Lloyd’s of London, the world’s oldest insurance market, said low yields on corporate bonds eroded equity investment gains in the first quarter.

Lloyd’s investments returned 49 million pounds ($79 million) in the period, the market said in a statement today.

The second quarter has been “less encouraging as fears about the solvency of sovereigns in the euro zone re-emerge,” the market said. “The very low general level of available yields continues to constrain investment returns.”

Lloyd’s in March posted a pretax loss of 516 million pounds in 2011 from a 2.2 billion-pound profit in 2010 after the worst year for natural-catastrophe claims on record. Chief Executive Officer Richard Ward said at the time that the market is struggling to raise prices, following earthquakes in Japan and New Zealand, windstorms in the U.S. and flooding in Thailand.

The market’s surplus assets increased by 46 million pounds to 3.03 billion pounds from the year end, Lloyd’s said.

To contact the reporter on this story: Jon Menon in London at jmenon1@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net