Hardy has moved a step closer to redomiciling to Bermuda, with chief executive Barbara Merry travelling to the country on a fact-finding mission.

Merry said Hardy was undertaking a “very comprehensive review” of the Bermuda market, and accused the Treasury of “making the situation worse” in denying tax cuts to the London market.

Hardy finance director Jamie McDiarmid had previously hinted at a redomiciliation, but said at the time that this was outside of Hardy’s current resources.

Merry said: “Bermuda is still on the agenda, and we have travelled over now.

“We have been meeting brokers and other insurers, and talking to people in the industry – people who have been in Bermuda for a long time – to get some perspective of what’s going on there.”

Commenting on the Treasury’s decision to deny tax cuts, she said: “The Treasury says the London market is competitive enough, but this will make the situation worse.

“I think that it has pretty much closed the door on any type of help.”

Merry also pointed out that around half of the listed insurers in Lloyd’s had decamped to Bermuda.

The news came as Hardy announced an increase in capacity for Syndicate 3820, from £65m to £75m for 2008, and that it would hit year-end targets.

Merry said: “Syndicate 3820 began only in 2007 and we had a pretty cautious business plan. With 12 months under our belt there’s scope for us to do more.”