Lloyd's of London unveils profits slump

Lloyd's of London, the largest insurance market in the world, has today reported a slump in first-half profits from £1.3 billion in the same period last year to £628 million. It seems a number of catastrophes have come together to create another nightmare scenario with the Chilean earthquake, BP oil disaster and a number of other issues coming to the fore.

These first-half catastrophes are the worst since the market began to report interim profits in 2005 and perfectly illustrate the very difficult and volatile nature of the insurance market. The Lloyd's insurance market is basically an exchange which allows insurance companies to offset any potential liabilities in the future via an array of underwriters. In the good times Lloyd's of London has often been seen as something of a moneymaking machine but in the bad times, for example when mortgage defaults spiralled out of control, it can take some time to get the market back on track.

The figures in question are a total for the underlying syndicates who make up the Lloyd's of London market as there is no one single entity. It is likely that we will see an increase in premiums in certain areas of the insurance market as a result of these poor first-half figures.