Lloyd's run-off Equitas has delivered good news to its policyholders with the announcement of a positive set of results for its year ended 31 March.

Equitas said accumulated surplus had increased, liabilities were reduced and its solvency margin had been improved, placing the company in a "slightly stronger financial condition than it was a year ago".

Accumulated surplus increased by £16m to £476m.

Equitas chief executive Scott Moser said the figure should be "considered as neutral" in the context of the balance sheet.

But City watchers considered the results to be a positive step forward, and said investors would feel the benefit of a higher surplus in the forthcoming financial year.

Equitas reported a £1bn decrease in claims liabilities from £5.4bn to £4.4bn. Solvency margin was up from 9.8% to 12.2%.

Market sources said the increased solvency margin signalled that Equitas had become a smaller entity, and that it had started to make considerable progress in settling US claims.

Despite facing "considerable uncertainties", the company has bolstered asbestos reserves by £167m.

Moser said Equitas' drive to settle claims had boosted the year-end results. It has settled claims with three out of five of its largest asbestos exposures, and has commuted with 85 reinsurers.

Moser failed to comment on whether the asbestos tort reform would have a negative impact on the company.

Moser said: "Whether such a bill would be good or bad for Equitas depends on how much Equitas is assessed by the commission contemplated by the Bill.

"However, we believe our reserves are appropriate, and that a fair-minded commission will seek from Equitas no more, and possibly less, than we have available for such claims."