Interim Results

Catlin Group Limited
08 September 2006


                         CATLIN GROUP LIMITED ANNOUNCES
                 INTERIM RESULTS FOR PERIOD ENDED 30 JUNE 2006

HAMILTON, Bermuda - Catlin Group Limited ('CGL': London Stock Exchange), the
international property and casualty insurer and reinsurer, announces record net
income for the six months ended 30 June 2006.

Highlights:

   • Net income increased to record US$147.3 million (30 June 2005: US$111.2
     million)

   • Excluding foreign exchange effects, profit before tax decreased 5.9 per
     cent to US$139.1 million (30 June 2005: US$147.9 million)

   • Annualised return on average equity was 29.1 per cent (30 June 2005:
     22.0 per cent)

   • Book value per share decreased 1.8 per cent to US$6.67 (30 June 2005:
     US$6.79); book value per share increased 11.7 per cent from US$5.97 at 31
     December 2005; in sterling terms book value per share increased 3.7 per 
     cent to £3.60 (31 December 2005: £3.47)

   • Gross premiums written increased 15.5 per cent to US$903.1 million (30
     June 2005: US$781.7 million)

   • Net premiums earned rose 2.5 per cent to US$642.5 million (30 June 2005:
     US$627.1 million)

   • Combined ratio was 84.7 per cent (30 June 2005: 82.3 per cent)

   • Earnings per share of 92 US cents (30 June 2005: 72 US cents)

   • Interim dividend increased to 6.0 pence (11.3 US cents) per share (30
     June 2005: 5.4 pence; 9.9 US cents)

   • Weighted average rate increase of 37 per cent for catastrophe exposed
     classes of business during period ended 30 June 2006; increase of 12 per
     cent across all classes

   • Aggregate catastrophe exposure reduced by approximately one-third

   • Catlin US management team in place; infrastructure being completed;
     underwriting teams hired; new offices opened in Atlanta and New York

Commenting on the Group's interim results, Chief Executive Stephen Catlin said:

'Catlin's performance during the first half of 2006 was strong thanks to our
culture of disciplined underwriting. We had record premium volume and net
income, while at the same time we have reduced our exposure to natural
catastrophe risk by approximately one-third compared with a year ago and
continued to diversify our risk portfolio.

'We have also made great strides in building our business for the future. We
have established strong management in our recently established US operating
platform, and we have also opened a number of offices in North America and Asia.
We are encouraged by the opportunities that this expansion creates.'


Key Financial Data
                                                                   For the six
                                                               months ended 30
                                                                          June
US$000 except where indicated                2006          2005       % change
Gross premiums written                    903,145       781,739           15.5%
Net premiums written                      765,993       658,695           16.3%
Net premiums earned                       642,483       627,086            2.5%
Income before income tax expense          167,399       126,335           32.5%
Net income                                147,310       111,175           32.5%
Earnings per share (US$)                     0.92          0.72           27.8%
Interim dividend per share (pence)            6.0           5.4           11.1%
Interim dividend per share (US cents)        11.3           9.9           14.1%
Book value per share (US$)                   6.67          6.79           (1.8%)
Effective tax rate                           12.0%         12.0%            --
Combined ratio                               84.7%         82.3%            --
Annualised return on average equity          29.1%         22.0%            --

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


Notes to editors:

1. The Catlin Group, headquartered in Bermuda, is an international
specialist property/casualty insurer and reinsurer writing more than 30 classes
of business worldwide. Catlin wrote gross premiums of $1.4 billion in 2005.
Catlin shares are traded on the London Stock Exchange (ticker symbol: CGL).

2. Catlin management will make a presentation to investment analysts
at 10am BST today at its London office (3 Minster Court, Mincing Lane, London
EC3R 7DD). The presentation will be broadcast live on the Group's website
(www.catlin.com). The webcast will also be available on the website following
the presentation.

3. Catlin operates four underwriting platforms:

   • The Catlin Syndicate at Lloyd's of London (Syndicate 2003), which is one
     of the largest syndicates at Lloyd's based on 2006 premium capacity of £500
     million. It is a recognised leader of numerous classes of specialty
     insurance and reinsurance.

   • Catlin Bermuda (Catlin Insurance Company Ltd.), which underwrites
     property treaty and casualty treaty reinsurance and property and casualty
     insurance.

   • Catlin UK (Catlin Insurance Company (UK) Ltd.), which specialises in
     underwriting commercial non-life insurance for UK clients. It also writes
     other classes of business written by the Catlin Syndicate.

   • Catlin US, which encompasses all of Catlin's operations in the United
     States. Catlin US includes Catlin Insurance Company Inc., an admitted US
     insurer, along with underwriting offices in several US cities.

The Catlin Syndicate, Catlin Bermuda and Catlin UK have financial strength
ratings of 'A' (Excellent) from A.M. Best Company. Catlin Bermuda and Catlin UK
have insurance financial strength ratings of 'A-' (Strong) from Standard &
Poor's; the Catlin Syndicate has a Lloyd's Syndicate Assessment of '4-' (Low
Dependency) from Standard & Poor's.

4. Catlin also operates offices worldwide which allow Catlin
underwriters to work closely with local policyholders and brokers. The offices
are located in the United States (Atlanta, Houston, New Orleans, New York and
San Francisco), Canada (Toronto and Calgary), Australia (Sydney), Singapore,
Malaysia (Kuala Lumpur), Hong Kong, Germany (Cologne), Belgium (Antwerp) and
Guernsey. Catlin UK has regional offices in Glasgow, Leeds, Derby, Birmingham,
Tonbridge and Watford.

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

6. Rates of exchange at 30 June 2006 - balance sheet: £1=US$1.85 (30
June 2005: US$1.79); income statement: £1=US$1.79 (30 June 2005: US$1.88).

7. Detailed information regarding Catlin's financial results for the
six months ended 30 June 2006 including unaudited consolidated financial
statements, is attached.

8. More information about Catlin can be found on the Group's website: 
www.catlin.com.


The Catlin Group is pleased to report record premium volume and net income for
the first half of 2006. This excellent performance reflects:

   • the favourable market environment which has arisen following the
     unprecedented catastrophe losses incurred in the second half of 2005;

   • Catlin's ongoing commitment to disciplined underwriting;

   • the continued development of underwriting initiatives by the Group over
     the past several years;

   • the advantages provided by Catlin's multi-platform operating structure;
     and

   • positive foreign exchange effects.


The record catastrophe losses arising from Hurricanes Katrina, Rita and Wilma in
the second half of 2005 have created a market environment that offers
significant opportunities for Catlin. However, we have ensured that we have not
strayed from our basic operating principles while taking advantage of those
opportunities. During the course of 2006 we have continued to reassess our
catastrophe exposed risk portfolio, and we have reduced our exposure to natural
catastrophe risk by approximately one-third compared with a year ago. We have
further diversified our already balanced risk portfolio to increase the amount
of business that we write that will not likely be impacted by a major
catastrophe. We are also expanding our geographic reach, opening offices in the
United States, Canada and Hong Kong during the year and accelerating the
development of our fourth underwriting platform, Catlin US.

Catlin's multi-platform structure - composed of a Bermuda based holding company,
underwriting platforms in key markets and a network of international offices
which allows us to work more closely with local brokers and policyholders - is
an important part of our success. This structure differentiates Catlin from many
of its competitors and provides the Group with financial flexibility and greater
access to uncorrelated risk.

We are proud of our performance in the first half of 2006, and we look forward
to continued growth and profitability in the remainder of the year and in 2007.


Financial Results

Gross premiums written increased by 15.5 per cent during the first six months of
2006 to US$903.1 million (30 June 2005: US$781.7 million). Growth in gross
premiums written accelerated during the first half, as premium rates for classes
of direct and reinsurance business exposed to natural catastrophes steadily
increased.

Net premiums earned rose 2.5 per cent to US$642.5 million (30 June 2005:
US$627.1 million). As premiums earned typically lag premiums written, the 2.5
per cent growth in net premiums earned reflects, in part, the pattern of written
premiums in 2005 when premium volumes decreased, particularly in the first half
of that year. Unearned premiums increased by 31.5 per cent in the first half of
2006 to US$872.9 million (31 December 2005: US$663.7 million), reflecting
written premium growth in the second half of 2005 and in the first half of 2006.

The Group's net income increased by 32.5 per cent to US$147.3 million (30 June
2005: US$111.2 million). The performance amounts to an annualised return on
average equity of 29.1 per cent.

The Group's underwriting performance in the first six months of 2006 was broadly
comparable to the corresponding period of 2005. The combined ratio for the first
six months of 2006 was 84.7 percent (30 June 2005: 82.3 per cent). The loss
ratio was 49.3 per cent (30 June 2005: 48.7 per cent), which reflected the
favourable underwriting conditions during the period along with a relatively
benign loss environment. The expense ratio increased to 35.4 per cent (30 June
2005: 33.6 per cent), reflecting the Group's investment in both personnel and
systems to enhance controls and to take advantage of future underwriting
opportunities, including the development of Catlin US.

The Group's net income for the six months ended 30 June 2006 includes US$28.3
million of realised gains on foreign currency exchange (30 June 2005: US$21.5
million foreign exchange loss). Catlin Bermuda assumes sterling denominated
intra-Group reinsurance from other companies within the Group and, consequently,
holds sterling net assets on its balance sheet. As a result of the strengthening
of sterling against the US dollar, foreign exchange gains are recorded when
these sterling net assets are presented in US dollars. These foreign exchange
effects comprise the majority of the foreign exchange gain in the first half of
2006. The gains do not have a significant economic impact and offsetting
intra-Group entries are reflected in stockholders' equity.

Stockholders' equity amounted to US$1.09 billion (30 June 2005: US$1.06 billion;
31 December 2005: US$931.1 million). A small release was made from prior year
loss reserves at 30 June 2006, even though net losses incurred in respect of the
three major hurricanes (Katrina, Rita and Wilma) in the second half of 2005
deteriorated by $26.0 million during the period. Catlin's reliance on
reinsurance remains modest, with reinsurance costs as a percentage of gross
premiums written amounting to 15.2 per cent (30 June 2005: 15.7 per cent).

Catlin's financial strength has been recognised by the major insurance rating
agencies. The Catlin Syndicate, Catlin Bermuda and Catlin UK continue to be
assigned financial strength ratings of 'A' (Excellent) from A.M. Best. In May
2006 Standard & Poor's assigned insurer financial strength ratings of A-
(Strong) to Catlin Bermuda and Catlin UK and an interactive Lloyd's Syndicate
Assessment of '4-' (Low Dependency) to the Catlin Syndicate.

The Group continued to adopt a conservative investment philosophy, with assets
of US$2.50 billion (30 June 2005: US$2.22 billion) invested primarily in fixed
maturities, cash and cash equivalents. The Group had no equity investments
during the first six months of 2006. Net investment income rose by 41.0 per cent
to US$51.9 million (30 June 2005: US$36.8 million), although the Group sustained
realised and unrealised investment losses totalling $31.1 million as US short
term interest rates continued to rise. The total annualised return on average
investments during the period therefore amounted to 1.7 per cent (30 June 2005:
3.1 per cent), although the realised annualised return on average investments
was 3.6 per cent (30 June 2005: 3.6 per cent).


Dividend

Catlin maintains a dividend policy under which payments are linked to recent
trends in the performance of the Group as well as to future business prospects.
The Board of Directors has declared an interim dividend of 6.0 pence (11.3 US
cents) per share (30 June 2005: 5.4 pence (9.9 US cents)), an increase of 11.1
per cent (US dollar increase: 14.1 per cent). The interim dividend will be paid
on 10 November 2006 to shareholders of record on 13 October 2006.


Share Placement

On 9 March 2006, the Group successfully placed 7.7 million new common shares,
which represented about 5 per cent of the Group's outstanding shares. The
placement raised approximately US$65 million, net of expenses. The additional
capital provides Catlin with greater financial flexibility to take advantage of
underwriting opportunities, whilst further strengthening the Group's capital
position.


Segmental Information

The Group's underwriting results by segment are presented prior to adjustments
necessary to eliminate intra-Group reinsurance transactions on consolidation.
Administrative and other expenses are managed on a Group basis and are allocated
between segments based on net premiums earned.

Six months ended 30 June 2006 (US$000)

                  Catlin        Catlin
               Syndicate     Syndicate     Catlin    Catlin   Intra-Group
                  Direct   Reinsurance    Bermuda        UK   Reinsurance      Total
Gross premiums
written          453,343       206,427    393,147   116,632      (266,404)   903,145
Reinsurance
premiums ceded  (233,681)      (97,708)    (5,944)  (66,223)      266,404   (137,152)
                ---------       -------    -------   -------      --------    -------
Net premiums
written          219,662       108,719    387,203    50,409                  765,993
                ---------       -------    -------   -------      --------   --------
Net premiums
earned           199,204        76,932    307,867    58,480                  642,483
Losses and
loss expenses    (67,909)      (38,824)  (174,503)  (35,328)                (316,564)
Expenses         (97,223)      (31,449)   (77,579)  (25,044)                (231,295)
                 --------       -------    -------   -------      --------    -------
Net
underwriting
result            34,072         6,659     55,785    (1,892)                  94,624
                  -------       -------    -------   -------      --------    -------

Loss Ratio          34.1%         50.5%      56.7%     60.4%                    49.3%
Expense             48.2%         40.3%      24.6%     42.2%                    35.4%
Ratio
Combined Ratio      82.3%         90.8%      81.3%    102.6%                    84.7%


Six months ended 30 June 2005 (US$000)

                  Catlin        Catlin
               Syndicate     Syndicate    Catlin    Catlin   Intra Group
                  Direct   Reinsurance   Bermuda        UK   Reinsurance      Total
Gross premiums
written          379,035       187,848   290,455   115,237      (190,836)   781,739
Reinsurance
premiums ceded  (185,015)      (88,319)   (6,580)  (33,966)      190,836   (123,044)
                ---------       -------   -------   -------      --------   --------
Net premiums
written          194,020        99,529   283,875    81,271                  658,695
                ---------       -------   -------   -------      --------   --------
Net premiums
earned           282,136        95,419   156,018    93,513                  627,086
Losses and
loss expenses   (134,607)      (38,729)  (78,414)  (53,523)                (305,273)
Expenses        (112,808)      (37,809)  (35,913)  (25,875)                (212,405)
                ---------       -------   -------   -------      --------   --------
Net
underwriting
result            34,721        18,881    41,691    14,115                  109,408
                ---------       -------   -------   -------      --------   --------

Loss Ratio          47.7%         40.6%     50.3%     57.2%                    48.7%
Expense             39.7%         39.4%     22.8%     27.4%                    33.6%
Ratio
Combined Ratio      87.4%         80.0%     73.1%     84.6%                    82.3%


Overview of Results and Operations

Gross premiums written by all four business segments increased in the first half
of 2006. This is largely attributable to the positive rating environment in
catastrophe exposed classes of business following the 2005 hurricanes. Weighted
average premium rates for catastrophe exposed classes of insurance and
reinsurance written during the first six months of 2006 rose by an average of 37
per cent, while weighted average premium rates for other classes of business
decreased by 2 per cent. Overall, weighted average premium rates for all classes
increased by 12 per cent.

Rate adequacy continued to be strong throughout our risk portfolio.

The increase in premium rates for catastrophe exposed business meant that Catlin
was able to increase gross premiums written in these classes whilst reducing its
aggregate exposure by approximately one-third from last year. This was achieved
through a combination of higher attachment points, lower maximum limits and
reduced line sizes. Whilst there is obviously a temptation to increase the
amount of business underwritten in classes when premium rates are rising
significantly, we have refused to do so. We believe that this prudent strategy
is the correct one, especially in the light of the record catastrophe losses
incurred during 2005 and the possibility that 2006 could be another severe year
for hurricanes.

Gross premiums written in the Catlin Syndicate Direct segment increased by 19.6
per cent to US$453.3 million (30 June 2005: US$379.0 million). Premiums
increased for general liability insurance, both because of better than expected
retention of business and because of new initiatives by the Catlin Syndicate to
write certain US general liability risks. Aviation premium volume has increased,
largely due to the establishment of an office in Guernsey in mid-2005 which
specialises in general aviation risks. Property facultative insurance volume
increased due to rate improvements following the 2005 hurricanes.

Gross premiums written in the Catlin Syndicate Reinsurance segment increased by
9.9 per cent to US$206.4 million (30 June 2005: US$187.8 million). Premium
volume increased for both property catastrophe reinsurance and marine and
aviation reinsurance, despite the fact that aggregate exposures in these
catastrophe exposed classes have been reduced.

Gross premiums written by Catlin Bermuda increased by 35.3 per cent to US$393.1
million (30 June 2005: US$290.5 million). The majority of the increased premium
volume is due to an increase in intra-Group reinsurance ceded to Catlin Bermuda,
although third-party business underwritten by Catlin Bermuda rose by 27.2 per
cent to US$126.7 million (30 June 2005: US$99.6 million), largely due to
increased property reinsurance premium volume.

Gross premiums written by Catlin UK, which writes both insurance for small to
medium size UK policyholders as well as other classes of business, increased by
1.2 per cent to US$116.6 million (30 June 2005: US$115.2 million). The lower
premium growth in this segment reflects the challenging market conditions in the
UK market.

During the six months ended 30 June 2006, Catlin Bermuda and Catlin UK accounted
for 52 per cent of total gross premiums written after intra-Group reinsurance
(30 June 2005: 51 per cent). Business originated by Catlin Bermuda and Catlin UK
accounted for 27 per cent of total gross premiums written (30 June 2005: 27 per
cent).

The loss, expense and combined ratios for each segment in the preceding tables
are reported including the effects of intra-Group reinsurance and therefore do
not reflect the ratios pertaining to the business as underwritten by the
segments prior to intra-Group transactions. The gross premiums written and the
loss, expense and combined ratios for each segment, excluding the effect of
intra-Group reinsurance, are shown in the following tables:


Six months ended 30 June 2006 (US$000)

                           Catlin         Catlin
                        Syndicate      Syndicate    Catlin    Catlin
                           Direct    Reinsurance   Bermuda        UK     Total
Gross premiums written    453,343        206,427   126,743   116,632   903,145

Loss Ratio                   41.0%          53.9%     42.5%     75.1%     49.3%
Expense Ratio                38.1%          32.2%     33.0%     33.5%     35.4%
Combined Ratio               79.1%          86.1%     75.5%    108.6%     84.7%

Six months ended 30 June 2005 (US$000)

                           Catlin         Catlin
                        Syndicate      Syndicate    Catlin    Catlin
                           Direct    Reinsurance   Bermuda        UK     Total
Gross premiums written    379,035        187,848    99,619   115,237   781,739

Loss Ratio                   52.8%          41.8%     28.6%     58.5%     48.7%
Expense Ratio                35.9%          32.6%     30.9%     28.9%     33.6%
Combined Ratio               88.7%          74.4%     59.5%     87.4%     82.3%

Loss experience during the first six months of 2006 was generally favourable, as
reflected by a loss ratio of 49.3 per cent (30 June 2005: 48.7 per cent). Losses
and loss expenses during the period include a $4.2 million release from prior
years, net of a $26.0 million deterioration in net losses incurred in respect of
the three major hurricanes (Katrina, Rita and Wilma) in the second half of 2005.
The bulk of this deterioration impacted the Catlin Syndicate Reinsurance and
Catlin Bermuda segments. A major satellite loss amounting to $19.0 million
impacted the Catlin UK segment, adversely affecting that segment's loss ratio.

Market conditions for catastrophe exposed classes of insurance and reinsurance
continued to improve during the 1 July renewal period. Weighted average premium
rates for catastrophe exposed business incepting in July rose by 40 per cent,
compared with a 2 per cent decrease for other classes. Overall, weighted average
premium rates across Catlin's portfolio for business incepting in July rose by
12 per cent.

Catlin's multi-platform operating structure continued to provide benefits during
the first six months of 2006. Intra-Group reinsurance programmes cede risk and
underwriting profits from our UK underwriting platforms to Catlin Bermuda to
maximise capital and tax efficiency. At 30 June 2006, we anticipate the full
year effective tax rate for the Group will be approximately 12 per cent.


International Expansion

Since 1999 the Catlin Group has set itself apart from many of its competitors by
establishing a network of international offices in the United States, Canada,
Europe, Asia and Australia. These local offices complement Catlin's strategy of
building a portfolio of uncorrelated risk by providing the Group with access to
local business that would not generally be underwritten at Lloyd's or in the
Bermuda market. By establishing these offices, Catlin will work more closely
with assureds and their retail brokers, strengthening the relationship between
Catlin and the client.

So far in 2006, Catlin has opened new offices in Hong Kong and Calgary. The Hong
Kong office was established in July and is underwriting marine hull and cargo,
non-marine property and terrorism coverages. This office will serve clients in
China, Korea and Japan and follows Catlin's successful development of Asian
offices in Singapore and Kuala Lumpur. The Calgary office, which was established
in August, specialises in underwriting aviation business. It complements
Catlin's existing Canadian office in Toronto, which opened in 2005 and is
already producing significant premium volume. We have also opened a Catlin UK
regional office in Tonbridge.

The bulk of the Group's international development during 2006, however, has been
focused on Catlin US, our newest underwriting platform.

Catlin US, which commenced operations in the second half of 2006, will
underwrite a diversified portfolio of specialty classes of insurance. Growth
will be driven by the employment of specialist underwriting teams. The classes
of business to be underwritten will be consistent with Catlin's existing
appetite for non-correlated risk. As with all Catlin underwriting platforms,
underwriting will be driven by the potential for bottom line profit, not top
line growth. Initially, business will be primarily underwritten by the US
underwriting teams on a non-admitted basis and placed with the Catlin Syndicate
or Catlin UK. As time passes, more business will be underwritten by US insurance
companies wholly owned by Catlin.

In May 2006, the Group completed the acquisition of American Indemnity Company,
a shell insurance company admitted in 27 US states, which has since been renamed
Catlin Insurance Company Inc. We are currently applying for the company to be
admitted in additional states, a process we expect will be substantially
completed in early 2007. The Group also plans to establish a non-admitted
insurer based in the United States, which will complement the Group's current
non-admitted capabilities through the Catlin Syndicate and Catlin UK. The
process of establishing this insurer has begun, and we expect this company to be
operating by mid-2007.

Richard Banas was appointed president and chief executive officer of Catlin US
effective 1 April 2006. Rich, who has more than 30 years of management
experience in US specialty lines underwriting, has since assembled an
experienced and respected management team, including executives responsible for
operations, finance, claims, actuarial, human resources and IT. The management
team is based in Catlin US's Atlanta headquarters, which opened in June.

In July, Catlin established an office in New York, which is staffed by a highly
experienced professional liability underwriting team specializing in various
classes of professional liability and directors & officers (D&O) liability
insurance. The professional liability classes underwritten include coverage for
financial institutions, real estate agents, lawyers, accountants and other
professionals. In August, a primary/excess casualty unit was established in
Atlanta. The existing Houston office continues to specialise in underwriting
medical malpractice insurance.

In addition to these classes of business, Catlin US's portfolio will expand over
time to include other classes. Potential classes include inland marine (builders
risk, cargo and specie), general aviation and equine/bloodstock.


Conclusion

Catlin is looking ahead to the remainder of 2006 and into 2007 with optimism.
Market conditions are currently good, and we expect that rates will continue to
firm for many classes of business. We believe that we have an advantageous
operating structure in place. We continue to underwrite on a disciplined basis,
driven by bottom line profit rather than top line growth. We have significantly
reduced our exposure to catastrophic events, whilst still benefiting from the
improved rates and conditions in catastrophe exposed classes. We have
established new offices worldwide, which will increase the amount of
uncorrelated business that we underwrite. Finally, we believe the prospects for
Catlin US are excellent, and we are working hard to develop this important part
of our business.

We are currently in the midst of the US hurricane season. No one can predict
with accuracy whether the wind will blow as it did in 2005, creating record
catastrophe losses. However, we are in an even stronger position to withstand
the impact of severe hurricane events than we were a year ago.

The entire Catlin team has worked extremely hard both to produce these record
results and to develop our initiatives and strategy for the future. I would like
to take this opportunity to thank the members of the team for their superb
effort and spirit.


Stephen Catlin
Chief Executive
7 September 2006



Consolidated Balance Sheets
As at 30 June 2006 and 2005
(US dollars in thousands, except share amounts)


                                     30 June 2006   31 Dec 2005   30 June 2005
                                      (unaudited)     (audited)    (unaudited)
Assets
Investments

Fixed maturities, available-for-sale, 
at fair value (amortised cost 2006: 
$1,735,282; Dec 2005: $1,761,968;                  
June 2005: $1,525,917)                 $1,693,718    $1,744,043     $1,531,650
Short-term investments at fair value        8,198        14,666         60,596
Cash and cash equivalents, at fair
value                                     794,497       609,857        624,243
Investment in associate                     2,498         2,794          2,520
                                        ---------     ---------      ---------
Total investments                       2,498,911     2,371,360      2,219,009
                                        ---------     ---------      ---------

Accrued investment income                  17,536        17,227         13,989
Securities lending
collateral                                209,137             -              -
Premiums and other
receivables                               768,133       565,500        628,255
Reinsurance recoverable (net of
allowance of 2006: $27,312; Dec 2005: 
$24,511; June 2005: $18,303)              522,420       607,446        338,072
Deposit with reinsurer                          -        21,823         21,823
Reinsurers' share of unearned premiums    112,103        37,222         88,890
Deferred acquisition costs                151,920       126,738        143,025
Intangible assets and goodwill
(accumulated amortisation 2006: 
$28,092; Dec 2005: $26,181; June 2005:
$27,210)                                   72,491        63,639         66,032
Other assets                               50,706        49,028         48,853
                                       ----------    ----------     ----------
Total assets                           $4,403,357    $3,859,983     $3,567,948
                                       ----------    ----------     ----------

Liabilities and Stockholders' Equity
Liabilities:
Unpaid losses and loss expenses        $1,950,583    $1,995,485     $1,482,400
Unearned premiums                         872,898       663,659        776,393
Deferred gain                               1,294         8,078          8,124
Reinsurance payable                       138,670       137,313        109,851
Notes payable                              50,000        50,000         50,250
Accounts payable and other
liabilities                                71,275        70,186         61,297
Securities lending
payable                                   209,137             -              -
Deferred taxes                             17,559         4,181         22,246
                                       ----------    ----------     ----------
Total liabilities                      $3,311,416    $2,928,902     $2,510,561
                                       ----------    ----------     ----------
Minority interest                             727             -              -


Stockholders' equity:
Ordinary common shares, par value
$0.01
Authorised 250,000,000;
issued and outstanding 2006:
163,633,683; Dec 2005: 155,914,616; 
June 2005: 155,843,070)                   $1,636        $1,559          $1,558

Additional paid-in capital               791,859       721,935         719,075
Treasury stock                              (552)            -               -
Accumulated other comprehensive
(loss)/income                            (46,983)      (21,399)            565
Retained earnings                        345,254       228,986         336,189
                                       ----------      --------      ---------
Total stockholders' equity             1,091,214       931,081       1,057,387
                                       ----------      --------      ---------
Total liabilities and stockholders' 
equity                                $4,403,357    $3,859,983      $3,567,948


Approved by the Board of Directors on 7 September 2006

Stephen Catlin, Director

Christopher Stooke, Director

Consolidated Statements of Operations (unaudited)
For the six months ended 30 June 2006 and 2005
(US dollars in thousands, except share amounts)

                                                              2006        2005
Revenues
Gross premiums written                                    $903,145    $781,739
Reinsurance premiums ceded                                (137,152)   (123,044)
                                                         ----------  ----------
Net premiums written                                       765,993     658,695
Change in net unearned premiums                           (123,510)    (31,609)
                                                         ----------  ----------
Net premiums earned                                        642,483     627,086
                                                         ----------  ----------
Net investment income                                       51,922      36,849
Net realised (losses)/gains on investments                  (7,633)      1,339
Net realised gains/(losses) on foreign currency exchange    28,314     (21,545)
Other income                                                   172         284
                                                         ----------  ----------
Total revenues                                             715,258     644,013
                                                         ----------  ----------
Expenses
Losses and loss expenses                                   316,564     305,273
Policy acquisition costs                                   157,157     159,548
Administrative expenses                                     61,790      40,968
Other expenses                                              12,348      11,889
                                                         ----------  ----------
Total expenses                                             547,859     517,678
                                                         ----------  ----------
Income before income tax expense                           167,399     126,335
Income tax expense                                         (20,089)    (15,160)
                                                         ----------  ----------
Net income                                                $147,310    $111,175
                                                         ----------  ----------
Earnings per common share
Basic                                                        $0.92       $0.72
Diluted                                                      $0.85       $0.66



Consolidated Statements of Changes in Stockholders' Equity and
Accumulated Other Comprehensive Income (unaudited)
For the six months ended 30 June 2006 and 2005
(US dollars in thousands, except share amounts)

                                                                                  Accumulated
                                             Additional                                 other          Total
                                    Common      paid-in   Treasury   Retained   comprehensive   stockholders
                                     stock      capital      stock   earnings   income (loss)         equity
Balance 1 January 2005              $1,541     $716,649         $-   $248,841          $4,156       $971,187
Comprehensive income:
Net income                               -            -          -    111,175               -        111,175
Other comprehensive income               -            -          -          -          (3,591)        (3,591)
                                   -------     --------    -------    -------       ----------      ---------
Total comprehensive income               -            -          -    111,175          (3,591)       107,584

Stock compensation expense               -        2,096          -          -               -          2,096
Stock options and
warrants exercised                      17          (17)         -          -               -              -
Dividends declared                       -            -          -    (23,480)              -        (23,480)
Deferred compensation
obligation                               -          347          -       (347)              -              -
                                   -------     --------    -------    --------       ---------    -----------
Balance 30 June 2005                $1,558     $719,075          -    $336,189            $565    $1,057,387
                                   -------     --------    -------    --------       ---------    -----------
Balance 1 January 2006              $1,559     $721,935          -    $228,986        $(21,399)     $931,081
Comprehensive income:
Net income                               -            -          -     147,310               -       147,310
Other comprehensive loss                 -            -          -           -         (25,584)      (25,584)
                                   -------     --------    -------    --------       ----------    ----------
Total comprehensive income               -            -          -     147,310         (25,584)      121,726

Equity raise                            77       65,154          -          -               -         65,231
Stock compensation expense               -        3,975          -          -               -          3,975
Stock options and
warrants exercised                       -            -          -          -               -              -
Dividends declared                       -            -          -     (30,247)             -        (30,247)
Deferred compensation obligation         -          795          -        (795)             -              -
Treasury stock purchased                 -            -       (552)         -               -           (552)
                                   -------     --------    --------   --------       ---------    -----------
Balance 30 June 2006                $1,636     $791,859      $(552)   $345,254        $(46,983)   $1,091,214
                                   -------     --------    -------    --------       ---------    ----------- 


Consolidated Statements of Cash Flows (unaudited)
For the six months ended 30 June 2006 and 2005
(US dollars in thousands, except share amounts)

                                                               2006       2005

Cash flows provided by operating activities
Net income                                                 $147,310   $111,175
Adjustments to reconcile net income to net cash provided
by operations:
Amortisation and depreciation                                 4,213      4,949
Amortisation of discounts of fixed maturities                (7,244)    (4,708)
Net realised losses/(gains) on investments                    7,633     (1,339)
Unpaid losses and loss expenses                            (176,092)   109,569
Unearned premiums                                           161,479    100,937
Premiums and other receivables                             (143,052)   (46,761)
Deferred acquisition costs                                  (16,328)    (9,119)
Reinsurance payable                                         (79,589)   104,449
Reinsurance recoverable                                     151,499      9,145
Reinsurers' share of unearned premiums                      (52,145)   (58,081)
Deposit with reinsurer                                      (20,583)    36,008
Deferred gain                                               (12,408)   (11,844)
Accounts payable and other liabilities                       68,732     (5,184)
Deferred tax                                                  1,456     15,150
Other                                                        70,460    (51,809)
                                                           ---------  ---------
Net cash flows provided by operating activities             105,341    302,537
                                                           ---------  ---------
Cash flows used in investing activities
Purchases of fixed maturities                              (644,684)  (951,914)
Purchases of short-term investments                         (46,760)  (190,115)
Proceeds from sales of fixed maturities                     689,361    806,985
Proceeds from maturities of fixed maturities                  5,410     50,487
Proceeds from sales of short-term investments                12,738    311,798
Purchase of intangible assets                                (3,578)         -
Purchases of property and equipment                          (3,149)    (3,841)
Proceeds from sales of property and equipment                    72          6
Investment of securities lending collateral                (209,137)         -
                                                           ---------  ---------
Net cash flows used in investing activities                (199,727)    23,406
                                                           ---------  ---------
                                                             2006         2005
Cash flows provided by financing activities
Proceeds from issue of common shares                      $65,786           $-
Dividends paid on common shares                           (30,037)     (23,425)
Proceeds from notes payable                               150,000      100,000
Repayment of notes payable                               (150,000)    (100,000)
Securities lending collateral received                    209,137            -
Proceeds from exercise of stock options                         -            -
Purchase of treasury stock                                   (552)           -
                                                         ---------    ---------
Net cash flows (used in)/provided by financing
activities                                                244,334      (23,425)
                                                         ---------    ---------
Net increase in cash and cash equivalents                 149,948      302,518
Cash and cash equivalents - beginning of year             609,857      354,608
Effect of exchange rate changes                            34,692      (32,883)
                                                         ---------    ---------
Cash and cash equivalents - end of year                  $794,497     $624,243
                                                         ---------    ---------
Supplemental cash flow information
Taxes paid                                                    $18           $3
Interest paid                                              $1,378         $702

Cash and cash equivalents comprise the following:
Cash at bank and in hand                                 $793,232     $615,656
Cash equivalents                                           $1,265       $8,587



Notes to the Consolidated Financial Statements (unaudited)
For the six months ended 30 June 2006 and 2005
(US dollars in thousands, except share amounts)

1      Basis of preparation

The unaudited interim consolidated financial statements have been prepared in
accordance with the accounting policies set out in the consolidated financial
statements for the year ended 31 December 2005.

In February 2006, the Group entered into a securities lending arrangement
described in Note 3 and, as a result, the Group has adopted the following new
accounting policy in the first half of 2006.

Securities lending
Certain entities within the Group participate in securities lending arrangements
whereby specific securities are loaned to other institutions, primarily banks
and brokerage firms, for short periods of time. Under the terms of the
securities lending agreements, the loaned securities remain under the Group's
control and therefore remain on the Group's balance sheet. Collateral in the
form of cash, government securities and letters of credit is required and is
monitored and maintained by the lending agent. The Group receives interest
income on the invested collateral, which is recorded in net investment income.

Changes in scope of consolidation
On 25 May 2006, the Group, through its wholly owned subsidiary Catlin Inc.,
acquired 100 percent of the outstanding common shares of American Indemnity.
This company was renamed Catlin Insurance Company Inc. ('Catlin US') and it will
underwrite specialty classes of property and casualty business for US commercial
clients on an admitted basis.

The aggregate purchase price was $8,375 in cash, which is equal to the fair
value of net assets acquired. There was no goodwill arising on the transaction.

On 13 June 2006, the Group, through its wholly owned subsidiary Catlin Holdings
Limited, acquired 50.01% of the outstanding common shares of Barfish Limited.
This company has been renamed Brighter Business Limited ('BB') and will operate
as an insurance intermediary, including as a coverholder for Lloyd's Syndicate
2003, whose sole member is Catlin Syndicate Limited. BB intends to offer
coverage including property, employers' and public liability, motor and legal
expenses.

The aggregate purchase price to acquire 50.01% of the outstanding common shares
of BB was $1,432 (£800) in cash. Goodwill of $704 (£394) was generated on this
transaction.


2      Segmental information

For the six months ended 30 June 2006 and 2005, these reporting segments
correspond to the location of where the business was written, with Catlin
Syndicate Direct, Catlin Syndicate Reinsurance and Catlin UK business being
written in the UK and Catlin Bermuda business being written in Bermuda. Net
income before tax by operating segment before intra-Group reinsurance
eliminations for the six months ended 30 June 2006 is as follows:

                              Catlin        Catlin
                           Syndicate     Syndicate     Catlin     Catlin      Intra-
                              Direct   Reinsurance    Bermuda         UK       Group      Total
Gross premiums written      $453,343      $206,427   $393,147   $116,632   $(266,404)  $903,145
Reinsurance premiums
ceded                       (233,681)      (97,708)    (5,944)   (66,223)    266,404   (137,152)
                             --------      --------   --------   --------     -------   --------
Net premiums written         219,662       108,719    387,203     50,409           -    765,993
                             --------      --------   --------   --------     -------   --------
Net premiums earned          199,204        76,932    307,867     58,480           -    642,483
Losses and loss expenses     (67,909)      (38,824)  (174,503)   (35,328)          -   (316,564)
Policy acquisition costs     (85,236)      (27,989)   (47,867)   (22,868)     26,803   (157,157)
Administrative and other
expenses                     (11,987)       (3,460)   (29,712)    (2,176)    (26,803)   (74,138)
                             --------      --------   --------   --------     -------   --------
Net underwriting result       34,072         6,659     55,785     (1,892)          -     94,624
                             --------      --------   --------   --------     -------   --------
Net investment income
and net realised
losses on investments         13,732         5,303     21,223      4,031           -     44,289
Net realised gains on
foreign currency
exchange                       8,779         3,390     13,568      2,577           -     28,314
Other income                      52            21         83         16           -        172
                             --------      --------   --------   --------     -------   --------
Income/(loss)before
income tax expense           $56,635       $15,373    $90,659     $4,732          $-   $167,399
                            ---------      --------   --------   --------     -------  ---------
Total revenue               $221,767       $85,646   $342,741    $65,104          $-   $715,258



Net income before tax by operating segment before intra-Group reinsurance
eliminations for the six months ended 30 June 2005 is as follows:

                              Catlin        Catlin
                           Syndicate     Syndicate     Catlin     Catlin      Intra-
                              Direct   Reinsurance    Bermuda         UK       Group      Total
Gross premiums written      $379,035      $187,848   $290,455   $115,237   $(190,836)  $781,739
Reinsurance premiums
ceded                       (185,015)      (88,319)    (6,580)   (33,966)    190,836   (123,044)
                             --------      --------   --------   --------    --------   --------
Net premiums written         194,020        99,529    283,875     81,271           -    658,695
                             --------      --------   --------   --------    --------   --------
Net premiums earned          282,136        95,419    156,018     93,513           -    627,086
Losses and loss                        
expenses                    (134,607)      (38,729)   (78,414)   (53,523)          -   (305,273)
Policy acquisition costs     (93,092)      (31,141)   (25,010)   (19,340)      9,035   (159,548)
Administrative and other
expenses                     (19,716)       (6,668)   (10,903)    (6,535)     (9,035)   (52,857)
                             --------      --------   --------   --------    --------   --------
Net underwriting result       34,721        18,881     41,691     14,115           -    109,408
                             --------      --------   --------   --------    --------   --------
Net investment income and
net realised gains on
investments                   17,181         5,811      9,501      5,695           -     38,188
Net realised gains on
foreign currency exchange     (9,694)       (3,278)    (5,360)    (3,213)          -    (21,545)
Other income                     128            43         71         42           -        284
                             --------      --------   --------   --------    --------   --------
Income before income tax
expense                      $42,336       $21,457    $45,903    $16,639           -   $126,335
                            ---------      --------  --------   --------     --------  ---------
Total revenue               $289,751       $97,995   $160,230    $96,037          $-   $644,013


Total revenue is the total of net premiums earned, net investment income and net
realised gain/(loss) on investments, net realised gain/(loss) on foreign
currency exchange, and other income.

Total assets by segment at 30 June 2006 and 2005 are as follows:

                                                      2006                2005
Catlin Syndicate Direct                         $2,344,239          $2,004,628
Catlin Syndicate Reinsurance                       895,467             667,666
Catlin Bermuda                                   2,625,031           1,636,097
Catlin UK                                          612,701             505,641
Other                                            1,034,716             837,062
Consolidation adjustments                       (3,108,797)         (2,083,146)
                                                -----------         -----------
Total assets                                    $4,403,357          $3,567,948
                                                -----------         -----------
'Other' in the table above includes assets such as investments in Group
companies which are not allocated to individual segments.


3      Investments

Fixed maturities
The fair values and amortised costs of fixed maturities at 30 June 2006 and 2005
are as follows:

                                               2006                      2005
                                  Fair    Amortised         Fair    Amortised
                                 Value         Cost        Value         Cost
US government and agencies    $857,888     $886,125     $765,592     $757,448
Non-US governments             334,325      340,053      201,094      200,375
Corporate securities           235,395      240,044      304,025      306,355
Mortgage backed securities      73,475       74,434       82,327       82,584
Asset-backed securities        192,635      194,626      178,612      179,155
                            ----------   ----------   ----------   ----------
Total fixed maturities      $1,693,718   $1,735,282   $1,531,650   $1,525,917
                            ----------   ----------   ----------   ----------
The gross unrealised gains and losses related to fixed maturities at 30 June
2006 and 2005 are as follows:

                                               2006                      2005
                                 Gross        Gross        Gross        Gross
                            unrealised   unrealised   unrealised   unrealised
                                 gains       losses        gains       losses
US government and agencies          $-      $28,238       $9,427       $1,283
Non-US governments                  42        5,769        1,472          753
Corporate securities                27        4,676          239        2,569
Mortgage backed securities          45        1,004          102          359
Asset-backed securities             59        2,050          100          643
                            ----------   ----------   ----------   ----------
Total fixed maturities            $173      $41,737      $11,340       $5,607
                            ----------   ----------   ----------   ----------
There were no other than temporary declines in the value of investments in the
six months to 30 June 2006 or 2005. The net realised losses on fixed maturities
for the six months ended 30 June 2006 were $7,399 (2005: net realised gain of
$1,254).

Fixed maturities at 30 June 2006, by contractual maturity, are shown below.
Expected maturities could differ from contractual maturities because borrowers
may have the right to call or prepay obligations, with or without call or
prepayment penalties.

                                                         Fair        Amortised
                                                        value             cost
Due in one year or less                              $272,453         $274,832
Due after one through five years                      726,847          743,285
Due after five years through ten years                425,606          445,229
Due after ten years                                     2,702            2,877
                                                   ----------       ----------
                                                    1,427,608        1,466,223
                                                   ----------       ----------
Mortgage backed securities                             73,475           74,433
Asset-backed securities                               192,635          194,626
                                                   ----------       ----------
                                       Total       $1,693,718       $1,735,282
                                                   ----------       ----------
Restricted assets
The Group is required to maintain assets on deposit with various regulatory
authorities to support its insurance and reinsurance operations. These
requirements are generally promulgated in the statutory regulations of the
individual jurisdictions. These funds on deposit are available to settle
insurance and reinsurance liabilities. The Group also has investments in
segregated portfolios primarily to provide collateral or guarantees for Letters
of Credit ('LOC'), as described in Note 6. Finally, the Group also utilises
trust funds where the trust funds are set up for the benefit of the ceding
companies, and generally take the place of LOC requirements.

The total value of these restricted assets by category at 30 June 2006 and 2005
are as follows:

                                                          2006            2005
Fixed maturities, available for sale                  $916,148        $635,010
Short term investments                                   8,198          21,127
Cash and cash equivalents                              136,752         136,231
                                                    ----------       ---------
Total restricted assets                             $1,061,098        $792,368
                                                    ----------       ---------
Securities lending
The Group participates in a securities lending program under which certain of
its fixed maturity investments are loaned to third parties through a lending
agent. Collateral in the form of cash, government securities and letters of
credit is required at a rate of 102% of the market value of the loaned
securities and is monitored and maintained by the lending agent. The Group had
$206,997 (2005: $nil) of securities on loan at 30 June 2006.


4      Unpaid losses and loss expenses

The Group establishes reserves for losses and loss adjustment expenses, which
are estimates of future payments of reported and unreported claims for losses
and related expenses, with respect to insured events that have occurred. The
process of establishing reserves is complex and imprecise, requiring the use of
informed estimates and judgments. The Group's estimates and judgments may be
revised as additional experience and other data become available and are
reviewed, as new or improved methodologies are developed or as current laws
change. Any such revisions could result in future changes in estimates of losses
or reinsurance recoverable, and would be reflected in the Group's results of
operations in the period in which the estimates are changed. Management believes
they have made a reasonable estimate of the level of reserves at 30 June 2006
and 2005.

The reconciliation of unpaid losses and loss expenses for the six months ended
30 June 2006 and 2005 is as follows:

                                                             2006         2005
Gross unpaid losses and loss expenses, beginning of
year                                                   $1,995,485   $1,472,819
Reinsurance recoverable on unpaid loss and loss
expenses                                                 (575,522)    (359,154)
                                                         ---------    ---------
Net unpaid losses and loss expenses beginning of
year                                                    1,419,963    1,113,665
Net incurred losses and loss expenses for claims
related to:
Current year                                              320,765      308,839
Prior years                                                (4,201)      (3,566)
                                                         ---------    ---------
Total incurred losses and loss expenses                   316,564      305,273
                                                         ---------    ---------
Net paid losses and loss expenses for claims related
to:
Current year                                              (24,047)     (11,719)
Prior year                                               (271,115)    (167,723)
                                                         ---------    ---------
Total paid losses and loss expenses                      (295,162)    (179,442)
                                                         ---------    ---------
Foreign exchange adjustment                                53,421      (46,110)
                                                         ---------    ---------
Net unpaid losses and loss expenses, end of period      1,494,786    1,193,386
Reinsurance recoverable on unpaid loss and loss
expenses                                                  455,797      289,014
                                                         ---------    ---------
Gross unpaid losses and loss expenses, end of period   $1,950,583   $1,482,400
                                                         ---------    ---------    
As a result of the changes in estimates of insured events in prior years, the
2006 provision for losses and loss expenses net of reinsurance recoveries
decreased by $4,201 (2005: decrease of $3,566). Included in this amount are
incurred losses of $26,032, caused by a reassessment of expected ultimate loss
costs relating to the 2005 hurricanes, offset by net decreases in estimated loss
reserves in other classes of business of $30,233. In 2006 and 2005, these
decreases were due to changes in estimates of insured events in previous years
resulting from reductions of expected ultimate loss costs, settlement of losses
at amounts below previously estimated loss costs and reduction in uncertainty
surrounding the quantification of the net cost of claim events.


5    Reinsurance

The Group purchases reinsurance to limit various exposures including catastrophe
risks. Although reinsurance agreements contractually obligate the Group's
reinsurers to reimburse it for the agreed upon portion of its gross paid losses,
they do not discharge the primary liability of the Group. The effect of
reinsurance and retrocessional activity on premiums written and earned is as
follows:

                                        2006                              2005
                   Premiums         Premiums         Premiums         Premiums
                    written           earned          written           earned
Direct             $582,153         $493,821         $501,922         $502,152
Assumed             320,992          221,717          279,817          203,219
Ceded              (137,152)         (73,055)        (123,044)         (78,285)
                  ----------       ----------       ----------       ----------
Net premiums       $765,993         $642,483         $658,695         $627,086
                  ----------       ----------       ----------       ----------

The Group's provision for reinsurance recoverable as at six months ended June
30, 2006 and 2005 is as follows:

                                                          2006            2005
Gross reinsurance recoverable                         $549,732        $356,375
Provision for uncollectible balances                   (27,312)        (18,303)
                                                      ---------       ---------
Net reinsurance recoverable                           $522,420        $338,072
                                                      ---------       ---------
The Group holds collateral against certain reinsurance recoverable positions,
including deposit with reinsurer, totalling $nil (2005: $27,978).


6    Notes payable, debt and financing arrangements

Bank facilities
Since November 2003, the Group has participated in a Letter of Credit/ Revolving
Loan Facility (the 'Club Facility') with three banks. Each bank participates
equally in the Club Facility. The Club Facility is comprised of three tranches
as detailed below. The Club Facility has been varied, amended and restated since
it was originally entered into, most recently on 22 December 2005 when the
credit available under the Club Facility increased from $150,000 and £125,000 to
$250,000 and £150,000 respectively. The following amounts were outstanding under
the Club Facility as at 30 June 2006:

   • Debt outstanding was $50,000, in the form of a 364-day $50,000 revolving
    facility with a one year term-out option ('Facility A'). Facility A, while
    not directly collateralised, is secured by floating charges on Group assets
    and cross guarantees from material subsidiaries. This debt bears interest at
    three-month Libor plus 65 basis points, and the Group is required to
    maintain free and unencumbered assets consisting of OECD Government Bonds,
    US Agencies and Corporate Bonds, discounted by 10%, sufficient to repay the
    loan at any time. The undrawn portion of Facility A costs 25 basis points
    per annum. This loan, which is available under one, two or three month
    renewal periods, can be repaid at any time at the discretion of the Group in
    increments of $10 million. The Group has the option to extend the revolving
    facility for 364 days, or to convert all cash advances into a term loan.

   • A clean, irrevocable standby LOC of $277,500 (£150,000) is provided to
    support Catlin Syndicate Limited's ('CSL') underwriting at Lloyd's
    ('Facility B'). As at 30 June 2006, CSL has utilised Facility B and
    deposited with Lloyd's an LOC in the amount of $277,500 (£150,000). In the
    event that CSL failed to meet its obligations under policies of insurance
    written on its behalf, Lloyd's could draw down this letter of credit. This
    LOC became effective on 26 June 2006 and has an initial expiry date of 27
    November 2009. Collateral of $74,000 (£40,000) was provided by 16 August
    2006 and a further $37,000 (£20,000) must be provided by 1 August 2007.

   • A two-year $200 million standby LOC facility is available for
    utilisation by Catlin Bermuda and Catlin UK ('Facility C'). At 30 June 2006,
    $128,472 in LOC's were outstanding, of which $126,511 are issued for the
    benefit of Catlin Bermuda, with a single LOC of $1,972 (£1,066) being for
    the benefit of Catlin UK. Collateral of 110% of 50% of the face value of the
    utilised portion of the LOCs under the Standby facility must be provided.


The terms of the Club Facility require that certain financial covenants be met
on a quarterly basis, evidenced by Compliance Certificates. These include
limitations on probable maximum losses arising from 'realistic disaster
scenarios' for the Group, as well as requirements to maintain minimum Tangible
Net Worth and Adjusted Tangible Net Worth levels, the calculations of which are
based upon fixed amounts in 2006 and increase over time, for items such as
consolidated net income in future accounting periods. The Group was in
compliance with all covenants during 2006.


7    Taxation

Catlin Group Limited ('CGL') and its Bermudian subsidiaries
Under current Bermuda law, the Company and its Bermuda subsidiary, Catlin
Bermuda, are not required to pay any taxes in Bermuda on their income or capital
gains. Each has received an undertaking from the Minister of Finance in Bermuda
that, in the event of any taxes being imposed, they will be exempt from taxation
in Bermuda until March 2016.

UK subsidiaries
The Group operates in the UK through its UK subsidiaries and the income of the
UK subsidiaries is subject to UK corporation taxes.

CSL is also subject to US federal income tax on the part of its income from its
operations at Lloyd's which is referred to as US connected income ('USCI'). USCI
is calculated in accordance with the terms of the Lloyd's Closing Agreement with
the Internal Revenue Service ('IRS'). The US federal income tax due on USCI is
remitted directly to the IRS by Lloyd's in the first instance but is
subsequently collected from CSL via the Catlin Syndicate. CSL, as a UK tax
resident, receives UK corporation tax credits for any US federal income tax
incurred up to the value of the equivalent UK corporation income tax charge on
the US income.

The UK tax authorities are currently reviewing legislation on the taxation of
insurance company technical reserves. The outcome of this review is not yet
known, but it remains a possibility that recoverability of foreign taxes by CSL
may be prejudiced in whole or in part by any changes in a future year.

US subsidiaries
The Group operates in the US through its US operations and the income of the US
subsidiaries is subject to US federal and state income taxes.

Other subsidiaries
Other Group companies are subject to income taxes imposed by the jurisdictions
in which they operate.

The Group is not subject to taxation other than as stated above, but there can
be no assurance that there will not be changes in applicable laws, regulations
or treaties, which might require the Group to change the way it operates or
become subject to taxation.

The income tax expense for the six months ended 30 June 2006 and 2005 is as
follows:

                                                       2006               2005
Current tax expense                                 $18,296                 $-
Deferred tax expense                                  1,793            $15,160
                                                  ---------          ---------
Expense for income taxes                            $20,089            $15,160
                                                  ---------          ---------                        

8    Stockholders' equity

The following is a detail of the number and par value of common shares
authorised, issued and outstanding as of 30 June 2006 and 2005:

                                        Authorised                  Issued and
                                                                   outstanding
                                               Par                         Par
                               Number        value        Number         value
                            of shares         $000     of shares          $000
Ordinary common shares,
par value $0.01 per
share                        
As at 30 June 2006        250,000,000       $2,500   163,633,683        $1,636
                         ------------   ----------   -----------    ----------
As at 30 June 2005        250,000,000       $2,500   155,843,070        $1,558
                         ------------   ----------   -----------    ----------   
The following table outlines the changes in common shares issued and outstanding
during 2006 and 2005:

                                                        2006              2005
Balance, 1 January                               155,914,616       154,097,989
Exercise of stock options and warrants                14,167         1,745,081
Equity raise                                       7,704,900                 -
                                                 -----------       -----------
Balance, 30 June                                 163,633,683       155,843,070
                                                 -----------       -----------   
Equity raise
On 14 March 2006, the Group placed 7,704,900 new common shares with par value of
$0.01 each at $8.68 (£5.00) per share, raising $65,231 net of expenses.

Treasury stock
In connection with the Performance Share Plan ('PSP'), at each dividend date, an
amount equal to the dividend that would be payable in respect of the shares to
be issued under the PSP, is paid into an Employee Benefit Trust ('EBT'). The EBT
uses these funds to purchase Group shares on the open market. These shares will
ultimately be distributed to PSP holders to the extent that the PSP awards vest.
In May 2006, the Group, through the EBT, purchased 67,300 of the Group's shares,
at an average price of $8.22 (£4.35) per share. The total amount paid of $552 is
shown as a deduction to stockholders' equity.

Dividends
On 12 June 2006, the Group paid a final dividend relating to the 2005 financial
year of $0.176 (£0.101) per share to shareholders of record at the close of
business on 12 May 2006. The total dividend paid for the 2005 financial year was
$0.275 (£0.155) per share.


9    Employee stock compensation schemes

The Group has two stock compensation schemes under which awards are outstanding:
a Performance Share Plan, which was adopted in 2004, and a Long Term Incentive
Plan, adopted in 2002. These financial statements include the total cost of
stock compensation for both plans, calculated using the fair value method of
accounting for stock-based employee compensation. The total cost of the plans
expensed in the six months ended 30 June 2006 was $3,975 (2005: $2,096).

On 9 March 2006, a total of 2,020,301 options with nil exercise price and
275,296 non-vested shares (total of 2,295,597 securities) were granted to Group
employees under the PSP. Up to half of the securities will vest on 9 March 2009
and up to half will vest on 9 March 2010, subject to certain performance
conditions.


10    Earnings per share

Basic earnings per share is calculated by dividing the earnings attributable to
common shareholders by the weighted average number of common shares in issue
during the year.

Diluted earnings per share is calculated by dividing the earnings attributable
to all shareholders by the weighted average number of common shares in issue
adjusted to assume conversion of all dilutive potential common shares. The
company has the following potentially dilutive instruments outstanding during
the periods presented:

(i)         Performance share plan;
(ii)        Employee stock option plan; and
(iii)       Warrants

There is no difference between net income attributable to ordinary stockholders
and net income attributable to all stockholders for the six months ended 30 June
2006 and 2005.

Reconciliations of the number of shares used in the calculations are set out
below.

                                                       30 June         30 June
                                                          2006            2005
Weighted average number of shares                  160,688,316     154,116,555
Dilution effect of warrants                          6,203,859       4,125,308
Dilution effect of stock options and non-vested
shares                                               6,930,990       3,900,578
Dilution effect of stock options and warrants
exercised in the period                                  8,106       5,196,711
                                                      --------        --------
Weighted average number of shares on a diluted
basis                                              173,831,271     167,339,152

Earnings per common share
Basic                                                    $0.92           $0.72
Diluted                                                  $0.85           $0.66

Options to purchase 9,885,557 shares under the LTIP were outstanding during the
year but were not included in the computation of diluted earnings per share
because the options' exercise price was greater than the average market price of
the common shares.


11    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                                                          Six months
                                                                 ended 30 June
                                                    Note       2006       2005
Net income under US GAAP                                   $147,310   $111,175
Adjustment for:
Change to single functional currency                 (a)     (7,890)     4,710
Exchange gains/(losses) on foreign currency
bond portfolios                                      (b)     (2,225)    11,787
Fair value of employee stock compensation            (c)        (49)       (49)
Recognition of payroll taxes on employee stock
compensation                                         (d)        562     (1,320)
Taxation                                             (e)      2,881     (4,646)
                                                          ----------  ---------
Net income under IFRS                                      $140,589   $121,657
                                                          ----------  ---------
Stockholders' equity                                                Six months
                                                                 ended 30 June
                                                Note         2006         2005
Stockholders' equity under US GAAP                     $1,091,214   $1,057,387
Adjustment for:
Change to single functional currency             (a)        3,943       (7,442)
Fair value of employee stock compensation        (c)         (275)        (241)
Recognition of payroll taxes on employee stock
compensation                                     (d)       (1,328)      (1,367)
                                                       -----------  -----------
Stockholders' equity under IFRS                        $1,093,554   $1,048,337
                                                       -----------  -----------
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 four 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 reconciling items are presented before tax. This line item
represents the tax effect of all the reconciling items.





                      This information is provided by RNS
            The company news service from the London Stock Exchange