After less that one month, Haverford has announced it is pulling out of negotiations of buying a stake in London’s Omega Insurance.
The Bermudan reinsurance company contacted Omega on Wednesday to tell them that, “all negotiations and discussions relating to a possible transaction in Omega shares have been terminated”.
Omega had offered its price at 83 pence per share for a 25% stake, valuing the company at GBP200 million, but Haverford was only prepared to pay 74 pence per share, raising concerns about Omega’s finances after the company reported widening catastrophe-related losses in November.
The deal would have been for a 25 per cent stake in the company.
Fitch ratings said today that small Lloyd’s of London insurers such as Omega were ‘primary targets’ for acquisition coming into 2012, as they struggle with low valuations and the implementation of Solvency II.
They said that the smaller, more specific insurers will struggle to survive by themselves after Solvency II so there is a strong likelihood that there will be an increase in consolidation.
“For the smallest insurers with only one or two business lines, Solvency II is likely to require higher capital levels to compensate for a relative lack of diversity. These firms could, therefore, also become takeover targets in 2012 as they would be able to operate with lower capital levels as part of a bigger group.”