Companies: HDU   

Hardy Underwriting is bullish after interim profits down £1.6 million at £6.1 million provided 2005's hurricane hits do not recur.

Chief executive Barbara Merry says 'we are almost through September and keeping our fingers crossed. If we can get through the US hurricane season without too much damage, we should have a very good year'.

Fully-listed Hardy's 21 per cent pre-tax profit slide in the six months to June on gross written premiums down 11 per cent to £58.3 million was less severe than the market had expected and some analysts are predicting full year pre-tax profits up 36 per cent to £10.2 million. Hardy, which with most of its peers took heavy losses on the hurricanes of 2004 and 2005 in the USA and Gulf of Mexico, has been able to benefit from the subsequent hefty premium rate rises on catastrophe cover which these industry-wide losses provoked.

With reinsurance either unavailable or unaffordable, Hardy's Lloyd's Syndicate 382 wrote without this protection and, with a marked absence of major hurricanes since, this has been paying off handsomely. Financial institution cover, once a source of concern, is profitable.

In a mixed rating environment, Merry says property and catastrophe premiums are extremely strong but aviation faces overcapacity and a potential 'bloodbath' at end-year renewals. Hardy has recruited underwriter David Carson from Farriday to handle international catastrophe business and is moving into new areas of property, accident, health, political risk and conveyancing.

The market authorities have agreed a reduction to 47.9 per cent in the required capital ratio for Syndicate 382, where the company is close to buying out remaining external underwriting capacity providers, and Hardy's new Syndicate 32820 is starting with a 56.3 per cent ratio, including a 20 per cent new syndicate loading. Merry says the reduction Hardy's capital requirement will be worth £8 to £9 million.

At 242p, up 5p this morning, Hardy's shares should have scope for more improvement, though are not immune the cyclicality of the sector.

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Hardy Underwriting Bermuda	LSE	£96.55m	270.00p	-5.00p
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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