The company's directors believe that Bermuda represents an important complementary market to London, and that the Group will be better placed to deliver its longer term plan if it is able to access the Bermuda insurance market and develop a platform for underwriting third party business there.

Hardy first hinted at its intentions to set up in Bermuda in January, when Chief Executive Officer Barbara Merry said that redomiciling to the island would offer the company an "enormous" competitive advantage. At this time, Lloyds underwriting firms Hiscox and Omega had both just departed London for Bermuda, citing the UK's unfavourable tax and regulatory regime in comparison to Bermuda.

The corporate tax rate for insurance firms operating in Bermuda is 0%, while firms based in London pay corporate tax at 30%.

In order to facilitate the move, Hardy will bring about a corporate reorganisation involving the establishment of a new Bermuda based holding company, Hardy Underwriting Bermuda Limited, which will acquire via a scheme of arrangement, Hardy Underwriting Group plc. A listing for the shares of Hardy Underwriting Bermuda Limited will be sought on the London Stock Exchange, and shareholders of Hardy Underwriting Group plc will become shareholders in Hardy Underwriting Bermuda Limited in the same proportions as they own Hardy at the relevant time. Dealings in the shares will be in sterling, and the company accounts and the par value of the shares will also be denominated in Sterling.

The company explained that the redomiciliation and establishment of its presence in Bermuda will be undertaken in two distinct phases as follows:

Phase 1: as part of the reorganisation referred to above, Hardy Re will be established as a Class 3 reinsurer to underwrite a quota share reinsurance of Hardy Underwriting Limited. The Board expects that the authorisation for Hardy Re to conduct business will be granted by the BMA in order for Hardy Re to begin underwriting in the first half of 2008, as in principle approval of its business plan was received from the BMA on 14 November 2007; and

Phase 2: during the next 18 months, subject to market conditions, Hardy intends to set up a further wholly owned subsidiary to function as a managing general agent. This company is expected to underwrite third party business via a binding authority on behalf of Hardy’s managed syndicates 382 and 38Twenty.

“This is an exciting time for Hardy and its shareholders," commented David Mann, Chairman of Hardy Underwriting Group plc, on the proposed move to Bermuda.

He continued: “This reorganisation is a key development for the Group and represents a measured step towards delivering our longer term strategic plan. The redomiciliation and establishment of a Class 3 reinsurer is only being undertaken on the basis that there will be a second phase to develop third party business. We believe that, market conditions permitting, we will be underwriting new business in approximately 18 months time.”

The proposals will be subject to court, shareholder and regulatory approvals.