Barbara Merry

Barbara Merry is a familiar face in the Lloyd’s market and beyond. It is perhaps inevitable that the only female chief executive should stand out from the crowd, but that’s not the only reason Merry turns heads. She’s made some very smart decisions over the past few years, not least when she fought off a takeover bid from Omega in 2005 (and just look what’s happened there recently); and some brave ones too – she redomiciled the company to Bermuda two years ago.

Today, as Merry welcomes Insurance Times, it’s clear she still shoots straight from the hip. Riding high on a successful results season – as indeed is the whole Lloyd’s market – she nevertheless admits that Hardy could be on the block to the right buyer. And she’s not afraid to speak her mind on some of the tougher issues facing the market, including that perennial problem of dealing with Solvency II.

Steady growth

2009 was a good year for Hardy. Merry spearheaded a strategy to diversify the insurer away from its aviation and marine roots. Last year, the firm’s property treaty book grew by nearly 60% to £76.9m, compared with £48.2m in 2008, while non-marine property expanded from £28m to £37m.

Merry, with a polite but firm demeanour, says: “It was fairly obvious that if we wanted to be a player, we had to get into the property market. We just weren’t there; we weren’t getting any of it.”

Meanwhile, Hardy has gone global. Last year, it sealed a joint venture with Arig to write reinsurance in the Middle East and North Africa. The board has also agreed in principle to open a Singapore office.

This change in direction has helped Hardy maintain steady growth over the past four years, with solid results in 2009 despite a soft cycle. Premium income grew by £69m, compared to 2008. It also managed to broadly maintain profitability at £20.1m last year, compared with £23.1m in 2008.

It’s these steady results that each year inspires speculation that Hardy is ripe for a takeover. With typical aplomb, Merry laughs off the interest, but fires back a ‘show me the money’ message intended to send bargain hunters scattering.

“The bottom line is that we want to stay independent and we want to show what we can do. But our job is to get the best deal for our shareholders. I think this business is incredibly valuable. We have some really talented people here and, whatever happens, we’re not going cheaply. But if somebody wants to buy Hardy,

and they pay a very full price that we would feel pleased to recommend to the shareholders, then obviously that’s different.”

So we can assume that the proposed Omega merger offer wasn’t up to Merry’s high expectations. Given the boardroom turmoil it has famously experienced in the past few months, it has looked like a smart decision.

But while Hardy’s shareholders won’t be looking back at a missed opportunity, the civil war has certainly provided plenty of grist for the Lime Street rumour mill. Merry says there’s no hard feelings. She worked at Omega before moving to the top job at Hardy in 2002, and has insight into both companies.

“At Hardy, we like the idea of leading risk and negotiating price, and we are risk takers,” she says. “The business model at Omega is different really; it always seemed to me that they were very happy to be followers in the market. They weren’t price makers, they were price takers.

“That’s not good or bad. It’s just different. It’s very difficult to put two businesses together where the philosophies are so fundamentally different.”

Right moves

Merry speaks quickly and cogently, so it’s not too surprising that she started life as an accountant, before moving to Lloyd’s in 1985. She spent 14 years there, helping the market steer through the turbulent years of the names fiasco that nearly brought it to the brink of destruction.

Merry remembers it as a “really, really fascinating time to be involved”, working on projects such as bringing in corporate capital and cleaning up the market’s reputation.

Her talents didn’t go unrecognised, and in 1999 she took on the managing director position at Omega Underwriting. Just over two years later, she landed Hardy’s top job, where she remains today.

Is it strange being the only female Lloyd’s chief executive of a listed company?

Merry is one for the ‘glass half full’ mentality, reasoning: “On the whole, I don’t think that I’ve been at a disadvantage. I think being in such a minority is positively a good thing. Certainly in the old days when Lloyd’s was so traditional, people went out of their way to be nice to you.”

But back to the present day, and Hardy itself proved it was unafraid of breaking tradition, shifting its holding company from London?to Bermuda in early 2008. Merry admits the move has saved millions in tax, but says that wasn’t the main rationale behind relocating.

“I have no doubt in my mind that if I had gone to my board and said ‘there’s this great tax wheeze if we move to Bermuda’, they would have said forget it. They would not have moved for tax reasons.

“What we could actually see was that there was simply quite a lot of US risk that was not coming into the Lloyd’s market: the property risk – exactly the sort of risk we want to target now.”

Crackdown

Just a few months after the redomicile, however, the financial world suffered its greatest shock since the 1930s. In the messy aftermath, the USA has come down hard on tax havens, and is proposing a new effort to tax insurers who cede premiums to overseas affiliates. Is Merry worried?

“Were there to be some legislation in the USA that actually formalised what is being talked about … we probably would lose our tax benefits. That would be a shame. But we would have earned shareholders more than they would have had otherwise and, anyway, we are part of the Bermuda market now, accessing risks out of the USA. So it is a perfectly good place to be.”

More immediately pressing for Hardy is Solvency II. It is costing the firm around £1m a year to get ready for 2012.

“I think we’re past the point of thinking about it as a burden,” she says. “Seeing that it’s going to happen, we might as well try to make the best of it. And try to get some business benefit from it.”

Diversification, Solvency II and tax issues: it’s all heavy-going stuff and you wonder how Merry turns the lights out at night without a thousand worries weighing on her mind.

To relax, Merry enjoys time with her children and indulges in her passion for reading. Her current read is a psychology self-help book, Nudge. She explains: “Your responses are biased, so you don’t necessarily make the best decision. But this technique points you in a different direction. And probably the right direction, had you thought about it a bit more.”

But when it comes to decisions, Merry doesn’t seem to need much help. She’s made a career out of making the right ones. IT