LONDON, Aug 20 (Reuters) - Insurer Hiscox has posted record first-half pretax profit, as strong trading conditions offset the impact of the weak dollar and European weather claims.

Hiscox, a Lloyd's underwriter and leading fine art and kidnap insurer which changed its domicile to Bermuda last year, said pretax profit in the six months to the end of June was £105.6 million ($208.7m), up 72 percent on a year earlier.

"We've grown well, all systems are firing, and it's a good profit," chairman Robert Hiscox told Reuters in a telephone interview.

Analysts had expected a pretax profit of £89m, according to a consensus forecast of seven analysts published by the company, with forecasts ranging from £72m to £105m.

"Overall, a very good set of results which shows that the Lloyd's market, despite falling rates and a weak US dollar, is in fine fettle," Seymour Pierce analyst Gerald Farr said.

Hiscox shares, which lost nearly 11 percent of their value between July 17 and Friday's close due to turmoil caused by the subprime crisis, rose strongly in early trading to stand up over four percent at £2.74 at 0802 GMT, well ahead of the FTSE All Share Index, which was up 1.5 percent.

The result was driven by its Global Markets division, where pretax profit surged to £87.5m from £22.1m during the same period last year, thanks to strong conditions in the catastrophe insurance and reinsurance market.

Continued high demand for coverage in disaster-prone areas of the US, such as Florida and the Gulf of Mexico, kept prices for cover high and offset the cost of the Kyrill storm that hit Europe in January and June flood claims in the UK, which the company said together would cost it around £55m.

It estimated that UK floods in July would cost it a further £20m in the second half.

Hurricane Dean, which has buffeted Jamaica and is churning its way towards Mexico, should not cost the firm too much, Hiscox said, providing it maintains it current path and steers clear of the Gulf of Mexico.

Investment income was up to £47.9m and it said it had almost no exposure to subprime credit-related products.

The company set an interim dividend of 4 pence per share, up from 3p for the first half of last year.

Hiscox said the insurer intended to pay a dividend of 12 pence for 2007, though it would consider returning any excess capital it may have at the end of the year, he said.

Of the 12p dividend, Hiscox said: "It's a target, we exceeded our target last year, but I wouldn't want to make any promises we will again this year."

He said a possible return of surplus capital "has always been heavily on the agenda ... But let's address that at the end of the year, when the hurricane season is over."