A lack of disasters swings Catlin into profit

Catlin, operator of the biggest syndicate in the Lloyd’s of London insurance market, made a pre-tax profit of $231m in the six months to June 30, compared with a loss of $201m a year earlier, it said yesterday.

Analysts had expected a profit of $212m, according to the average of 10 estimates collected by the company.

Catlin said the improvement reflected a lack of catastrophe claims during the first half, in contrast with the same period in 2011, when it absorbed a net $534m loss following a string of natural disasters including Japan’s Tohoku earthquake.

Last year was the insurance industry’s second-worst on record for catastrophe claims, with earthquakes in Japan and New Zealand, flooding in Australia and Thailand, and tornadoes in the US generating some $116bn in claims, according to reinsurer Swiss Re.

London-listed Catlin’s shares have risen 12 per cent since the start of the year, lagging a 16 per cent increase in the FTSE non-life insurance index .

“An impressive set of results, beating consensus, demonstrating top-line growth, and maintaining underwriting discipline,” Oriel Securities analyst Marcus Barnard said.

Catlin said it had been able to push through average price increases of 5 per cent over the first half of 2012 as financially weaker rivals retrenched in response to last year’s losses, easing competitive pressures.

The price increases, the first sustained upturn in global property and casualty insurance rates in four years, allowed Catlin to expand its revenues in the core London market by 8 per cent, the first increase there in five years.

“This is the first year for some time we’ve been able to grow in London and we’re very pleased to have done that,” chief executive and founder Stephen Catlin said.

The insurer opened an office in Beijing four weeks ago and is planning further expansion in China and Latin America over the next five years, and could also establish a presence in Turkey, Mr Catlin added.

The insurer is paying a dividend of 9.5p per share, an increase of 5 per cent.

Mr Catlin added: “Rates for catastrophe-exposed business classes continue to increase, and we are seeing positive momentum for other classes, including US Casualty business.

“Catlin’s focus on underwriting discipline and flexible capital structure puts us in a solid position to take advantage of opportunities as they arise in the second half of the year and bey- ond.”