Hardy Underwriting said profit before tax fell to £6.1m in the first half of 2006. (H1 2005: £7.7m)
The Lloyd's insurer and reinsurer said the figure still beat market expectations.
Hardy said gross written premium fell to £58.35m (2005: £65.58m). The combined ratio slipped to 84.4% (2005: 82.7%).
However, Barbara Merry, chief executive was upbeat: "Each of the underwriting years has continued to progress satisfactorily.
"We have been busy in 2006 with our corporate activities and are now primed to take the business forward, enhancing income and profits considerably over the next few years and
improving the return on equity dramatically if underwriting conditions permit."
She added: "These are exciting times for Hardy."
Hardy said the key area of difficulty continues to be aviation and predicted further rate reductions for the final quarter airline book renewal as new entrants joined the sector.
However, it added: "We had fortunately forecast very little airline income for 2006, so our portfolio will
consist almost entirely of general aviation, with a continuing focus on helicopters and small fixed wing aircraft."
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