Hardy expects “satisfactory” 2010 despite cat losses

Lloyd’s insurer Hardy Underwriting is expecting “a satisfactory result for the full year” of 2010 absent a major catastrophe before the year end, the firm said in its third-quarter interim management statement.

Hardy’s first-half 2010 profit slumped 70% to £1.97m from £6.54m in the same period last year because of heavy catastrophe losses in the first two quarters of the year.

The firm said that while its property treaty division’s results had suffered in 2010 as a result of catastrophe losses and generally weakening market conditions, results for its other three business units – marine and aviation, non-marine property and specialty lines – were either in line with or ahead of plan.

Hardy has reduced its loss estimate from February’s earthquake In Chile to $27.5m from $30m. Australian hailstorm losses are developing as expected.

The firm’s current best estimate of losses from September’s earthquake in New Zealand is less than £10m.

While many observers expect reserve releases from old underwriting years to dwindle, Hardy said that it fully expects reserve releases to continue and enhance the current year’s result.

Hardy anticipates writing around £300m of gross premium in the full year of 2010, up 24% on the £242m it wrote in 2009. The insurer’s business plan for 2011 assumes gross premium volume of approximately £315m. Hardy expects income from current classes to be flat, but anticipates growth to come mainly from new initiatives, geographies and classes of business introduced during 2010 or to be introduced for the 2011 year.

The company hired four new underwriters in the third quarter, which it expects to add diversity to the portfolio of its Lloyd’s syndicate, and opened an office in Singapore in October. As announced in October, Hardy will open a new operation in Guernsey following the appointment of kidnap and ransom underwriter Jonathan Beck, who will join the firm in 2011.

Despite Hardy’s upbeat message, it reported that rates had fallen across all of its business units for the year to October 1 2010. Marine and aviation rates dropped by 0.3%, non-marine property by 2.5%, specialty lines by 1.5% and property treaty by 5%. The average decrease across the portfolio was 2.8%.