Helios Underwriting (HUW): Initiation - Increas...

Edison Investment Research Limited Helios Underwriting (HUW): Initiation - Increased Lloyd's participation at the right time 25-Feb-2022 / 07:37 GMT/BST London, UK, 25 February 2022 Helios Underwriting (HUW): Initiation - Increased Lloyd's participation at the right time Helios Underwriting is a successful aggregator of Lloyd's of London (Lloyd's) syndicate capacity, delivering a sixfold increase since FY16. This larger portfolio, alongside a hardening underwriting cycle, should fuel strong earnings growth. Helios's ability to acquire further limited liability vehicles (LLVs), offering ageing Lloyd's Members (Names) an elegant, tax-efficient exit plan, is limited by capital constraints. This will slow capacity growth until FY24 when the hard premium cycle should deliver strong earnings, unless Helios can raise additional capital sooner. Increased funding could fuel strong acquisitive growth for Helios in the remaining £3bn pool of LLV capacity. Helios's underwriting investment track record, diversified, outperforming underwriting investment portfolio, ability to enhance capital efficiencies (through diversification and reinsurance) and its long-term growth potential makes it an attractive investor entry point into Lloyd's and a unique exit solution for individual Names from Lloyd's. Strong earnings growth and returns support our valuation of 212p/share at a 33% premium to FY21e NAV/share (a 33% premium to current price). There is valuation upside if more working capital can be generated and deployed in underwriting capacity growth, boosting value drivers. Issuing debt is most valuation accretive, followed by raising capital, while higher quota share reinsurance is largely neutral. Click here to view the full report or here to sign up to receive research as it is published. All reports published by Edison are available to download free of charge from its website www.edisongroup.com About Edison: Edison is a leading research and investor relations consultancy, connecting listed companies to the widest pool of global investors. By focusing on the volume and quality of investors reached - across institutions, family offices, wealth managers and retail investors - Edison can create and gauge intent to purchase, even in the darkest pools of capital, and then make introductions via non-deal roadshows, events or virtual meetings. Having been the first in-market 17 years ago, Edison now has more than 100 analysts covering every economic sector. Headquartered in London, Edison also has offices in New York, Frankfurt, Amsterdam and Tel Aviv and a presence in Athens, Johannesburg and Sydney. Edison is authorised and regulated by the Financial Conduct Authority. Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not solicitations to buy or sell any securities. For more information, please contact Edison: Marius Strydom [phone] [e-mail] Learn more at www.edisongroup.com and connect with Edison on:  LinkedIn  www.linkedin.com/company/edison-group-/ Twitter   www.twitter.com/Edison_Inv_Res YouTube  www.youtube.com/edisonitv Dissemination of a CORPORATE NEWS, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.

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