Memories of the devastation caused by Hurricane Katrina mean there is every right for Robert Hiscox to remain nervous about the current hurricane season. But at the moment, his insurance business is looking storm proof.

Today’s half-year results reveal record interim profits, strong growth in written premiums, a 33 per cent hike in the dividend and little impact from the sub-prime crisis in the US on investment income.

Across the group the combined operating ratio - the most closely followed measure of an insurer's profitability - has improved to 84.8 per cent from 94.6 per cent. This means that Hiscox is paying out less of the premiums it collects.

All this in a six month period when Hiscox has faced windstorm Kyrill, flooding that has dominated the British summer and downward pressure on rates.

Hiscox is reacting to this pricing pressure by cutting underwriting capacity for next year. It may lose out on some new business by opting to keep prices high but hopes its reputation will keep customers on side and show that the prudent approach is the right one to take.

The stock trades on 1.37 times its net asset value, marginally below the 1.41 median across the rest of the Lloyd’s sector. Today’s results suggests that gap will begin to close.

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