Hiscox has reported a 30 per cent increase in its insurance service result for the first half of the year as premium growth and better underwriting offset a steep decline in investment returns.

The Bermudian-headquartered group’s insurance service result rose to $255.4 million, compared with $196.2 million during the same period last year.

Despite stronger underwriting, Hiscox’s statutory pre-tax profit fell by 13.1 per cent to $240.5 million.

The decline mostly reflected lower investment returns, which dropped to $128.2 million from $234.9 million during the first half of last year.

Insurance contract written premiums increased by 10.1 per cent to $3.24 billion, with Hiscox reporting profitable growth across each of its three business segments.

Hiscox operates through three main divisions: Hiscox Retail, which provides specialist insurance to individuals and small businesses; Hiscox London Market, which writes larger and more complex risks; and Hiscox Re & Insurance-Linked Securities.

The group’s undiscounted combined ratio, a key measure of underwriting profitability, improved to 90.4 per cent from 92.6 per cent. A ratio below 100 per cent indicates that an insurer collected more in premiums than it paid in claims and expenses.

Adjusted operating profit increased by 26.3 per cent to $331 million, while adjusted operating return on tangible equity rose to 20.2 per cent from 14.5 per cent.

Aki Hussain, the group chief executive, said: “We have delivered an excellent first-half performance, with profitable growth in all three of our segments.”

He added that Hiscox was navigating an “evolving market” in its large-risk businesses through “disciplined underwriting, innovation and proactive cycle management”.

Large-risk re/insurance markets have become more competitive as more capital and better recent returns have softened prices, which are now having a real impact on Bermuda’s key industry.

The group increased its interim dividend by 16.7 per cent to 16.8 cents per share.

Hiscox is also carrying out a $300 million share buyback programme. About 32 per cent of the programme had been completed by June 30.

The insurer said its capital position is still strong. The results release did not provide separate performance figures for Hiscox Re & ILS or disclose any changes to the group’s Bermuda operations.