Catlin is gloomy on outlook in spite of trouncing forecasts

City A.M. Reporter
Lloyd’s of London insurer Catlin yesterday posted a better-than-expected 2009 pre-tax profit on healthy investment returns and a benign hurricane season, and was upbeat despite a challenging outlook.

The Bermuda-based property and casualty insurer said its international focus will help offset the effects of weaker rates in 2010, while underwriting contributions are forecast to grow year on year.

However, the focus for insurers is firmly on the outlook for 2010 over concerns that falling government bond yields could dent investment performance in the months ahead, in a “challenging” environment, said Catlin’s chief executive.

“Our view at the moment is let’s keep our powder dry, let’s be short in duration and very much liquid, so we’re not affected by the crisis per se,” said chief executive Stephen Catlin.

Catlin, one of the biggest players in the Lloyd’s of London market, reported a pre-tax profit in 2009 of $603m (£384m), ahead of a consensus forecast of $552.3m supplied by the group. This compares with a pre-tax loss of $13m in 2008 after hurricane Ike and Gustav claims pushed it into the red.

Investment returns jumped 5.9 per cent in the year against a dip of 1.4 per cent in 2008.

The insurer reported a 12 per cent increase in gross written premiums to $3.7bn on a constant currency basis, with non-London centres contributing 37 per cent to this total. Non-London hubs are forecast to add over 10 per cent to profitability in 2010, subject to losses, according to Catlin .