Catlin Misses Profit Estimate on Hurricane, Costa Concordia

Catlin Group Ltd., the second-largest Lloyd’s of London insurer by market value, reported lower-than- estimated pretax profit for 2012 on claims related to Hurricane Sandy and the shipwrecked Costa Concordia.

Pretax profit rose to $339 million from $71 million in 2011, which was the most costly year for natural disasters on record, the Hamilton, Bermuda-based firm said in a statement today. That missed the median estimate of $383 million of 17 analysts surveyed by Bloomberg.

Catlin increased loss estimates for Hurricane Sandy, which struck New York and New Jersey in October, by $25 million to $225 million and for the Costa Concordia cruise ship, which ran aground off the coast of Italy, by $16 million to $51 million. As a result, the firm’s return on equity was 11.3 percent for the year, compared with rival Beazley Plc’s 19 percent.

“A somewhat frustrating slippage,” Eamonn Flanagan, a Liverpool, England-based analyst at Shore Capital Group Ltd. with a hold rating on shares, wrote in a note to clients today, referring to the increased loss estimates. “The shares have had a terrific run in the past six months, up 20 percent, but to us they have travelled far enough for now.”

The shares dropped 3.8 percent to 518 pence in London trading. They have gained 17.5 percent over the past year, giving the company a market value of about 1.9 billion pounds ($3 billion).

Higher-than-estimated claims from damaged ships were among the main reasons for the increased loss estimates for Hurricane Sandy, while the Italian government’s decision to require the Costa Concordia to be removed whole rather than in parts also had an impact, Paul Jardine, Catlin’s chief operating officer, said in a telephone interview.

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