More than an apostrophe separates a large UK bank that has come back from the brink of bankruptcy from London’s profitable specialist insurance market. The City of London’s reputation as a financial centre hangs not just on its investment banking operations but also on its specialist underwriting skills typified by Lloyd’s, the world’s largest insurance market. While Lloyds Banking Group has a UK-focused business, Lloyd’s insures against risks around the globe. And while the bank made a first-half loss of almost £4bn, because its HBOS unit underestimated the risks of property lending, Lloyd’s on Thursday reported a 40 per cent year-on-year profit increase to £1.3bn. Its combined ratio of 91.6 per cent continues to point to profitable pricing for risk.

The lack of catastrophes in the first half certainly helped. There was also less competition for business. The collapse of AIG one year ago has not delivered quite the same surge in business that the investment bank survivors of Lehman’s failure have since enjoyed. But it has encouraged broader risk distribution, which suits the Lloyd’s syndicate model. Bermuda-based catastrophe risk underwriters are also less of a threat. The roof was blown off their thinly capitalised monoline model by the hurricanes of 2005. Rating agencies’ subsequent capital demands have made it less attractive to operate there.