Hardy adds external capital to syndicate

Lloyd’s insurer Hardy Underwriting has secured third-party capital for its Lloyd’s Syndicate, 382, for the 2011 year of account.

The third party, which Hardy did not name, will provide capital to support 7.5% of the syndicate’s underwriting capacity for the 2011 year of account. The capital will be provided on a limited tenancy arrangement, which guarantees participation on the 2011 and 2012 years of account but does not provide rights for future participation. Hardy will receive fees and profit commission on the external capacity.

Hardy said that it has sufficient capital to support its 2011 business plan itself. However it added that it continues to see opportunities to grow its insurance and reinsurance portfolio in 2011 and beyond, and inviting external capital to participate on syndicate 382 allows it to take these opportunities without needing to raise additional equity capital. It also provides an opportunity to form a strategic partnership with the third-party capital provider, the company added.

In addition, Hardy unveiled plans to initiate a share buy-back programme, assuming Beazley’s £3.30-a-share offer for the firm, which the board rejected on November 12, is withdrawn. Hardy said the share buy-back will be financed with internal resources and would not constrain 2011 growth objectives or negatively affect its dividend strategy.

At its annual general meeting on 18 May, Hardy received approval to buy back up to 7,842,485 common shares, though at the time had no specific plans to do so. The insurer expects to make a further announcement about the size of the buy-back.

Finally, in line with current trends, Hardy plans to start disclosing the extent to which its reserves are above the best estimate, starting from the announcement of its 2010 full-year results.