UPDATE 2-UK insurer Catlin's H1 profit falls 21 percent
(Adds CEO comment, analyst reaction, share price)
LONDON, Aug 8 (Reuters) - London-listed insurer Catlin (CGL.L) blamed weaker investment returns for a 21-percent drop in first-half profit, though its chief executive told Reuters that insurance rates were falling less steeply than expected.
Its pretax profit for the six months to June 30 was $150 million versus $190 million a year earlier, Bermuda-based Catlin said on Friday.
Analysts had expected a profit of $158 million, according to the average of six forecasts collected by the company.
Weak bond and equity markets hurt Catlin's investment performance, the company said as net investment income slumped to $54 million from $112 million, a decrease of 52 percent.
That outweighed growth at the group's core insurance operations, with income from underwriting rose 12 percent to $310 million despite an average 5 percent decline in insurance rates during the first half.
Catlin shares were up 0.73 percent at 343.75 pence at 0855 GMT.
"Catlin has reported a good set of results. The core insurance operations are performing strongly," analysts at JP Morgan Cazenove, Catlin's joint house broker, wrote in a note.
Chief Executive Stephen Catlin told Reuters the decline in rates, driven by increased competition, was less steep than feared.
"I said that we might see a 10 percent decrease in premiums by year-end. It's extremely unlikely now to be as bad as that. It hasn't been as difficult as we anticipated," he said in an interview.
He also said a defensive investment strategy, with cash and bonds accounting for 56 percent of total assets, should improve returns in the second half of the year.
"On a balance of probabilities we'd expect to do better in the second half," he said.
The company's first-half combined ratio -- claims and costs as a percentage of premium income, a key indicator of underwriting profitability -- improved to 91 percent from 92 percent a year earlier.
Catlin is paying an interim dividend of 8.6 pence per share, an increase of 6 percent.
(Reporting by Myles Neligan; Editing by Jason Neely)
