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Atrium feel FX squeeze as profits fall

Lloyd's insurer Atrium reported a fall in pre-tax profits today (27 September) with foreign exchange fluctuations blamed for the drop to £7.9mn for the first half of 2006, against £13.7mn in the prior-year period.

In a story that has been repeated by many of Atrium's Lloyd's peers the pre-tax profit before foreign exchange impact was £15mn for the half-year, up from £9.6mn last year.

Atrium CEO Steve Cook commented: "Atrium has continued to perform well with underlying underwriting performance improved over the equivalent period last year. Although movements in the US dollar exchange rate have taken the shine off headline figures, the outlook for the full year, absent any significant storm losses, remains very encouraging. Our attractive capital ratio and gearing structure leave us well placed to continue our excellent track record of return on equity."

In contrast to most other Lloyd's (re)insurers, the company's premium income fell during the half, with gross written premiums down 1 percent to £93.6mn and net premiums earned slipping 2 percent to £53.2mn.

The company's Syndicate 609 grew its profit £3.8mn for the half-year compared to £2.6mn in the first half of 2005, while its combined ratio improved 3 points to 87 percent.

Syndicate 570's profits slipped to £2.1mn for the period against £3.9mn last year, while its combined ratio deteriorated 15 points to 94 percent.

Atrium said this was due to a combination of foreign exchange movements and a failure to repeat the "exceptional first half of 2005".

Meanwhile the group said the other syndicates in which it participates delivered a reduced profit of £3.2mn.

In a statement to the London Stock Exchange the company concluded: "Although the lack of major insurance losses in 2006 to date is encouraging, it is important to remember that the hurricane season is not yet over and our second half performance will obviously depend on the events of the next three months. The syndicates in which we participate have written business at rates, terms and conditions which, in the absence of abnormal loss activity, should provide attractive returns to our shareholders."

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