The Lloyd's of London insurance market posted a rise in headline first-half profit, boosted by sharp gains in its investment returns, but highlighted that market conditions were becoming increasingly challenging.
Pretax profit rose 21% to £1.67 billion for the six months to the end of June, compared with £1.38 billion the previous year, Lloyd's said in a trading statement.
94 syndicates underwrite insurance at Lloyd's, with listed companies including Catlin, Hiscox and Amlin.
Investment income rose to £642m, up from £247m in the first half of 2013, helped by higher yields in the market's corporate bond portfolio, acting finance director John Parry said.
But Lloyd's combined ratio, a measure of profitability showing how much insurance premium is paid out in claims and expenses, deteriorated to 88.2% from 86.9%. A ratio below 100% indicates an underwriting profit.
"It's been a fairly benign period for major catastrophes," Parry said.
Insurance underwriters tend to perform less well in the absence of major catastrophes, as insurance premiums fall.
New players such as hedge funds in the reinsurance sector, which helps insurers pay large damage claims in exchange for part of the premium, have also made the sector increasingly competitive.
But Lloyd's return on capital rose to 16.5% from 14% a year ago.
"Against the broader economic environment, insurance looks quite attractive, there's a lot of talk of it as a diversifying investment," Parry said.
