LONDON (Bloomberg) — Hiscox Ltd., the Lloyd’s of London insurer that moved to Bermuda last year, returned to profit in the second half of 2006 after catastrophe claims fell and income surged at the international unit.Net income in the last half of the year was $116.5 million ($225.6 million), or 28.6 pence a share, compared with a loss of $12.5 million, or 4.9 pence a share in the year- earlier period, Hiscox said today. Shares of the company rose the most since May 2006 after profit beat analysts estimates.

Hiscox transferred its headquarters to Bermuda in December 2006, joining other Lloyd’s insurers to take advantage of lower taxes and regulation. Its international unit, which includes the US and Bermuda, had a nine-fold increase in second-half profit as major hurricanes were absent last year.

“2006 was helped by a dose of luck in that Mother Nature took a vacation,” chairman Robert Hiscox said in an interview yesterday. “I think 2007 is going to be good, but I don’t think it will be a clean year. Something, somewhere will happen.”

Shares of Hiscox rose as much as 6.7 percent and traded up 1.9 percent to 277 pence at 11.20 a.m. in London, valuing the company at $1.1 billion. They gained 21 percent in 2006, trailing the 17-member FTSE All-Share Non-life Insurance Index, which gained 29 percent.

“They are a good set of results overall,” said Gerald Farr, a London-based analyst at Seymour Pierce who rates Hiscox shares “outperform.”

Pretax profit of 139.7 million pounds in the second half exceeded his estimate of 120.7 million pounds.

“Bermuda and the London market are doing very well,” said Farr.

The company’s combined ratio, or claims and expenses as a percentage of premiums, declined to 88.3 percent from 96 percent in 2005, as Hiscox increased insurance-policy sales in the UK and Europe.

The lower the combined ratio, the more profitable the company’s insurance underwriting.

“The expenses were pretty high, but that was more than offset by the company’s investment income,” said Farr.

Investment income more than doubled to 61.2 million pounds in the second-half. Net written premiums rose 40 percent to $470.7 million.

Second-half profit in Hiscox’s Lloyd’s unit rose to $76.8 million from a loss of $44.3 million a year earlier.

Profit at its UK and Europe operations fell 13 percent to $18.9 million, and profit at the international unit, comprising Bermuda and the US, jumped to $44 million. The company set aside about $25 million for Europe’s January storm Kyrill and an extra 45 million pounds for claims for US hurricanes in 2005, Hiscox said.

The company, which also insures homes and art, said full-year net income more than tripled to 163.8 million pounds.

Hiscox raised its dividend 43 percent to ten pence and plans a 2007 dividend of “not less than 12 pence,” it said yesterday.