LONDON (Bloomberg) — Brit Insurance Holdings Plc, a Lloyd’s of London insurer, rebounded to a profit in the second half of last year on lower weather-related claims.Net income was $59.3 million ($114 million), or 18.18 pence a share, from a loss of $30.9 million, or 8.71 pence in the year-earlier period, based on full-year figures released by the London-based company yesterday.

“The outlook remains positive though challenging,” the company said in a statement. “The lack of any significant catastrophes in 2006 has resulted in increasing competition across most underwriting classes.”

Brit created and invested in a new Bermuda-based reinsurer, called Norton Re, in December to provide coverage for catastrophes and take advantage of higher rates following record hurricane losses in 2005. Premium rates are coming under pressure, Lloyd’s insurer Amlin Plc said this week.

Second-half earnings were calculated by subtracting first-half results from full-year figures published this week.

The company’s combined ratio, or claims and expenses as a percentage of premiums, fell to 86.9 percent last year from 105.2 percent in 2005, showing a return to profitable underwriting.

“The benign claims experience was a help,” said chief executive officer Dane Douetil in an interview.

Gross written premiums rose 2.8 percent in the full year to $1.24 billion. The insurer, which also provides coverage outside the Lloyd’s market for businesses, expects gross written premiums of more than $2 billion by 2010, said Douetil.

Brit, which provides coverage for satellite risks and insures 30 percent of London’s black cabs, may expand in accident and health insurance, and plans to increase coverage for commercial motor insurance in the second half of the year, said Douetil.

The company will pay a special dividend of 2 pence a share and buy back as much as $50 million of stock for cancellation to return money to shareholders, Brit said. It will pay a final dividend of 7.5 pence a share.

“They are thinking about shareholders with the dividend as rates soften a bit,” said Charles Coyne, an analyst at KBC Peel Hunt Ltd. in London, who has an “add” rating on the stock.