Hardy shares could rise this morning: analyst

Hardy Underwriting Bermuda could face net losses of £9m-£12m from the Japanese earthquake and tsunami.

The losses would come from Hardy's property treaty portfolio. The firm said estimates of final losses were some way off, but that it expected industry losses of around £21.5bn.

Shore Capital analyst Eamonn Flanagan said: "This figure is much less than we had feared and I believe the shares should respond favourably this morning."

Hardy chairman David Mann said: "Our thoughts are with those who are suffering as a result of recent catastrophes, and I intend to join the Hardy underwriting team visiting Japan in June in order to gain a more complete understanding of the position and to demonstrate our commitment to this important market. The world certainly seems to be a riskier place at the moment, and this creates both opportunities and threats to our industry."

Hardy also gave guidance about the impact of the Japanese earthquake and tsunami.

  • Disaster scenarios have normally been based on an event centred on Tokyo; the insured losses from the more rural areas that have been most affected should be significantly less
  • Hardy is a lead reinsurer in Japan, but has tended to position itself on the higher layers of programmes
  • Hardy has purchased second event reinsurance protection at a relatively low attachment point for 2011 and also has substantial quota share cover, so the reinsurance programme going forward provides greater protection than was available in 2010
  • The Kyosai book of insurance written by Hardy includes homeowners' business, but only provides contents cover and does not include earthquake shock or tsunami; the impact of "fire following quake" on the book is not expected to be material
  • Hardy's marine and aviation accounts are unlikely to have any material losses, and the specialty lines division does not have significant exposure to personal accident cover in the affected areas
  • The direct and facultative property account has low exposure to the affected region and losses are not expected to be significant; a conservative reserve has, however, been included in the total loss estimate