LONDON (Reuters) ? The Lloyd's of London insurance market said it had agreed a settlement with six insurers over cover for its central fund, which will cut its 2004 pretax profit by 323 million ($621 million).

Lloyd's said Swiss Re, St Paul, Hannover Re, XL Re, Federal Insurance Co., a subsidiary of Chubb and Employers Re, a unit of General Electric, had agreed to pay it 152 million pounds -- but that sum includes amounts already paid by the six insurers.

A spokeswoman for the world's second biggest commercial insurer declined to say how much had already been paid.

Lloyd's will report its annual results on April 6 and the spokeswoman said the market was still confident of making a "substantial profit" in 2004 amid continuing good market conditions.

The market said the settlement would reduce its Central Fund -- used for paying outstanding claims -- by 226 million, after tax. Lloyd's had previously estimated that under a worse case scenario its fund would be reduced by 276 million.

Lloyd's central fund had assets of around 801 million at the end of 2004.

The central fund is the cornerstone of the Lloyd's market's credit ratings as it is used to pay claims if individual market insurers who underwrite policies cannot meet the payments.

Rating agencies Fitch and Standard & Poor's said the settlement would not change their 'A' financial strength rating on Lloyd's and their 'BBB+' rating on its subordinated debt and stable outlook.

"You can't say this is a positive for Lloyd's but it is not so negative that it would warrant a move in the rating or the outlook because there are many other factors that support them," S&P analyst Marcus Rivaldi said.

Fitch said it had already factored the worst case scenario into its rating for the market.

"The fact that there will be a reduction in the central fund assets is not a positive but we do view as a positive the fact that this will reduce one of the issues that has been taking up a significant amount of management time," Chris Waterman, a senior director at Fitch, said.

The dispute broke out in April 2003 when the insurers refused to pay further claims on a policy Lloyd's bought in 1999.

Under the terms of the policy the insurers would pay out if calls for cash to Lloyd's from unpaid policyholders went above 100 million in a year. They would pay out up to 350 million in any one year, with a maximum pay-out limit over the lifetime of the policy of 500 million.

In January a tribunal had initially ruled that Swiss Re, which underwrote nearly a third of the policy, was entitled to refuse payment of the claims. The arbitration hearings, begun in August 2004, will now stop.

Lloyd's, the world's oldest insurance market, is a collection of 62 mini-insurers or syndicates. The market saw its profits more than double in 2003 to 1.89 billion as a result of strong demand and fewer natural disasters.

Despite a disastrous U.S. hurricane season and some price pressures, a slew of Lloyd's syndicates, such as Hiscox, Brit and Amlin recently reported profits ahead of forecasts amid continuing good conditions for some risks.