Lloyd’s of London insurer Catlin has seen its first-half profits tumble by more than a third after the value of its fixed-income portfolio was hit by higher interest rates.
The operator of the largest syndicate in the Lloyd’s market said it racked up “catastrophe” losses of about $99 million (£63.7m) from flooding in Canada and central Europe, as well as tornadoes in Oklahoma.
Despite this hit, the firm’s net underwriting contribution – the value of premiums earned after losses and other costs are taken into account – remained strong at $441m for the six months to 30 June, just below last year’s record $443m figure.
However, pre-tax profits fell to $145m, from $231m a year earlier, on the back of higher interest rates.
Chief executive Stephen Catlin said: “Our reported investment performance suffered due to mark-to-market reductions in the value of our fixed income portfolio caused by rising interest rates.
“The decrease in profits before tax compared with a year ago is the result of these movements. Catlin’s investment returns will ultimately benefit from higher interest rates.”
Shareholders will receive an interim dividend of 10p a share on 20 September, up 5 per cent on last year.