LONDON (AFX) - Lloyds insurer and reinsurer Kiln PLC saw pretax profit fall to 24.3 mln stg in the six months to end-June from 34 mln in the the first half of 2005 on a weak dollar.

As expected, Kiln saw first half gross premiums written rise to 230.8 mln stg from 195.1 mln in the first half of 2006, as it capitalised on higher rates in the catastrophe insurance and reinsurance market.

However, the rise was below Numis Securities' expectations of 242.4 mln stg, which was 'mainly due to the fact that they wrote their business in the second half of the period,' Gradlidge said.

Combined ratio -- costs and claims expenses as a proportion of premium income, and a key indicator of profitability -- for the first half of 2006 rose to 88 pct, up from 83 pct in the first half of 2005 because of increases in the operating and acquisition expense ratios, the company said in a statement.

At the same time the company reiterated its intention to increase capacity by 25 pct -- the amount of insurance coverage allocated to a particular policyholder -- at Lloyds to over 1 bln stg for the 2007 underwriting year.

'The expansion is the right thing to do. They are utilizing the funds available at the end of the 73 mln stg rights issue in 2005,' Gradlidge said.

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