Companies: HDU   

Lloyd's insurer Hardy Underwriting has raised interim profits 36 per cent to £7.7 million and is braced for Hurricane Rita.

Gross written premiums at fully-listed Hardy increased 27 per cent to £65.6 million in the six months to June. The company suffered one big loss on a foray into financial institutions business but chairman Peter Hardy says 'overall the account may yet produce a modest profitable result'.

He adds that Hardy reckons its exposure to Hurricane Katrina, which ravaged the New Orleans area of the USA, will be 'of manageable proportions', around £2.5 million, after taking into account reinsurance cover and other provisions. Indeed, the likely boost to premium rates prompted by Katrina has encouraged the company to shelve plans to cut current underwriting capacity and keep it at its present level of £100 million.

Now, Rita could be more severe for the market as a whole, stronger than Katrina and heading for Houston and a plethora of onshore Texan oil rigs and installations. But Hardy chief executive Barbara Merry sounds unflappable, saying 'we may increase capacity'.

She argues energy insurers will be hardest hit 'and we are not in that market in a huge way'. Hardy will have some losses on its property aggregate business, but its exposure is curbed by reinsurance and retention limits.

Merry suggests the boost to rates from Katrina and Rita may not be as dramatic as from the World Trade Center and other incidents that broke onto an already weak market. Today, she argues, the market is stronger.

Merger approaches from recent AIM insurance arrival Omega have died a death, says Merry, who argues improvements in the financial institutions book 'vindicate' Hardy's diversification strategy.

At 207.5p, Hardy's shares value the company at £74 million. They are unlikely to perform in the short term until the market digests the hurricane implications, but could have scope thereafter.

Hardy Underwriting Bermuda	LSE	£98.34m	275.00p	7.50p
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Other company articles:
Hardy Underwriting Bermuda			21/11/2008
Hardy hails ‘improving outlook’			17/11/2008
Interim easing at Hardy			02/09/2008
New fields for Hardy			18/03/2008
First-half growth for Hardy			12/09/2007