LONDON (Bloomberg) — Bermuda-based Hiscox Ltd., the third-biggest underwriter at Lloyd's of London, said US reinsurance rates increased at the start of 2009 after last year was the worst hurricane season since 2005.

Rates for US reinsurance, which accounts for about 70 percent of Hiscox's total reinsurance sales, rose on average by 15 percent to 25 percent in its main business areas this year, the company said yesterday in a statement. Rates in other areas increased by between five percent and 30 percent. "Gross written premiums for reinsurance during this period have increased, even as we cut back on accounts which did not meet our target returns," Hiscox said in the statement. "We expect these rates to remain strong and to have increased further by the time of the important US renewals in June and July."

Reinsurers, who protect insurance companies against risks, are looking to charge higher prices to offset losses on equity investments amid tumbling stock markets. Damage caused by hurricanes Gustav and Ike last year cost insurers the most since Hurricane Katrina devastated New Orleans in 2005.

Hiscox's estimate for total claims related to the two hurricanes is $175 million. The insurance industry's losses will probably be more than $20 billion, the company said.

Investment returns last year fell by 1.3 percent after mark-to-market losses on asset-backed securities, the company said. The value of the insurer's investments was about £2.5 billion at the end of 2008.

Hiscox fell 9.25 pence (three percent) to 301 pence in London trading yesterday.