British insurer RSA on Thursday posted higher-than-expected profit for 2011 as cost cuts helped offset big catastrophe claims, and said it would increase its shareholder dividend more slowly because of weak investment returns.

RSA, Britain's biggest commercial insurer, said its 2011 operating profit rose 884 million pounds, narrowly beating the 844 million pounds pencilled in by analysts in a company poll.

We have delivered a good result in difficult conditions given record natural catastrophe losses for the industry, the challenging economic environment, and historically low yields, Chief Executive Simon Lee said in a statement.

RSA said it would raise its final dividend for the year by just 2 percent to 5.8 pence, blaming weak investment returns amid rock-bottom interest rates.

While these economic and investment markets persist, it is prudent to grow the dividend at a more modest rate, the company said.

RSA shares closed at 112.5 pence on Wednesday, valuing the company at about 4 billion pounds. The stock has lost about a fifth of its value in the past year, underperforming a 16 percent drop in the Stoxx 600 European insurance share index.

(Reporting by Myles Neligan; Editing by Helen Massy-Beresford)