Hardy Bermuda: ‘Hugely Challenging Times’
Hardy Underwriting Bermuda Limited, the specialist insurer and reinsurer, today [Mar. 3] announced its pre-tax profits fell to £10 million in 2010 (2009: £20.1 million), following an “unprecedented level of international natural catastrophes”.
The specialist insurer and reinsurer recorded gross written premium of £279.4 million, up from £242 million in 2009.
Operating out of offices on Par-La-Ville Road, Hardy Underwriting Bermuda Limited is a management and holding company. The company’s principal activity is acting as a managing agent at Lloyd’s for syndicate 382. Hardy Underwriting Bermuda also manages Hardy Re Limited, a Bermuda-based reinsurance company and Hardy Bermuda Limited, a coverholder company, which assumes risk on behalf of syndicate 382 via a binding authority. It operates in four segments: Marine and aviation, Specialty lines, Non-marine property, and Property treaty. Its subsidiaries include Hardy Underwriting Group Plc, Hardy Re Limited, Hardy Bermuda Limited, Hardy Underwriting Limited and Hardy Names Limited.
Highlights of 2010 operations included:
FINANCIAL
- Gross written premium of £279.4m (2009: £242m)
- Net tangible assets of 270p per share (2009: 266p per share)
- Full year dividend of 14.6p per share (2009: 13.3p per share)
- Profit before tax of £10m (2009: £20.1m)
- Combined ratio of 94.7% (2009: 78.1%)
- 5 year average combined ratio of 85.4%
- Basic earnings per share of 18.6p (2009: 36.8p)
OPERATIONAL
- Adrian Walker, Director of Underwriting, is retiring from the Group and will be succeeded by his deputy, Patrick Gage
- Appointment of Richard Lim Ngak Kwan to head up the newly opened Singapore office
- Focus on capital management including;
- Ongoing share buy back programme
- Dividend strategy
- Introduction of third party capital to syndicate 382 via two-year limited tenancy agreement with ARIG
- Further development of the business, including expansion of the Bermuda underwriting platform to include direct and facultative property risks
Commenting the drop in earnings, chief executive, Barbara Merry, said: “The geographic distribution of natural disasters in the period (notably in Chile, Australia and New Zealand, but also in central Europe and Canada) has meant that our more internationally focused property treaty account has incurred a greater frequency and severity of loss than a typical Lloyd’s account.”
Chairman, David Mann, added: “”We have achieved a profit before tax despite the hugely challenging times we have faced throughout 2010 with an unprecedented level of international natural catastrophes. Our heavy focus on short tail classes, and the strong underlying performance, will allow us to move forward in 2011. Whilst we are proud of our history we are keen to be also judged on our future performance.”
Looking ahead, the firm says it intends to expand its Bermuda underwriting platform to include direct and facultative property risks.
“The unprecedented level of international natural catastrophes has meant that our pure year underwriting performance has been hit to a greater extent than some of our peers with a more US focused book,” said Mr. Mann in his chairman’s statement.
“A surplus of capacity across most classes has prevented any improvement in rates, but the underlying performance, being the loss ratio from the non-catastrophe affected classes, has been strong. Furthermore, our heavy focus on short tail classes will allow us to move forward in 2011 and beyond without the concerns which many may have over the ultimate performance of prior years.
“With this in mind, we are delighted that we have commenced operations in Singapore through Hardy Underwriting Asia Pte Limited and developed our contacts in the Middle East through our joint venture company Hardy Arig Insurance Management (HAIM). These initiatives are an important part of our plans to maintain and enhance our position in the global marketplace, as economies outside of Europe and North America continue to take a more significant place on the world stage.
“The costs of managing the business are rising, driven to a great extent by Solvency II, and we are acutely aware of the need to manage our expense base more tightly. Every part of the group has reviewed expenditure in detail in order to prioritise how resources are deployed to meet growing business and regulatory needs. We believe that the investment that Hardy has made in systems and people will enable us to establish a robust platform to manage Solvency II.
“I should also mention the unsolicited approach for the Hardy business made by one of our fellow Lloyd’s businesses. There may well be opportunities where the combination of two entities makes both commercial sense and is capable of fully valuing the acquired business; in this instance we do not believe that either was the case. The approach did, however, serve to reinforce the philosophies that have been nurtured within the entire Hardy team over many years. Whilst we are proud of our history we will be judged on our future performance and we are focused on delivering our plan. A number of talented underwriters have joined us in 2010 and, by providing the environment in which they can flourish, we expect that others will also want to be part of our growth vision.
“After a long and successful career in the Lloyd’s market, most recently overseeing the growth of the Hardy business, Adrian Walker has decided to retire. I have enjoyed working with Adrian tremendously, and his contribution to the business during a defining period for Hardy has been immense.
“On behalf of the Board and shareholders, I record our thanks for the efforts made by all of the team in such a challenging year and for the ongoing support of our brokers, clients, reinsurers and other key business partners.”
