Specialist Bermuda-based insurer Hardy Underwriting has seen its first-half profit decline from £7.76m ($12.3m) in 2009 to £774,000 in 2010, on gross written premiums of £155.9m, up from £149.9m the previous year. The technical result fell to a £2.8m loss from a £21.0m gain. Investment income also declined, down to £1.63m from £3.3m. Chairman David Mann noted that "in almost all areas, the market has failed to harden as we would have liked", but added that in non-catastrophe accounts the performance had been strong. Marine and aviation booked a £9.1m gain on premiums of £30.4m. Specialty gained £6.4m from premiums of £27.5m. But a small loss in non-marine property and a £14.8m loss in property treaty pushed the underwriting result into negative territory. The interim dividend is being increased to 4.4p a share. Hardy initially estimated its Chile earthquake loss at $40m-$60m gross on property treaty and $7.5m gross on Direct & Facultative risks. The insurer is currently maintaining those estimates, but said that, as more data came in, "the overall trend indicates that the loss should fall closer to the lower end of that range". The gross loss estimate of AUD34.6m ($31.6m) as a result of two hailstorms in Melbourne and Perth remains unchanged. CEO Barbara Merry said that, although Hardy had deliberately developed an international rather than a US-focused account, "our share of the loss in Australia is large in comparison to our peers and we have considered it appropriate to adjust our underwriting in this region accordingly". She noted that Hardy's property treaty portfolio was atypical for the Lloyd's market, being 70% international and 30% US. "Consequently we do not represent a market tracker and it is possible for us to have material losses when others may not (and vice versa)." On the underlying years of account, 2010 was said to have become "marginal" because of catastrophe losses, but should still return a modest profit. 2009 was "progressing satisfactorily on all fronts" but profits were being held back by natcat losses. YoA 2008 was "settling well", and the profit estimate for the year had risen by about a quarter in the past three months. Looking ahead, Hardy noted that significant levels of government support and quantitative easing had prevented the anticipated capital crunch. This, combined with a relatively catastrophe loss-free 2009, meant that "the industry is awash with capital and, in addition, we can see globally that there remain billions of dollars looking for a home". Hardy noted that insurance had not performed badly through the financial crisis and that yields were still attractive "compared to the alternatives". This, it was felt, could lead to insurance attracting yet more capital. "This is not good news for the rating environment", Hardy said. The markets reacted positively to Hardy's figures, pushing the share price up 8.2% in a slightly rising market.

UK-based composite Aviva has posted an operating gain of £525m ($832m) for the first half, down from £545m in the same period last year, on net written premiums of £5.04bn, up from £4.95bn. The combined ratio was flat at 97% — ahead of the "meet or beat" target of 98% — although this consisted of a 4pp improvement at Delta Lloyd, down to 93%, and a 6pp deterioration at Aviva Europe, up to 102%. The worldwide expense ratio was reduced to 11.8% from 12.3% in H1 2009. The UK non-life business, where profit declined to £268m from £284m, saw the combined ratio improve slightly to 98% from 99%. CEO Andrew Moss said that net premiums in UK non-life were up by 7% compared with the second half of last year, indicating a "return to growth". For the group as a whole the profit after tax rose 101% to £1.51bn, although the operating profit was up 20% to £1.27bn. Despite improved profitability, with the internal rate of return on new business rising to 12%, from 9.5% in the same period last year, Aviva is continuing to focus on improving productivity. Mr Moss noted that the company achieved £500m in cost reductions a year ahead of schedule, with costs in H1 2010 4% lower than for the same period last year, and that "the benefits of this are now flowing through to operating profit". The markets approved of the result, pushing up Aviva's share price by mid-morning to 389p, up nearly 6% in a rising market.

Switzerland-based insurer Zurich Financial Services has reported a net income of $1.64bn for the first half, down from $1.97bn in the same period last year. The operating profit in the non-life sector declined to $1.38bn from $1.71bn, on gross written premiums of $17.94bn, down from $18.28bn. The combined ratio rose to 98.0% from 96.2%. Of this, only 0.4pp was due to an increase in the loss ratio, with 1.3pp being added on the expense side. The insurer noted that "within the overall expense ratio, the commission ratio increased as a result of a change in reinsurance structure and profit commissions related to the North America crop business". Zurich said that it had achieved average rate increases of 2%, but that this did not compensate for reduced customer exposures and lower levels of new business. The net underwriting result declined by $256m to $279m. Global life operating profit was up 12%, to $720m from $641m, on gross written premiums of $13.11bn, up from $11.57bn. The California-based unit Farmers management Services also performed well, with management fees rising 12% to $1.4bn. However, gross written premiums at Farmers Re were down 14% to $2.49bn, although the operating profit was up to $151m from $88m in H1 2009. Zurich noted that general insurance suffered a $200m impact from the Chilean earthquake and a drop-off in investment income. In "Other Operating Businesses" the operating loss rose to $361m from $121m, reflecting "a more normalized run-rate for Group financing costs". Non-core businesses — run-off and banking — had a combined operating loss of $295m, up from a $7m loss the previous first half. This was entirely due to a Q2 $330m increase in banking loan loss provisions "as a result of a review of its loans for commercial property development in the UK and Ireland". The return on equity for the first six months was 11.5%. Diluted EPS fell 23% year on year to CHF12.14. CFO Dieter Wemmer noted that foreign exchange movements had impacted the book value per share by CHF8, while the year-on-year net reduction "also reflects the restatement that we had previously announced in connection with the implementation of a dynamic hedge in the first quarter on a closed US life portfolio". He said that without this restatement, Zurich would have shown an increase against the $1.3bn of net income as published last year.

Netherlands-based insurer Delta Lloyd, which is majority owned by UK-based Aviva, has reported a first half gain of €767m ($1.01bn), up from €211m in the same period last year. The company announced the appointment of Onno Verstegen to the executive board, succeeding Henk Raué, who is to retire on April 1 2011. Mr Verstegen who is 47, has been chairman of Delta Lloyd since 2008. Meanwhile, Delta Lloyd has announced that a new commercial division will be responsible for the marketing and sales of the Dutch insurance and banking activities of Delta Lloyd and OHRA. The commercial and operational banking and insurance activities are to be separated. There will also be a merging of corporate functions at group level, reducing the total from 13 to seven. The number of directors will be reduced from 52 to 32. Major changes are the appointment of Robert Otto as managing director of the Commercial Division, Leon van Riet as managing director of Delta Lloyd Life, Edwin Grutterink as managing director of Delta Lloyd General, and Peter Heemskerk as chief information officer and managing director of IT/Facilities.