But commentators say it is still a ‘superior performance’, even beating the Bermudians

Pre-tax profit at Lloyd’s halved to £1.9bn last year from the £3.8bn posted in 2007.

The market’s combined ratio also worsened to 91.3%, from 84% in 2007.

Richard Ward, its chief executive, pointed out that although it had been the market’s third worst catastrophe year, it had still posted a strong combined ratio.

“Lloyd’s has proved resilient and our market discipline has been maintained,” he said.

Commentators were largely buoyed by the Lloyd’s results. Andrew Hubbard, head of insurance services at accountancy firm Mazars, said: “Lloyd’s has again demonstrated superior performance compared with American and European peers, and similar performance to Bermudian reinsurers. Considering Bermudian operating costs tend to be lower, this suggests the Lloyd’s claims experience is better than that of the Bermudians.”

Barrie Cornes, an analyst at Panmure Gordon, said: “If we have any concerns, it is the willingness of the quoted insurers to raise capital in 2009 ahead of a hoped-for upswing in the underwriting cycle.”

Lloyd’s said its combined ratio of 91.3% compared favourably with an estimated average of 101% for US property and casualty insurers, 102% for US reinsurers, 97% for European insurers and reinsurers and 92% for Bermudian insurers and reinsurers.

The biggest loss was in the energy business, which had a ratio of 124%. This was attributed to losses from hurricanes Ike and Gustav.

Lloyd’s said its overall results had been affected by significant claims from natural catastrophes, lower insurance rates and a reduction in investment income. Lord Levene, the market’s chairman, said this had been partially offset by currency movements and prior year surpluses.

There was a 50%-plus reduction of investment return. In 2008 it made £957m, compared with £2bn the previous year. It had to release £1.2bn in reserves last year.

But Hubbard said it was a creditable result in the current financial climate and vindicated Lloyd’s conservative investment policy.

Ward said it had invested a third in cash and letters of credit, a third in government bonds, a third in corporate bonds “and very little in equities”.

Lloyd’s said its exposure to claims from large fraud cases such as Madoff was minimal.