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Lloyd's of London profit down on lower investment results

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Lloyd's of London profit down on lower investment results

Lloyd's of London's pretax profit for the first half of the year fell 27.9% to £1.19 billion ($1.81 billion) compared with that of the same period in 2014, Lloyd's announced Thursday.

Gross written premiums for the six months of this year rose 7.1% over those of a year earlier to £15.51 billion ($23.53 billion). The combined ratio slipped to 89.5% from the 87.4% posted during the same period in 2014.

There is “no escaping profits have fallen,” said Lloyd's Chief Executive Inga Beale during a live presentation discussing the results Thursday morning. Ms. Beale said 60% of the decline was the consequence of lower investment results, adding that the first half of last year “was really exceptional” in terms of performance, driven in large part by low catastrophe losses.

Looking ahead, Ms. Beale said there would continue to be pressure on pricing and that it is “hard to see” the current low investment returns changing soon. But she said that Lloyd's market is maintaining “rigorous underwriting discipline.”

She also addressed merger and acquisition activity in the market.

“We welcome what we're seeing at the moment,” Ms. Beale said. She noted Mitsui Sumitomo Insurance Co.'s announcement earlier this week that it had reached an agreement to acquire British insurer Amlin P.L.C., which operates multiline syndicate 2001, the second-largest syndicate at Lloyd's in terms of capacity for the 2015 underwriting year.

She said the move shows how highly access to the Lloyd's market is regarded.

“Over the past six months Lloyd's has continued to outperform its competitor group,” said Lloyd's Chairman John Nelson in a statement issued Thursday announcing the first-half results. “Although there is little doubt that challenging times lie ahead, Lloyd's is in a robust financial position, well-capitalized and well-reserved to face the future. With an expanding international footprint across Asia, Latin America and the Middle East, Lloyd's influence and relevance as a global force for effective risk management has never been stronger.”

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