LONDON (Bloomberg) — Amlin Plc, the largest Lloyd's of London insurer by market value, raised its dividend 13 percent and predicted higher premium rates this year and next.

Amlin will pay a final dividend of 11 pence a share, bringing total shareholder payments for the year to 17 pence, up from 15 pence in 2007, the insurer said in a statement yesterday. Amlin climbed 2.3 percent in London trading.

Reinsurance rates have climbed about nine percent, while premiums in other areas have increased by about five percent this year, chief executive officer Charles Philipps said on a call with reporters. "We're getting more excited about the outlook by the day," he said.

The stock rose 7.75 pence, or 2.3 percent, to 350.75 pence, giving the insurer a market value of £1.6 billion ($2.2 billion). Amlin has a reinsurance unit in Bermuda.

Amlin, like Catlin Group Plc, has seen profit dwindle as falling stock markets eroded its investments. Amlin's net income fell 77 percent to £80.3 million last year as earnings from investments tumbled 89 percent to £18 million. The worst Atlantic hurricane season since 2005 also boosted catastrophe claims.

"We continue to be in very difficult investment markets," Philipps said. "We are anticipating that the return in 2009 will come mainly from the underwriting side of the business."