LONDON (Bloomberg) — Hiscox Ltd., the third-biggest insurer at Lloyd's of London, plans to increase capacity at its main sales unit by a third as the market forecasts the dollar will strengthen against the pound next year.

Hiscox's initial business plan for Syndicate 33 shows capacity will rise by £250 million ($414 million) to £1 billion in 2010, the company said in a statement.

The Lloyd's premium income monitoring exchange rate, which indicates how much capital insurers need to hold as currencies fluctuate, rose to $1.50 per pound in 2010 from $1.99 in 2009, Hiscox said.

The insurer gets a third of its revenue from the US and reports earnings in pounds.

A final plan for the syndicate will be submitted in late September, Hiscox said.

Hiscox shares rose one pence, or 0.35 percent, to 290 pence in London trading.