Figures from two London market insurance companies illustrate how the cyclical downturn in premium rates has eaten into profitability. Beazley Group, whose first-half profits fell 24 per cent to £46 million pre-tax, blames weakening rates and poor returns on invested premiums.

The company, which insists that its underwriters held the line and turned away business failing to meet their minimum terms, says the USA local market, where premiums are ‘less volatile’ than on large syndicated Lloyd’s business, was a bright exception, with premiums up 79 per cent. Beazley says it is ‘satisfied’ with its reserves against sub-prime-related and other claims, and argues that other initiatives, such as investing in claims management within ‘specialty lines’, continue to reap rewards.

Meanwhile, Lloyd’s insurer Advent Capital suffered a 76 per cent first-half pre-tax profits fall to £1.6 million, despite a 56 per cent increase in gross written premiums to £150 million. Expenses rose and Advent, chaired by market veteran Brian Caudle, says premium rates and terms on property, marine and catastrophe risks have been under pressure in most areas.