Transcript No Slide Title

HARDY UNDERWRITING GROUP
PLC
BACKGROUND
• Lloyd’s insurance business.
• Syndicate 382 commenced trading for the 1975 YOA.
• Hardy Underwriting Limited commenced underwriting in 1995
• 80% ownership of £54 million syndicate for 2002 YOA.
• Average return on syndicate 382 stamp capacity of 17.2 %.
HIGHLIGHTS
• Excellent syndicate track record.
• Preserved capital in difficult underwriting conditions.
• Underwriting conditions have improved considerably.
• Raising £25m
THE SYNDICATE
• Consistently outperformed Lloyd’s Global Market.
Percentage of stamp capacity
60
40
20
0
-20
-40
Syndicate 382
Lloyd's
-60
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
Note 1
All results are shown after the deduction of illustrative personal expenses for an individual name as a percentage of
capacity.
Source:
2001 syndicate report and accounts
BEST / WORST RESULTS FOR SYNDICATE 382
Year
Best
Year
%
Worst
%
1984
37.4
1998
(1.3)
1985
34.6
1990
0.2
1976
34.6
1999
2.98
1986
30.1
1992
3.9
1993
28.9
1991
4.2
Results are expressed as a % of syndicate capacity after illustrative expenses for an individual Name
for all closed years of account.
Data source: 2001 syndicate reports and accounts
THE SYNDICATE – PROFIT NOT VOLUME
80,000
70,000
60,000
£000's
50,000
Unutilised capacity
40,000
Gross written premiums
30,000
Syndicate result
20,000
10,000
0
1993
1994
1995
1996
1997
1998
-10,000
The syndicate result is expressed after illustrative expenses for an individual Name.
The 2000 and 2001 figures are estimates obtained from the syndicate business plan.
Data source: 2001 syndicate report and accounts and business plan
1999
2000
2001
RECENT EVENTS
• Market conditions improving progressively since 2000.
• Major losses in 2001 accelerated already improving ratings.
• WTC impact.
THE OPPORTUNITIES
• More risks meet underwriting requirements of the Group.
• Expand underwriting of the Group.
• Raise profile of Hardy among brokers and clients.
• Strengthen the balance of the book of business.
USE OF PROCEEDS
• Establish and capitalise a quota share syndicate to write increased
business in 2002.*
• Fund mandatory capacity offer in 2002 and back any resultant increase
in the Group’s capacity in 2003.
• Future expansion of underwriting.
• Working capital to fulfil strategy.
* Subject to consent from non-aligned members of Syndicate 382
FINANCIAL HIGHLIGHTS
• Profit before tax of £3, 192,000 (2000 - £1,621,000)
• Operating profit, assuming long term rate of return, of £4,648,000
(2000 - £1,097,000)
• Combined ratio 83.2% (2000 – 91.8%)
• Dividend proposed 6.5p (2000 – 6.0p)
• WTC exposure less than 4% of syndicate 382’s 2001 stamp capacity
($2.6m gross and net)
APPENDICES
CORPORATE HISTORY
•
•
•
1975:
1978:
1995:
•
1996:
•
•
•
1997:
1998:
1999:
•
2000 – 2002
Syndicate 382 commenced trading.
Hardy Underwriting Agency (HUA) established.
Hardy Underwriting (HU) commenced underwriting as
a corporate member.
Hardy Underwriting Group plc (HUG) formed.
Acquisition of HU and HUA by HUG.
HUG raised £1.8million via an open offer.
Formation of Hardy Names Limited as a corporate member.
HUG admitted to AIM @ 125p per share
HUG raised £2.5m.
Raised £17.7m.
HUG’s share of Syndicate 382 increased to 71%.
Admitted to the official list of the London Stock Exchange.
Strengthened Management team.
THE SYNDICATE
• Composite syndicate - predominantly short tail.
60%
Syndicate 382 estimated net premium income split by major class
% of whole net premium income
50%
40%
1998
1999
2000
30%
2001
2002
20%
10%
0%
Marine
Aviation
Source: revised business plan (Feb 2002)
Non Marine
War
XL (included in other classes)
THE SYNDICATE
• Progressive increase in own capacity ownership.
100,000
90,000
80,000
70,000
£000's
60,000
Hobbit owned
50,000
Unaligned
40,000
30,000
20,000
10,000
0
1996
1997
* 2003 anticipated owned capacity
1998
1999
2000
2001
2002
2003*
THE BOARD
Peter Hardy (aged 62) (Chairman)
Until January 2002, Peter Hardy was Chief Executive of Hobbit, when he became Non-executive
Chairman. He is also the Chairman of Hardy (Underwriting Agencies) Limited and a director of the other
group subsidiaries. Peter Hardy has worked in the Lloyd’s market since 1959 and was appointed in 1969
as the underwriter of syndicate 30 under the management of C.T. Bowring (Underwriting Agencies)
Limited. He became the underwriter for syndicate 382 in 1975 and was a founding director of the
managing agent in 1978. He ceased as Active Underwriter of syndicate 382 at the end of 1998.
Barbara Merry (aged 44) (Chief Executive)
Barbara Merry qualified as a chartered accountant in [1983]. She joined the Board on 29 January 2002,
having been appointed Chief Executive of the Group on 14 January 2002. She is also a director of the
other Group companies. Prior to this, she was Managing Director of Omega Underwriting Agents Limited
and a director of the other Omega group companies. Barbara Merry has extensive Lloyd’s experience,
having worked at the corporation for 14 years, latterly was a general manager in the regulatory division.
Adrian Walker (aged 45) (Active Underwriter)
Adrian Walker joined the Board and assumed the role of Active Underwriter for syndicate 382 on 9
January 2001. Prior to this appointment he was a Non-executive Director on the board of Hardy
(Underwriting Agencies) Ltd (appointed 13 April 2000). He is also a director of the other Group
companies. He was previously employed by Amlin PLC as the underwriter for syndicate 902 (A J Walker
& Others), a position he had held since March 1995 having previously been the deputy for the syndicate
since 1988.
David Dunning (aged 43) (Finance Director)
David Dunning was appointed as Finance Director in August 2000. He is a fellow of the Association of
Chartered Certified Accountants, having qualified in 1987, and is an associate member of the Chartered
Institute of Bankers. In 2000, he obtained an MBA from Manchester Business School. From 1997 to
2000 he was Director of Financial Planning and Analysis at Hiscox plc. Prior to that he was with Royal &
Sun Alliance. He is also a director of the other Group companies.
Nigel Ellis (aged 62) (Non-executive)
Nigel Ellis is a chartered accountant and is presently Chairman of Quintain Estates. From • to • he was
Non-executive Chairman of Hobbit. Previously he was Finance Director of BAA plc and its subsidiaries.
Alastair Leslie (aged 67) (Non-executive)
Alastair Leslie joined Willis Faber & Dumas Limited in 1955 and was managing director of Willis Faber
& Dumas Agencies Limited from 1976 until 1985. He formed A.P. Leslie Underwriting Agencies Limited
in 1976. This business was acquired by Wellington Underwriting Holdings Limited in 1990 and
subsequently changed it name to Wellington Members Agency Limited. He retired in 1992 but remains a
director of various private companies.
Pierre van der Mersch (aged 67) (Non-executive)
Pierre van der Mersch is chairman and chief executive of Brederode S.A., which is listed on the Brussels
Stock Exchange. The Brederode Group has substantial interests in the insurance sector, principally in
Belgium, Bermuda, the United States and at Lloyd’s where it set up Athanor Limited as one of the first
corporate members in 1993. Pierre van der Mersch is also a non-executive director of SVB Holdings plc,
another Lloyd’s listed group.