Update on Capacity and Growth Plans

RNS Number : 5550V

Helios Underwriting Plc

10 August 2020

 

10 August 2020

Helios Underwriting plc

("Helios" or the "Company")

Update on Capacity and Growth Plans

Helios, the unique investment vehicle which acquires and consolidates underwriting capacity at Lloyd's, announces an update on its capacity portfolio and its growth plans.

The Company's strategy is to build a fund of capacity on the better quality syndicates at Lloyd's by acquiring existing limited liability vehicles ("LLVs") and by taking up pre-emption capacity offered by its supported syndicates.

T he number of potential LLV acquisitions available in the market has increased recently due to rising costs and requirements to fund losses on the Lloyd's market , which have all been causing concern for an aging base of investors who are now considering   their plans for 2021 underwriting.  Helios has successfully   seized these opportunities in the past and has an excellent track record of acquiring LLVs at a discount to their fair market value , significantly growing its capacity portfolio over time.

Since 1 ^st January 2018, the premium rates charged by those supported syndicates have increased by approximately 28 per cent., thereby improving underwriting margins and the prospects of profitable underwriting. The increase in premium rates and hardening market will provide new opportunities for Helios shareholders to benefit from the improved rating environment.  For example, the Company expects certain supported syndicates to offer pre-emption capacity that is able to be taken up by Helios for nil value.  In this regard, preliminary indications* show an overall increase in capacity from pre-emptions of between £5m and £7m for the Helios portfolio.

In addition, the Company currently cedes 70 per cent. of its current portfolio to reinsurers in 2020, equating to approximately £49m.  Due to the improving market conditions, the Board is considering the possibility of retaining a larger proportion of any additional capacity underwritten, so that average capacity reinsured will remain at approximately £50m going forward. This could significantly increase the retained exposure of Helios shareholders.

Given these attractive opportunities for growth and shareholder value enhancement, the Board is investigating options to finance the additional capital required to fund the increase in the capacity from pre-emptions, acquisitions and from the increase in retained capacity by Helios.

Further announcements will be made in due course.

Nigel Hanbury, Chief Executive, commented: "I am delighted that the improving market will likely present opportunities to underwrite additional capacity next year, acquire further LLV's and increasing retained exposure. In the current environment we see significant opportunities to grow Helios and to significantly enhance value for shareholders."

*Preliminary indications and are subject to change

For further information, please contact:

Helios Underwriting plc

Nigel Hanbury - Chief Executive                               07787  530404 /   [e-mail]

Arthur Manners - Chief Financial Officer    07754 965 917

Shore Capital

Robert Finlay / David Coaten   020 7408 4090

Buchanan

Helen Tarbet / Henry Wilson / George Beale         07872 604 453

George Beale   020 7466 5111

About Helios

Helios provides a limited liability direct investment into the Lloyd's insurance market and is quoted on the London Stock Exchange's AIM market (ticker: HUW). Helios trades within the Lloyd's insurance market writing approximately £70m of capacity for the 2020 account. The portfolio provides a good spread of business being concentrated in property insurance and reinsurance. For further information please visit www.huwplc.com.

 

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