All material subject to strictly enforced copyright laws. © 2021 Insurance Insider is part of Euromoney Institutional Investor PLC.
Accessibility | Terms & Conditions | Privacy Policy | Modern Slavery Act | Cookies | Subscription Terms & Conditions

Hardy staying in London – for now

Lloyd's insurer Hardy Underwriting Group has revealed that it will stay in London, but that the possibility of moving to a low tax jurisdiction remains firmly in its sights.

Hardy's CEO Barbara Merry told The Insurance Insider: "While we have, of course, considered the possibility of a relocation of part of our business to Bermuda, Dublin, or elsewhere, we take the view that we need to be able to identify real commercial advantages to justify such a move. At the moment we do not feel we could adequately compete in Bermuda and so have not been able to make a business case for the move. However, we may find that the case changes as we grow."

Merry was speaking as the company today (22 March) became the latest (re)insurer to post record profits on the back of last year's docile claims environment.

Hardy's profit before tax more than doubled from 2005 to £16.8mn last year, underpinned by a loss ratio of 37.8 percent and a combined ratio of 76.9 percent - which were down from 64.1 percent and 92.7 percent, respectively, on the previous year.

"We are really pleased with the results, we are a very underwriting focussed business and have demonstrated this with the combined ratio, which we feel is the best measure of the business," added Merry.

Last week Kiln plc became the latest Lloyd's company to announce plans to re-domicile in Bermuda and launch an insurer on the island. Kiln joins Hiscox plc and Omega Underwriting Holdings to relocating and set up a Bermudian insurer, while Amlin plc and Advent Capital Holdings have launched insurance subsidiaries on the island.

"The competitive advantage is enormous," Merry said in an interview with Bloomberg, in January this year. "I'm slightly concerned we aren't going to have much choice."

Gross written premium was down to £106.1mn last year, against £111.3mn in 2005, but is expected to increase this year with additional capacity provided by the company's new Lloyd's Syndicate 3820, which will write a mixture of direct and facultative property business.

"The key thing with 3820 is that we have the right team now in place, we have recruited people who can lead rather than follow the market," said Merry. "As at the end of 2006, the Hardy business stands on the cusp of entering new underwriting territory and being able to participate more actively in the hugely significant non-marine property classes of business that are available in the London market."

Basic earnings per share more than doubled from 15.3p in 2005 to 34.1p last year, while post tax return on equity increased to 17.8 percent from 8.3 percent in the prior-year.

Analyst Nick Johnson of Numis Securities said: "While noting that competition is becoming 'quite fierce', Hardy describes a positive outlook for underwriting margins in 2007, with the added diversification benefit of its new syndicate 3820. New syndicate capacity of £65mn for 2007 should generate strong EPS growth in 2008, which we believe is yet to be fully appreciated by the market. We think this is too low for a group with Hardy's EPS growth prospects and track record of profitable underwriting. With upside of 13 percent to our target price of 320p, we retain our ADD recommendation."

Hardy's shares rose 0.75p to 283p in early trading on the London Stock Exchange today.

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree