HAMILTON, Bermuda (Bloomberg) ? Alea Group Holdings Ltd., a Bermuda- based reinsurer, said first-half profit halved because of investment losses. The company will pay its first dividend and expects earnings to improve as insurance rates stop falling.

Net income fell to $16.4 million in the six months to June 30, from $34.6 million in the year-earlier period, the Hamilton, Bermuda-based company said in a Regulatory News Service statement. Operating profit rose 74 percent to $61.4 million, from $35.3 million, helped by gains in premiums.

?We are very positive about the market and our outlook,? said Chief Executive Mark Ricciardelli said in a telephone interview.

Property and casualty insurance rates will ?continue to be attractive? through 2005, Ricciardelli said.

Alea expects to benefit from a halt in the decline of property reinsurance premium rates, after hurricanes Charley, Frances and Ivan hit the US in the last six weeks and caused billions of dollars of damage, Ricciardelli said.

Shares of Alea closed down 2.3 percent to 198.75 pence in London. The stock has lost more than a fifth of its value since the company raised $263.7 million in an initial public offering on the London Stock Exchange last November. The insurer said it will pay its first interim dividend of $0.03 per share.

Alea operates in the US and Europe and specialises in so- called mid-market insurance which includes cover for dentists and apartment buildings.

The company had net unrealised losses on investments of $29.2 million, compared with a year-earlier loss of $984,000, as rising interest rates pushed down bond prices.

The reinsurer?s combined ratio, or claims and expenses as a percentage of premiums, fell to 95.7 percent, from 97.1 percent, indicating more profitable underwriting. Alea promoted Ricciardelli to chief executive in June, replacing Dennis Purkiss who had headed the company since May 2000.