Hardy confirmed this week that it would be reducing the capacity of Syndicate 382 by 15% in 2005.

The Syndicate's capacity will drop from £115m to £100m. Syndicate 382 writes marine, property reinsurance, UK direct property, aviation and financial institutions business.

Hardy announced that the Syndicate's 2003 year of account was expected to produce a profit of 7%-12% of capacity.

The insurer said the forecast for the 2002 year of account remained unchanged, with a profit of 13.5% to 18.5% of capacity expected.

Hardy said the forecasts had been influenced by "a lower than expected capacity utilisation which, in turn, has been impacted by a deterioration in the value of the US dollar".

Chief executive Barbara Merry said the syndicate "continued to be extremely selective in the business written".