Wednesday, January 17, 2007

by Jon Menon and Ben Livesey

England (Bloomberg), LONDON: Hardy Underwriting Plc may decide to redomicile to Bermuda, adding to an exodus of Lloyd's of London insurers seeking to take advantage of lower tax rates.

Hardy will decide what to do by the time the company publishes its first-half earnings in September, said Chief Executive Officer Barbara Merry on Tuesday in an interview.

"The competitive advantage is enormous," said Merry. "I'm slightly concerned we aren't going to have much choice."

Hardy may follow other Lloyd's insurers including Hiscox Plc and Amlin Plc, which have established companies in Bermuda to take advantage of zero corporate taxation and looser regulation than in Britain. Lloyd's CEO Richard Ward has a three year plan to cut costs for insurers operating at Lloyd's and prevent other regions from gaining market share.

"It's a bit of a disaster for Lloyd's," said Merry, who sits on the council of Lloyd's responsible for the management and supervision of the market.

Still, the movement to Bermuda hasn't prevented the Lloyd's market from expanding, helped by price increases driven by losses related to the US hurricanes of 2005. Lloyd's yesterday said it anticipates increasing the amount of premiums it can accept this year by 8.9 percent to 16.1 billion pounds ($31.7 billion).

Hardy, which insures risks ranging from helicopters to shopping malls, plans to increase its underwriting by 75 percent to 175 million pounds this year. The company has hired new underwriters and is investing in technology to increase its efficiency, said Merry.

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