Chief exec insists retaining 10%-20% buffer is 'appropriate'

Equity analysts continue to call for Catlin to buy back shares, despite the firm’s reluctance to do so.

Chief executive Stephen Catlin said at the company’s 2010 results meeting that the decision to retain a buffer of 10%-20% was “appropriate”.

“It’s consistent with the buffer we have had previously and with the way that we pay our shareholders on a continuing basis in dividend, with an increasing dividend year-on-year," he said.

But Collins Stewart analyst Ben Cohen said the move could disappoint shareholders: “If Catlin shows more goodwill on this, I think it would help with the overall value of the firm and the regard in which it is held by investors.”

Panmure Gordon analyst Barrie Cornes said: “The problem is that the underwriting cycle continues to spiral down because too many companies have too much surplus capital. Competition is fierce and rates are being cut.”

Cornes said Catlin should follow the lead of other companies in the market such as Novae, Beazley, Lancashire and Hardy who have returned capital to investors.

“Short of a large loss, it’s the only way in which discipline will return to the sector,” Cornes added.