LONDON (Bloomberg) ? Hiscox Plc, a Lloyd?s of London insurer, plans to incorporate itself in Bermuda by the end of the year.

Chairman Robert Hiscox said almost two thirds of the company?s business is generated outside the UK.

His announcement coincides with news that Hiscox?s first-half profit declined 23 percent as a weakened US dollar eroded gains in premiums. The stock fell 5 percent.

Net income dropped to ?47.3 million ($88.3 million), or 11.9 pence a share, from ?61.1 million, or 20 pence a share, a year earlier, the London-based company said in a statement. Hiscox posted a currency loss of 3.4 million pounds compared with a gain of 36.9 million pounds in the first half of 2005.

?The numbers were worse than I was going for,?? said Charles Coyne, a London-based analyst at KBC Peel Hunt Ltd., who raised his rating on the stock to ??add?? from ??hold??. ??But they are investing for the future.??

Some UK insurers that report earnings in pounds and generate part of their revenue in US dollars are reporting profit declines after the dollar fell 6.7 percent against the British currency during the first half. Hiscox has reduced underwriting vulnerable to hurricanes this year, while higher prices helped boost revenue. Shares of Hiscox dropped 12 pence to close at 227 pence in London, valuing the company at 890.1 million pounds. The stock has fallen 1.7 percent this year.

Changes in currency values are ?irrelevant to the health of the business?, chairman Robert Hiscox, 63, said in a telephone interview yesterday.

??It changes a figure but does not change money in the bank,?? Hiscox said. ``The fundamentals of the business are profitable and when I look at the first-half the fundamentals are better.??

Gross written premiums increased 43 percent to ?625.1 million. The combined ratio jumped to 93.2 percent in the first half, from 83.5 percent in the first six months of 2005, Hiscox said. A higher ratio indicates less profitable underwriting.

Hiscox plans to incorporate itself in Bermuda by the end of the year because almost two thirds of its business is generated outside the UK, the chairman said. Insurers such as Hiscox have been moving to Bermuda to take greater advantage of zero percent tax rates in the region and lighter regulation than Europe.

?The most important thing is they are re-domiciling to Bermuda so the stock should be going up not down,?? said Coyne.

Full-year net income fell 24 percent to 48.6 million pounds in 2005 on losses from Hurricanes Katrina and Rita, the insurer said in March. The US storms caused more than $65 billion of damage last year, according to Fitch Ratings.