1

HARDY UNDERWRITING GROUP PLC

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2002

ANALYST PRESENTATION

25 SEPTEMBER 2002

2

RESULTS OVERVIEW

• Board is encouraged by the result for the year so far

• 2002 year performing well – no major claims to date

• 2001 continues to develop well with a benign run-off

• WTC remains at $2.6m net

• 2000 expected to produce a profit in the range of 0% - 5%

• optimistic about the year end outlook and the future

3

RESULTS OVERVIEW (continued)

• syndicate investments have held up well

• Group funds have suffered from volatility in equity markets

• new funds retained in cash for the moment

4

UNDERWRITER’S OVERVIEW

2000 and prior years

• promising run off of earlier years

• 2000 expected to benefit from prior year release

• improvements seen across all years

5

UNDERWRITER’S OVERVIEW (continued)

2001

• developing well on premium front

• claims progression better than originally forecast

• WTC remains at $2.6m net

• aviation – premium dramatically up on previous year especially last quarter income – tail therefore slightly longer

• hull and cargo progressing well with good rate increases

6

UNDERWRITER’S OVERVIEW (continued)

2002

• written premium volumes holding up well

• envisaging approximately £62m overall: quota share syndicate will take £10m capacity (being excess over syndicate 382’s capacity of £54m with margin for prudence)

• remarkable year for lack of claims incidence

• aviation very exciting – rating levels holding up well

• cargo – developing well

• marine hull – promising but not there yet

• non-marine – volume has been disappointing; new niche lines envisaged for next year

7

UNDERWRITER’S OVERVIEW (continued)

The future

• syndicate pre-emption to £100m for 2003

• overall premium rating levels very satisfactory

• aviation

- developing new accounts throughout portfolio

- on-line quoting facility very well received

• marine including cargo

- the book is very attractive although resource intensive

- enhanced recently by a developing specie/fine art account

• non-marine

- new underwriter recruited to help develop account further and introduce new niche lines

8

FINANCIAL HIGHLIGHTS

• Group share of gross premium written up by 58% to £28.2m (2001 - £17.9m)

• syndicate 382 gross written premium up 47% to £35.7m (2001 – £24.3m)

• profit before tax of £1,849,000 (2001 - £913,000)

• operating profit, assuming long term rate of return, of £2,738,000 (2001 - £1,449,000)

• combined ratio 91.2% (2001 – 92.6%)

9

GROUP PERFORMANCE

June

2002

£’000

Restated

June

2001

£’000

Restated

Full Year

2001

£’000

Underwriting year 2002 (2001) 341 298 527

Underwriting year 2001 (2000) 1,812 614 540

Underwriting year 2000 & prior

(1999 & prior)

1,301 773 4,166

Investment return included in

non-technical account

(999) (536) (1,456)

Other income 1,585 1,254 2,790

Total income 4,040 2,403 6,567

Expenses (2,191) (1,490) (3,375)

Profit before tax 1,849 913 3,192

10

GROUP STATISTICS

June

2002

£’000

Restated

June

2001

£’000

Restated

Full Year

2001

£’000

Gross written premium 28,229 17,918 31,847

Profit before tax 1,849 913 3,192

Operating profit before tax 2,738 1,449 4,648

Shareholders’ funds 54,761 28,974 30,009

Earnings per share

- basic

- diluted

5.9p

5.8p

1.4p

1.4p

13.8p

13.7p

Net assets per share 156p 165p 171p

Net tangible assets per share 140p 133p 138p

11

100% TECHNICAL RESULT June

2002

£’000

June

2001

£’000

Full Year

2001

£’000

Gross written premium 35,686 24,318 43,165

Net written premium 23,937 19,839 38,170

Net earned premiums 20,849 15,084 30,230

Allocated investment income 1,429 1,244 3,075

Net claims incurred (11,298) (9,198) (16,720)

Net operating expenses (8,876) (6,273) (10,655)

Change in deferred acquisition costs 2,548 1,472 1,395

Technical result 4,652 2,329 7,325

Claims ratio 54.2% 61.0% 55.3%

Expense ratio 37.0% 31.6% 27.9%

Combined ratio 91.2% 92.6% 83.2%

12

CASH & INVESTMENTS June

2002

£’000

June

2001

£’000

Full Year

2001

£’000

GROUP ASSETS

Fixed interest 10,840 10,834 11,005

Equity based investments 7,589 8,885 8,209

Deposits 2,355 248 432

GROUP’S SHARE OF SYNDICATE ASSETS

Fixed interest 13,557 10,092 10,845

Deposits 5,246 267 5,455

TOTAL 39,587 30,326 35,946

CASH AT BANK

Group 25,664 1,619 756

Group’s share of syndicate 2,292 6,357 2,728

TOTAL 27,956 7,976 3,484

13

INVESTMENT PERFORMANCE 1997 1998 1999 2000 2001 Average

GROUP

£ Fixed interest- actual- benchmark (under 5 yrs)

N/A N/A 8.04%

7.73%

8.51%

8.11%

6.11%

5.53%

7.55%

7.12%

£ Equity- actual- benchmark WM private client

growth indicator

17.6%

16.3%

15.1%

14.4%

23.3%

21.3%

(1.3%)

(5.5%)

(10.6%)

(13.1%)

8.82%

8.13%

US$ Equity- actual- benchmark S&P 500

N/A

-

N/A

-

N/A

-

5.1%

(10.1%)

11.2%

(13.0%)

8.15%

(11.55%)

SYNDICATE

US$ Fixed interest- actual- benchmark between 3 mths

& 2 years

6.58%

5.21%

6.28%

6.85%

5.11%

6.39%

4.04%

4.73%

1.88%

6.45%

6.18%

7.53%

5.59%

4.48%

7.90%

5.90%

5.14%

5.97%

14

UPDATE ON USE OF NEW FUNDS

• total group funds available £44m

• £100m syndicate for next year/80% ownership/50% risk based capital ratio/fund requirement £40m approximately

• some of cash raised put into funds at Lloyd’s already

• consideration to be given to balance of cash/other assets/letter of credit in FAL

• letter of credit available up to £15m

• use of a letter of credit in FAL would create free funds for further expansion/other opportunities/more capacity purchases/hedge against increase in risk based capital ratio

15

CURRENT AND FUTURE ISSUES FOR BUSINESS

• overall underwriting environment very encouraging

• profit not volume focus will be maintained

• mandatory offer/capacity auctions/approach to future capacity acquisitions

• inside/outside Lloyd’s – jury still out

• we will be challenged going forward by Chairman’s Strategy group proposals

• as part of Lloyd’s, we punch above our weight in the insurance world

• we need more substance

• we are considering growth plans e.g.

- grow Hardy – possibly through establishing new syndicate

- grow by merger/acquisition – open to opportunities