Chief insists London operation will continue as normal

Hardy, the Lloyd’s insurer, finally announced this week that it will redomicile to Bermuda, ending months of speculation.

Following the news, chief executive Barbara Merry said that Hardy’s London operations would continue to function as normal, but that a member of senior management would relocate to become “the face of Hardy in Bermuda”.

She added that the decision to relocate was based on a variety of factors, and not just the Treasury’s decision to deny tax breaks to London insurers.

She went on to talk of the importance of the Bermudan market as a “complementary” market to London, as analysts posted positive updates on the listed company.

Two weeks ago, Merry spoke to Insurance Times regarding a recent fact-finding tour to Bermuda, during which she and her team spoke to a wide variety of people involved in the market.

Merry said this week: “We went to Bermuda to see whether there were business opportunities that Hardy could take, and there were.”

“We developed a very detailed financial plan, regarding where we want Hardy to be in five years’ time. We didn’t have the resources to move five months ago.”

Hardy will establish Hardy Underwriting Bermuda (HUB) on the island. The company will then complete an inversion, whereby HUB will acquire Hardy’s UK operations.

“Bermuda has become a very important complementary market to the London market”, Merry continued.

“40% of a big property order is going to Bermuda first, and then the rest is shared between London and the rest of the world. Hardy clearly needs to be there.”

Nicholas Johnson, analyst at Numis, said: “Establishing a presence in Bermuda is a sensible step.”

He added that moving from a tax rate of 30% to 15% would enhance earnings per share in 2008 by 18% to 53.5 pence, while reiterating his ‘Add’ stance.

As Insurance Times went to press, Hardy shares stood at 289p, up 5p since the redomiciliation was officially announced to the stock exchange.

Hardy underwrites business in Lloyd’s via Syndicates 382 and 3820, the latter having started up this year. Combined 2007 capacity was £175m.