A.M. Best Removes from Under Review and Affirms Ratings of Omega Insurance Holdings Limited and Omega Specialty Insurance Company Limited

LONDON--(BUSINESS WIRE)-- A.M. Best Europe – Rating Services Ltd. has removed from under review with negative implications and affirmed the ICR of “bbb” of Omega Insurance Holdings Limited (Omega) (Bermuda) and the FSR of A- (Excellent) and ICR of “a-” of Omega Specialty Insurance Company Limited (OSIL) (Bermuda). All ratings have been assigned a stable outlook. Omega is the parent company of OSIL, Omega US Insurance, Inc. (Omega US) (United States), Omega Underwriting Agents Limited and Omega Dedicated Limited (ODL).

The ratings of Omega and OSIL had been placed under review reflecting the uncertainty regarding Omega's board composition, operational management and future strategy. Following the appointment of a new board and chief executive officer and a wide-ranging review of Omega’s operations by the new chairman and chief executive officer, A.M. Best’s concerns have been alleviated.

The ratings of OSIL reflect the expectation that its risk-adjusted capitalisation will remain excellent in 2010, as the company continues to benefit from the funds transferred from Omega following a successful capital-raising exercise at the end of 2008. OSIL’s risk-adjusted capitalisation is further enhanced by a comprehensive reinsurance programme that limits its exposure to major losses.

A strong operating performance by OSIL in 2009 produced profits of USD 44.5 million. However, following major market losses in the first half of the year, including the Chilean earthquake, Deepwater Horizon oil rig disaster, Aban Pearl gas rig and Australian hailstorms and a strengthening of claims reserves, a weaker underwriting performance is anticipated in 2010, with a combined ratio of almost 100%. Investment income is likely to be higher than in 2009, with the continued strong performance in bond markets. OSIL is expected to continue to conform to the group’s conservative reserving and reinsurance strategy.

OSIL continues to benefit from the strong market profile of Omega and Lloyd’s Syndicate 958 (United Kingdom). Approximately 70% of the company’s business in 2010 is expected to be associated with syndicate 958’s underwriting through a 20% whole account quota share reinsurance arrangement with the syndicate and the reinsurance of ODL (Omega’s corporate member at Lloyd’s, which has increased its ownership of the syndicate’s capacity to 38.8% in 2010 from 16.4%). Business written directly by OSIL is expected to remain stable, and a modest increase is anticipated in business derived from Omega US, for which OSIL underwrites a 50% whole account quota share.

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilised include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; “Understanding Universal BCAR”; “Rating Members of Insurance Groups”; and “A.M. Best’s Ratings & the Treatment of Debt”. Methodologies can be found at www.ambest.com/ratings/methodology.

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures, A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best Company. Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.

A.M. Best Company
David Drummond, +(44) 20 7626 6264
Senior Financial Analyst
[email protected]
or
Catherine Thomas, +(44) 20 7626 6264
Managing Senior Financial Analyst
[email protected]
or
Rachelle Morrow, +(1) 908 439 2200, ext. 5378
Senior Manager, Public Relations
[email protected]
or
Jim Peavy, +(1) 908 439 2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Europe – Rating Services Ltd.