Lloyd’s has reported pre-tax profit for last year of £3.16 billion ($6 billion), against a backdrop of low interest rates and a softening market.

The figure is down slightly on the previous year’s £3.21 billion ($6.1 billion), while the combined operating ratio deteriorated to 88.1% from 86.8%.

Gross written premium was down 1% to £25.28 billion ($48 billion).

The performance was better than expected, thanks mainly to benign catastrophe losses.

Major claims totalled £670 million ($1.27 billion), down 23% on 2013 despite a series of losses in the aviation sector.

Natural catastrophes were below average, with hurricane activity in the Gulf of Mexico particularly muted.

CEO Inga Beale says challenging conditions are set to continue into this year.

“In the wider industry, a persistent imbalance between capital and risk is triggering increased competition, making organic growth difficult,” she said.

“In this context it is unsurprising that there has been a spike in merger and acquisition activity; the same happened in the mid to late-1990s.

“We expect this trend to continue through [this year] and accept the gauntlet that this consolidation throws down – to protect and promote the diversity of the Lloyd’s market.”

Syndicates must be increasingly nimble and innovative, with “a willingness to embrace transformational change”, Lloyd’s says.

Maintaining underwriting discipline and constantly reviewing books will be “of paramount importance”.

Lloyd’s General Representative for Australia Chris Mackinnon says Australia-specific figures are not currently available. He told insuranceNEWS.com.au the overall result is “a fantastic set of figures built on the platform of previous years”.