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Julian Gibbs

Everyone I have spoken to recently has had their insurance premiums increased, in some cases by 300 per cent.

Insurers are also refusing to cover bad risks such as flooding in some areas. This should mean that insurance companies&#39 profits will rise and also their shares. Insurance brokers in particular should make much higher profits because they are mainly paid by commission.

The best way for UK investors to take advantage of this is by investing in the S&F Hiscox insurance portfolio fund which invests mostly in the international non-life insurance sector. The manager, Alec Foster, has 35 years experience within the insurance industry.

He is the Hiscox group&#39s investment officer. He believes that with the current strong funda-mentals, insurance business has never been better in his working lifetime. Stockmarkets,on the other hand, have savaged insurance shares. For example, Swiss Re saw its shares suffer by over 30 per cent in nine trading days in July without any particularly bad news.

Foster sensibly bought more shares at near the then low. His confidence is such that he and his wife have increased their holding in the trust by around £50,000-worth of units. Around 70 per cent of the £45m fund is owned by institutions and only 30 per cent is retail. The fund is now targeting IFAs on sensible terms.

The biggest holdings are Warren Buffett&#39s company, Berkshire Hathaway, and two of the world&#39s biggest insurance brokers, Marsh & McLennan and Brown & Brown. Foster believes there are now parallels with the crash of 1974/75 when values fell so low that the share price bore no resemblance to a company&#39s real commercial health. I strongly recommend this fund in current circumstances.


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