* Net premiums up 6.5 pct to $2.04 bln
* Average weighted premiums down 3.2 pct
* Pretax profit up 118 pct to $318 mln
* Shares up more than 5 pct
(Adds COO, analyst quotes; share reaction; details)
By Richa Naidu
LONDON, Aug 8 Bermuda-based Catlin Group
said first-half profit more than doubled as the insurer's
geographical spread shielded it from weak pricing that has
dogged its British rivals during the period.
Catlin's London-listed shares shot up more than 5 percent on
Friday, making it the biggest FTSE-250 percentage
Rates of insurance against potential disasters have been
either stagnant or in decline mainly due to increased
competition and fewer large catastrophe claims over the past
Catlin said its exposure to "more resilient" pricing in the
United States, Europe and Asia had made it less vulnerable to
sinking rates in London and Bermuda, where wholesale and
catastrophe reinsurance lines dominate the market.
Bermuda has no corporate income tax, which has helped it
become a major centre for reinsurance companies, which help
insurance firms cover claims from major events such as
earthquakes or floods in exchange for part of the premium.
"Nearly 50 percent of (underwriting) now comes from
non-London hubs," Chief Operating Officer Paul Jardine told
"We are getting access to business that quite frankly is at
better pricing levels than we might see in our more traditional
hubs of London and Bermuda. And that's a differentiator."
Catlin, which operates the biggest syndicate in the Lloyd's
of London insurance market, said net premiums earned increased
by 6.5 percent to $2.04 billion in the six months ended in June,
even though average rates decreased 3.2 percent across its
Rates for catastrophe-exposed business classes decreased by
6.4 percent, while rates for non-catastrophe classes fell by
only 0.1 percent, the company said.
"Catlin reported the strongest set of numbers across its
peer group so far," Barclays analyst Andy Broadfield wrote in a
note. "What Catlin is repeatedly demonstrating, and what is so
important at this early stage of the softening environment, is
the benefit of a diversified and 'value adding' business model."
Barclays has a "equal rate" rating on Catlin shares, which
were up 5.3 percent at 0928 GMT.
Catlin's peers, including fellow Lloyd's underwriters Amlin
and Hiscox and insurance broker Jardine Lloyd
Thompson, have all warned on the impact of softening
Pretax profit rose 118 percent to $318 million, helped also
by better investment returns and a "relatively benign" first
half for claims.
Catlin posted a combined ratio of 85 percent, down from
88.1. A ratio below 100 percent means an insurer earns more in
premiums than it pays out in claims.
The underwriter, which covers risks ranging from aviation
and marine to kidnapping and livestock, said it took hits
totalling $31 million from the missing Malaysia Airlines
flight MH370, a U.S. barge collision and a fire at an
offshore drilling rig.
It said it would incur a loss of less than $50 million from
the downed Malaysia Airlines flight MH17 and aircraft losses
from violence at Tripoli's international airport last month.
Catlin's investment return for the period rose to 1.6
percent from 0.2 percent, while the company raised its interim
dividend by 5 percent to 17.7 cents.
(Reporting by Richa Naidu; edited by Yousra Elbagir and Simon