Final Results - Part 1

Catlin Group Limited
09 March 2007


PART 1

                              CATLIN GROUP LIMITED
              PRELIMINARY RESULTS FOR YEAR ENDED 31 DECEMBER 2006

HAMILTON, Bermuda - Catlin Group Limited ('CGL': London Stock Exchange), the
international specialty property/casualty insurer and reinsurer, announces its
financial results for the year ended 31 December 2006.

Financial highlights:
Combined basis (see notes on Page 2)

   • Income before tax of US$521 million
   • Net income of US$428 million
   • Return on average equity of 24 per cent
   • Earnings per share of US$1.73
   • Gross premiums written of US$2.72 billion, representing 15 per cent
     growth compared with 2005
   • Combined ratio of 87 per cent

As reported (see notes on Page 2)

   • Income before tax rose nine-fold to US$275 million (2005: US$28million)
   • Stockholders' equity increased by 117 per cent to US$2.0 billion (2005:
     US$931 million)
   • Investments and cash increased by 111 per cent to US$5.0 billion (2005:
     US$2.4 billion)
   • Book value per share increased 19 per cent in sterling terms to £4.12
     (2005: £3.47); book value per share in dollar terms rose 35 per cent to
     US$8.07 (2005: US$5.97)
   • Proposed final dividend of 17 pence (32.8 US cents) (2005: 10.1 pence;
     17.6 US cents); proposed total dividend of 23 pence (44.1 US cents), an
     increase of 48 per cent in sterling terms over prior year (2005: 15.5 pence
     ; 27.5 US cents)


                                         Catlin
                                    as reported      Wellington       Combined
US$000                                     2006            2006           2006
-----------------------             -----------     -----------    -----------
Gross premiums written                1,605,019       1,116,781      2,721,800
Net premiums written                  1,410,123         913,138      2,323,261
Net premiums earned                   1,325,861         902,301      2,228,162
Income before income taxes              275,417         245,097        520,514
Net income                              258,789         169,692        428,481
Tax rate                                    6.0%           30.8%          17.7%
Loss ratio                                 51.4%           47.9%          50.0%
Expense ratio                              36.8%           38.1%          37.3%
Combined ratio                             88.2%           86.0%          87.3%
Return on average equity                   24.2%           22.4%          23.8%

Investments and cash                  5,013,709                      5,013,709
Stockholders' equity                  2,018,280                      2,018,280
Earnings per share (US$)                   1.59                           1.73
Book value per share (sterling)            4.12                           4.12
Book value per share (US dollar)           8.07                           8.07
Total dividend per share (pence)           23.0                           23.0
Total dividend per share (US cents)        44.1                           44.1

Notes:

1. Catlin's results for the year ended 31 December 2006 include the acquisition 
   of Wellington on 18 December 2006. Because of its timing, the acquisition had 
   no impact on the income statement, including net income, for the year, but 
   the acquisition is reflected in the balance sheet at 31 December 2006.

2. Income statement figures presented on a combined basis represent the
   aggregation of audited Catlin results and Wellington results, both presented
   under US GAAP. The Wellington US GAAP income statement has not been audited.

3. A summary of Catlin's financial results for the year ended 31 December 2006, 
   including comparisons to the previous year, are contained in the Financial
   Review attached to this announcement. Catlin's full financial statements are
   also attached.

4. Earnings per share are based on weighted average shares in issue of 162.6 
   million (as reported) and 248.7 million (combined). Book value per share is 
   based on shares in issue and to be issued of 250.0 million at 31 December 
   2006.

Operational highlights:

Underwriting

   • Strong underwriting performance in 2006 for Catlin and Wellington
   • Catlin and Wellington reduced catastrophe exposures; nevertheless, both
     portfolios grew strongly
   • Broadly constant split of premium volume between catastrophe exposed and
     non-catastrophe business

Wellington acquisition

   • Relocated: All London-based employees in one location
   • Refinanced: Acquisition bridge finance facility retired with proceeds of
     US$600 million non-cumulative perpetual preferred share issue
   • Integrated: Catlin and Wellington operations fully integrated
   • Minimal unplanned staff departures
   • Acquisition now expected to be earnings accretive for 2007 after
     restructuring and retention costs
   • Greater than US$70 million in post-tax synergies projected for 2008,
     ahead of original expectations

Growth

   • Embedded growth will result from uplift in share of Lloyd's business
     retained by Group arising from departure of third-party capacity
   • Organic growth potential across business, from investment in Catlin US
     and from expansion of international office network

Outlook:

   • Estimated written premium for January 2007 renewal season slightly above
     combined 2006 volumes for same period
   • Rates for catastrophe exposed business expected to remain firm
   • Rates for non-catastrophe exposed business expected to decrease, but
     margins should remain good
   • Catlin will continue to expand non-catastrophe exposed portfolio
   • Catlin looks ahead with confidence


Commenting on the Group's preliminary results, Sir Graham Hearne, Chairman of
Catlin Group Limited, said:

'Catlin produced a strong operating performance during 2006, with a return on
average equity of 24 per cent. We are confident about our prospects following
the acquisition of Wellington, and this confidence is reflected in the proposed
total dividend of 23 pence per share, an increase of 48 per cent.'

Chief Executive Stephen Catlin said:

'Catlin has made excellent progress, both in terms of our operating results for
2006 and the rapid integration with Wellington. Since our offer for Wellington
was declared unconditional on 18 December 2006, we have relocated all London
employees to a single office, refinanced the debt we assumed to acquire
Wellington and integrated all operational functions. We now expect the
acquisition to be earnings accretive in 2007 and to produce post-tax savings of
at least $70 million in 2008.

'The Wellington acquisition provides Catlin with a springboard for future
growth. We have made an excellent start to 2007, with written premiums in the
January renewal season slightly above the combined volumes for the same period
in 2006. We are set to benefit from embedded growth in the amount of business
retained by the Group from its Lloyd's operations, and expect to see continued
organic growth from our investment in Catlin US and our international office
network. Catlin is in the strongest position in its history, and we look ahead
with confidence.'

                                    - ends -

For more information contact:

Media Relations:
James Burcke,                     Tel:        [phone]
Head of Communications, London    Mobile:     [phone]
                                  E-mail:     [e-mail]
    
                                  
Liz Morley, Maitland              Tel:        [phone]
                                  E-mail:     [e-mail]

Investor Relations:
William Spurgin,
Head of Investor
Relations, London                 Tel:        [phone]
                                  Mobile:     [phone]
                                  E-mail:     [e-mail]
                                              

Notes to editors:

1. Catlin Group Limited, headquartered in Bermuda, is an international 
specialist property/casualty insurer and reinsurer writing more than 30 classes 
of business worldwide. Catlin shares are traded on the London Stock Exchange 
(ticker symbol: CGL). More information about Catlin can be found at 
www.catlin.com.

2. Catlin management will make a presentation to investment analysts at 10.30am 
GMT today at its London office. The presentation will be broadcast live on the 
Group's website (www.catlin.com). The webcast will be available on the website 
following the presentation.

3. Catlin's financial statements are prepared in accordance with accounting 
principles generally accepted in the United States of America ('US GAAP'). The 
Group reports in US dollars.

4. Rate of exchange at 31 December 2006: £1 = US$1.96 (balance sheet); £1 = 
US$1.85 (income statement); at 7 March 2007: £1 = US$1.93.

5. Detailed information regarding Catlin's operations and financial results for
the year ended 31 December 2006 follow, including statements from the Chairman 
and Chief Executive, an underwriting and financial review, and information about 
the Wellington acquisition.

6. Statements that the Wellington acquisition is expected to be earnings 
accretive do not constitute a profit forecast and should not be interpreted to 
mean that the earnings per share in 2007, or in any subsequent period, would 
necessarily match or be greater than those for the relevant preceding financial 
year.


Chairman's Statement

A year ago, in the aftermath of Hurricanes Katrina, Rita and Wilma, I expressed
optimism that the unparalleled catastrophe losses of 2005 would create new
opportunities for the Catlin Group. This was indeed the case during 2006:

• The Group achieved excellent operating results as Catlin's reported net income 
rose to a record US$258.8 million (2005: US$19.7 million) and return on average 
equity increased to 24.2 per cent (2005: 2.1 per cent).

• Catlin's market position was substantially enhanced by the acquisition of 
Wellington Underwriting plc, which was declared unconditional on 18 December 
2006. Including Wellington, Catlin's net income amounted to US$428.5 million and
the return on average equity was 23.8 per cent.

The acquisition of Wellington is a watershed in Catlin's evolution. The Catlin
Syndicate now ranks as the largest syndicate at Lloyd's in terms of premium
capacity, and the Group's other operating platforms are in a position to write
increased volumes of business as a result of the acquisition. The addition of
Wellington's established US-based operations significantly advances the
development of Catlin US. The combination of the two companies' books of
business broadens the Group's already diversified risk portfolio. Catlin's staff
will be strengthened by the addition of a group of talented employees. The
acquisition is now expected to be earnings accretive in 2007, and synergies are
expected to increase earnings substantially in 2008 and future years.

Dividend

As first announced in October 2006, the Board of Directors proposes a final
dividend of 17 pence (32.8 US cents) per share, payable on 8 June 2007 to
shareholders of record at the close of business on 11 May 2007. Including the
interim dividend of 6 pence (11.3 US cents) per share paid on 10 November 2006,
the proposed 2006 dividend represents an increase of 48 per cent on the 2005
dividend paid to Catlin shareholders and a pro forma 37 per cent increase on the
2005 dividend paid to former Wellington shareholders.

Catlin is committed to providing an attractive return to shareholders through
the dividend and will continue its current policy under which dividend payments
are linked to recent trends in the Group's performance as well as to future
prospects.

Capital/share issues

Catlin's capital base was strengthened during 2006 by earnings and through the
addition of Wellington's net assets. Stockholders' equity increased 117 per cent
to US$2.02 billion at 31 December 2006 (31 December 2005: US$931.1 million).
Included in this increase was the US$65 million in net proceeds from the
placement of 7.7 million new common shares in March 2006. To fulfil the share
portion of the Wellington offer, the Group has issued 86.1 million new common
shares.

In January 2007, Catlin Bermuda (Catlin Insurance Company Ltd.) issued US$600
million in non-cumulative perpetual preferred shares at a dividend rate of 7.249
per cent. The proceeds from this issue, which received an excellent response
from investors, was used primarily to repay the US$500 million short-term debt
facility Catlin established as part of the financing for the Wellington
acquisition and also for general corporate purposes.

Board of Directors

Jonathan Kelly and Gene Lee will be retiring from the Board at the conclusion of
our upcoming Annual General Meeting, as the entitlement under the Bye-laws for
their appointing shareholders to maintain a Director in office has lapsed. In
addition, Richard Haverland has decided to retire from the Board. I would like
to thank them for their many contributions to the Group's success, and to thank
all Directors for their guidance and hard work during a demanding year.

Outlook

The acquisition of Wellington has made Catlin a much larger company in terms of
premiums written, profits, assets and stockholders' equity. Our increased size
and stature has strengthened our balance sheet and creates exciting
opportunities for further growth. Market conditions remain favourable, with
rates adequate across all of the classes of business the Group underwrites. With
its market leadership position strengthened and its reputation for financial
prudence and disciplined underwriting secure, Catlin has never been in a
stronger position.

It gives me great pleasure to welcome the management and staff of Wellington to
the Catlin Group. The past 12 months have presented a new, exciting set of
challenges for them and the Catlin team. I express my sincere thanks to Stephen
Catlin and all employees for their hard work, and I look forward to reporting on
their further achievements next year.

Sir Graham Hearne
Chairman
8 March 2007



Chief Executive's Review

The Catlin Group's strong operating results for 2006 combined with our
acquisition of Wellington Underwriting plc provides Catlin with a springboard
for growth and earnings potential in the years ahead.

As soon as we announced our offer to acquire Wellington in October 2006, we
began to plan how we could most effectively combine the two companies. Our plan
has been successful: we have already relocated employees, refinanced our debt
and integrated Wellington's operations.

   • Relocation. A key strategy was to ensure that Catlin and Wellington
     employees could work as soon as possible from the same location in London,
     where the majority of both companies' employees are based. All underwriting
     staff began working from a new, purpose-built underwriting floor in 
     Catlin's London office within 14 hours after the offer to acquire 
     Wellington was declared unconditional on 18 December 2006. All other 
     employees were relocated to Catlin's office by 4 February.

   • Refinancing. To finance the Wellington acquisition in part, Catlin
     arranged a US$500 million bridge financing facility. Our goal was to
     refinance this debt as quickly as possible. On 18 January 2007 Catlin
     Bermuda issued US$600 million in non-cumulative perpetual preferred shares
     to repay the bridge financing and for general corporate purposes. The 
     demand for the preferred shares was strong, and the shares qualify as 
     capital for regulatory purposes in Bermuda and, in large part, for the 
     rating agencies.

   • Integration. All underwriting and operational functions have been
     integrated. Details of all insurance contracts incepting on or after 1
     January 2007 are stored in Catlin's data warehouse, and prior year
     Wellington data will be carefully migrated over time.


Part of the integration process included employee departures. Since the offer
was declared unconditional, there have been 47 agreed employee departures and 31
resignations. Eight underwriters have resigned out of more than 220 employed by
the Group. These resignations will not have a meaningful impact on Catlin's
future operations.

We now expect that the acquisition will be earnings accretive in 2007 after
restructuring and retention costs and that synergies in 2008 will amount to at
least US$70 million.

The acquisition of Wellington strengthens Catlin and provides a platform for
continued profitable growth. The acquisition is expected to double Catlin's
gross premiums in a favourable underwriting environment and has significantly
increased the Group's investment portfolio and stockholders' equity. Improved
market positioning arising from the combination of the complementary
underwriting portfolios, organic growth plans and increasing levels of
intra-group reinsurance should enable all four Catlin operating platforms to
increase their flow of profitable business.

Significantly, structural aspects of the acquisition have created embedded
growth that the Group will realise over the next several years. Previously,
Wellington owned only approximately two-thirds of the capacity of its Lloyd's
Syndicate 2020, acting solely as agent for the third parties who supplied the
remaining capacity. Concurrent with the acquisition and through the cessation of
Syndicate 2020, Catlin in effect removed the third-party capacity and combined
the Wellington and Catlin Syndicates. As a result, there will be an uplift in
2007 in the amount of business retained by the Group. There will be a further
uplift after 2008, when the quota share reinsurance provided by some of
Wellington's former third-party capacity providers expires.

This embedded growth is in addition to the organic growth that Catlin aims to
achieve. We anticipate significant growth from our international network of
offices and from Catlin US, our fourth underwriting platform. Gross premiums
written by our international offices rose by 120 per cent in 2006 to US$106
million (2005:US$48 million), and we anticipate a further increase to
approximately $150 million in 2007. This growth reflects the development of our
existing offices and the establishment of new offices in Hong Kong and Calgary
in 2006 and in Paris, Barcelona, Zurich and Innsbruck so far in 2007.

Catlin US developed rapidly during 2006 with the appointment of Richard Banas as
President and Chief Executive Officer. Rich has recruited a team of seasoned
executives, opened new offices in Atlanta and New York, and developed new books
of professional liability and general/excess liability business to go along with
Catlin US's existing book of medical malpractice insurance. The development of
Catlin US will be accelerated by the acquisition, with the addition of
established US insurance and reinsurance operations. Combined, Catlin and
Wellington US operations wrote gross premiums of US$305 million in 2006 (2005:
US$238 million), and we project that this volume will increase to approximately
US$450 million in 2007 as existing specialties are developed and new
underwriting teams are recruited.

Catlin achieved an excellent underwriting performance in 2006. Whilst 2005 saw a
record level of catastrophe losses including Hurricanes Katrina, Rita and Wilma,
2006 was a benign year for natural catastrophes. Average weighted premium rates
for Catlin's catastrophe exposed business increased by 31 per cent during the
year, whilst rates for uncorrelated business decreased by 3 percent. Overall,
average weighted premium rates across Catlin's risk portfolio increased by 6 per
cent. Rate adequacy was strong in the vast majority of business classes we
write.

Detailed commentary regarding our 2006 performance is including in the attached
Underwriting Review and Financial Review.

For 2007, we expect premium rates for catastrophe exposed business to be broadly
neutral following the large increases in 2006, although catastrophe rates will
greatly depend on catastrophe loss experience during the year. Rates for
non-catastrophe exposed business will remain under pressure, but margins are
expected to remain good across the portfolio.

When we made our original offer to acquire Wellington, we anticipated that we
could possibly lose a substantial amount of business that had been previously
underwritten by Wellington. That has not been the case. For the January 2007
renewal season, written premium was slightly greater than the combined volumes
written during the same period in 2006. Overall, we are pleased with our
performance to date in 2007.

The entire Catlin team continues to work extremely hard to deliver superior
results to our shareholders. 2006 has been a particularly busy year because of
the Wellington acquisition, and I would like to thank our employees - both old
and new - for their dedication and effort.

Given the advantages that the Wellington acquisition has provided to Catlin, the
market environment, our experience to date in 2007 and the prospects of embedded
and organic growth, I believe Catlin's prospects in 2007 and beyond are
excellent.

Stephen Catlin
Chief Executive
8 March 2007

Underwriting Review (Catlin As Reported)

Any discussion of Catlin's underwriting performance in 2006 must first look back
to 2005, the worst year for natural catastrophe losses on record. The global
insurance industry's aggregate natural catastrophe losses - including losses
from Hurricanes Katrina, Rita and Wilma - exceeded US$100 billion in 2005. The
2005 loss experience followed what had also been a record year for natural
catastrophe losses in 2004.

Rates for catastrophe exposed coverages - both direct and reinsurance - rose
significantly during 2006. Weighted average premium rates for catastrophe
exposed classes of business underwritten by Catlin rose 31 per cent during 2006,
compared with a 3 per cent decrease in weighted average premium rates for
non-catastrophe exposed classes. Overall, weighted average premium rates across
Catlin's risk portfolio increased by 6 per cent in 2006 (2005: 1 per cent
decrease). Rate adequacy was strong in the vast majority of the classes of
business that Catlin underwrites.

This strong rate environment and the relatively benign catastrophe experience
during 2006 can be seen in the Group's loss ratio of 51.4 per cent (2005: 71.1
per cent).

It is unknown whether the low frequency and severity of catastrophe losses in
2006 was an aberration or represents a return to more normal loss levels
compared with the previous two years. However, Catlin is taking a cautious view
and managing its risk portfolio on the basis that catastrophe losses in future
years could again equal or exceed the levels seen in 2004 and 2005.

Whilst gross premiums written for catastrophe exposed classes of business
increased in 2006 because of the strong rating environment, the Group's
aggregate catastrophe exposure was reduced. Throughout 2006, Catlin reduced its
exposure to catastrophe risk, so that if loss experience in 2006 had been
similar to the previous year's, the company's ROE would have been significantly
higher than was achieved in 2005. Catastrophe risk was reduced through a
combination of increased attachment points, reductions in the maximum limits
offered and smaller line sizes for certain risks.

Catlin maintains that this cautious strategy is the correct one. Whilst the
Group could have written a significantly greater volume of catastrophe business
in 2006 - and would have made a greater profit had it done so because of the
benign conditions - the potential downside was simply too great for Catlin to
accept. This underwriting strategy limits both the upside and downside risk
presented by catastrophe business, which we consider a prudent course of action.

In addition to reducing our aggregate exposure to catastrophe risk, Catlin
continued to seek additional streams of non-catastrophe business to balance its
portfolio. The Catlin Syndicate began writing three new classes of business in
2006: US general liability insurance, international casualty treaty reinsurance
and crisis management, which comprises product recall and kidnap & ransom
insurance. The development of Catlin US, which generally writes non-catastrophe
exposed classes of business, accelerated in 2006. Catlin Bermuda expanded its
political risk and terrorism portfolio. We increased the amount of business
written through our international offices and opened new offices in Hong Kong
and Calgary in 2006 and in Paris, Barcelona, Zurich and Innsbruck in early 2007.

2007 outlook

Rates for catastrophe exposed business throughout 2007 will depend greatly on
catastrophe experience during the year. Average weighted premium rates for
catastrophe exposed business renewing in January 2007 increased by 5 per cent.
For other classes of business we are expecting modest rate reductions across the
portfolio during 2007. Average weighted premium rates for non-catastrophe
business decreased by 3 per cent in January 2007. Overall, average weighted
premium rates for all classes of business increased by 1 per cent in January
2007.

The acquisition of Wellington substantially strengthens Catlin's underwriting
operations. The two companies underwrote complementary portfolios, and the
overlap of business written is less than was initially anticipated. Catlin will
benefit from greater risk diversification and an increase in the strength and
depth of underwriting teams.

With the addition of Wellington, Catlin now has the size, the track record, the
client base and the reputation to be a true leader in the specialty insurance
and reinsurance market.


Financial Review

The following pages contain commentary on Catlin's consolidated financial
statements for the year ended 31 December 2006, which are prepared in accordance
with US Generally Accepted Accounting Principles ('US GAAP').

The commentary also includes an unaudited pro forma income statement for the
year ended 31 December 2006. This unaudited pro forma statement is prepared
through the aggregation of the consolidated results of operations of Catlin
together with the results of operations of Wellington Underwriting plc for the
period from 1 January 2006 to the date of acquisition. The acquisition of
Wellington was declared unconditional on 18 December 2006. Because the effect of
trading from 19-31 December 2006 was immaterial to Catlin's consolidated
results, the acquisition date for accounting purposes was 31 December 2006.

Set out below are the Consolidated Results of Operations as reported by Catlin.
Because the Wellington acquisition date for accounting purposes was 31 December
2006, these are Catlin's stand-alone results.

Consolidated Results of Operations (as reported)

US$000                                             2006        2005   % change
                                              ---------   ---------  ---------
Revenues
Gross premiums written                        1,605,019   1,386,600         16
Reinsurance premiums ceded                     (194,896)   (197,501)        (1)
                                              ---------   ---------  ---------
Net premiums written                          1,410,123   1,189,099         19
Change in unearned premiums                     (84,262)     27,343       (408)
                                              ---------   ---------  ---------
Net premiums earned                           1,325,861   1,216,442          9

Net investment income and change in fair
value                                           104,668      82,147         27
of derivatives
Net realised (losses)/gains on investments      (17,041)     (1,520)     1,021
Net realised (losses)/gains on foreign           38,746     (13,791)       381
currency
Other income                                      3,528         741        376
                                              ---------   ---------  ---------
Total revenues                                1,455,762   1,284,019         13
                                              ---------   ---------  ---------

Expenses
Losses and loss expenses                        681,549     865,285        (21)
Policy acquisition costs                        341,531     305,539         12
Administrative expenses                         130,703      61,865        111
Other expenses                                   26,562      23,665         12
                                              ---------   ---------  ---------
Total expenses                                1,180,345   1,256,354         (6)
                                              ---------   ---------  ---------

Income before income taxes                      275,417      27,665        896
Minority interest                                   (22)          -          -
Income tax expense                              (16,606)     (8,003)       107
                                              ---------   ---------  ---------
Net income                                      258,789      19,662      1,216
                                              ---------   ---------  ---------



                                                        2006              2005
                                                   ---------         ---------
Loss ratio(1)                                           51.4%             71.1%
Expense ratio(2)                                        36.8%             32.0%
Combined ratio(3)                                       88.2%            103.1%
Tax rate(4)                                              6.0%             28.9%
Return on average equity(5)                             24.2%              2.1%
                                                   ---------         ---------

 1. Calculated as losses and loss expenses divided by net premiums earned
 2. Calculated as the total of policy acquisition costs, administrative expenses
    and other expenses, less financing and amortisation expenses, divided by net
    premiums earned
 3. Total of loss ratio plus expense ratio
 4. Calculated as income tax expense divided by income before income taxes
 5. Calculated as net income divided by the weighted average of opening and
    closing stockholders' equity.

For the purposes of the preparation of the unaudited pro forma statement, the
results of Wellington's operations are presented in accordance with US GAAP.

Included below are pro forma adjustments to combined net income, calculated as
if the acquisition had been in place for the duration of 2006, as required by US
GAAP. These adjustments include amortisation on acquired intangible assets, the
value of the quota share reinsurance provided by some of Wellington's former
third-party capacity providers and the value of in-force business acquired, as
well as interest expense in respect of the US$500 million bridge financing
facility, which has now been repaid.

Consolidated Results of Operations (Pro Forma)

                                                                    Pro forma
                                  Wellington          Catlin     Catlin Group
US$000                            (unaudited)   (as reported)      (unaudited)
                                    ---------        ---------       ---------
Revenues
Gross premiums written              1,116,781        1,605,019       2,721,800
Reinsurance premiums ceded           (203,643)        (194,896)       (398,539)
                                    ---------        ---------       ---------
Net premiums written                  913,138        1,410,123       2,323,261
Change in unearned premiums           (10,837)         (84,262)        (95,099)
                                    ---------        ---------       ---------
Net premiums earned                   902,301        1,325,861       2,228,162

Net investment income and change
in fair value of derivatives           80,178          104,668         184,846
Net realised gains/(losses) on
investments                            20,542          (17,041)          3,501
Net realised (losses)/gains on
foreign currency                       (7,544)          38,746          31,202
Other income                           37,212            3,528          40,740
                                    ---------        ---------       ---------
Total revenues                      1,032,689        1,455,762       2,488,451
                                    ---------        ---------       ---------

Expenses
Losses and loss expenses              431,844          681,549       1,113,393
Policy acquisition costs              199,183          341,531         540,714
Administrative expenses               144,315          130,703         275,018
Other expenses                         12,250           26,562          38,812
                                    ---------        ---------       ---------
Total expenses                        787,592        1,180,345       1,967,937
                                    ---------        ---------       ---------

Income before income taxes            245,097          275,417         520,514
Minority interest                           -              (22)            (22)
Income tax expense                    (75,405)         (16,606)        (92,011)
                                    ---------        ---------       ---------
Combined net income                   169,692          258,789         428,481
                                    ---------        ---------       ---------

Pro forma adjustments:
Amortisation of intangible assets, 
value of quota share and value of 
in-force, net of tax                                                     8,388
Interest on bridge loan                                                (28,234)
                                    ---------        ---------       ---------
Pro forma net income                                                   408,635
                                    ---------        ---------       ---------

Ratios on Combined Basis
Loss ratio                              47.9%            51.4%           50.0%
Expense ratio                           38.1%            36.8%           37.3%
Combined ratio                          86.0%            88.2%           87.3%
Tax rate                                30.8%             6.0%           17.7%
Return on average equity                22.4%            24.2%           23.8%
                                    ---------        ---------       ---------

Gross premiums written

On a pro forma basis gross premiums written in 2006 increased by 15 per cent to
US$2.72 billion. Both Catlin and Wellington benefited from the positive rating
environment following the 2005 hurricane losses, with Catlin's gross premiums
written increasing by approximately 16 per cent and Wellington's increasing by a
slightly lower percentage.

The largest increases in premium written for both companies were experienced in
the hurricane-impacted classes of business, particularly property treaty
reinsurance written by Catlin Bermuda, the Catlin Syndicate Reinsurance segment
and by Wellington Syndicate 2020. The energy, marine facultative and marine
excess of loss business written by both the Catlin Syndicate and Wellington
Syndicate 2020 showed significant increases in premium volume. The growth in
gross written premium across these classes was achieved as a result of the
strong rating environment, notwithstanding the reductions in exposure to
catastrophe-exposed classes implemented by both Catlin and Wellington.

Gross written premium growth was also achieved in non catastrophe-exposed
classes. Catlin's general liability and aviation accounts both experienced
significant growth driven by recruitment of new staff, including staff in
international offices, and attractive market conditions. Wellington also
reported growth as a result of the recruitment of new underwriting teams for new
classes of business, particularly US casualty and non-marine liability.

Reinsurance

Both Catlin and Wellington experienced reductions in premiums ceded to
reinsurers, which were increased in 2005 by reinstatement costs resulting from
the large catastrophe loss experience in that year. Reinsurance costs as a
percentage of gross premiums written have fallen to 12 per cent for Catlin
(2005: 14 per cent) and to 18 per cent for Wellington (2005: 24 per cent). Both
companies experienced savings in overall reinsurance costs: for Catlin the
savings represented approximately US$3 million or 1 per cent; the savings for
Wellington amount to US$30 million or 13 per cent.

Net premiums earned

Growth in earned premiums tends to lag growth in written premiums. Accordingly
for Catlin, growth in net premiums earned was lower than the growth in net
premiums written at 9 per cent. As previously noted Wellington made a 13 per
cent savings in reinsurance costs in 2006, which is reflected in a 21 per cent
increase in net premiums earned.

Losses and loss expenses

The 2005 underwriting year was significantly impacted by the three large
hurricanes - Katrina, Rita and Wilma - which together produced US$333.5 million
in net losses and loss expenses for Catlin and US$328.2 million for Wellington
in the 2005 calendar year. The 2006 year had no similar large loss activity and
this is reflected in substantial decreases in losses and loss expenses for both
companies. This has also resulted in a decrease in the loss ratio to 51.4 per
cent for Catlin (2005: 71.1 per cent); on a pro forma basis the consolidated
loss ratio was slightly lower at 50.0 per cent.

Catlin experienced a number of relatively large losses during 2006, particularly
two satellite losses which combined amounted to more than US$30 million and a
large motor liability reinsurance loss (relating to a prior accident year) which
has been reserved at US$29 million.

The 2005 hurricane losses remain a source of claims volatility and there is
still some uncertainty in respect of the nature and amount of the underlying
losses which will impact the Group's reinsurance accounts. Both Catlin and
Wellington have strengthened reserves during 2006 in respect of these losses:
Catlin by US$52 million and Wellington by US$50 million. The relatively high
incidence of specific losses which relate to accident years prior to 2006 has
absorbed general releases from previous years' reserves such that overall Catlin
has strengthened prior years' reserves by US$2 million. Wellington has released
prior years' reserves of US$19 million, net of the deterioration in respect of
the 2005 hurricanes and, taken together, there has been a small release of US$17
million.

Expense ratio

Catlin's expense ratio increased to 36.8 percent (2005: 32.0 per cent). Included
in the expense ratio is approximately 25.8 percentage points which relates to
policy acquisition costs; for Catlin this is broadly unchanged compared with
2005. On a pro forma basis the expense ratio stood at 37.3 per cent; policy
acquisition costs represented 24.3 percentage points of the overall expense
ratio.

The increase in administration and other expenses is primarily a result of
investment in Catlin US and the Group's international offices; investment in
information technology, particularly in theFrame, Catlin's proprietary
underwriting management system and data warehouse; and higher awards granted
under the performance share scheme and higher bonus payments to staff, both of
which are based on consolidated return on equity.

Wellington's administrative and other expenses also increased, largely
reflecting certain one-off costs including the cost of projects which were
terminated following the acquisition by Catlin and additional costs resulting
from the early vesting of employee stock options.

The expense ratio includes all head office costs and excludes financing and
amortisation expenses.

Net investment income and net realised gains/(losses) on investments

                                                 2006
                                            unaudited
                                            pro forma
US$000                                   consolidated         2006        2005
                                            ---------    ---------   ---------
Total investments and cash as at 31
December                                    5,013,709   2,722,5801   2,371,360

Net investment income and change in fair
value of derivatives                          184,846      104,668      82,147
Net realised gains/(losses) on
investments                                     3,501      (17,041)     (1,520)
Net unrealised (losses)/gains on
investments                                     1,643        1,643     (29,015)
                                            ---------    ---------   ---------
                                              189,990       89,890      51,612
                                            ---------    ---------   ---------
Realised return on average investments            4.1%         3.5%        3.6%
                                            ---------    ---------   ---------
Total return on average investments               4.1%         3.5%        2.3%
                                            ---------    ---------   ---------

1. Represents legacy Catlin investments only, on which the reported return
   was earned. Total investments and cash as reported in the balance sheet is
   US$5.01 billion.

For Catlin, the 2005 total investment return was depressed by significant
unrealised losses on investments caused by rises in US interest rates during
that year. During 2006 certain of those losses have been realised following a
review of investment managers and a resulting rebalancing of portfolios. This
has slightly depressed the realised return in 2006. In overall terms, after
taking account of unrealised gains, returns showed a significant improvement
over 2005 with interest rates and other valuation effects being quite small.

Net investment income also includes the change in the fair value of the
catastrophe swap entered into by Catlin Bermuda, a charge of US$619,000.

The Wellington return for 2006 is higher than Catlin's, at 5.3 per cent,
resulting particularly from the shorter duration of its fixed income securities
as well as diversification in equities and hedge funds of funds.

Net realised gain/(loss) on foreign currency exchange

During 2006 Catlin realised a gain on foreign exchange of US$38.7 million (2005:
US$13.8 million loss). The sterling-US dollar exchange rate rose to 1.96 at
year-end 2006 (31 December 2005: 1.72). representing a 14 per cent strengthening
of sterling against the US dollar. During 2005, the US dollar had strengthened
by 10 per cent against sterling. Gains largely resulted from Catlin's US dollar
reporting operations holding sterling assets during the year.

Wellington had a realised loss on exchange of US$7.5 million, primarily
resulting from losses on currency sales.

Income tax expense

Catlin's income tax expense increased 108 per cent to US$16.6 million (2005:
US$8.0 million), whilst the effective tax rate has fallen to 6.0 per cent (2005:
28.9 per cent).

The effective tax rate is lower than the Group's expected rate of 12 to 15 per
cent over the course of an underwriting cycle because profitable business was
ceded to Catlin Bermuda. The Catlin Syndicate and Catlin UK recorded net losses
during the year, after intra-Group reinsurance. The Catlin Syndicate losses
occurred due to losses from prior years that were not covered by intra-Group
reinsurance. The Catlin UK loss was the result of two large satellite claims
which caused a loss for the year even after intra-Group reinsurance.

During 2005 the opposite effect occurred, when losses were ceded to Catlin
Bermuda through intra-Group reinsurance, leaving profits in the Catlin Syndicate
and Catlin UK, which caused the Group's tax rate to exceed the expected rate.

Most of Wellington's profits arose in UK entities and its effective tax rate is
close to the UK corporate tax rate.

Balance sheet

The balance sheet at 31 December 2006 incorporates the net assets of Wellington
which were acquired as at the year end. The fair value of the assets acquired is
reflected in the balance sheet in accordance with US GAAP requirements.
                                               
US$000 (except share amounts)                     2006         2005   % change
                                             ---------    ---------   --------
Investments and cash                         5,013,709    2,371,360        111
Securities lending collateral                  130,854            -          -
Intangible assets and goodwill                 868,026       63,639      1,264
Premiums and other receivables                 987,768      565,500         75
Reinsurance recoverable                      1,238,852      629,269         97
Value of in-force business acquired            118,384            -          -
Deferred acquisition costs                     144,063      126,738         14
Other assets                                   304,662      103,477        194

Loss reserves                               (4,005,133)  (1,995,485)       101
Unearned premiums                           (1,290,379)    (663,659)        94
Notes payable                                 (550,290)     (50,000)     1,000
Subordinated debt                              (99,936)           -          -
Other liabilities                             (710,697)    (219,758)       223
Securities lending payable                    (130,854)           -          -
Minority interest                                 (749)           -          -
                                             ---------    ---------   --------
Stockholders' equity                         2,018,280      931,081        117
                                             ---------    ---------   --------
Stockholders' equity per share (US$)(1)        US$8.07      US$5.97         35
                                             ---------    ---------   --------
Stockholders' equity per share (sterling)(1)     £4.12        £3.47         19
                                             ---------    ---------   --------

(1) Calculated based on issued share capital at 8 March 2007 of 250.0 million
shares.

The chart below shows the principal components of the change in stockholders'
equity during the year:

US$000
Stockholders' equity, 1 January 2006                                   931,081
Equity raise, March 2006                                                64,881
Net income                                                             258,789
Equity issued to acquire Wellington                                    812,427
Stock compensation and other                                            11,000
Treasury shares acquired                                                (6,600)
Dividends declared                                                     (48,607)
Change in other comprehensive income                                    (4,691)
                                                               ---------------
Stockholders' equity, 31 December 2006                               2,018,280
                                                               ---------------

Investments and cash

Investments and cash increased by 111 per cent to US$5.01 billion (2004:US$2.37
billion). Included in this amount are US$2.29 billion in investments and cash in
the acquired Wellington balance sheet. In addition to cash generated from
operations, cash resources were increased by US$65 million through the issue of
equity in March 2006.

The Group continued to maintain a conservative investment philosophy, with the
majority of assets invested in a portfolio of fixed maturities, short term
investments and cash. At 31 December 2006, the fixed maturities were all high
quality, primarily with ratings of AA or higher. The Wellington portfolio
includes assets with a market value of US$233 million invested in diversified
investment funds.

Securities lending

In early 2006 the Group entered into a securities lending arrangement, through
which certain of its fixed maturity investments are loaned to third parties
through a lending agent. Catlin maintains control over the securities it lends,
retains the earnings and cash flows associated with the loaned securities, and
receives a fee from the borrower for the temporary use of the securities.
Collateral in the form of cash, government securities and letters of credit is
required to be established by the borrower at a minimum rate of 102% of the
market value of the loaned securities; this is monitored and maintained by the
lending agent.

Intangibles and goodwill

Intangibles and goodwill have increased by US$804 million due to the acquisition
of Wellington at the end of the year. Goodwill arising on the transaction is
US$69 million. The following intangible assets have been created:

   • Purchased Lloyd's syndicate capacity (US$716 million)

    o This represents the capacity that Wellington owned on acquisition as
      well as the capacity acquired by Catlin from Wellington's third-party 
      capital providers. The element acquired by Catlin as part of the cessation 
      of Syndicate 2020 is valued at US$250 million.
    o This asset will have an indefinite life and, as such, will not be
      amortised but will be subject to annual impairment tests.

   • Distribution network (US$5 million)

    o This represents the value of the customer and broker networks after
      allowing for an assumed rate of attrition and will be deducted from the
      syndicate capacity amount above. Catlin already has access to similar 
      networks in Lloyd's, but there is value in the Lloyd's distribution 
      network from a market participant's point of view.
    o This asset will be amortised over its estimated useful life of five years.

   • Surplus lines licenses (US$ 6 million)

    o This represents the value of the surplus lines licenses acquired.
    o This asset will be amortised over its estimated useful life of five years.

Under US GAAP Catlin is required to establish a liability for deferred taxation
in relation to the value of intangible assets and goodwill arising on the
acquisition. This liability is included in 'other liabilities' and amounts to
US$127 million.

In May 2006 the Group acquired American Indemnity Company, a shell insurance
company in the United States which will write admitted business for the Group.
As part of the acquisition, the Group acquired approvals by states to write
surplus lines business which are valued at $3 million. These intangible assets
are also included in this balance.

Reinsurance recoverable

Included in this amount are reinsurance recoverables of US$805 million in the
acquired Wellington balance sheet. Wellington historically relied on reinsurance
to a greater extent than Catlin. The composition and quality of reinsurers used
by Wellington are comparable to those used by Catlin.

The legacy Catlin reinsurance recoverable, which included the deposit with
reinsurer, has decreased by US$196 million compared with the prior year. The
2005 balance reflected the anticipated recoveries from reinsurers due to the
hurricane losses incurred in the second half of 2005. There is no deposit with
reinsurer balance in the 2006 figures as all recoveries have now been made under
this contract.

Premiums and other receivables

Included in this amount are receivables of US$339 million in the acquired
Wellington balance sheet. Legacy Catlin premiums and other receivables have
increased by US$83 million compared with the prior year, reflecting the higher
levels of premiums written during 2006.

Value of in-force business acquired

As part of the Wellington acquisition, the legacy Wellington deferred
acquisition costs have been written off and have been replaced by an asset that
represents the value of the business acquired. The establishment of this asset,
which represents the profit embedded in the unearned premiums carried on the
Wellington balance sheet, is required under US GAAP. It will be amortised to net
income in line with the earning of the related unearned premium.

Deferred acquisition costs

Deferred acquisition costs as a percentage of unearned premiums was 11 per cent
(31 December 2005: 19 per cent). However, including the value of in-force
business acquired, which effectively replaced deferred acquisition costs on
Wellington's acquisition balance sheet, this percentage is comparable to the
previous year at 20 per cent.

Loss reserves

Gross loss reserves have approximately doubled to US$4.00 billion (2005:US$2.00
billion), including US$2.03 billion assumed at fair value upon the acquisition
of Wellington. For both companies the level of gross loss reserves has fallen
over 2006, reflecting steady settlement of losses arising from the 2005
hurricanes. Notwithstanding this, approximately 44 per cent of the gross
reported losses in respect of Hurricane Katrina remain unpaid. Loss reserves
continue to be held at levels which are conservative relative to the range of
estimates of both internal actuaries and independent advisors.

Unearned premiums

Unearned premiums have increased by approximately 94 per cent to US$1.29 billion
(31 December 2005:US$664 million), including US$492 million assumed on the
acquisition of Wellington. The growth in unearned premiums reflects growth in
net written premiums during 2006.

Cash and capital management

Intra-Group reinsurance

The use of intra-Group reinsurance is central to the management of the Group's
capital. The Group seeks to maintain economic capital within Catlin Bermuda to
the maximum extent possible and to manage the insurance risk portfolio on a
Group basis, regardless of the underwriting platform which originally
underwrites the risk. The intra-Group contracts which cede risk from the Catlin
Syndicate and Catlin UK to Catlin Bermuda have been renewed during the year, and
contracts have also been put in place to cede Catlin US risk to Bermuda when
Catlin US commences underwriting for its own account. These arrangements will
also be effective in ceding former Wellington syndicate risk to Catlin Bermuda;
Wellington Syndicate 2020 ceased operations effective 31 December 2006, with the
business formerly written by Syndicate 2020 now underwritten by the Catlin
Syndicate.

Cash and liquidity
A summary of the growth in cash and invested assets is shown in the table below.

US$000
Total cash and investments, 1 January 2006                           2,371,360
Operating cash                                                         121,192
Dividends paid                                                         (48,751)
Acquisition of Wellington, net of cash and investments acquired      1,970,942
Bridge financing facility                                              500,000
Other                                                                   98,966
                                                                --------------
Total cash and investments, 31 December 2006                         5,013,709
                                                                --------------

Gearing and banking facility

The Group's banking arrangements were largely unchanged from 2005 up to the
acquisition of Wellington. To assist with the financing of that transaction,
Catlin entered into a US$500 million bridge financing facility which was used to
finance the cash element of the acquisition of Wellington, together with part of
the consideration paid to the third-party capital providers to the Wellington
syndicate in accordance with the syndicate cessation arrangement. The cost of
this facility was LIBOR plus 45 basis points.

On 18 January 2007 Catlin Insurance Company Ltd. ('Catlin Bermuda') issued
US$600 million of non-cumulative perpetual preferred shares. Interest is payable
at 7.249 per cent. The proceeds of this issue were primarily used to repay the 
bridge financing facility. These preferred shares represent regulatory capital 
for Catlin Bermuda and innovative Tier I capital.

The Group has renegotiated its bank facility to meet the needs of the combined
Group. This includes the following three elements:

  • A US$50 million revolving credit facility. This was fully drawn at 31
    December 2006 but was repaid following completion of the preferred share
    issue referred to above.
  • A £275 million (US$539 million) unsecured letter of credit facility.
    £225 million of this facility is currently drawn and used to provide part of
    the Funds at Lloyd's supporting the underwriting of the Group's operations
    at Lloyd's.
  • A US$350 million standby letter of credit facility which is used by
    Catlin Bermuda and Catlin UK to secure outstanding claim and unearned
    premium balances as necessary for trading in, for example, the US. There is
    approximately US$110 million outstanding on this facility.

During 2006 Wellington issued a total of US$68 million and €18 million variable
rate unsecured subordinated notes. The interest payable on the notes is based on
market rates for three-month deposits in US dollars plus a margin of up to 317
basis points. The notes, which are redeemable in 2011 at the earliest, qualify
as lower Tier II capital under UK Financial Services Authority regulations. The
proceeds were primarily used to provide funding for Syndicate 2020.

The gearing reflected on the balance sheet arising from this financing
represents 32 per cent (31 December 2005: 5 per cent) of stockholders' equity.
After the preferred share issue in January 2007, gearing has fallen to 4 per
cent.

Foreign currency management

US dollars account for the majority of the Group's cash flows. A significant
part of the remaining cash flows are in sterling; the Group also maintains euro
and Canadian dollar funds. Management of foreign currency exposures is primarily
focussed on analysis and matching of expected cash flows; derivatives or other
financial instruments have not been utilised by Catlin during the year. Forward
purchases and sales of currency are used when currency needs are identified.
Wellington undertook forward currency and other currency derivative transactions
during the year.

Other capital management

Group capital adequacy is measured against Catlin's economic capital model which
measures required capital against a series of 1 in 200 year scenarios. This
complies with European and US regulatory requirements, although the Group holds
capital in excess of regulatory minima. The model calculates capital
requirements having regard to underwriting, reserving, credit, market,
investment and operational risk. The model is regularly updated as part of the
Group's planning process.

Catlin Bermuda, Catlin UK and the Catlin Syndicate have financial strength
ratings of 'A' (Excellent) by A.M. Best Company, while Wellington Specialty
Insurance Company is rated 'A-' (Excellent). The Catlin Bermuda and Catlin UK
ratings from A.M. Best are currently under review with negative implications.
Catlin anticipates that this review will be resolved in the first half of 2007.
During 2006, Catlin Bermuda and Catlin UK received insurer financial strength
ratings of A- (Strong) by Standard & Poor's.

The non-cumulative perpetual preferred shares issued by Catlin Bermuda are rated
'bbb' by A.M. Best Company and 'BBB' by Standard & Poor's.


Reconciliation to IFRS

The Group's consolidated financial statements are prepared in accordance with US
GAAP, which differs in certain respects from International Financial Reporting
Standards ('IFRS').

The following statements summarise the material adjustments, gross of their tax
effect, which reconcile the net income and stockholders' equity under US GAAP to
the amounts which would have been reported had IFRS been applied.

Net income                                                       Year ended 31
                                                                      December
(US$000)                                           Note       2006        2005
                                                  -----  ---------   ---------
Net income under US GAAP                                  $258,789     $19,662
Adjustment for:
Change to single functional currency                (a)    (50,052)      5,275
Exchange gains/(losses) on foreign currency bond
portfolios                                          (b)     (4,240)      3,662
Fair value of employee stock compensation           (c)        (99)        (99)
Recognition of payroll taxes on employee stock

compensation                                        (d)       (371)     (1,826)
Taxation                                            (e)     16,429      (2,319)
                                                  -----  ---------   ---------
Net income under IFRS                                     $220,456     $24,355
                                                  -----  ---------   ---------

Stockholders' equity                                                  As at 31
                                                                      December
(US$000)                                           Note        2006       2005
                                                  -----   ---------  ---------
Stockholders' equity under US GAAP                        2,018,280   $931,081
Adjustment for:
Change to single functional currency                (a)     (10,388)    (9,387)
Fair value of employee stock compensation           (c)        (310)      (241)
Recognition of payroll taxes on employee stock
compensation                                        (d)      (1,981)    (1,721)
                                                  -----   ---------  ---------
Stockholders' equity under IFRS                           2,005,601   $919,732
                                                  -----   ---------  ---------

a) Under US GAAP, an entity is permitted to have more than one functional
currency, if certain criteria are met. The Catlin Syndicate meets these criteria
and therefore operates with multiple functional currencies. Under IFRS, the
revised IAS 21 became effective on 1 January 2005. Although multiple functional
currencies were allowed under the former IAS 21, the revised standard prohibits
multiple functional currencies within an entity. The new IAS 21 has been applied
prospectively, and this reconciling item shows the net effect of moving the
Catlin Syndicate from four functional currencies to sterling as the sole
functional currency.

b) Certain of the Group companies hold fixed income investments in foreign
currencies, which are intended to mitigate exposures to foreign currency
fluctuations in net liabilities. Under US GAAP, changes in the value of such
investments due to foreign currency rate movements are reflected as a direct
increase or decrease to stockholders' equity. Under IFRS, such changes are
included in the statement of operations.

c) Under US GAAP, options issued under an employee stock compensation scheme
when the Company is privately-held may be valued assuming no expected volatility
(the minimum value method). Under IFRS, a volatility assumption must be made in
valuing stock-based compensation issued after 7 November 2002, even if the
Company is privately-held. This reconciling item represents the fair value of
employee stock options issued after 7 November 2002, recalculated with an
expected volatility assumption reflecting the historical volatility of the
Group's listed peers.

d) Under US GAAP, a liability for payroll taxes arising from stock
compensation is recognised when the amount is due to the taxing authority, for
example on the exercise of stock options. Under IFRS, a liability must be
recorded at the date of grant, based on the market value of the underlying
security. This liability should be subsequently adjusted for movements in the
market value of the underlying security.

e) All of the net income reconciling items are presented before tax. This
line item represents the tax effect of all the reconciling items.

The Wellington Acquisition

Catlin's acquisition of Wellington Underwriting plc is expected to bring
material benefits to the business. Catlin's and Wellington's businesses are
complementary with strong operational and underwriting expertise which will be
further strengthened and diversified through the combination. On an unaudited
combined basis, Catlin and Wellington's operations produced net income in 2006
amounting to US$428 million, representing a 23.8 per cent return on average
equity.

Catlin's recommended offer to acquire Wellington was declared unconditional on
18 December 2006. The combination of the businesses was deemed effective 31
December 2006 for accounting purposes and the net assets acquired have been
valued as at that date. The operating results of Wellington will be included in
Catlin's consolidated financial statements for periods following 31 December
2006.

Under the terms of the offer, Wellington shareholders received 0.17 shares of
the Company's common stock and 35 pence in cash for each Wellington share. Total
consideration including expenses for the transaction was approximately US$1.18
billion, including US$347 million of cash and 86.1 million shares of the
Company's common stock valued at US$812 million.

The offer represented a premium for Wellington shareholders of approximately 25
per cent to the closing middle market price of 97.25 pence per Wellington share
on 23 October 2006, the last business day prior to the announcement that Catlin
and Wellington were in discussions. The offer represented a premium for
Wellington shareholders of approximately 31 per cent to the average Wellington
share price over the one-month period prior to 24 October 2006, the day that it
was announced that Catlin and Wellington were in discussions.

Prior to the acquisition, Wellington conducted its underwriting activities
through:

   •The management by Wellington Underwriting Agencies Limited of Syndicate
    2020, and its participation on Syndicate 2020 through the Wellington
    corporate members (the Wellington Group's participation on Syndicate 2020
    amounted to 67 per cent for the 2006 year of account). In December 2006,
    Lloyd's approved the cessation of Syndicate 2020 and its operations have
    been combined with those of the Catlin Syndicate (Syndicate 2003) for the
    2007 year of account.
   •Wellington Underwriting Inc., an underwriting agency in the United States
    which underwrote or introduced insurance and reinsurance business to
    Syndicate 2020.
   •Wellington Specialty Insurance Company, a non-admitted insurer in the
    United States which underwrites specialty casualty and non-catastrophe
    property insurance for US commercial clients.

The projected benefits of the acquisition include:

   •A major expansion of Catlin's operating platforms. Following the
    amalgamation with Syndicate 2020, the Catlin Syndicate is the largest
    syndicate at Lloyd's for the 2007 underwriting year with a total premium
    capacity of £1.25 billion. Catlin Bermuda is expected to grow through
    further underwriting opportunities and increased intra-Group reinsurance
    cessions. Catlin UK will develop further through writing business classes
    also underwritten by Wellington.
   •The accelerated development of Catlin's US business. The acquisition of
    Wellington advances Catlin's existing expansion plans in the US. The
    addition of Wellington's US operations enhances the depth of the
    underwriting staff and the range of products offered by Catlin US. It has
    also strengthened Catlin US's infrastructure.
   •Further diversification of Catlin's underwriting operations. The
    Wellington acquisition broadens Catlin's already diversified underwriting
    portfolio by adding new classes of business and additional non-catastrophe
    risk. In addition, Wellington brings a strong reputation for underwriting
    skill, and the addition of Wellington's underwriting staff will bolster
    Catlin's team.
   •A strengthened balance sheet. Catlin's greater financial resources
    arising from 2006 results and the acquisition are a positive factor for
    clients, brokers and shareholders. At 31 December 2006, investments and cash
    increased by 111 per cent per cent to US$5.01 billion (31 December 2005:
    US$2.37 billion), whilst stockholders' equity increased by 117 per cent to
    US$2.02 billion (31 December 2005: US$931.1 million).

The acquisition is now expected to be earnings accretive in 2007 after projected
restructuring and retention costs, and significantly earnings enhancing in 2008
and subsequent years following the projected realisation of not less than US$70
million in annualised synergies. The projected synergies include:

   • Reinsurance synergies, which are expected due to greater diversification
    and therefore reduced reinsurance need, and economies of scale. There is
    considerable scope for reinsurance synergies in the light of the Group's
    US$500 million expenditure for reinsurance in 2006.
   • Tax synergies, which are expected through the maintenance of capital in
    Bermuda. For 2006 Wellington produced pre tax income of US$245 million and
    had a tax rate of 30.8 per cent. Catlin's tax rate for 2006 was 6.0% and it
    is expected that Catlin's tax rate over time will average 12 per cent to 15
    per cent.
   • Operating synergies, which are expected to stem from scale efficiencies,
    including headcount savings and consolidation of information technology,
    professional services and office costs . As at 28 February 2007, there have
    been 47 agreed employee departures and 31 resignations since the offer was
    declared unconditional, producing an annualised saving of US$9 million. In
    addition, the Group has reduced by 150 employees the recruitment previously
    projected separately by Catlin and Wellington, which will produce an
    estimated annualised cost saving of US$14 million. The combination of
    premises is expected to produce an additional annualised saving of US$6
    million.
   • Investment synergies, which are expected as a result of increased
    portfolio size and optimisation of risk-adjusted returns.

Catlin has owned 100 per cent of the capacity of the Catlin Syndicate since 2003
and believes that full ownership of syndicate capacity provides significant
benefits. Accordingly, concurrent with the acquisition and through the cessation
of Syndicate 2020, Catlin in effect removed the third-party capacity and
combined the Wellington and Catlin Syndicates. As a result, the Group owns 100%
of the capacity of the enlarged Catlin Syndicate for 2007. Some of the third
party capacity that previously supported Wellington Syndicate 2020 participates
on a quota share reinsurance of Catlin Syndicate for 2007 (and will do so for
2008). The quota share reinsurance comprises £156 million of Catlin Syndicate's
total premium capacity of £1.25 billion.

In December 2006, after the offer was declared unconditional, Lloyd's granted
permission for Syndicate 2020 to cease as at 31 December 2006.

Catlin entered into a US$500 million bridge financing facility which was used to
finance the cash element of the acquisition of Wellington, together with part of
the consideration paid to the third-party capital providers to Syndicate 2020.
On 18 January 2007 Catlin Insurance Company Limited issued US$600 million of
non-cumulative perpetual preferred shares and used a portion of the proceeds of
this issue to repay the bridge facility.






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