News


nsurance entrepreneur Mark Byrne, the founder of Flagstone Re and son of insurance


veteran Jack Byrne, plans new priorities for Lloyd’s of London insurer Omega should his bid to buy a 25 percent stake successfully navigate shareholder and regulatory approval, he has told Intelligent Insurer. He says he first took an interest in Omega


in April this year and has conducted exhaustive due diligence on the business. “This led me to make an offer to buy a quarter of the company, as well as an offer to install a new strategic di- rection to allow the company to move on from the difficult period which it had been experi- encing,” he said. Through his newly-formed Bermuda com-


pany Haverford, Byrne appears to have suc- ceeded in winning what at one stage looked like a three-way battle to invest in the company with Canopius and Barbican Insurance also taking a strong interest. But Byrne now has the endorsement of asset management house Invesco, the largest Omega shareholder, and its board, along with almost all the regulatory approvals he needs. Invesco has also agreed Byrne’s appointment as execu- tive chairman of the company. “We are still go- ing through the process of finishing those regu- latory approvals at the moment,” Byrne says. Through Haverford, he has offered a maxi-


mum of 83 pence a share. The deal will now be offered to Omega shareholders and each will submit the minimum offer they will accept in a so-called Dutch auction. If Byrne succeeds in gaining 15 percent in this way, the remain- ing 10 percent is assured by the terms of the


deal. “I do believe that it is pretty likely that we will receive 15 percent or more,” Byrne says. Once the deal is com-


plete, Byrne says he in- tends to take a hands-on role in the company. “I will get involved and help it to achieve its objec- tives,” he says. “I want to focus on


the Solvency II process, the optimisation of the use of capital and the structure of that capital. I will also continue to look for opportunities to achieve greater scale. “Like many Inte- Lloyd’s vehicles


grated


the company has excess capital and I would like to achieve some growth. I want to do that in a va- riety of ways including expanding existing lines of business and adding new lines. I will also look at M&A activity.” Byrne now hope the deal will be completed


24.10.11 MONDAY


Byrne plots new strategy for Omega I


Mark Byrne, chairman, Haverford


Lloyd’s operations can say that,” he says. He adds that, despite reports of interest


by the end of November but says it could hap- pen faster. “The next steps will be to focus the business on its successful Lloyd’s franchise; its Lloyd’s syndicate operation has been profitable 29 years out of 31 and I don’t think that many


Loss reporting must improve, says BMS M


year’s Baden-Baden meeting while


ethods of improving post-loss reporting estimates will be a talking point at this cedant-


reinsurer negotiations will now be far more focused and distilled compared with meetings at the Monte Carlo Rendez-Vous. That is the view of Jonathan Morris, man-


aging director of broker BMS. He says that loss reporting creep—where loss estimates gradu- ally grow over time—and post-renewal loss ad- vising will be important topics after several ex- amples in the aftermath of catastrophic losses


from Canopius and Barbican Insurance, he believes his offer was the only serious one ever on the table. “There was a series of tentative, indicative proposals but that is different from an offer like mine, which was backed with cash in a bank account,” he says.


this year. “This will continue the discussion of loss


reporting creep and post-renewal loss advis- ing or, more to the point, accuracy of loss advice prior to renewal,” he says. “Inevitably, the profitability of some business will be ques- tioned not just in absolute cash result terms over a period but also risk-reward ratios to capital in the future.” According to Morris, these points should


be the main drivers for any rating analysis for 2012 and beyond. “We assume this would lead


2 | INTELLIGENT INSURER —BADEN-BADEN TODAY | Monday October 24 2011


to an increase in reinsurance premiums glob- ally and an increase in attachment points, not just for 2012 but beyond,” he says. “The pressure on the existing loss-making


reinsurers will be exerted by clients not col- lecting on the recent earthquake losses and the willingness of new, non-loss paying, capacity entering the fray. The insurance industry is also struggling to increase rates, either due to world recession or regulatory infrastructure in some markets, all of which makes for an interesting market.”


www.intelligentinsurer.com


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