The Lloyd's market has reduced its underwriting capacity by 9% in 2005, chief executive Nick Prettejohn announced today.

Lloyd's said it expects to have the capacity to underwrite £13.7bn of business.

It said the move reflected the market's disciplined approach to current conditions.

Prettejohn said: “Under the new franchise arrangements, businesses at Lloyd's have to take a hard look at how much business they plan to write in the coming year.

“Given current market conditions and the focus on delivering underwriting profit, it is a positive sign that there has been a decrease, not an increase in capacity at this point in the insurance cycle.”