UPDATE 1-S.Africa's Santam H1 jumps, hikes dividend payout

* H1 headline EPS 511 cents vs 284 cents

* Dividend 685 cents vs 166 last year

* Shares up 2.2 pct, vs 1.6 pct gain in index

(Adds details)

JOHANNESBURG, Sept 1 (Reuters) - South African insurer Santam Ltd (SNTJ.J) posted an 80 percent jump in first-half profit on Wednesday, helped by strong performance in its underwriting business and said it would hike its dividend.

Shares of Santam, the country's biggest property and casualty insurer, jumped on news of the higher payout to shareholders.

Santam said headline earnings per share totalled 511 cents in the six months to end-June, compared with 284 cents in the same period a year earlier.

The company said last month it expected profit to increase by 75 to 85 percent.

Headline earnings, the main gauge of profit in South Africa, exclude some one-time items.

Gross written premiums rose 6 percent to 7.7 billion rand ($1.05 billion).

The company said it would pay out a total of 685 cents for its half-year dividend, including a special dividend of 500 cents.

In 2009 it paid a half-year dividend of 166 cents.

Santam said last month it was helped by the absence of large industrial claims during the period, however, its investment portfolio remained under pressure due to volatile equity markets.

South African insurers were hit hard by the economic downturn, as debt-burdened customers let their policies lapse and declining equity markets hit investment portfolios.

Earlier on Wednesday, Metropolitan Holdings METJ.J, the country's fourth-largest life insurer by market value, reported a 13 percent rise in first-half profit. [ID:nLDE67U21F]

Shares of Santam were up 2.2 percent after the results, compared with a 1.6 percent rise in Johannesburg's All-share index .JALSH. (Reporting by David Dolan)