New fields for Hardy
Article Date: Mar 18 2008Hardy Underwriting Bermuda is looking at new mobile phone and medical business after lifting profits nine per cent to £18.3 million.
The insurer, which formally moved its corporate domicile from London to Bermuda last month, increased net premiums 36 per cent to £108.6 million last year, which saw net claims incurred rise 66 per cent to £50.3 million. Fully listed Hardy achieved a 17.7 per cent net return on equity, though investment returns were indifferent.
Earnings rose 12.5 per cent to 38.4p a share, helped by the company’s placing of a portion of its reinsurance with its own reinsurance arm in the tax haven of Bermuda. The dividend is up ten per cent to 11p a share and there are hints that the Bermuda tax base might accelerate payout growth.
Lloyd’s insurance underwriting syndicate 382, supported and managed by Hardy, made a 17.6 per cent profit for 2005, a result described by chairman David Mann as ‘stunning’ in the year of hurricanes Katrina, Wilma and Rita. Releases from back-year reserves fell from £12 million to £9 million. Explaining why the company’s new Bermuda-based syndicate 38Twenty made a slower start than some had hoped, chief executive officer Barbara Merry says it was not prepared to write direct and facultative property reinsurance at the low rates on offer in last year’s continued softening of premiums.
With a portfolio of property, catastrophe and other risks, Hardy says prospects for the 2006 and 2007 underwriting years are ‘looking strong’. For 2008, Merry concedes ‘the market overall is still softening’ and says underwriters will have to look ‘very carefully’ at what business they accept.
But she contends there are geographical and business areas within property and treaty business where margins are ‘still good’ and stresses that ‘we have no sub-prime problems and our reserves are strong’. According to Merry, Hardy has a large potential contract for mobile phone cover in its sights, as well as a ‘very innovative’ accident and health policy with a UK healthcare group.
Insisting Hardy has no corporate moves afoot just now, she points out the current year should benefit from 38Twenty’s contribution. The shares, which have fluctuated between 338p and 244p over the past 12 months, now stand at 281p, up 11p this morning, where they value the company at £100.5 million and should fare better than several sector peers.
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