LONDON (Bloomberg) — Hiscox Ltd., the third-biggest insurer at Lloyd's of London, said reinsurance rates dropped at the start of the year after a reduction in 2009 claims.

Rates for reinsurance, which accounts for about a third of Hiscox's gross written premiums, fell on average by five percent to seven percent, the Hamilton, Bermuda-based company said yesterday in a statement. Investment returns were about 7.2 percent over the course of the year, the insurer said.

The drop in reinsurance rates was "expected given the very light level of insured catastrophe loss borne by the industry in 2009," Hiscox said in the statement. "Since our last update in November, it has continued to be a particularly benign period for catastrophe losses."

Hiscox said there was a "small" rise in claims in the UK following the recent cold weather. The insurer said in the US it had not experienced any "significant losses," while in Europe claims were down in the second half of last year.