LONDON (Bloomberg) - Catlin Group, the biggest insurer on the Lloyd's of London market, said first-half profit was hurt by take-over costs and rose less than analysts estimated.

Pre-tax profit, closely followed by UK insurance analysts, advanced 14 percent to $190.3 million, missing the five-estimate average of $212m, the Bermuda-based company said yesterday in a statement.

Net income increased 9.8 percent to $161.7m, or 61 cents a share, from $147.3m, or 85 cents a share, a year earlier.

Catlin, which gets about half its premium revenue from catastrophe coverage, bought London-based Wellington for £591m last October. It predicted yesterday the combination will save $100m after restructuring costs, more than its previous estimate. A $65m charge to cover withdrawals by Wellington's private investors, known as names, reduced pretax profit, it said.

"The pretax profit is a bit disappointing," said Gerald Farr, a London-based analyst at Seymour Pierce who has a "buy" rating on the stock. "It is below where Wellington and Catlin combined were last year and is substantially below my forecast and consensus."

Catlin shares fell one percent to 480 pence at 10.30 a.m. in London, valuing the company at £1.2billion. They are down six percent this year, compared with a 5.8 percent decline for the 15 member FTSE All-Share Nonlife Insurance Index.

Gross written premiums more than doubled to $1.99bn from $903.1m, and net written premiums jumped to $1.4bn from $766m as the company took on Wellington's underwriting capacity. Costs more than doubled to $1.1bn.

"Whilst Catlin faces a tougher market with increased competition, we believe that margins will remain good in the specialty classes of business that we underwrite and in the classes that we are targeting for future growth," said CEO Stephen Catlin in the statement.

Catlin has $105m of asset-backed securities tied to US subprime mortgages, it said.

Catlin's acquisition costs were $26m in the first half.

"First-half profits were reduced by residual interests of Wellington's former third-party capital providers and by integration costs," Catlin said. "These effects will decline in future periods and the financial benefits of the transaction will grow."

Catlin, which writes property and casualty insurance in Bermuda and covers aviation, satellites and cargo ships at Lloyd's, wants to use Wellington's US operations as a platform for expansion.

Catlin, which combined its US unit with Wellington's, forecast premium revenue of about $350m this year, down from an earlier estimate of $450m after it terminated a contract on concerns over falling premiums.

The UK floods in June cost the insurer $30m in the first half. Catlin forecast the country's July floods will cost it $10m in the second half.

Catlin's combined ratio, or claims and expenses as a percentage of premiums, rose to 92.2 percent from 84.7 percent. A ratio of less than 100 percent means an insurer's underwriting is profitable.

The insurer increased its dividend to 8.1 pence a share for the first six months, compared with six pence a share year earlier.