Lloyd's expects to produce a profit at its year-end despite taking a £1.4bn hit from Hurricane Katrina.

At the six months ended 30 June Lloyd's reported an interim profit of £1.4bn, a 21% rise on the same period last year.

Lloyd's said its syndicates had showed strong underwriting discipline in reducing gross written premiums by 15% to £8.5bn to reflect the softening market place.

Combined ratio rose 2.3 percentage points on the same period last year to 87.3%, it said.

Lloyd's chief executive Nick Prettejohn said: “It is not possible to draw any firm conclusion about full year profits, but in the absence of unusual catastrophic losses in the remainder of the year, we would expect the market to make a profit.”