Canopius to buy Omega Insurance for $264 million

LONDON (Reuters)—Lloyd’s of London insurer Canopius Group Ltd. said it had agreed to buy rival Lloyd's insurer Omega Insurance Holdings Ltd. after raising its offer to £164 million ($264.4 million) in a recommended cash deal.

Canopius said on Wednesday it will pay 67 pence ($1.08) per share, raising an approach it made earlier in April by 2 pence ($3.22) per share to secure the support of the board.

The suitor said institutional shareholders owning 49% of Omega said they would accept the offer.

Small Lloyd's of London players are seen as vulnerable to takeovers because persistently weak insurance prices have weighed on their shares, with proposed tighter capital requirements for European insurers adding further pressure.

Omega last month said its pretax loss doubled to $95 million last year because of a surge in catastrophe claims.

Separately, American insurer Tower Group said it would acquire a 10.7% stake in Canopius following the close of the Omega deal for some $75 million.

Tower will get one seat on Canopius's board and will get an option to merge its business with Canopius's Bermudian reinsurance operations.