Preliminary Results Year ending 31 December 2005

1. Preliminary Results Year ending 31 December 2005 David Mann – Chairman Barbara Merry - Chief Executive Jamie MacDiarmid - Finance Director Adrian Walker - Active Underwriter March 2006

2. Agenda • Introduction David Mann • Key Points Barbara Merry • Overview of Business Barbara Merry • Financial Performance Jamie MacDiarmid • Catastrophe Impact Adrian Walker • Underwriting Review Adrian Walker • Summary Barbara Merry • Questions 2

3. Key Points • A challenging year for Hardy on a number of fronts • Peter Hardy retired as Chairman; David Mann appointed • Distraction and cost of the Omega approach • Profit before tax of £7.474m (2004: £8.937m) • Overall underwriting portfolio performed well • Result marred by hurricane losses in second half • Combined ratio of 92.7% (2004: 94.3%) and excluding hurricane Katrina 82.2% • Cash flow strong: dividend of 8.25p proposed 3 29 years of unbroken profitability in Lloyd’s

4. Overview of Business 4

5. Syndicate 382 characteristics • Diversification of the portfolio - a balanced book: tested in 2005 • Focus on profit, not volume • Management of underwriting risk: - Leading risks so as to influence price - Underwriting a predominantly short tail account - Control of exposures - Underwriting without the purchase of high levels of reinsurance • Management of reserving risk - prudence and consistency of reserving approach 5 a profitable and secure long-term investment

6. Business Mix 6 6 first class security

7. Performance Full year Atrium gain NB. 2004 and 2005 values are reported under IFRS. 2000 to 2003 are reported under UK GAAP. 7 where others see risk, Hardy sees opportunity

8. Financial Performance 8

9. Preliminary Highlights 9

10. Group Performance 10

11. Investments and Cash Equivalents 11

12. 2005 Catastrophe Impact 12

13. 2005 Catastrophe Impact 13 Hardy has a policy of robust reserving

14. 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% Return on capacity 5.0% 0.0% 1 2 3 4 5 6 7 8 (5.0%) (10.0%) (15.0%) (20.0%) (25.0%) Cycle year Hardy cycle (1986 - 1993) Hardy cycle (1994 - 2001) Hardy average Lloyd's cycle (1986 - 1993) Lloyd's cycle (1994 - 2001) Lloyd's average Underwriting cycle – Relative Performance 14 market leader where pricing can be influenced

15. Underwriting cycle – Settlement Ratios Settlement Ratio as % of Net Premium Years of Account 15 market leader where pricing can be influenced

16. Underwriting Overview 16

17. Aviation Net Premium & Ultimate Net Loss Ratios (UNLR) Key points • Senior Underwriter: Mervyn Sugden – 30 years’ experience at Hardy • Helicopters comprise 60% of the premium income to the aviation account • Generating good profits in niches where we have expertise • General aviation rates holding up better than airline • Acceptable profit margins achieved in 2005 • Similar approach for 2006 millions 17 actively managing throughout the market’s cycles

18. Marine: Hull Hull - Key points • Senior Underwriter: Adrian Walker • Market leader in fishing vessels, loss of hire and harbour craft • Rating scale approach to underwriting • Bluewater hull – still competitive • Brownwater satisfactory • 2006 looks promising • Energy book being expanded Net Premium & Ultimate Net Loss Ratios millions 18 specialist risks less prone to competitive pressures

19. Marine: Cargo & Specie Cargo & Specie - Key points • Senior Underwriter: Edward Barker – 13 years experience with Hardy • Core account for many years • Broad range of cargoes insured, also jewellers block, fine art and collections • Stable market since 2002 • Expect to maintain profit margins without cutting back income • Team strengthened with appointment of Gary Chick, a specialist specie underwriter Net Premium & Ultimate Net Loss Ratios millions 19 specialist risks less prone to competitive pressures

20. Non-Marine: Catastrophe Excess of Loss Net Premium & Ultimate Net Loss Ratios Key points • Senior underwriter: Henry Glasse • Volatile market but positive returns across the cycle • 2004 and 2005 suffered from hurricane experience • 2006 under review and participation will depend on cost and availability of reinsurance millions 20 solutions for difficult and unusual risks

21. Non-Marine: All Other Net Premium & Ultimate Net Loss Ratios Key points • Influenced by hurricane activity in 2004/5 • More diversification over the last 3 years • Direct Property (UK / Europe) – Tim Bartleet • Accident & Health – Henry Glasse • Financial Institutions – Adrian Daws • Political Risk & Trade Credit – George Doughty • Conveyancing – Roy Partington • Most recently, International Direct / Fac Property – Richard Ikin millions 21 solutions for difficult and unusual risks

22. Summary 22

23. Summary • 2006 underwriting capacity £110m: if market changes, we will write more • Operational review completed following appointment of new Chairman • Continue to seek new niche lines to strengthen business and diversify underwriting portfolio - international direct and facultative property account recently added • Will now also work on improving the efficiency of the existing book of business • Line sizes will be increased where we have a strong market footprint • Market is competitive but not irrational in pricing terms so opportunities for managed growth exist • Hardy’s balance sheet is strong and will support growth 23 experts in pricing risk with focus on profit not volume

24. Appendices • Executive directors • Non-executive directors • Strong reserves • Business led by Hardy 24

25. Executive Directors Barbara Merry – Chief Executive • Director of the other Hardy group companies • On Board of Lloyd’s Market Association • Corporation of Lloyd's - 14 years. General Manager in the regulatory division • 1984: chartered accountant Jamie MacDiarmid – Finance Director • Joined Board in 1 October 2003 • KPMG: manager in insurance sector Adrian Walker – Active Underwriter • Non-executive director on Board prior to becoming active underwriter (2001) • Formerly underwriter for syndicate 902 (AJ Walker & Others) 25

26. Non-Executive Directors David Mann – non-executive chairman • A Board member of Hardy’s subsidiary company, Hardy (Underwriting Agencies) Ltd since November 2004 • Formerly the active underwriter of non-marine syndicate 435, which was managed by D P Mann Ltd (“DPL”). DPL was acquired by General Re in 1998 and changed its name to Faraday Underwriting Ltd in 2001 Peter Hardy - non-executive director • Formerly active underwriter of Hardy • Worked in the Lloyd's market since 1959 Ian Ivory - non-executive director • Founded two investment management companies (Ivory & Sime, Stewart Ivory) • Member of Lloyd’s for 18 years Barbara Thomas - non-executive director • Appointed 17 March 2004 • Currently deputy Chairman of Friends’ Provident plc and of Financial Reporting Council • Previously a commissioner of US Securities & Exchange Commission 26

27. Strong Reserves • Current underwriting results routinely supplemented by releases of back year reserves where proven to be unnecessary • Reserving approach relies on a variety of statistical methods, supplemented by underwriter judgement. In addition, the reserves which we establish are rigorously challenged by our professional actuarial advisers • Our reserves are accordingly robust, at high confidence levels 27

28. Business led by Hardy 28