Bermuda-based Hiscox has no plans to join the merger spree occurring in the reinsurance market.

The London-listed insurer and reinsurer, which yesterday reported a £231.1 million ($355 million) pre-tax profit for 2014, down more than 5 per cent from the previous year, said it was happy with its size and its diversification strategy.

“The biggest driver of M&A [mergers and acquisitions] is companies seeking scale,” Hiscox chief executive officer Bronek Masojada said. “We feel no need or pressure to deliver scale. We have enough. We’re very happy with the strategy we have.”

The company delivered a 17.1 per cent return on equity and announced a special dividend of 45p per share to add to a 15p regular dividend.

Overall, the group’s gross premiums rose 3.3 per cent to £1.8 billion ($2.8 billion). In response to market conditions, Hiscox Re, which has a major underwriting operation in Bermuda, reduced the amount of business it wrote, with reinsurance premiums written falling 13.9 per cent.

But the group posted premium growth of 8.8 per cent on the insurance side, including a 24.1 per cent increase for Hiscox USA.

Hiscox has a network of retail businesses, which generated more than half of the group’s gross premiums written.

The retail business growth has helped to give Hiscox the flexibility to make money even when it chooses to pull back on its “big-ticket” insurance and reinsurance businesses when rates are unattractive.

Hiscox Re chief executive officer Jeremy Pinchin, who is based in Bermuda, said the group had set up its stall to diversify over the past 20 years, a strategy that was proving itself.

Asked about merger possibilities, he said: “We have built up the brand and diversified the businesses. Now is not the time to look for alternatives. We have more than enough capital.”

It was the first year of operations for Hiscox Re, the company’s combined reinsurance operation, including the units in Bermuda, London and Paris and Mr Pinchin was pleased by the results.

“The lower-than 50 per cent loss ratio shows the high quality of risk selection by our underwriting team,” he said.

Hiscox has achieved rapid expansion in its insurance-linked securities funds management arm, Bermuda-based Kiskadee, on track to be managing $500 million by mid-year.

“This is a great performance by the team,” Mr Pinchin said. “We’ve shown we have the brand, the reputation, the access to clients and the ability to manage money on behalf of third-party clients to deliver strong returns.”

Hiscox shares rose 0.5 per cent to 795p in London trading yesterday. They are up about 10 per cent this year.