LONDON (Reuters) — Bermuda-based insurer Catlin Group Ltd. reported better-than-expected pretax profit for 2006, due to the acquisition of rival Wellington, high prices and low hurricane claims, and delivered a confident outlook, lifting its shares.The London-listed company’s earnings of $521 million, including Wellington, were well above an average forecast of $455 million in a poll of 15 analysts conducted by the company.

On a standalone basis Catlin made pretax profit of $275 million, but this figure was nearly matched by Wellington, which made $245 million, marking a strong rebound in its earnings after being hit hard by hurricanes in 2005.

“Overall, these are pretty decent results, especially from Wellington,” Seymour Pierce analyst Gerald Farr said.

“Catlin didn’t do quite as well as I’d been expecting but Wellington came in with absolutely stunning results,” said Farr. “Considering how badly (Wellington) was hit in 2005 it looks a very good deal for Catlin now.”

Both companies’ earnings were boosted by the lack of hurricanes last year, but Catlin was hit by a number of large claims, which cost it $100 million in the second half, chief executive Stephen Catlin said.

Catlin proposed a final dividend of 17 pence per share, making a total dividend for the year of 23p, a 48 percent jump on 2005’s payout of 15.5p.

The company’s shares gained 6.1 percent on Friday.

Catlin, the largest player in the Lloyd’s of London insurance market after its $591-million ($1.14 billion) take-over of rival Wellington Underwriting, said it had fully integrated the two companies.

The acquisition would now be earnings accretive for 2007 — a year ahead of plan — and would generate more than the $70 million in post-tax synergies by 2008 that had originally been forecast, Catlin said. The extra savings are largely from the combined group losing less business than it had originally estimated, said Catlin.

The combined group had instead taken slightly higher premium volume in the important January 2007 renewal season — when many clients buy their annual reinsurance contracts — than the two companies had a year earlier, Catlin said.

The number of staff defections during the merger has been low, and their departures would not have a meaningful impact on the business, it said.

The firm also expects to trim its reinsurance spend and increase the income yielded from its $5 billion pool of assets.

“Overall there are benefits in each area (but) it’s impossible for me to tell you what they will be in terms of quantum,” Catlin said.

The group delivered a confident outlook for 2007 and beyond, saying premium income will rise strongly in the next few years, with growth of at least 20 percent from having bought out the individual investors who owned around a third of Wellington’s underwriting capacity, on top of higher sales from Catlin’s international office network.