Lloyd’s has warned premiums in some lines are dropping at a “concerning rate” after first-half underwriting profit crashed 51.6% to €1.5 billion ($3.09 billion).

The combined operating ratio deteriorated to 92.5% in the six months to June from 83.7% a year earlier, mainly driven by the claims impact of the California wildfires.

Overall claims paid by the market cost £14 billion ($28.8 billion), also reflecting aviation settlements related to the conflict in Ukraine.

Gross written premium rose to £32.5 billion ($66.9 billion) from £30.6 billion ($63 billion), but pre-tax profit dropped to £4.2 billion ($8.6 billion) from £4.9 billion ($10.1 billion).

“The quality of underwriting decisions, especially among the market’s top-performing syndicates, has been maintained,” CEO Patrick Tiernan said.

“That said, premiums in certain lines are falling at a concerning rate. In a market with elevated risk, reinvestment of profits and top-line targets are having a softening effect in certain wholesale-dominated sectors of the market.”

He says Lloyd’s is intent on a “relentless and comprehensive” focus on cutting the cost and complexity of operations.

“The ‘shadow costs’ of Lloyd’s, which can result in higher cost or greater bureaucracy for market participants, must be reduced … And over time, the only difference between the cost of doing business inside and outside Lloyd’s should be the 1% charge for access.”

He added: “We will not pursue top-line growth. The size of the market will be an outcome, not a target.

“We will seek to expand the multiplying effect of our network to developed and developing markets alike. From geographies where we already have a strong presence, such as North America, the UK and Asia-Pacific, through underpenetrated markets such as Europe and into expanding markets such as the Middle East.”