Bermuda-based insurer and reinsurer Hiscox saw half-year pre-tax profits rise by 8.4 per cent, fuelled by strong growth in its retail insurance business.

Hiscox reported earnings of £135.1 million ($210.4 million) for the January-through-June period, up from £124.6 million in the same period last year.

Hiscox Re, the company’s reinsurance unit, which works out of Bermuda as well as London and Paris, saw pretax profit slip to £59.6 million from £75.6 million in the prior-year period. The reinsurance business’s combined ratio — the proportion of premium dollars spent on claims and expenses — was 45.5 per cent.

The company has set up Kiskadee group of funds in Bermuda to manage third-party capital. As of July 1, Hiscox said Kiskadee had attracted more than $540 million in capital, up from the $400 million expected at January 1, 2015. During the first half of the year, Kiskadee contributed $87 million in gross premiums written.

Reinsurers have faced difficult market conditions, with increasing competition from third-party capital and falling rates. And Hiscox chairman Robert Childs, who said in the company’s earnings statement that reinsurance prices were “close to walk-away levels”, expects the tough market to continue.

“Prices in reinsurance are largely driven by capital and there is still an awful lot of capital coming in,” Mr Childs said in an interview with The Royal Gazette.

“There are some signs we may be reaching a floor, but at the moment they’re largely anecdotal.”

The tough market has prompted some reinsurers to merge with each other to seek inorganic growth and economies of scale. Mr Childs said he had no fear of reinsurance rivals becoming larger.

“I joined this company in 1986 and then we were quite small and we had no problem with taking on the bigger people then,” he said. “Now that we are considerably bigger, we still have no problem taking on the bigger people.

“Our strategy is unchanged. We have a lot of room for growth in all of our chosen areas and we believe in organic growth.”

The company had made some bolt-on acquisitions recently, he added, including a marine managing general agency (MGA) and a classic car MGA.

Hiscox is a major player in the Lloyd’s of London market. It redomiciled to Bermuda from Britain in 2005. Earlier this month, the George Osborne, the Chancellor of the Exchequeur, announced that a phased cutting of corporation tax would lead to a rate of 18 per cent by 2020.

Mr Childs said the changing UK tax situation “does not change the way we think about Bermuda”.

“We could probably achieve an equivalent tax rate if we were based in the UK, but the reason we stay in Bermuda is not just because of tax,” he said. “Bermuda has a business-friendly environment with stable regulation. What businesses like is stability.”

Hiscox raised its interim dividend payment to 8p from 7.5p, an increase of 6.7 per cent. In London Stock Exchange trading, Hiscox shares fell more than 4 per cent to close on 891.5p, perhaps because investors were disappointed to hear no mention of a special dividend.

Hiscox’s retail business showed strong growth, delivering record profits of £59.3 million, up from £37.4 million in the same period of last year.

Overall, the group saw gross premiums rise by more than 10 per cent to nearly £1.1 billion, combined ratio of 82.5 per cent and a return on equity of 19.9 per cent.