Walsham Brothers made a loss for 2002 despite hardening rates and a substantial increase in business volumes.

The group, which concentrates mainly on broking reinsurance at Lloyd's but also runs underwriting and investment operations, increased turnover by 35% but still made a pre-tax loss of £1.88m.

The group, which lost £2.25m in 2001, said its largest loss was in its reinsurance business.

It was forced to increase loss reserves for underwriting on the 2001 account and put £1.7m towards supporting its subsidiaries' losses.

Its underwriting business in 2002 made £2.9m on direct business and lost £923,000 on reinsurance.

The biggest profit-making area was underwriting of third party liability direct risks.