Catlin beats expectations with 118% profit surge

Lloyd’s insurer Catlin made a profit before tax of $318m (£189m) in the first half of 2014, up 118% on the $145m it made in the same period last year.

The combined operating ratio improved by 3.1 percentage points to 85% (H1 2013: 88.1%).

Also contributing to the profit rise was a nine-fold surge in investment income to $145m (H1 2013: $16m), and $49m of reserve releases (H1 2013: $56m).

Gross written premium for the half was up 11% to $3.7bn (H1 2013: $3.3bn).

Shore Capital analyst Eamonn Flanagan said Catlin’s pre-tax profit was “better than we and the market had expected”.

Chief executive Stephen Catlin said: “Our strategy is delivering excellent results.

“All areas of the business performed well. Average weighted premium rates decreased by 3.2% across our portfolio, with rating conditions remaining more resilient in our US, Europe, Asia-Pacific and Canada hubs than in the London and Bermuda markets.

“We continue to see opportunity for further profitable growth, thanks to our investment in our hubs worldwide.”

Large losses

Catlin’s improved results came despite $24m of catastrophe losses emanating from April’s earthquake in northern Chile, and the European hailstorms in June.

The Lloyd’s insurer also took a total $31m hit from three large single losses: the disappearance of Malaysian Airlines Flight MH370, a barge collision in the US and a fire at an offshore drilling rig.

Upbeat on rates

Despite the global industry trend for falling rates, particularly in property catastrophe reinsurance, Catlin’s chief executive was more upbeat about pricing.

He said: “There has been considerable commentary about the current state of the marketplace.

“While it is true that rates for many classes of business have deteriorated during the first half of 2014, I do not believe that the rate environment is as bad as some observers contend, and margins are still adequate for most business classes.”

Rates across Catlin’s portfolio fell by 3.2% in the first half of 2014.