Insurer seeks new capacity as profits soar
Hardy Underwriting is planning an expansion that could see it developing another syndicate, making acquisitions or even leaving Lloyd's entirely.
The successful insurer's pre-tax profits more than doubled in the first half of this year to £1.8m compared to £913,000 in the same period of 2001.
Gross written premiums increased by 58% to £28.2m from £17.9m and the combined ratio improved to 91.2% from 92.6% on its existing syndicate 382.
Chief executive Barbara Merry said it planned to expand capacity to £100m for 2003 from £54m this year, but she said capacity would probably be limited to about £150m for the syndicate. Further expansion would take different routes.
She said: "One of the routes we would consider very actively is the establishment of a new syndicate, say from 2004."
Such plans would require a capital raising and markets remaining strong. "We would like to have some more
substance so that we can weather the soft markets slightly better."
One alternative would be to get new business through acquisition. "We may seek to go forward on two fronts," Merry said.
Another would be leaving Lloyd's altogether. Reason to leave included concerns over its solvency, the higher cost of doing business there compared to the companies market and the principle of mutuality, under which successful operations agree to cover others' losses through the Central Fund.
Less than half of Hardy's business needed the Lloyd's licences to do business.
Ratings agency Standard & Poor's last week published syndicate assessments showing Hardy was among those least reliant on Lloyd's.
Merry acknowledged that Hardy would be a very small player outside Lloyd's but concluded: "We don't see why we should be contributing to other people's losses, especially where those entities have ratings better than Lloyd's own."