(Bloomberg) — Amlin Plc, the second-biggest Lloyd's of Londoninsurer by market value, posted an 8% drop in first-half pretaxprofit on losses from foreign exchange and naturalcatastrophes.

Profit declined to 148.5 million pounds ($248 million) from161.4 million pounds a year earlier, the London-based insurer saidin a statement today. Profit from underwriting fell 11% to 141.6million pounds, it said.

Losses on large catastrophe, impacted by European hailstorms anda tornado in Nebraska in June, widened to 48.9 million pounds inthe first half from 32.2 million pounds in the same period lastyear. The company said profit also fell after “an adverse foreignexchange swing” of 24.6 million pounds.

Amlin decreased 0.9% to 443.3 pence at 9:02 a.m. in Londontrading, extending losses this year to 3.4% and valuing the companyat 2.2 billion pounds.

The combined ratio rose to 87% from 85%, indicating that thecompany paid out more in claims and costs relative to premiums thana year earlier. The combined ratio of Amlin U.K. rose to 102% inthe half with roughly 10 million pounds of claims followingflooding in the U.K. in January.

“We'll see improving profitability this year and most likely thenext,” Chief Executive Officer Charles Philipps told journalists ina conference call. “We remain focused on the 15 percentreturn-on-equity target.”

Gross written premiums increased to 1.89 billion pounds from1.84 billion pounds a year earlier.

Amlin recorded an investment return of 1.3% on average fundsunder management of 4.4 billion pounds, down from the 1.4% onfunds of 4.5 billion pounds in the year- earlier period.

The company said it increased its interim dividend 3.9% to 8.1pence a share.

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