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Catlin Says Rate Rises May Top 17% After Worst Disaster Year

Catlin Group Ltd., the second-biggest Lloyd’s of London insurer by market value, said premium rates for property catastrophe policies will rise by more than 17 percent this year as insurers try to recoup last year’s losses.

“By the time we get to the end of the year it wouldn’t surprise me that the average weighted premiums in property cat exceeds 17 percent, ahead of what we achieved in January,” Chief Executive Officer Stephen Catlin said in a telephone interview today.

Earthquakes in Japan and New Zealand, windstorms in the U.S. and flooding in Thailand cost insurers about $105 billion last year, making it the industry’s most expensive year on record, surpassing the $101 billion paid out in 2005, the year Hurricane Katrina struck New Orleans, according to Munich Re. Insurers typically seek to raise prices to make up for losses following a costly claims period.

U.S. property treaty reinsurance rates increased 17 percent in January, when most policies are renewed, and international property premiums rose 12 percent, the Hamilton, Bermuda-based firm said in a statement today. The firm’s average premium increase of 5 percent exceeded the 4 percent rise posted by Lloyd’s competitor Amlin Plc this week.

Catlin said full-year pretax profit fell to $71 million from $406 million the previous year. That beat the $24.5 million median estimate of 17 analysts surveyed by Bloomberg.

“The underlying business looks strong,” James Shuck, a London-based analyst at Jefferies International Ltd. with a “buy” rating on the stock, wrote in a note to clients today. The firm’s “reinsurance program worked well in the second half of the year, differentiating Catlin from peers.”

The stock rose 3.6 percent to 441.7 pence at 10:31 a.m. in London trading, valuing the firm at about 1.6 billion pounds.

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