The Lloyd's of London insurance market overcame a costly year for hurricane claims by unveiling annual profits of £1.36 billion yesterday.
The figure was down from the £1.89 billion reported a year earlier but came despite a £1.2 billion bill for storm damage in the United States and the "worst-ever year" for industry losses from natural catastrophes.
Lloyd's, which has staged a series of reforms in recent years to modernise the market, said such a result would have been "unthinkable" a few years ago.
Among recent changes, Lloyd's has introduced a new franchise structure and phased out the number of Names who backed the market with an unlimited liability. There are 62 syndicates who underwrite insurance at Lloyd's.
The results built on the progress made in 2003 and 2002, when it reported its first profits figure since 1996.
Chief executive Nick Prettejohn said: " Lloyd ' s performance compared well with our global competitors. However, we must remain vigilant if we are to continue to deliver a strong underwriting performance.
"Market conditions remain profitable but increasingly competitive in a number of lines."
At £1.33 billion, Lloyd's said 2004 had been the second worst year in recent times for catastrophe claims. In 2001, the figure reached £2.66 billion in the wake of September 11, but fell to £142 million in 2003. Net claims and operating expenses amounted to £11.42 billion last year, up on £10.62 billion in 2003, and still covered by premiums of £11.79 billion.
That left underwriting profits for 2004 at £370 million, while improved investment returns of £1.02 billion pushed overall profits up to the £1.36 billion figure.
Lloyd's said its combined ratio - a measure setting claims and costs against premium income - was favourable when compared with other insurers.
It posted a figure of 96.9 per cent - where anything below 100 per cent means the business is profitable - while US property and casualty insurers achieved 98.7 per cent, Lloyd's said. Aviation and marine insurance helped drive the improvement.
Chairman of Lloyd's, Lord Levene, said: "These results, achieved despite significant losses from natural catastrophes, are testimony to the continually improving quality and strength of the Lloyd's market."
He added the critical nature of its role in insuring some of the toughest risks was underlined in 2004 with the " catalogue of natural disasters".
The underlying resources of the society reached £12.17 billion, up 20 per cent over the year. Last April Lloyds revealed that the net resources of the society and its members had risen by 35 per cent to £10.1 billion.
Lloyd's switched to reporting its results on an annual basis in 2003 as part of a raft of reforms to modernise the market and make it more transparent and easier to compare with other major insurance centres such as Bermuda. Other changes included introducing the new franchise structure to the market.