Chief Executive Officer Richard Ward said the benign catastrophe season contributed to the results. But he stressed the market's three-year plan to institute tighter underwriting and improved business procedures will meet the challenges of any less than benign season or softening market.

"There is clear evidence that the market, having worked with the Franchise Performance Directorate over a number of years, is now better prepared to manage the insurance cycle," he said in an interview this morning.

Mr. Ward, who joined Lloyd's last year after a career in energy trading, said of the property insurance market's current reduced pricing cycle that "soft markets are new to me, I am afraid."

The FPD was formed in 2003, so it also has yet to weather a soft cycle. "But I am confident through the underwriting standards, the risk management standards, the franchise performance scrutiny and business planning performance, and the capital management processes that we will be able to manage the cycle more effectively."

Mr. Ward said Lloyd's relationship with market members has evolved over the past year to one of commercial partner and the franchise standards introduced last year help each market firm understand the minimum level to which they are expected to perform.

Lloyd's earnings report came on the heels of its announcement it had sealed its deal with Berkshire Hathaway to reinsure the liabilities of Equitas, the runoff entity for all of Lloyd's pre-1993 liabilities.

"We should recognize that Equitas has been a drag on the market but mostly psychological," said Mr. Ward. "But through the completion of Phase One, I do believe we have been able to close that chapter in its history so we can start looking forward rather than constantly looking over our shoulder."

While declining to predict the outcome of any National Association of Insurance Commissioners deliberations, Mr. Ward said Lloyd's remains in constant dialogue with the U.S. regulators and hopes a revised collateral requirement for reinsurers can be implemented that is not based on country of domicile.

Lloyd's exceeded its target of 85 percent of all contracts meeting certainty standards set by British regulators. "We now want to embed contract certainty in business as usual activities and ensure that managing agents are making the right contract certainty, tax, regulatory and risk management checks before entering into contracts," he said.