, which includes compensation for a long term incentive programme which was worth more than $6m to him.

Omega sources said that the claim from Tolliday was ongoing and that the group was trying to work out what it believed its liability to be.

Tolliday was paid $1.1m including his bonus and pension, according to the last annual report, with a basic salary of $816.000. He also had share options.

Sources say that he was entitled to a change of control or a termination of his contract of up to three years' salary, three years' maximum bonus entitlements (to a maximum of 150 per cent of salary), the value of two years' benefits and a pro rata maximum bonus in respect of the year in which his contract was terminated (maximum 150 per cent of salary).
David Hellier