Lloyd's says 2005 was unprecedented for natural disasters

The loss followed a profit of �1.37bn in 2004, and Lloyd's said that 2005 had been "the worst year on record for natural disasters".

The market had net claims of �3.31bn from the string of hurricanes that hit the US and the Caribbean last year.

However, Lloyds said that it remained in "sound financial shape".

Continued caution

Last year, the southern states of the US suffered the worst hurricane season on record.

We must not fall into the trap of thinking that 2005 was a freak year which could never happen again Lord Levene, Lloyd's of London chairman

Hurricane Katrina struck the US Gulf of Mexico coast in late August, Rita hit Texas and Louisiana in late September, and in October Wilma caused widespread damage in Florida.

Lloyd's chairman Lord Levene said that 2005 cost the insurance industry "far more than the impact of the 9/11 attacks on New York".

"For Lloyd's to emerge from such a year with just a small loss represents an excellent performance by the market," he added.

However, Lord Levene warned that the market should not dismiss the events of 2005 as a one-off.

"We must not fall into the trap of thinking that 2005 was a freak year which could never happen again," he said.

"We must only accept risk at an adequate price and on the right terms."