NU Online News Service

Lloyd's reported a 52.4 percent decrease in 2010 first-halfprofit compared to last year, attributing the decrease to highcatastrophe losses.

Lloyd's said its 2010 first-half profit before tax was ?628million ($942 million at current exchange rate).

The results reflect a period of major losses and extremelychallenging investment conditions, according to Lloyd's.

Lloyd's said its investment mix resulted in a positive return of?597 million ($896 million) during a period of continuingvolatility in financial markets, and that central assets are at arecord high.

"We are quietly satisfied with the result; we turned in aprofit," Lloyd's Chief Executive Richard Ward told NU Online NewsService. "It's been challenging, with big claims going out--Chile?1.4B net, that's close to $2 billion net...which is a prettysignificant number."

To still generate a profit, he said, "it's satisfying."

Ward added that Lloyd's will be "really focused until the end ofthe year on underwriting--getting the pricing right, and where thepricing's not right, willing to walk away from business."

He said Lloyd's careful underwriting is also the focus ofperformance management working with the syndicates "in monitoringtheir performance against the plan that they have agreed to withus."

At this point, he noted, "2010 doesn't have the hallmarks of avery profitable year, certainly not of a record year, though we'vegot to wait and see what happens by the end of the year. We stillhave another three months to go."

Ward concluded that the results are also "a reminder of whywe're in business, which is to pay claims. It's a reminder thatsome years we have record profits when we have very benigncatastrophe seasons, and then when the catastrophes come, ourprofits fall--which is not surprising, because we're out therepaying the claims that we should be paying."

He observed that the market is soft and that the claims are notsufficient to cause market conditions to change globally. Themarket is being driven "in part by the economic climates, in partby the surplus of capital in insurance, and probably in part by theprevious year's results. And so we need to see capital exit thebusiness before market rates improve," Mr. Ward said.

Lloyd's Chairman Lord Peter Levene said in a statement, "Thefirst six months of 2010 were the costliest on record since webegan interim reporting, testing not only Lloyd's but insurersaround the globe. While events such as the Chilean earthquake andthe Deepwater Horizon loss have proved challenging, paying theseclaims and supporting our policyholders is what we are here todo."

He added, "It is a true indication of the strength of theLloyd's market that despite challenging investment conditions,softening rates and exceptional catastrophic events, we havereturned a first-half profit of $942 million."

The Lloyd's market recorded an accident-year combined ratio forthe six months to June 2010 of 103.3, compared to 95.5 the yearbefore. This was reduced by a prior-year reserve release of 4.6percent to give an overall combined ratio of 98.7.