Lloyd’s has reported a 51% drop in annual gross profit to £1.9 billion ($4 billion) in the aftermath of the second costliest year on record for insurers.

The Lloyd’s combined ratio of 91.3% reflected a sharp contraction in profitability compared to an 84% ratio the previous year. Overall profit was well down on the £3.85 billion ($8.11 billion) Lloyd’s earned in 2007.

While Lloyd’s central assets increased 6% to £2.07 billion ($4.36 billion) during the year, investment income tumbled 52% to £957 million ($2.02 billion).

There was greater joy in prior year reserve figures where Lloyd’s recorded a surplus of £1.27 billion ($2.67 billion) against £856 million ($1.8 billion) previously. The market also recorded a 10% increase in gross written premium of £18 billion ($38 billion).

CEO Richard Ward says Lloyd’s remains in good shape despite the economic downturn, with beneficial currency rate movement and positive investment returns in December helping to stem losses.

“Given the financial crisis that has unravelled over the last year and the scale of catastrophes, our results represent a solid performance and better than we might perhaps have expected in such a turbulent year,” he said.

Large-scale natural catastrophes last year killed 240,000 people and cost the insurance industry £193 billion ($407 billion), while Lloyd’s paid out £1.8 billion ($3.8 billion) in natural disaster claims.

Credit ratings agency Standard & Poor’s maintained its A+ rating on Lloyd’s citing a “very solid performance”.