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Growth in capacity through acquisitions

The strategy of building a portfolio of underwriting capacity at Lloyd’s has continued through the purchase of further corporate members. There remains a steady flow of vehicles for sale as existing owners wish to cease underwriting due to a change of circumstances. This acquisition strategy has increased the portfolio from £13m at the start of the 2013 underwriting year to £53m currently. Since 2013 over £40m of capacity has been acquired. We remain selective on the purchases and have encountered increasing competition from other potential purchasers. There remains a risk to the implementation of our strategy if suitable vehicles are not available at attractive prices.

Quality of portfolio

We continue to focus ruthlessly on the quality syndicates. So participations on weaker syndicates in acquired portfolios are sold to maintain the overall quality. Seven of the leading managing agents provide 77% of the portfolio in terms of syndicate participation. These syndicates are managed by the leading managing agents at Lloyd’s and represent shares in the better managed businesses at Lloyd’s.

The underwriting results of the Helios portfolio have consistently outperformed the Lloyd’s market average. Helios’ average return on capacity over the last four years is 11% and is on average 4% higher than the average of the Lloyd’s market.

These incremental returns demonstrate the diversity and the breadth of underwriting expertise within the businesses comprising the portfolio of syndicate capacity

Highlights

  • 77% of the portfolio managed by leading managing agents at Lloyd’s
  • Adjusted net tangible asset value is 160p per share (2016 - 196p per share)
  • Total dividend for the year to 31st December 2017 of 1.5p per share (2016 - 5.5p per share)

Adjusted net assetvalue per share (pence)

Chart:Dividends

Dividend for the year (pence per share)

Chart:Dividends
Underwriting Year
2014 2015 2016 2017 2018
Capacity at 1st January – £m 18.1 20.5 28.1 32.6 41.0
Acquired since year commenced – £m 19.5 15.8 26.9 21.7 15.9
Capacity at 31st December – £m 37.6 36.3 55.0 54.3 56.9
Helios Retained Capacity – £m 22.3 19.7 31.8 28.9 18.7
Increase in retained from Quota Share Commutation – £m 3.3
Adjusted Retained Capacity – £m 22.3 19.7 35.1 28.9 18.7
Proportion of Capacity Retained 59% 54% 64% 53% 33%
View historical figures
2015 Year 1 Year 2 Year 3
Capacity at 1 January at start of Year – £m 20.5 26.8 32.2
Helios retained capacity at start of YOA – £m 6.2 10.6 16
Retained 30% 40% 50%
Acquired during succeeding 12 Months – £m 6.3 5.4 4
Helios retained capacity at end of 12 Months – £m 10.7 16 19.7
Retained 40% 50% 54%
Capacity at each 31st December after commencement of the YOA – £m 26.8 32.2 36.3
2016 Year 1 Year 2 Year 3
Capacity at 1 January at start of Year – £m 28.1 33.7 37.9
Helios retained capacity at start of YOA – £m 8.4 10.9 17.9
Retained 30% 32% 47%
Acquired during succeeding 12 Months – £m 5.6 4.2 -
Helios retained capacity at end of 12 Months – £m 10.9 14.6 -
Retained 32% 38.5% -
Capacity at each 31st December after commencement of the YOA – £m 33.7 37.9 -
Increrase in retention from Q/S Commutation – £m - 3.3 -
Adjusted Helios Retention – £m - 17.9 -
Adjusted retained - 47 -
2017 Year 1 Year 2 Year 3
Capacity at 1 January at start of Year – £m 32.6 37 -
Helios retained capacity at start of YOA – £m 10.7 11.6 -
Retained 30% 31% -
Acquired during succeeding 12 Months – £m 4.4 - -
Helios retained capacity at end of 12 Months – £m 11.6 - -
Retained 31% - -
Capacity at each 31st December after commencement of the YOA – £m 37 - -
2018 Year 1 Year 2 Year 3
Capacity at 1 January at start of Year – £m 41 - -
Helios retained capacity at start of YOA – £m 12.3 - -
Retained 30% - -
Acquired during succeeding 12 Months – £m - - -
Helios retained capacity at end of 12 Months – £m - - -
Retained - - -
Capacity at each 31st December after commencement of the YOA – £m - - -
Hide historical figures

Helios portfolio (@ January 2019)

Top six holdings by Managing Agent

Syndicate Managing agent Capacity £’000 Helios portfolio % of total
510 Tokio Marine Kiln Syndicates Ltd 9,352 17.4
623 Beazley Furlonge Ltd 8,038 15
33 Hiscox Syndicates Ltd 6,686 12.5
2791 Managing Agency Partners Ltd 5,254 9.8
609 Atrium Underwriters Ltd 4,778 8.9
6117 Argo Managing Agency 2,905 5.4
Subtotal 41,381 77.1
Other 12,283 22.9
Total Helios portfolio 53,664 100.0

Source: 2018 syndicate capacities sourced from Lloyd’s / Hampden Agencies Ltd.

Inheritance Tax

Helios Underwriting Plc has been advised that its ordinary shares are eligible for Business Relief (formerly known as Business Property Relief) for Inheritance Tax purposes.

The exemption is applicable for shareholdings in unquoted trading companies. For these purposes, AIM listed shares are considered to be unquoted.

This is not intended to be tax advice. Individual investors should seek their own personal tax advice prior to making decisions to trade in Helios Underwriting Plc’s share capital.