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Lloyd’s reports £3.7bn profit

Strong performance from Lloyd's insurers in calm cat conditions has led the Society to report pre-tax 2006 profits of £3.7bn for the market.

The result, announced this morning (29 March), contrasted with the £103mn loss reported in the hurricane devastated 2005 year.

Light catastrophe activity was the main contributor to a combined ratio of just 83.1 percent for the market, down from 111.8 percent in 2005.

This compared favourably with an estimated average 93 percent for US property and casualty insurers; 95 percent for US reinsurers; 94 percent for European (re)insurers; and, 86 percent for Bermudian (re)insurers, said Lloyd's.

Lloyd's chairman Lord Levene acknowledged the performance had benefited from an "exceptionally low level of catastrophes", and warned it would be "unrealistic" to expect a repeat pattern this year.

"With a trend for more frequent and severe natural catastrophes, we must continue our focus on underwriting for profit. The market is well prepared to meet these challenges," he stated.

In his debut annual results statement, chief executive Richard Ward focussed on maintaining the market's "strong competitive position" and performance against its peers.

"Retaining our competitive edge requires an unrelenting focus on all our customers. We have a clear vision to be the platform of choice for specialist insurance and a clear strategy in place to achieve this," he said.

Lloyd's central assets increased 14.8 percent through the year to £1.45bn, and Ward confirmed that, "if conditions permit", the Central Fund contribution rate for 2008 would be cut, a year earlier than originally planned.

He also welcomed the upgrade of Lloyd's ratings to A+ by Fitch Ratings yesterday following the completion of the first phase of the Equitas deal.

"This upgrade will enhance the perceptions of Lloyd's amongst insurance buyers, brokers and potential investors," he commented.

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