Lloyd’s posts highest interim profit in five years

Lloyd’s of London has reported an interim profit of £1.53 billion (about $2.4 billion) for the first half of 2012 (ending June 30), the highest in five years.

This is despite 2011 being what the company calls “the most expensive year on record for the insurance industry,” when it posted a loss of £697 million (about $1.1 billion).

The company credits few major claims from natural catastrophes as leading to the profit.

“The strong figures for the first half of this year are largely the result a benign claims climate, with just a few major events…However we cannot count on an extended period of low claims activity lasting until the end of 2012,” chairman John Nelson said in a statement.

Lloyd’s incurred total net claims of nearly £4.6 billion (about $7.2 billion), a drop by 32% from the first half of 2011. Its investment return also rose 13% to £619 million (about $980 million), giving a combined ratio of 88.7%, down from 113.3% in the first half of last year.

“This is a welcome return to profit for the market and is testament to the market’s disciplined underwriting that, in the face of continuing low premium rates, coupled with low interest rates and the most challenging economic climate for a generation, it is able to return the strongest half year result in five years,” company CEO Richard Ward noted in a statement.

“Of course, disasters do not respect calendars and we do not yet know what the second half of the year will bring. However, the importance we place on market oversight and the conservative management of our capital will ensure we remain ready and able to respond promptly to our policyholders,” he added.