It’s the first annual loss recorded since 2001, but Lloyd’s of London says its £103 million ($247 million) deficit represents a strong performance for 2005. The result was within market expectations and factored in losses from the devastating North Atlantic hurricane season.

Chairman Lord Levene says the combined effect on the insurance market of Hurricanes Katrina, Rita and Wilma was worse than the September 11 terrorist attacks in 2001. Given total losses in excess of £3.31 billion ($7.94 billion) for these three events, the result was testament to careful risk planning and other areas of the Lloyd’s business.

“For Lloyd’s to emerge from such a year with just a small loss represents an excellent performance by the market,” he said. “That outcome would have been unthinkable just a few years ago, which is the true measure of the progress Lloyd’s has made.”

The Lloyd’s market lost £2.21 billion ($5.3 billion) on Hurricane Katrina – up from the £1.93 billion ($4.62 billion) estimate announced late last year. Hurricane Wilma resulted in £498 million ($1.2 billion) of insurance losses for Lloyd’s and Rita was responsible for £602 million ($1.4 billion).

The loss was severe when compared with a £1.37 billion ($3.28 billion) profit in 2004, but Director of Finance and Risk Management Luke Savage says Lloyd’s is in a very strong financial position this year.

“Conditions remain profitable, and the market is well placed to take advantage of current opportunities,” he said.