Hardy profit drops 45% on cat losses

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Australia re-underwriting will limit 2011 losses

Lloyd’s insurer Hardy made a profit after tax of £9.6m for the full year of 2010, down 45% on the £17.4m it made in 2010.

Profit before tax halved to £10m from £20.1m, and the combined ratio increased to 94.7% in 2010 from 78.1% in 2009.

Hardy chief executive Barbara Merry said the company had been hit harder than a typical Lloyd’s business by the swathe of natural catastrophes in 2010. This is because the company’s property treaty reinsurance book is more internationally focused than traditional Lloyd’s players.

Despite the profit reduction, Hardy chairman David Mann praised the result. “We have achieved a profit before tax despite the hugely challenging times we have faced throughout 2010 with an unprecedented level of international natural catastrophes,” he said. “Our heavy focus on short tail classes, and the strong underlying performance, will allow us to move forward in 2011.”

Following the hailstorms in Australia, Hardy reduced its exposure in the country and so is not expecting a material impact from the Brisbane floods and Cyclone Yasi. However, because the main renewal date for New Zealand is mid-year, the company has not yet been able to re-underwrite its book there.

Nevertheless, Merry said that Hardy reduced its overall exposure it the year-end and so is not expecting February’s earthquake in Christchurch to exceed the losses from the September 2010 Christchurch earthquake.

Hardy also announced that underwriting director Adrian Walker has decided to retire, and will formally stand down from the board on 17 May. Deputy underwriting director Patrick Gage has assumed Walker’s executive duties with immediate effect, and will join the board in May when Walker steps down.

Hardy 2010 highlights in £m (compared with 2009)