LONDON (Bloomberg) ? Lloyd's of London underwriter Wellington Underwriting Plc will dispose of its remaining stake in Bermuda-based reinsurer Aspen Holdings Ltd. and also indicated it was too early to say if it was planning its own Bermuda platform.

Wellington made the announcement after saying its first half profit fell 66 percent on a weaker dollar and accounting adjustments that cut revenue. Its shares fell as much as 7.6 percent yesterday.

Wellington said net income fell to ?17.6 million ($33.56 million), or 3.6 pence a share, from ?52 million, or 10.5 pence a share, in the year-earlier period. Revenue fell 15 percent as premiums under new accounting standards declined.

Wellington's loss was increased by an investment loss of ?5.5 million in Bermuda-based Aspen Holdings Ltd. Wellington said yesterday it plans to dispose of its remaining 5.4 percent stake in the reinsurer, having sold 1.9 million shares in the first half of the year.

AFX news agency reported that some analysts had thought the company would announce a rights issue in an effort to fund a new Bermuda platform, but chief executive Preben Prebensen urged caution.

"If we get to that in our strategy we'll take it to the shareholders," he said.Wellington's investment in Bermuda-based Aspen Holdings Ltd. resulted in a loss of ?5.5 million, compared with a profit of ?21.5 million in the year earlier period, the company said.

Wellington, which reported a loss in 2005 following record insurance claims on US hurricanes, is broadening its underwriting to spread risk and minimise potential losses on any one catastrophe. Underlying net premiums, which eliminate the impact of accounting changes under new International Financial Reporting Standards, rose 24 percent to ?223.6 million from ?180.4 million.

"Perhaps the foreign exchange charge had not been fully anticipated and came as a bit of surprise," said Nicholas Johnson, a London-based analyst at Numis Securities Ltd. He has a "hold" rating on the shares. "When you look at the underlying picture, it is more reassuring. The picture remains positive."

Currency fluctuations cost the insurer ?14.2 million, compared with a gain of ?13.8 million in the year-earlier period, it said.

Wellington's first-half revenue was ?258.2 million, down from ?302.1 million in the year-earlier period, the company said. Net earned premiums after reinsurance costs fell 6.6 percent to ?229.1 million from ?245.4 million.

Gross premiums rose 23 percent to ?357.7 million from ?291.8 million in the year earlier period, and underwriting profit rose to ?44 million from ?43.3 million, Wellington said.

The company said insurance prices rose 17 percent in the period, which "bodes well for future profitability," said Mr. Johnson.

"The actions taken earlier in the year to adjust the risk profile in the syndicate have left us better positioned to benefit from higher rates, with less exposure to extreme events," Mr. Prebensen said in a statement. "We are on target to deliver in 2006."

The insurer's combined ratio, or claims and expenses as a percentage of premiums, climbed to 87 percent, from 82 percent. Investment income rose to ?19.5 million from ?13.3 million , the insurer said. Total costs fell slightly to ?229.3 million, from ?231.7 million.

Most Lloyd's insurers struggled last year following record claims from US hurricanes, which mainly hurt second-half results. Wellington's second-half loss in 2005 offset its first-half profit and resulted in a full-year loss of ?13.7 million.

"We are well positioned going into the storm season," Prebensen said in an interview today. "It remains to be seen whether it is an active or inactive season. We are assuming we have an active season."