Richard Ward, chief executive of Lloyd’s of London, has said the strong results of last year will not be repeated in 2010 as the insurance market reported a record profit of £3.87 billion, double the level of 2008, the Financial Times reported.

“Our concern is more about what’s going to happen this year than what happened last year,” Ward said.

Underwriters in the London market have benefited from a strong increase in investment returns and relatively low level of payouts for losses.

Back in the 1980s and 1990s, the Lloyd’s of London insurance market was in a poor state, as the unlimited liability investors in the syndicates composing the market discovered to their horror that unlimited liabilities were indeed unlimited. The market was hit by events such as the Piper Alpha disaster in the North Sea and huge claims connected to asbestos and hurricane damage in the US. As far as high net worth investors were concerned, this market looked very unappealing.

But Lloyd’s has recovered; new investors can not have unlimited liability due to rule changes – there are a few of the other type of investor still around – and a period of reform and overhaul has meant that the syndicates are making money again. While other parts of the financial industry, such as once-strutting investment banks or hedge funds, have taken a beating, Lloyd’s has at least so far been able to ride out the storm.

For high net worth investors able to put up the sums involved, the long-term payoffs to investing in this market are worth considering so long as they take a long view and understand the risks, Alistair Wood, head of research at Hampden Agencies, a firm that advises individuals investing in syndicates, told WealthBriefing last year.

The benign trend may hit a speed-bump, however, due to developments such as the recent earthquake in Chile, as losses stemming from the disaster could reach as high as $10 billion.