Shares in Benfield fell 15% after the UK reinsurance broker reported a 7.4% pct decline in 2007 profits.

The group blamed dollar weakness and falling reinsurance rates, and warned of a further dip in its profit this year.

Operating profit for 2007 came in at £69.3 million, down from £74.9 million in the previous year.

Analysts had expected a profit of £71.3 million.

Benfield said the deterioration partly reflected a decline in the value of the US dollar against the pound.

That held back progress at Benfield's key US division, reducing group revenue by 5% to £339.2 million. US revenue accounts for over a third of the total.

Benfield said it had also been affected by a cyclical downturn in reinsurance rates, estimating catastrophe reinsurance prices outside the US have now fallen by more than 20% since 2005. Falling reinsurance rates reduce the commission income Benfield receives for broking reinsurance contracts.

The group added its 2008 operating profit would be 'marginally below' the 2007 figure, held back by continued dollar weakness and further declines in reinsurance rates.