Lloyd’s has posted its highest half-year profit in five years on the back of a benign claims period.

The market made a pre-tax profit of £1.53 billion ($2.38 billion) in the six months to June 30, compared with a disaster-hit £697 million ($1.08 billion) loss in the previous corresponding period.

Lloyd’s CEO Richard Ward says fewer catastrophes aided the result, in which the combined operating ratio fell from 113.3% to 88.7%.

Total incurred net claims were £4.58 billion ($7.12 billion) for the half, down from £6.9 billion ($10.72 billion) in the previous corresponding period.

“The result has certainly been helped by the favourable claims climate,” Mr Ward said. “But it is testament to the market’s disciplined underwriting that, in the face of continuing low premium rates, coupled with low interest rates and the most challenging economic climate for a generation, it is able to return the strongest half-year result in five years.”

Lloyd’s performance was also helped by a 13% rise in investment income to £619 million ($962 million).

Gross written premium for the half-year was £14.8 billion ($23 billion), up 9.2%, which was attributed to movements in foreign exchange rates, prices hardening in some lines and inflationary increases in insured values.

Lloyd’s says property catastrophe has been the strongest segment in terms of rates, with double-digit increases. But it notes “this upward momentum slackened towards the end of the half-year”.

It also points to falling rates in “several specialty lines, with considerable uncertainty as to how the main casualty lines will develop”.

Lloyd’s Chairman John Nelson says because “rates on many classes remain marginal, despite the exceptional level of claims in 2011”, maintaining underwriting discipline is the “top priority”.