Lloyd's of London insurer Amlin today posted record profits for last year of £182.7 million before tax, an increase of 42 per cent, despite being part of the industry's unprecedented losses as a result of the hurricanes that lashed against the American coast.

Amlin said it was forced to absorb hurricane losses of £130.1 million, nearly double the level of the previous year, in the wake of the devastion caused by hurricanes Rita and Katrina last summer.

Losses for the industry as a whole following the two hurricanes, which were followed later by Hurricane Wilma, have been forecast to reach as much as £50 billion.

Amlin, one of Lloyd's of London's largest insurers, said it had nevertheless managed to generate "excellent" results as a result of its risk management practices and its increasingly diversified portfolio.

Roger Taylor, the chairman, said that having successfully absorbed the insurance losses, Amlin was now well-placed to benefit from the subsequently higher premiums charged for policies.

"Property insurance and reinsurance markets have been badly shaken by the size of hurricane losses in 2005, particularly from Katrina and Wilma, with many companies forced to re-examine their business models and reduce risk exposures, particularly in major catastrophe zones," Mr Taylor said.

"Consequently, rates today are considerably better in our non-marine and marine businesses than we had expected they would be this time last year and for US catastrophe exposed risk, in particular, we are experiencing significant price increases."

Mr Taylor said that, although Amlin had "come under increasing pressure" in its airline and commercial insurance in the UK, he expected conditions to remain "favourable" and signalled his hopes for a strong 2007.

Amlin today increased its proposed dividend by 27.5 per cent to 10.2p a share.

Gerald Farr at Seymour Pierce said the results were ahead of expectations, adding that they were boosted by the insurer's ability to release reserves of £79.7million as a result of its conservative policy on holding back capital.

"We continue to believe that rates will harden throughout the year and into 2007, and reiterate our buy recommendation on Amlin, one of our top picks in the sector," Mr Farr said in a note.

Shares in Amlin gained 5.25p to 275.75p in early deals, valuing the insurer at more than £1.4 billion.

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