Bumper profits at Lloyd's

Lloyd’s revealed bumper profits for the half year, reporting an extra £456m in pre-tax profit on 2006 during a benign claims season with few major catastrophes.

Pre-tax profit was up from £1,351m in 2006 to £1,807m, while the combined ratio falling 3.1 points from 86% to 82.9%.

However, the results were propped up by reserve releases of £400m. Luke Savage, director of finance, risk management and operations, said the release reduced the combined ratio by 6.3 points.

In the first half of 2006, releases only accounted for a 0.3 point reduction.

Warnings also echoed about future market conditions, with Savage saying: “Good results will serve only to reduce the rates in the market.” Rolf Tolle, franchise performance firector, said that continued rates reduction in some lines will pull down others. “The reality of life is that we’re in a softening cycle”, he said.

As Insurance Times revealed earlier this month, the third quarter A&S uptake target was missed, sitting at about 40% – 20% off the target of 60%. Chief executive Richard Ward said: “Electronic reform is proceeding well, but I hesitate, because progress should be better.”

Gross written premiums were down slightly from £9,996m to £9,864m. Ward attributed this to the decline of the dollar, saying that a small gain would otherwise have been made.