Lloyd's of London, which plays host to the world's largest insurance market, insisted it should still make a profit for the full year despite the devasting effects of hurricanes Katrina and Rita and with more potentially castastrophic natural disasters looming on the horizon.

As it warned that this year's hurricane season will have a "significant impact" on its full-year results, Lloyd's predicted that insurance premiums are likely to reverse their recent slide and noted that in some instances the price of policies is actually rising.

But with current estimates about the full cost of the disasters currently running at about $50 billion, Lloyd's said that the full hit to the insurance industry as a result of Katrina, Rita and the New Orleans floods was still "not certain".

Nick Prettejohn, the chief executive, said: "Hurricanes Katrina and Rita serve as a reminder that insurers' full year results are influenced significantly by the extent of catastrophic loss, and most notably this year by the severity of the windstorm season. Katrina, in particular, will have a significant bearing on full year profits.

"With three months left of the year, the North American hurricane season not yet over and the full impact of Katrina and Rita not certain, it is not possible to draw any firm conclusions about the full year result," he said.

"However, in the absence of any other major catastrophic loss or unforeseen event, the market is still expected to achieve a profit."

Mr Prettejohn's comments about the full year came as Lloyd's reported "strong" profits of £1.38 billion before tax in the first half, although this was down on the £1.14 billion the insurance market made during the same period last year and pre-dated August's calamitous storm season.

Lloyd's saw a reduction in written premiums over the half year to the end of June - to £8.4 billion from £9.8 billion the previous year - but attributed this to its "discipline" in underwriting decisions.

As reported that its 87.3 per cent "combined ratio" - a measure of insurers' underwriting profitability - compared favourably with the 92.9 per cent average among European insurers, Lloyd's also said its resources and those of its members had risen by 4.9 per cent to £11.98 billion since the half-way point last year.

Mr Prettejohn added: "A combination of disciplined underwriting and a relatively benign claims environment put Lloyd's on a strong footing, even as rates declined from their peak across areas of business in the first six months."

Some of Lloyd's biggest syndicate members, including Brit and Wellington, are preparing to suffer substantial losses as a result of this year's hurricane season in the US, which was far harsher than that suffered last year.

Continental insurers such as Swiss Re have also prepared investors for hefty payouts on claimed policies as the overall estimated cost of the disasters nearly doubled from the original $25 billion to $30 billion.

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