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Catlin posts $201m loss but Bermuda business grows

Bermuda-based re/insurer Catlin Group Ltd posted a $201 million loss in the first half of the year after record claims from natural catastrophes, the company announced yesterday.

The loss compared with a profit of $86 million in the year-earlier period, as Catlin counted the cost of $534 million in natural disaster losses in the first six months of the year.

Japan’s biggest earthquake on record as well as flooding in Australia, earthquakes in New Zealand and tornadoes in the US were behind most of the losses.

During the second quarter, Catlin recorded net income of $72 million, compared to $56 million in the April through June period last year.

The firm still expects to report a profit for the full year as premium rates increase, the company’s CEO Stephen Catlin said. The company raised its first-half dividend to nine pence a share, from 8.6 pence a year earlier.

Yesterday’s statement said Catlin wrote more business through its Bermuda underwriting unit, where gross premiums written rose 7.6 percent to $451 million, compared to $419 million in the first half of 2010.

The company said this increase was “largely the result of reinstatement premiums paid by cedants following the first-half catastrophe events” and that the unit made an underwriting loss.

The firm also increased gross premiums written in its US and International operations, but reduced premiums written through the Lloyd’s market from $1.41 billion to $1.36 billion, in the light of competitive pressures.

Overall, gross premiums written climbed by nine percent to $2.7 billion from $2.5 billion in the same period last year.

The insurer also said Sir Graham Hearne will step down as chairman in May 2012 and will be succeeded by John Barton, chairman of Next and Cable & Wireless Worldwide, who will join the firm as a director on December 1.

Mr Catlin said underlying performance during the period was strong and that rates for property insurance were hardening.

“Our US and International underwriting hubs continued to grow significantly and produced positive underwriting contributions,” Mr Catlin said.

“Rates for property treaty reinsurance increased significantly during 1 June and 1 July renewals, and we are already seeing evidence that rates for primary property insurance are hardening.

“Our multiple hub structure, diversified portfolio and disciplined approach to underwriting will allow Catlin to prosper in the current market environment and put us in a good position to take advantage of opportunities whenever and wherever they occur worldwide.”

The statement said Catlin was optimistic for the second half of the year. It added that further catastrophe losses would likely trigger recoveries from the group’s Catastrophe Aggregate programme, which would significantly reduce the financial impact on the firm.

Total investment return for the six-month period was $119 million, a return of 1.5 percent, down from $140 million, or 1.8 percent in 2010.

Shareholders’ equity fell nine percent to $3.12 billion at June 30 from $3.45 billion at the end of 2010.

Catlin said part of its capital “buffer” had been eroded by the first-half catastrophe losses. “The Group has attracted additional third-party capital support for certain parts of its risk portfolio for the remainder of 2011 and 2012, and it will continue to explore additional third-party capital options appropriate to the opportunities available in the market,” the statement added.

Devastation: A bus sits atop a building in Ishinomaki, Japan, following the March 11 earthquake and tsunami

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Published August 05, 2011 at 2:00 am (Updated August 05, 2011 at 9:59 am)

Catlin posts $201m loss but Bermuda business grows

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