(Reuters) - Lloyd's of London underwriter Hiscox Ltd (L:HSX) reported a 12.5 percent rise in first-half pretax profit, driven by its retail business and a benign reinsurance claims environment.
Hiscox, which decided to set up a subsidiary in Luxembourg to underwrite its retail business in Europe after Britain's decision to leave the European Union, said pretax profit, excluding the impact of foreign exchange, rose to 133.5 million pounds in the six months ended June 30 from 118.7 million pounds a year earlier.
The insurer, which underwrites a range of risks from oil refineries to kidnappings, said gross written premiums rose to 1.46 billion pounds in the period, from 1.29 billion pounds a year earlier.
The underwriter, which earns the bulk of its revenue overseas, said fall in the value of the pound against the dollar and the euro caused a loss of 30.9 million pounds.
However, Hiscox's London Market increased gross written premiums by 8.2 percent to 314.6 million pounds, while gross written premiums at Hiscox USA surged 50.3 percent to $275.6 million.
The underwriter's London Market has seen "intense" rating pressure in the aviation, marine and energy and U.S. big-ticket property classes, with margins "evaporating" in some areas.
Over the past few years, insurance rates have either stagnated or fallen due to fierce competition. A slump in oil prices has also put pressure on the balance sheets of companies exposed to energy prices.
However, the first-half profit at Hiscox, which has more than 750,000 retail customers, was driven by strong retail operations for the second consecutive year.
($1 = 0.7619 pounds)