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The post-Brexit collapse in the value of sterling has boosted Hiscox as the impact of foreign currency translation sent the insurer’s first-half profits soaring.

Hiscox generates three-quarters of its premiums in currencies other than the pound — mostly euros and US dollars. Sterling depreciated by 10 per cent against the US dollar between the day of the vote and Hiscox’s half-year end on June 30.

Reporting results on Monday, it said that pre-tax profits had risen by more than 50 per cent to £206m. Strip out the impact of foreign exchange, however, and the rise turns into a 21 per cent fall in profits to £119m.

Bronek Masojada, Hiscox’s chief executive, said that the foreign exchange moves were a side issue. “Rather than being distracted by the volatility and the front page noise, the focus is on winning customers.

“The benefits of diversifying from the London market, which we started decades ago, are showing through,” said Mr Masojada.

Like other insurers, Hiscox has been finding life tough in the commercial insurance market as an influx of capital to back new business has been pushing rates down over the past few years. The company’s pre-FX profits in the London market — which covers areas such as marine, energy, aviation and big-ticket property — slipped a fifth to £20m as soft rates in some areas combined with large claims for the Alberta wildfires, Houston floods and a problem in the Jubilee oilfield off the coast of Ghana.

Instead, it has switched its focus to retail markets where it sells a range of policies to consumers and small businesses. This is the biggest contributor to group profits, although earnings here also fell — by 7 per cent to £68m. That was largely due to weakness in Europe, where Hiscox faced €5m of flood losses in France and Germany.

However, Mr Masojada pointed out that the combined ratio (claims and costs as a proportion of premiums) in the retail business of 85 per cent was better than the target range of 90 per cent to 95 per cent.

Hiscox announced a 6 per cent increase in the dividend, to 8.5p per share. The shares rose 2 per cent on Monday to a high of £10.91.

Eamonn Flanagan, an analyst at Shore Capital, said that the company had delivered “a robust underlying performance”. Jonny Urwin, at UBS, said “Hiscox is doing all the right things in a tough market.”

Hiscox said that the UK’s decision to leave the EU was “a structural rather than a strategic challenge”. The company generates £260m of premiums in Europe (outside the UK) and employs 355 people there.

It is planning to set up a new subsidiary somewhere in the EU, which it can use as a base for its continental business. Mr Masojada said that it would make a decision on the location in the first quarter of next year, and would then take another six to 12 months to set the business up.

He added that Brexit could be an opportunity to win new business in Europe, particularly if other ways of writing insurance, such as the Lloyd’s market, take longer to adapt to the post-Brexit world.

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