Catlin FY profit bounces back; hikes dividend

LONDON (Reuters) - Lloyd's of London insurer Catlin (CGL.L) posted a better-than-expected 2009 pretax profit after an absence of hurricane damages during the year and healthy investment returns, but warned of a tougher environment ahead.

The Bermuda-based property and casualty insurer reported a pretax profit in 2009 of $603 million (386.2 million pounds), ahead of a consensus forecast of $552.3 million supplied by the company.

This compares with a pretax loss of $13 million in 2008 after hurricane Ike and Gustav claims pushed it into the red.

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

Beazley, the first Lloyd's of London insurer to report 2009 results, said earlier this week that its profit rose 15 percent on the back of a recovery in its investments.

But the focus for insurers is firmly on the outlook for 2010 amid falling insurance prices and concerns that falling government bond yields could dent investment performance in the months ahead.

"The current market environment is good, with attractive pricing levels for most business classes, although the investment environment remains challenging," chief executive Stephen Catlin said in a statement on Thursday.

"Absent extreme events, we foresee steady increases in our underwriting performance as our international underwriting hubs continue to mature," he added.

Catlin, one of the biggest players in the Lloyd's of London, reported an 8 percent rise in its annual dividend to 25 pence per share.

Analysts point to attractive dividends in the sector, despite catastrophe rates set to soften further this year, after coming off 5-10 percent from historically high levels.

(Reporting by Lorraine Turner; editing by Kate Holton)