A place in the sun

It’s a crisp February morning in London, as Hardy chief executive Barbara Merry sits in her modestly decorated Lime Street office. But her mind is on sunnier climes. This is the day that Hardy’s redomicile to Bermuda becomes effective – the latest in a string of impressive achievements to her name.

Merry is the only woman chief executive of all the listed Lloyd’s insurers, and one of only two women who sit on the Lloyd’s council. But she tends to evade this point in conversation, focusing instead on the buzz of a career spent in the City, mentioning her passion for arts and literature, and, most importantly, her family, and looking forward to the busy months ahead.

One senior executive in the Lloyd’s market, who works close to Merry, said that her leadership of Hardy has been her greatest achievement. “I have known her ever since she was a regulator in Lloyd’s. She is a genuine person of great integrity and insight, as well as intellect. And she certainly isn’t afraid to say what she thinks.”

Merry replaced Peter Hardy as chief executive of the Lloyd’s insurer in 2002. Outspoken even in her early days as chief executive, she suggested later in October 2002 that Hardy was considering leaving the Lloyd’s market altogether.

In the summer of 2005, Omega failed in a takeover bid for Hardy amid speculation of personality clashes and that Merry would be the first to lose her job should the bid succeed. Hardy rejected two offers from Omega under pressure from major shareholders. The Takeover Panel intervened with an ultimatum, but Omega gave up.

2006 saw a record pre-tax profit of £16.8m, and was also the year that Hardy finally gained full control of Syndicate 382, buying out the remaining Names.

In the first half of 2007, profits were up 50% to £9m. Also in that year was the launch of Syndicate 3820, focusing on property lines – a move touted by Merry back in 2002.

Last December, Hardy ended months of speculation by announcing the redomicile. She said then that Hardy’s London operations would continue to function as normal, and that the Bermuda market was complementary to Lloyd’s.

Hardy Re– which is to write quota share reinsurance of Hardy’s syndicates – has been established in Bermuda as part of the company’s redomiciliation. Hardy also plans to establish a Bermuda-based managing general agent (MGA), with the intention of attracting new sources of business currently not available to insurers in the Lloyd’s market. By writing all MGA business through the Lloyd’s operation, before quota share reinsuring with Hardy Re, the group should be able to take advantage of the more favourable capital regime at Lloyd’s.

“If we are to develop a business in Bermuda, it would make sense to underwrite that business as part of a well developed portfolio. We will set up an MGA using Lloyd’s paper,” says Merry.

“It is a very strange atmosphere on the council, [members] were seen as gods when I was much younger. We do not always agree on things, but I suppose that is the point

But she says that Hardy may decide to set up a new Bermuda insurer, with its own rating, to sit alongside the Lloyd’s operation. Whether Hardy will do this will “depend on the business environment and business opportunities”, she says.

But Merry rejects suggestions that a capitalised Bermuda insurer would cannibalise Hardy’s Lloyd’s operation. “It [the Bermuda insurer] would be looking at business that does not come to London. We would still have marine, aviation and specialisms at Lloyd’s. Our heart and soul is at Lloyd’s.”

She argues that Lloyd’s and Bermuda are complementary markets. “Lloyd’s has a lot to offer, such as underwriting expertise and licences.

“But if you want US property business with catastrophe exposure, it is not going to London.”

Merry grew up in the sleepy seaside town of Great Yarmouth, but has spent her adult years firmly rooted in the City. After gaining a degree in French and economics from the LSE, she qualified as an accountant and spent a couple of years working at KPMG before moving to the very different world of Lloyd’s, which was to become her home.

But Lloyd’s at the time was not a steady ship. Ian Hay Davison had just been appointed as chief executive following the scandals of the 1980s. “He decided it wasn’t acceptable for Lloyd’s not to follow accounting standards practised elsewhere in the financial sector. There were a lot of accountants being employed to help turn this around.”

Within two weeks, Merry was beginning to regret her decision – accounting practices in Lloyd’s simply didn’t match up to the standards she had seen elsewhere.

“The person who was responsible for producing the corporation’s results was sat at a desk with one of these enormous calculators with a till roll coming out of it. The desk was covered in reams of paper.”

Two weeks later, an embarrassed Hay Davison stood up in front of the press and apologised for errors in Lloyd’s global accounts, which had to be withdrawn, rectified and later republished. Hay Davison followed up quickly with a complete overhaul of Lloyd’s accounting system.

Despite the initial worries, Merry stayed with the corporation for 14 years, rising to become general manager in the regulatory division. “I was absolutely in the thick of it, up to the introduction of corporate members into the market.”

“If you want US property business with catastrophe exposure, it is not going to London

A short stint as managing director of Omega Underwriting followed before Peter Hardy asked Merry to replace him.

Exodus completed

Now six years on, following a successful application in the High Court, Hardy Underwriting Group shares were cancelled and immediately replaced with Hardy Underwriting Bermuda shares – thus completing Hardy’s exodus from London. Well, almost.

“We should be sending out four or five people in about 18 months’ time,” Merry says. “But the redomicile is effective as of now,” she adds with a smile.

How does she think Bermuda compares to Lloyd’s in terms of its business processing efficiency? And are Lloyd’s efforts to modernise proceeding fast enough?

“Some people say the processing is better in Bermuda, others say it is not,” she replies. “When Lloyd’s does surveys, business processing comes up as an important issue. Recent surveys say it is getting better, but it can do more.

“The sinister undertone is that people will lose their jobs [as a result of reform]. So one can’t be surprised if it takes a long time. If we [the market] are not meeting targets, it doesn’t matter. We are getting there,” she says.

Merry currently sits on the Lloyd’s council alongside chairman Lord Levene, chief executive Richard Ward and a host of Lloyd’s heavyweights – a long climb upwards from her roots as a youngster working in the regulatory department.

“It’s a very strange atmosphere on the council – [members] were seen as gods when I was much younger. We don’t always agree on things, but I suppose that’s the point,” she laughs.

It’s not all work. Merry retains a love for the arts and visits art galleries, the opera and the theatre, and is open to anything cultural. She reads in the evenings after putting her son to bed, although in her opinion, Philip Roth’s latest book, Exit Ghost, is “way too sexed up”. But her demeanour changes when she says, soberly, that her main loves are not books, plays or even Lloyd’s, but her husband and son.

With the new operation in Bermuda, continuing work on the Lloyd’s council and the launch of a Bermuda MGA business next year, Merry has plenty to keep her busy over the coming months. And if past form is any indicator, there will be many more successes to come.