After moving to Bermuda at the beginning of the summer, Lloyd's insurer Kiln remains upbeat about its $8 million relocation to the Island despite suffering a 14 percent drop in its first half-year pre-tax profit, which was $41.8m.

The company intends to continue its expansion in Bermuda with a view to setting up a US excess and surplus lines insurance platform. It has also not ruled out the possibility of turning its newly created Class 3 Bermuda subsidiary Kiln Re into an open market entity at a later date.Lower premium income and a £4m ($8.08m) relocation bill dented profits, as did the impact of a weaker US dollar on world exchanges. Kiln's chief executive officer Edward Creasy, told the Royal Gazette that premium rates were only slightly lower than a year ago, but Kiln would not write business where it judged pricing to be at an unrealistic level."The premium rates aren't too bad. They are only down a small amount, they are at 98 percent of the level they were at 12 months ago, so we are relatively happy about that," he said."This is a company that very much writes for underwriting profit, rather than premium income and if we see business that is not priced properly then we will move away from it. It is that and the weakness of the US dollar, in particular, which affected our top line a bit in the first half-year, because we of course we report in sterling."In May Kiln, the fourth largest operator in the Lloyd's of London market, relocated its headquarters from the UK capital to Bermuda. Lloyd's mainstays Catlin Group, Hiscox and Omega Underwriting made the same move during 2006.The 45-year-old firm also set up a Class 3 Bermuda subsidiary Kiln Re with $309m to reinsure its own business lines.In London yesterday Kiln reported a pre-tax profit of £20.8m ($41.8m) down from £24.3m a year ago. However, it's net income rose 5.5 percent to £17.2m helped in part by the lower tax charge it now attracts having moved to Bermuda.

The company, which is currently valued at £331m ($669m), has a combined ratio of 86 percent, down one point from a year ago.

Although some market commentators have suggested Kiln will reduce its underwriting in London, Kiln's chief underwriter Robert Chase said: "The emphasis is not on us reducing underwriting in London and underwriting somewhere else and switching business or anything like that. This is simply that we are saying that prices on this slow downward drift, if that continues into next year, you would presume us to reduce our volumes somewhat. But nothing dramatic."

He told the <>I<>Royal Gazette the season has been fairly quite with the main losses coming from the two periods of UK flooding in June and July.

Mr. Chase said: "Overall we would expect it to cost us no more than £5m ($10.1m), and that is split with £2m related to the flooding in June and that is included in our half-year numbers."

The other £3m from the July flooding in England will be included in the second half-year results. Kiln is also looking at a possible £1.5m of losses from last month's Hurricane Dean in the southern Caribbean and Mexico.

Reflecting on the move of headquarters from London to Bermuda, CEO Mr. Creasy said: "We are really pleased with it. It was a significant, strategic step in Kiln's development. We are working on a number of plans from Bermuda and it is everything we intended it should be. We are off to a modest start but we intend to grow our Bermuda business and will use it as a strategic centre for Kiln.

"It is more than possible to be headquartered in Bermuda and have a presence in Lloyds and I think there are more and more companies doing exactly that. You have had two Bermudian companies buy into the Lloyds market this year already. That demonstrates the way the two markets can work well together."

He said the company still intends to set up a US excess and surplus lines insurance platform, although that will not happen this year.

"There is a lot of work going on behind the scenes to make that work for us. One of the important things is to make sure the business is right, the people are right, the platform is right and the timing is right. We are doing all the groundwork for that," he added.

Asked if subsidiary Kiln Re might become a fully-fledged reinsurer, Mr. Creasy said: "We will be looking at one of the strategic initiatives and we'll consider that when we feel the timing is right."