Omega in Names offer
OMEGA Insurance plans to boost its exposure to Lloyds of London, spending up to £125m buying out Names who are members of the insurance market’s successful Syndicate 958.
Omega already has a 16 per cent stake in Syndicate 958, which has turned a profit every year since 1980. It is offering to pay private investors in the syndicate, known as Names, between £50m and £125m in cash or shares in order to raise its stake as high as 50 per cent.
Chief executive Richard Tolliday said it was the only capacity offer Omega would make this year after the company raised £130m from investors at the start of the year to help fund expansion.
Omega will offer existing capacity holders 0.332 new shares for every £1, which equates to about 45p based on the current share price. Names will also be able to opt for a cash alternative of 40p.
Charles Coyne, analyst at Finncap, said it was a sensible strategic move by Omega but that, based on past experience, there was no guarantee existing syndicate members would accept the offer.
“Since capacity on the syndicate has rarely traded above 20p per pound this looks reasonable, but Names are notoriously difficult to shift,” Coyne said.