UPDATE 2-Beazley H1 profit soars, aided by forex gain

* Profit $115.5 mln vs $30.1 mln; forex gain $33.7 mln

* Investment income slumps to $8.5 mln from $40.5 mln

* CFO sees FY consensus unchanged

* Group combined ratio of 89 pct

* Shares up 0.5 pct (Adds CEO, analyst comment, share price)

By Lorraine Turner

LONDON, July 23 (Reuters) - Lloyd's of London [LOL.UL] insurer Beazley (BEZG.L) said its first-half pretax profit nearly quadrupled as one-off gains helped offset a weak investment performance and lower rate environment.

Dublin-based Beazley reported a pretax profit of $115.5 million in the six months to June 30, up from $30.1 million in the same period last year.

The result included a foreign exchange gain of $33.7 million and a reserve release of $65.9 million, while the company took a hit in the same period last year from currency fluctuations. [ID:nLR89328]

Chief Financial Officer Martin Bride told Reuters that he did not expect full-year market expectations to be revised from the current consensus of $225 million.

"I would not expect the analysts to move their expectations significantly from where they are, I'm expecting $200-220 million will be the consensus," he said.

"Underwriting performance should please people, and investment performance will be slightly behind their expectations," he added.

Investment income stood at $8.5 million in the first half, down from $40.5 million in the prior year due to low investment yields, while the group's combined ratio stood at 89 percent.

OUTLOOK WORRIES

Softening rates and increased competition will prove a tough market environment for non-life insurers.

Beazley's rates declined by 2 percent in the first half on average. They are forecast to decline by the same amount in the second half and a further 2-3 percent in 2011, said Chief Executive Andrew Horton.

"Rates are gently edging down by small single digits. It eats into your margin relatively quickly, that's quite important, but we have a pretty good combined ratio," he added. Gross written premiums rose by 5 percent, thanks to growth in its reinsurance and speciality lines.

Beazley said its loss estimates from the Chilean earthquake and Deepwater Horizon oil rig remained unchanged at $55-75 million and $6 million, respectively.

Eamonn Flanagan at Shore Capital said the group reported good results, but was cautious on the outlook.

"We await clarity on the scope of potential recession-related claims and the likely impact of Solvency II before turning more positive on the stock and following an excellent run in the shares since the start of the year," he said.

The group, whose shares were up 0.5 percent at 0836 GMT, raised its dividend from 2.3 pence to 2.4 pence. (Editing by Victoria Bryan and Michael Shields)