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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Helios Underwriting Plc | LSE:HUW | London | Ordinary Share | GB00B23XLS45 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 155.00 | 150.00 | 160.00 | 155.00 | 155.00 | 155.00 | 3,927 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Insurance Carriers, Nec | 148.35M | -3.32M | -0.0434 | -35.71 | 118.53M |
From Apr 2019 to Apr 2024
TIDMHUW
RNS Number : 1646S
Helios Underwriting Plc
29 September 2017
Helios Underwriting plc
("Helios Underwriting" or the "Company")
Interim results for the six months ended 30 June 2017
Helios Underwriting plc, which provides investors with a limited liability direct investment into the Lloyd's insurance market, announces its unaudited results for the six months ended 30 June 2017.
The summary is as follows:
Hot Features
Premium
-- Operating profits of GBP365,000 (30 June 2016 - GBP821,000)
-- Earnings per share has reduced to 2.03p per share (30 June 2016 restated - 8.44p)
-- Adjusted Net Asset Value per share is GBP1.93p per share (30 June 2016 - GBP2.00 per share)
SUMMARY FINANCIAL INFORMATION
6 months to 30th June Year ended
31(st) December
2017 Restated 2016
GBP000's 2016 GBP000's
GBP000's
Underwriting profits 1,070 1,283 2,208
Other Income 391 429 904
Costs (1,096) (891) (1,778)
----------- ----------- -----------------
Profit for the
year before impairment
and goodwill 365 821 1,334
----------- ----------- -----------------
Profit after tax 297 886 713
Earnings per share 2.03p 8.44p 6.22p
Adjusted Net Asset GBP1.93 GBP2.00 GBP1.96
Value per Share
Note: The comparative figures for the period to 30(th) June 2016 have been re-stated to include the "Other Comprehensive Income" as an underwriting profit to reflect the disclosure as at 31(st) December 2016.
Interim results to 30(th) June 2017
The underwriting conditions have remained difficult with profit margins continuing to be squeezed. The profits for the half year have been impacted by the following factors:
-- The underwriting profits from the net retained capacity of Helios have reduced as a result of lower recognition of profits for the more mature years of account, in comparison to the position last year, and as the level of Helios retained capacity was lower than the comparative position.
-- Operating costs have increased as a loss on the conversion of the US$ profits to sterling received in the distribution from the 2014 underwriting year was realized. The other costs including reinsurance costs are in line with expectations and we continue to benefit from the fees and profit commissions payable by the quota share reinsurers.
-- The tax charge no longer benefits from tax losses carried forward.
-- The Adjusted Net Asset Value per share is GBP1.93 per share (June 2016 - GBP2.00 per share) and has reduced following the payment of the final dividend of 5.5p per share for the year ended 31(st) December 2016.
-- The earnings per share of 2.03p (2016: 8.44p) has been impacted by the lower after tax profits and the additional shares in issue following the placing in October 2016.
Recent Catastrophe Events
The catastrophe loss activity in the second half of 2017 has been substantial. To date there have been four major insured losses in the US, Caribbean, Mexico and Puerto Rico, the latter being the largest insured loss. Although initial market wide estimates of insured losses have been announced, it is too early to assess both whether these are accurate and the extent of the potential effect on the Helios portfolio in terms of net losses to be recognized for 2017 underwriting year. The Board expects that the reinsurance arrangements put in place by Helios will limit the losses recognized from these events. We continue to reduce our exposure on the most recent underwriting year by 70% through quota share reinsurance. Stop loss reinsurance has been bought to limit the Group's exposure in the event of large underwriting losses. These reinsurances have been in place for a number of years to assist both in the funding of substantial losses and reduce the impact on capital.
The Board currently expects that the syndicate results for the 2015 and 2016 underwriting years will exceed current mid-point forecasts published by the managing agents, which should make a meaningful contribution to the Helios full year results whilst it is expected that the 2017 underwriting year at the 12-month stage will result in a significant loss that will be mitigated by the Helios reinsurance programs in place.
Capacity acquired
We have completed four transactions in 2017 so far, acquiring GBP3.7m of capacity for the 2017 year of account for a total consideration of GBP4.3m at an average discount to the Humphrey value of 6.8% Value expectations of vendors of LLV's continued to exceed fair value in our estimation. The increase in the capacity for the 2014 to 2017 years of account is shown below
Year of account - GBPm
-----------------------------------------------------------
2014 2015 2016 2017
----------------------------------------------------------- ------ ------ ----- -----
Capacity at 1 January 35.5 32.2 33.7 32.6
Acquired during the year 2.1 3.4 3.5 3.7
----------------------------------------------------------- ------ ------ ----- -----
Capacity at 28(th) September 37.6 35.6 37.2 36.3
Helios Retained Capacity 22.3 19.1 14.0 11.0
----------------------------------------------------------- ------ ------ ----- -----
Increase in retained capacity from Quota Share Commutation - - 3.3 -
----------------------------------------------------------- ------ ------ ----- -----
Adjusted Retained Capacity 22.3 19.1 17.3 11.0
----------------------------------------------------------- ------ ------ ----- -----
Proportion of Capacity retained 59% 54% 47% 30%
----------------------------------------------------------- ------ ------ ----- -----
In August 2017 we increased the retained capacity on the 2016 underwriting year by GBP3.3m as certain quota contracts with capital providers for 2016 underwriting year of account have been commuted. This commutation is in-line with the Helios strategy of increasing the "off risk" capacity and this additional capacity should benefit the earnings in calendar year 2018.
Our strategy of building the portfolio of syndicate capacity continues to rely on the flow of vehicles for sale at reasonable prices. We continue to remain selective on the vehicles acquired and several vehicles have been sold recently at prices which were unattractive to us.
The Lloyds' capacity auctions are scheduled for mid-November in 2017 and, although the recent major insured losses should affect the capacity values, it is expected that there will continue to be strong demand for the top syndicates that make up a significant proportion of the Helios Capacity Fund.
For further information please contact:
Helios
Nigel Hanbury - Chief Executive 020 7863 6655 / nigel.hanbury@huwplc.com
Arthur Manners - Chief Financial Officer 07754 965 917
Stockdale Securities
Robert Finlay 020 7601 6100
David Coaten
Financial results summary
Six months ended 30 June 2017
6 months to 6 months to 30 Year to 31 December
30 June 2017 June 2016 2016
Underwriting profits 1,070 1,283 2,208
Other Income
Fees from reinsurers 233 331 557
Investment income 158 98 347
Total Other Income 391 429 904
Costs
Pre - acquisition (126) (133) (63)
Stop loss costs (113) (121) (248)
Operating costs (857) (637) (1467)
Total Costs (1,096) (891) (1,778)
Profit for the year 365 821 1,334
Impairment charge 8 39 (555)
Tax (76) 26 (66)
Retained Profit 297 886 713
============== =============== ====================
Period to 30(th) June 2017
Helios retained Total profit
capacity at currently % earned Helios
30 June 2017 Portfolio mid estimated in the 2017 half year Profits
Underwriting Year GBPm point forecasts GBP'000 calendar GBP'000
2015 18.5 10.8% 2,002 26% 518
2016 13.3 3.8% 501 141% 707
2017 11.2 N/A (155)
------------------ --------------- ---------------- ------------ ---------------------- --------
1,070
------------------ --------------- ---------------- ------------ ---------------------- --------
Period to 30(th) June 2016
Helios retained Total profit
capacity at currently % earned Helios
30 June 2016 Portfolio mid estimated in the 2017 half year Profits
Underwriting Year GBPm point forecasts GBP'000 calendar GBP'000
------------------ --------------- ---------------- ------------ ---------------------- --------
2014 19.5 11.3% 2,205 38% 841
2015 15.1 7.2% 1,090 60% 651
2016 9.8 N/A (209)
------------------ --------------- ---------------- ------------ ---------------------- --------
1,283
------------------ --------------- ---------------- ------------ ---------------------- --------
Year to 31 December 2016
Helios retained
capacity at Total profit
31 December currently % earned Helios
2016 Portfolio mid estimated in the 2017 half year Profits
Underwriting Year GBPm point forecasts GBP'000 calendar GBP'000
------------------ --------------- ---------------- ------------ ---------------------- --------
2014 20.6 15,5% 3,193 52% 1,661
2015 16.1 8.2% 1,314 79% 1,031
2016 10.8 N/A (484)
------------------ --------------- ---------------- ------------ ---------------------- --------
2,208
------------------ --------------- ---------------- ------------ ---------------------- --------
Summary Balance Sheet
The summary Group balance sheet excludes items relating to syndicate participations. See Note 15 for further information.
6 Months to June 2017 6 Months to June 2016 Year to 31 December 2016
GBP'000 GBP'000 GBP'000
------------------ --------------------- ----------------------- ------------------------
Intangible assets 12,495 10,906 10,732
Funds at Lloyd's 6,884 4,954 4,083
Other cash 5,832 2,975 7,229
Other assets 2,382 1,304 3,480
------------------ --------------------- ----------------------- ------------------------
Total assets 27,594 20,139 25,524
------------------ --------------------- ----------------------- ------------------------
Deferred tax 2,943 3,002 3,581
Other liabilities 5,903 4,722 4,618
------------------ --------------------- ----------------------- ------------------------
Total liabilities 8,846 7,724 8,199
------------------ --------------------- ----------------------- ------------------------
Syndicate equity 3,253 4,369 5,194
------------------ --------------------- ----------------------- ------------------------
Total equity 22,001 16,784 22,519
------------------ --------------------- ----------------------- ------------------------
Summary Group Cash Flow
The summary group cash flow sheet excludes items relating to syndicate participations. See Note 15 for further information.
6 months to 6 months to 30 Year to 31 December
30 June 2017 June 2016 2016
GBP'000 GBP'000 GBP'000
Opening Balance (free cash) 7,230 2,972 2,972
Income
Acquired on acquisition 237 577 413
Distribution of profits (net
of tax retentions) 4,490 3,378 3,378
Transfers from Funds at Lloyds' 66 2,258 3,775
Investment income 25 28 271
Other income - - 5,722
Sale of investments - - -
Transfers from PTF accounts
(early release) - - -
Expenditure
Operating costs (inc Hampden
/ Nomina fees) (647) (250) (815)
Reinsurance Cost (115) (237) (237)
Payments to QS reinsurers - - (741)
Acquisition of LLV's (4,080) (4,885) (5,592)
Transfers to Funds at Lloyds' (560) (861) (1,524)
Tax (2) (5) (95)
Dividends paid (812) - (299)
Closing balance 5,832 2,975 7,230
-------------- ----------------------------- ------------------------------
Interim condensed consolidated statement of comprehensive income
Six months ended 30 June 2017
6 months Restated 12 months
ended 6 months ended
30 June ended 31 December
2017 30 June 2016
Unaudited 2016 Unaudited Audited
Note GBP'000 GBP'000 GBP'000
------------------------------------------------------- ----- ---------- --------------- ------------
Gross premium written 4 17,061 17,585 31,307
Reinsurance premium ceded (5,119) (4,710) (7,772)
------------------------------------------------------- ----- ---------- --------------- ------------
Net premium written 4 11,942 12,875 23,535
------------------------------------------------------- ----- ---------- --------------- ------------
Change in unearned gross premium provision 5 (432) (4,343) (826)
Change in unearned reinsurance premium provision 5 771 1,650 199
------------------------------------------------------- ----- ---------- --------------- ------------
5 339 (2,693) (627)
------------------------------------------------------- ----- ---------- --------------- ------------
Net earned premium 3,4 12,281 10,182 22,908
Net investment income 6 581 528 885
Other income 255 546 2,134
------------------------------------------------------- ----- ---------- --------------- ------------
Revenue 13,117 11,256 25,927 ------------------------------------------------------- ----- ---------- --------------- ------------ Gross claims paid (8,108) (5,769) (13,355) Reinsurers' share of gross claims paid 1,038 745 2,472 ------------------------------------------------------- ----- ---------- --------------- ------------ Claims paid, net of reinsurance (7,070) (5,024) (10,883) ------------------------------------------------------- ----- ---------- --------------- ------------ Change in provision for gross claims 5 (1,810) (183) (3,826) Reinsurers' share of change in provision for gross claims 5 678 (2,040) 1,904 ------------------------------------------------------- ----- ---------- --------------- ------------ Net change in provision for claims 5 (1,132) (2,223) (1,922) ------------------------------------------------------- ----- ---------- --------------- ------------ Net insurance claims and loss adjustment expenses 4 (8,202) (7,247) (12,805) ------------------------------------------------------- ----- ---------- --------------- ------------ Expenses incurred in insurance activities (3,967) (2,808) (10,819) Other operating expenses (583) (380) (969) ------------------------------------------------------- ----- ---------- --------------- ------------ Operating expenses (4,550) (3,188) (11,788) ------------------------------------------------------- ----- ---------- --------------- ------------ Operating profit before goodwill and impairment 4 365 821 1,334 Goodwill on bargain purchase 12 - - - Impairment of goodwill 12 - - - Impairment of syndicate capacity 8 39 (555) ------------------------------------------------------- ----- ---------- --------------- ------------ Profit before tax 373 860 779 Income tax charge 7 (76) 26 (66) ------------------------------------------------------- ----- ---------- --------------- ------------ Profit for the period 297 886 713 ------------------------------------------------------- ----- ---------- --------------- ------------ Other comprehensive income Foreign currency translation differences - - - Income tax relating to the components of other comprehensive income - - ------------------------------------------------------- ----- ---------- --------------- ------------ Other comprehensive income for the period, net of tax - - - ------------------------------------------------------- ----- ---------- --------------- ------------ Total other comprehensive income for the period 297 886 713 ------------------------------------------------------- ----- ---------- --------------- ------------ Profit for the period attributable to owners of the Parent 297 886 713 ------------------------------------------------------- ----- ---------- --------------- ------------ Total comprehensive income for the period attributable to owners of the Parent 297 886 713 ------------------------------------------------------- ----- ---------- --------------- ------------ Earnings per share attributable to owners of the Parent Basic and diluted 8 2.03p 8.44p 6.22p ------------------------------------------------------- ----- ---------- --------------- ------------
The profit attributable to owners of the Parent and earnings per share set out above are in respect of continuing operations.
The notes are an integral part of these Financial Statements.
Interim condensed consolidated statement of financial position
Six months ended 30 June 2017
6 months Restated
ended 6 months 12 months
30 June ended 30 ended
2017 June 2016 31 December
Unaudited Unaudited 2016 Audited
Note GBP'000 GBP'000 GBP'000
------------------------------------------------------- ----- ---------- ---------- -------------
Assets
Intangible assets 12,495 10,907 10,732
Financial assets at fair value through profit or
loss 43,886 38,004 45,580
Reinsurance assets:
- reinsurers' share of claims outstanding 5 8,840 7,689 9,674
- reinsurers' share of unearned premium 5 3,976 3,527 2,548
Other receivables, including insurance and reinsurance
receivables 28,967 28,579 30,243
Deferred acquisition costs 4,218 4,204 4,255
Prepayments and accrued income 364 414 187
Cash and cash equivalents 6,853 5,668 6,212
------------------------------------------------------- ----- ---------- ---------- -------------
Total assets 109,599 98,992 109,431
------------------------------------------------------- ----- ---------- ---------- -------------
Liabilities
Insurance liabilities:
- claims outstanding 5 45,772 43,060 50,087
- unearned premium 5 19,193 18,054 16,821
Deferred income tax liabilities 2,943 3,002 3,581
Other payables, including insurance and reinsurance
payables 15,273 13,948 14,708
Accruals and deferred income 4,417 4,144 1,715
------------------------------------------------------- ----- ---------- ---------- -------------
Total liabilities 87,598 82,208 86,912
------------------------------------------------------- ----- ---------- ---------- -------------
Equity
Equity attributable to owners of the Parent:
Share capital 11 1,460 1,050 1,460
Share premium 11 15,387 9,901 15,399
Retained earnings 5,154 5,833 5,660
------------------------------------------------------- ----- ---------- ---------- -------------
Total equity 22,001 16,784 22,519
------------------------------------------------------- ----- ---------- ---------- -------------
Total liabilities and equity 109,599 98,992 109,431
------------------------------------------------------- ----- ---------- ---------- -------------
Interim condensed consolidated statement of changes in equity
Six months ended 30 June 2017
Attributable to owners
of the Parent Restated
----------------------------------------------------
Note Share Share Other Retained
capital premium reserves earnings Total
Consolidated GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- ------ -------- --------- ---------- --------- --------
At 1 January 2017 1,460 15,399 - 5,660 22,519
Total comprehensive income for the year:
Profit for the year - - - 297 297
Other comprehensive income, net of tax - -
----------------------------------------- ------ -------- --------- ---------- --------- --------
Total comprehensive income for the year - - - 297 297 ------------------------------------------------- -------- --------- ---------- --------- -------- Transactions with owners: Dividends paid - - - - - Other - (12) - (803) (815) ------------------------------------------------- -------- --------- ---------- --------- -------- Total transactions with owners - (12) - (803) (815) At 30 June 2017 1,460 15,387 - 5,154 22,001 ------------------------------------------------- -------- --------- ---------- --------- -------- At 1 January 2016 1,050 9,901 - 5,472 16,423 Total comprehensive income for the year: Profit for the year - - - 886 886 Other comprehensive income, net of tax - - - - - ----------------------------------------- ------ -------- --------- ---------- --------- -------- Total comprehensive income for the year - - - 886 886 ------------------------------------------------- -------- --------- ---------- --------- -------- Transactions with owners: Dividends paid - - - (525) (525) Share issue - - - - - ----------------------------------------- ------ -------- --------- ---------- --------- -------- Total transactions with owners - - - (525) (525) ------------------------------------------------- -------- --------- ---------- --------- -------- At 30 June 2016 1,050 9,901 - 5,833 16,784 ------------------------------------------------- -------- --------- ---------- --------- -------- At 1 January 2016 1,050 9,901 - 5,472 16,423 Total comprehensive income for the year: Profit for the year - - - 713 713 Other comprehensive income, net of tax - - - - - ----------------------------------------- ------ -------- --------- ---------- --------- -------- Total comprehensive income for the year - - - 713 713 ------------------------------------------------- -------- --------- ---------- --------- -------- Transactions with owners: Dividends paid - - - (525) (525) Share issue 410 5,498 - - 5,908 ------------------------------------------------- -------- --------- ---------- --------- -------- Total transactions with owners 410 5,498 - (525) 5,383 ------------------------------------------------- -------- --------- ---------- --------- -------- At 31 December 2016 1,460 15,399 - 5,660 22,519 ------------------------------------------------- -------- --------- ---------- --------- --------
Interim condensed consolidated statement of cash flows
Six months ended 30 June 2017
Note 6 months Restated 12 months
ended 6 months ended
30 June ended 31 December
2017 30 June 2016
Unaudited 2016 Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------------------------------------------- ----- ---------- --------------- ------------
Cash flows from operating activities
Profit before tax 373 914 779
Adjustments for:
Other comprehensive income, gross of tax - - -
Interest received (2) (4) (113)
Investment income 6 (526) (424) (594)
Goodwill on bargain purchase 12 - -
Impairment of goodwill 12 - -
(Profit)/loss on sale of intangible assets - (94)
Impairment of intangible assets (8) (39) 555
Goodwill on acquisition (134) (449) -
Changes in working capital:
* change in fair value of financial assets held at fair
value through profit or loss 6 (105) (50) (256)
* (increase)/decrease in financial assets at fair value
through profit or loss 5,835 (409) (6,825)
- (increase)/decrease in other receivables 5,636 (3,234) (3,848)
- (increase)/decrease in other payables (463) 4,114 3,090
- net (increase)/decrease in technical provisions (7,017) 5,236 8,361
-------------------------------------------------------------- ----- ---------- --------------- ------------
Cash generated/(utilised) from operations 3,589 5,655 1,055
-------------------------------------------------------------- ----- ---------- --------------- ------------
Income tax paid 2 2 (15)
-------------------------------------------------------------- ----- ---------- --------------- ------------
Net cash inflow from operating activities 3,591 5,657 1,040
-------------------------------------------------------------- ----- ---------- --------------- ------------
Cash flows from investing activities
Interest received 2 4 113
Investment income 526 424 594
Purchase of intangible assets - - (6)
Proceeds from disposal of intangible assets - - 137
Acquisition of subsidiaries, net of cash acquired (3,478) (4,051) (4,723)
-------------------------------------------------------------- ----- ---------- --------------- ------------
Net cash inflow from investing activities (2,950) (3,623) (3,885)
-------------------------------------------------------------- ----- ---------- --------------- ------------
Cash flows from financing activities
Net proceeds from issue of ordinary share capital - - 5,722
Dividends paid to owners of the Parent - - (299)
-------------------------------------------------------------- ----- ---------- --------------- ------------
Net cash outflow from financing activities - - 5,423
-------------------------------------------------------------- ----- ---------- --------------- ------------
Net increase in cash and cash equivalents 641 2,034 2,578
Cash and cash equivalents at beginning of period 6,212 3,634 3,634
-------------------------------------------------------------- ----- ---------- --------------- ------------
Cash and cash equivalents at end of period 6,853 5,668 6,212
-------------------------------------------------------------- ----- ---------- --------------- ------------
Cash held within the syndicates' accounts is GBP4,439,000 (2016: GBP3,456,000) of the total cash and cash equivalents held at the period end of GBP6,853,000 (2016: GBP5,668,000). The cash held within the syndicates' accounts is not available to the Group to meet its day-to-day working capital requirements.
Cash and cash equivalents comprise cash at bank and in hand.
Notes to the financial statements
Six months ended 30 June 2017
1. General information
The Company is a public limited company quoted on AIM. The Company was incorporated in England, is domiciled in the UK and its registered office is 40 Gracechurch Street, London EC3V 0BT. The Company participates in insurance business as an underwriting member at Lloyd's through its subsidiary undertakings.
2. Accounting policies
Basis of preparation
The Condensed Consolidated Interim Financial Statements have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRSs) and in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting.
The Condensed Consolidated Interim Financial Statements are prepared for the six months ended 30 June 2017.
The Condensed Consolidated Interim incorporate the Financial Statements of Helios Underwriting plc, the Parent Company, and its directly and indirectly held subsidiaries being Hampden Corporate Member Limited, Nameco (No. 365) Limited, Nameco (No. 605) Limited, Nameco (No. 321) Limited, Nameco (No. 917) Limited, Nameco (No. 229) Limited, Nameco (No. 518) Limited, Nameco (No. 804) Limited, Halperin Underwriting Limited, Bernul Limited, Dumasco Limited, Nameco (No. 311) Limited, Nameco (No. 402) Limited, Updown Underwriting Limited, Nameco (No. 507) Limited, Nameco (No. 76) Limited, Kempton Underwriting Limited, Devon Underwriting Limited, Nameco (No 346) Limited, Pooks Limited, Charmac Underwriting Limited, Nottus (No 51) Limited, Helios UTG Partner Limited, Nomina No 035 LLP, Nomina No 342 LLP, Nomina No 380 LLP, Nomina No 372 LLP and Salviscount LLP. (Note 10).
The Condensed Consolidated Interim Financial Statements for the six months ended 30 June 2017 and 2016 are unaudited, but have been subject to review by the Group's auditors. The Condensed Consolidated Interim Financial Statements have been prepared in accordance with the accounting policies adopted for the year ended 31 December 2016.
The underwriting data on which these Condensed Consolidated Interim Financial Statements are based upon has been supplied by the managing agents of those syndicates which the Group supports. The data supplied is the 100% figures for each syndicate. The Group has applied its share of the syndicate participations to the gross figures to derive its share of the syndicates transactions, assets and liabilities.
Significant accounting policies
The Condensed Consolidated Interim Financial Statements have been prepared under the historical cost convention. The same accounting policies, presentation and methods of computation are followed in these Condensed Consolidated Interim Financial Statements as were applied in the preparation of the Group Financial Statements for the year ended 31 December 2016. The new standards and amendments to standards and interpretations effective after 1 January 2017, as disclosed in the Annual Report for the year ended 31 December 2016, have not had a significant impact on the Condensed Consolidated Interim Financial Statements at 30 June 2017.
New standards effective from 1 January 2017:-
- IAS 7 Amendment: Disclosure initiative. (EU effective date: 1 January 2017); and
- IAS 12 Amendment: Recognition of deferred tax assets for unrealised losses. (EU effective date: 1 January 2017); and
- IFRS 2014-2016 annual improvement cycle, IFRS 12 Disclosure of Interests in Other Entities. (EU effective date: 1 January 2017)
These amendments will not result in any material impact on the interim financial statements of the group and there have been no amendments to the Group's accounting policies as a result of the new standards listed above.
3. Segmental information
Nigel Hanbury is the Group's chief operating decision-maker. He has determined its operating segments based on the way the Group is managed, for the purpose of allocating resources and assessing performance.
The Group has three segments that represent the primary way in which the Group is managed, as follows:
-- syndicate participation;
-- investment management; and
-- other corporate activities.
Other
Syndicate Investment corporate
participation management activities Total
6 months ended 30 June 2017 Unaudited GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- -------------- ----------- ----------- --------
Net earned premium 13,738 - (1,457) 12,281
Net investment income 446 135 - 581
Other income - - 255 255
Net insurance claims and loss adjustment
expenses (8,203) - 1 (8,202)
Expenses incurred in insurance activities (2,987) - (980) (3,967)
Other operating expenses - - (583) (583)
Goodwill on bargain purchase - - - -
Impairment of goodwill - - - -
Impairment of syndicate capacity (see Note
13) - - 8 8
------------------------------------------- -------------- ----------- ----------- --------
Profit before tax 2,994 135 (2,756) 373
------------------------------------------- -------------- ----------- ----------- --------
Other
Syndicate Investment corporate
participation management activities Total
Restated 6 months ended 30 June 2016 Unaudited GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------- -------------- ----------- ----------- --------
Net earned premium 10,741 - (559) 10,182
Net investment income 495 33 - 528
Other income 216 - 330 546
Net insurance claims and loss adjustment
expenses (7,247) - - (7,247)
Expenses incurred in insurance activities (2,241) - (567) (2,808)
Other operating expenses - - (380) (380)
Goodwill on bargain purchase - - - -
Impairment of goodwill - - - -
Impairment of syndicate capacity (see Note
13) - - 39 39
----------------------------------------------- -------------- ----------- ----------- --------
Profit before tax 1,964 33 (1,137) 860
----------------------------------------------- -------------- ----------- ----------- --------
Other
Syndicate Investment corporate
participation management activities Total
12 months ended 31 December 2016 Audited GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- -------------- ----------- ----------- --------
Net earned premium 24,302 - (1,394) 22,908
Net investment income 663 222 - 885
Other income 643 - 1,491 2,134
Net insurance claims and loss adjustment
expenses (12,805) - - (12,805)
Expenses incurred in insurance activities (10,422) - (397) (10,819)
Other operating expenses 884 - (1,853) (969)
Goodwill on bargain purchase - - - -
Impairment of goodwill - - - -
Impairment of syndicate capacity (see Note
13) - - (555) (555)
------------------------------------------- -------------- ----------- ----------- --------
Profit before tax 3,265 222 (2,708) 779
------------------------------------------- -------------- ----------- ----------- --------
The Group does not have any geographical segments as it considers all of its activities to arise from trading within the UK.
No major customers exceed 10% of revenue.
Net earned premium within 2017 other corporate activities totalling GBP1,457,000 (2016: 559,000 - 2014, 2015 and 2016 years of account) represents the 2015, 2016 and 2017 years of account net Group quota share reinsurance premium payable to Hampden Insurance Guernsey PCC Limited - Cell 6. This net quota share reinsurance premium payable is included within "reinsurance premium ceded" in the Consolidated Income Statement of the period.
4. Operating profit before goodwill and impairment
Underwriting year of account*
-------------------------------------------
2015 and Pre- Corporate Other
6 months ended 30 prior 2016 2017 Sub-total acquisition reinsurance corporate Total
June 2017 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------- --------- --------- ----------- ------------ ------------ ---------- --------
Gross premium written (61) 3,374 14,513 17,826 (765) - - 17,061
Reinsurance ceded 164 (663) (3,232) (3,731) 182 (1,457) (113) (5,119)
----------------------- -------- --------- --------- ----------- ------------ ------------ ---------- --------
Net premium written 103 2,711 11,281 14,095 (583) (1,457) (113) 11,942
----------------------- -------- --------- --------- ----------- ------------ ------------ ---------- --------
Net earned premium 1,393 9,849 3,190 14,432 (581) (1,457) (113) 12,281
Other income 311 199 5 515 (70) 233 158 836
Net insurance claims
and loss adjustment
expenses (95) (5,389) (3,059) (8,543) 341 - - (8,202)
Operating expenses (557) (2,668) (652) (3,877) 184 - (857) (4,550)
----------------------- -------- --------- --------- ----------- ------------ ------------ ---------- --------
Operating profit
before goodwill and
impairment 1,052 1,991 (516) 2,527 (126) (1,224) (812) 365
----------------------- -------- --------- --------- ----------- ------------ ------------ ---------- --------
Quota share adjustment (534) (1,284) 361 (1,457) - 1,457 - -
----------------------- -------- --------- --------- ----------- ------------ ------------ ---------- --------
Operating profit
before goodwill and
impairment after
quota share adjustment 518 707 (155) 1,070 (126) 233 (812) 365
----------------------- -------- --------- --------- ----------- ------------ ------------ ---------- --------
Underwriting year of account*
-------------------------------------------
2014 and Pre- Corporate Other
6 months ended 30 prior 2015 2016 Sub-total acquisition reinsurance corporate Total
June 2016 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------- --------- --------- ----------- ------------ ------------ ---------- --------
Gross premium written 432 2,485 16,319 19,236 (1,651) - - 17,585
Reinsurance ceded (4) (342) (4,065) (4,411) 421 (599) (121) (4,710)
----------------------- -------- --------- --------- ----------- ------------ ------------ ---------- --------
Net premium written 428 2,143 12,254 14,825 (1,230) (599) (121) 12,875
----------------------- -------- --------- --------- ----------- ------------ ------------ ---------- --------
Net earned premium 1,291 7,578 3,048 11,917 (1,056) (559) (121) 10,182
Other income 533 148 4 685 (39) 330 98 1,074
Net insurance claims
and loss adjustment
expenses (382) (4,289) (3,269) (7,940) 693 - - (7,247)
Operating expenses 61 (2,024) (857) (2,820) 269 - (637) (3,188)
----------------------- -------- --------- --------- ----------- ------------ ------------ ---------- --------
Operating profit
before goodwill and
impairment 1,503 1,413 (1,074) 1,842 (133) (229) (660) 821
----------------------- -------- --------- --------- ----------- ------------ ------------ ---------- --------
Quota share adjustment (662) (762) 865 (559) - 559 -
----------------------- -------- --------- --------- ----------- ------------ ------------ ---------- --------
-Operating profit
before goodwill and
impairment after
quota share adjustment 841 651 (209) 1,283 (133) 330 (660) 821
----------------------- -------- --------- --------- ----------- ------------ ------------ ---------- --------
Underwriting year of account*
--------------------------------------------
2014 Pre- Corporate Other
12 months ended 31 and prior 2015 2016 Sub-total acquisition reinsurance corporate Total
December 2016 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ---------- --------- --------- ---------- ------------ ------------ ---------- --------
Gross premium written 250 3,521 30,131 33,902 (2,595) - - 31,307
Reinsurance ceded 26 (487) (6,244) (6,705) 575 (1,394) (248) (7,772)
---------------------- ---------- --------- --------- ---------- ------------ ------------ ---------- --------
Net premium written 276 3,035 23,886 27,197 (2,020) (1,394) (248) 23,535
---------------------- ---------- --------- --------- ---------- ------------ ------------ ---------- --------
Net earned premium 1,679 11,986 12,676 26,341 (1,791) (1,394) (248) 22,908
Other income 1,566 543 82 2,191 (76) 557 347 3,019
Net insurance claims
and loss adjustment
expenses 990 (6,196) (8,680) (13,886) 1,081 - - (12,805)
Operating expenses (1,300) (4,169) (5,575) (11,044) 723 - (1,467) (11,788)
---------------------- ---------- --------- --------- ---------- ------------ ------------ ---------- --------
Operating profit
before goodwill and
impairment 2,935 2,164 (1,497) 3,602 (63) (837) (1,368) 1,334
---------------------- ---------- --------- --------- ---------- ------------ ------------ ---------- --------
Quota share adjustment (1,274) (1,133) 1,013 (1,394) - 1,394 - -
---------------------- ---------- --------- --------- ---------- ------------ ------------ ---------- --------
-Operating profit
before goodwill and
impairment after
quota share
adjustment 1,661 1,031 (484) 2,208 (63) 557 (1,368) 1,334
---------------------- ---------- --------- --------- ---------- ------------ ------------ ---------- --------
Pre-acquisition relates to the element of results from the new acquisitions before they were acquired by the Group.
* The underwriting year of account results represent the Group's share of the syndicates' results by underwriting year of account before corporate member level reinsurance and members' agents charges.
5. Insurance liabilities and reinsurance balances
Movement in claims outstanding
Gross Reinsurance Net
GBP'000 GBP'000 GBP'000
------------------------------------------------- -------- ----------- --------
At 1 January 2017 50,087 9,674 40,413
Increase in reserves arising from acquisition of
subsidiary undertakings 4,114 (1,458) 5,573
Movement of reserves 1,810 678 1,132
Other movements (10,239) (54) (10,186)
------------------------------------------------- -------- ----------- --------
At 30 June 2017 45,772 8,840 36,932
------------------------------------------------- -------- ----------- --------
Movement in unearned premium
Gross Reinsurance Net
GBP'000 GBP'000 GBP'000
------------------------------------------------- -------- ----------- --------
At 1 January 2017 16,821 2,548 14,273
Increase in reserves arising from acquisition of
subsidiary undertakings (886) 87 (974)
Movement of reserves 432 771 (339)
Other movements 2,826 570 2,257
------------------------------------------------- -------- ----------- --------
At 30 June 2017 19,193 3,976 15,217
------------------------------------------------- -------- ----------- --------
Included within other movements are the 2014 and prior years' claims reserves reinsured into the 2015 year of account on which the Group does not participate and currency exchange differences.
Movement in claims outstanding
Gross Reinsurance Net
GBP'000 GBP'000 GBP'000
------------------------------------------------- -------- ----------- --------
At 1 January 2016 32,985 5,657 27,328
Increase in reserves arising from acquisition of
subsidiary undertakings 6,643 1,142 5,501
Movement of reserves 183 (2,040) 2,223
Other movements 3,249 2,930 319
------------------------------------------------- -------- ----------- --------
At 30 June 2016 43,060 7,689 35,371
------------------------------------------------- -------- ----------- --------
Movement in unearned premium
Gross Reinsurance Net
GBP'000 GBP'000 GBP'000
------------------------------------------------- -------- ----------- --------
At 1 January 2016 11,169 1,501 9,668
Increase in reserves arising from acquisition of
subsidiary undertakings 2,616 451 2,164
Movement of reserves 4,343 1,650 2,693
Other movements (74) (75) 2
------------------------------------------------- -------- ----------- --------
At 30 June 2016 18,054 3,527 14,527
------------------------------------------------- -------- ----------- --------
Included within other movements are the 2013 and prior years' claims reserves reinsured into the 2014 year of account on which the Group does not participate and currency exchange differences.
Movement in claims outstanding
Gross Reinsurance Net
GBP'000 GBP'000 GBP'000
------------------------------------------------- -------- ----------- --------
At 1 January 2016 32,985 5,657 27,328
Increase in reserves arising from acquisition of
subsidiary undertakings 8,122 1,417 6,705
Movement of reserves 3,826 1,904 1,922
Other movements 5,154 696 4,458
------------------------------------------------- -------- ----------- --------
At 31 December 2016 50,087 9,674 40,413
------------------------------------------------- -------- ----------- --------
Movement in unearned premium
Gross Reinsurance Net
GBP'000 GBP'000 GBP'000
------------------------------------------------- -------- ----------- --------
At 1 January 2016 11,169 1,501 9,668
Increase in reserves arising from acquisition of
subsidiary undertakings 3,154 531 2,623
Movement of reserves 826 199 627
Other movements 1,672 317 1,355
------------------------------------------------- -------- ----------- --------
At 31 December 2016 16,821 2,548 14,273
------------------------------------------------- -------- ----------- --------
Included within other movements are the 2013 and prior years' claims reserves reinsured into the 2014 year of account on which the Group does not participate and currency exchange differences.
6. Net investment income
6 months 6 months 12 months
ended ended ended 31
30 June 30 June December
2017 Unaudited 2016 Unaudited 2016 Audited
GBP'000 GBP'000 GBP'000
--------------------------------------------------------- --------------- ---------------- -------------
Investment income 526 424 594
Realised gains on financial assets at fair value through
profit or loss 193 48 (19)
Unrealised losses on financial assets at fair value
through profit or loss (139) 52 256
Investment management expenses (1) - (59)
Bank interest 2 4 113
--------------------------------------------------------- --------------- ---------------- -------------
Net investment income 581 528 885
--------------------------------------------------------- --------------- ---------------- -------------
7. Income tax charge
Analysis of tax charge/(credit) in the period
6 months 6 months 12 months
ended ended ended 31
30 June 30 June December
2017 Unaudited 2016 Unaudited 2016 Audited
GBP'000 GBP'000 GBP'000
------------------ --------------- ---------------- -------------
Income tax charge 179 (26) 66
------------------ --------------- ---------------- -------------
The income tax expense is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used is 20% (2016: 20%). Material disallowed terms have been adjusted for in the income tax calculation.
8. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to ordinary shareholders after tax by the weighted average number of ordinary shares outstanding during the period.
Diluted earnings per share is calculated by dividing the net profit attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the period, plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
The Group has no dilutive potential ordinary shares.
Earnings per share has been calculated in accordance with IAS 33 "Earnings per share".
The earnings per share and weighted average number of shares used in the calculation are set out below:
Restated
6 months 6 months 12 months
ended 30 ended 30 ended 31
June 2017 June 2016 December
Unaudited Unaudited 2016 Audited
--------------------------------------------------------- ---------- ---------- -------------
Profit for the period after tax attributable to ordinary
shareholders 297,000 886,000 713,000
--------------------------------------------------------- ---------- ---------- -------------
Weighted average number of shares in issue 14,604,240 10,495,350 11,463,456
--------------------------------------------------------- ---------- ---------- -------------
Basic and diluted earnings per share 2.03 8.44 6.22
--------------------------------------------------------- ---------- ---------- -------------
9. Dividends paid or proposed
A final dividend of 5.5p per share was proposed and agreed at the AGM on 28 June 2017 (2016: 5.0p).
10. Investments in subsidiaries
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
------ -------- -------- -----------
Total 23,015 19,503 19,503
------ -------- -------- -----------
At 30 June 2017 the Company owned 100% of the following companies and limited liability partnerships, either directly or indirectly. All subsidiaries are incorporated in England and Wales.
Direct/indirect 30 June 30 June 2016 31 December
interest 2017 ownership 2016
Company or partnership ownership ownership Principal activity
--------------------------- ---------------- ---------- ------------ ----------- -----------------------------
Hampden Corporate Member Lloyd's of London corporate
Limited Direct 100% 100% 100% vehicle
Lloyd's of London corporate
Nameco (No. 365) Limited Direct 100% 100% 100% vehicle
Lloyd's of London corporate
Nameco (No. 605) Limited Direct 100% 100% 100% vehicle
Lloyd's of London corporate
Nameco (No. 321) Limited Direct 100% 100% 100% vehicle
Lloyd's of London corporate
Nameco (No. 917) Limited Direct 100% 100% 100% vehicle
Lloyd's of London corporate
Nameco (No. 229) Limited Direct 100% 100% 100% vehicle
Lloyd's of London corporate
Nameco (No. 518) Limited Direct 100% 100% 100% vehicle
Lloyd's of London corporate
Nameco (No. 804) Limited Direct 100% 100% 100% vehicle
Halperin Underwriting Lloyd's of London corporate
Limited Direct 100% 100% 100% vehicle
Lloyd's of London corporate
Bernul Limited Direct 100% 100% 100% vehicle
Lloyd's of London corporate
Dumasco Limited Direct 100% 100% 100% vehicle
Lloyd's of London corporate
Nameco (No. 311) Limited Direct 100% 100% 100% vehicle
Lloyd's of London corporate
Nameco (No. 402) Limited Direct 100% 100% 100% vehicle
Updown Underwriting Lloyd's of London corporate
Limited Direct 100% 100% 100% vehicle
Lloyd's of London corporate
Nameco (No. 507) Limited Direct 100% 100% 100% vehicle
Lloyd's of London corporate
Nameco (No. 76) Limited Direct 100% 100% 100% vehicle
Kempton Underwriting Lloyd's of London corporate
Limited Direct 100% 100% 100% vehicle
Lloyd's of London corporate
Devon Underwriting Limited Direct 100% 100% 100% vehicle
Lloyd's of London corporate
Nameco (No 346) Limited Direct 100% 100% 100% vehicle
Lloyd's of London corporate
Pooks Limited Direct 100% - - vehicle
Charmac Underwriting Lloyd's of London corporate
Limited Direct 100% - - vehicle
Lloyd's of London corporate
Nottus (No 51) Limited Direct 100% - - vehicle
Lloyd's of London corporate
Nomina No 035 LLP Indirect 100% 100% 100% vehicle
Lloyd's of London corporate
Nomina No 342 LLP Indirect 100% 100% 100% vehicle
Lloyd's of London corporate
Nomina No 380 LLP Indirect 100% 100% 100% vehicle
Lloyd's of London corporate
Nomina No 372 LLP Indirect 100% 100% 100% vehicle
Lloyd's of London corporate
Salviscount LLP Indirect 100% - 100% vehicle
Helios UTG Partner Limited Direct 100% 100% 100% Corporate partner
--------------------------- ---------------- ---------- ------------ ----------- ---------------------------
Helios UTG Partner Limited, a subsidiary of the Company, owns 100% of Nomina No 035 LLP, Nomina No 342 LLP, Nomina No 380 LLP, Nomina No 372 LLP and Salviscount LLP.
For details of all new acquisitions made during the period refer to Note 12.
11. Share capital and share premium
Number Ordinary
of shares share Share
capital premium Total
Allotted, called up and fully paid GBP'000 GBP'000 GBP'000
---------------------------------------------- ----------- -------- -------- --------
Ordinary shares of 10p each and share premium
at 30 June 2016 10,495,350 1,050 9,901 8,452
---------------------------------------------- ----------- -------- -------- --------
Ordinary shares of 10p each and share premium
at 31 December 2016 14,604,240 1,460 15,399 16,859
---------------------------------------------- ----------- -------- -------- --------
Ordinary shares of 10p each and share premium
at 30 June 2017 14,604,240 1,460 15,387 16,847
---------------------------------------------- ----------- -------- -------- --------
12. Acquisition of Limited Liability Vehicles
Pooks Limited
On 25 January 2017, Helios Underwriting plc acquired 100% of the issued share capital of Pooks Limited for a total consideration of GBP308,000. Pooks Limited is incorporated in England and Wales and is a corporate member of Lloyd's.
The acquisition has been accounted for using the acquisition method of accounting. After the alignment of accounting policies and other adjustments to the valuation of assets and liabilities to reflect their fair value at acquisition, the fair value of the net assets was GBP279,000. Goodwill of GBP29,000 arose on acquisition which has been recognised as an intangible asset and will be assessed at each period end for impairment. The following table explains the fair value adjustments made to the carrying values of the major categories of assets and liabilities at the date of acquisition:
Carrying
value Adjustments Fair value
GBP'000 GBP'000 GBP'000
------------------------------------------------------- -------- ------------- ----------
Intangible assets - 516 516
Reinsurance assets:
Financial assets at fair value through profit or
loss 747 - 747
- reinsurers' share of claims outstanding 206 - 206
- reinsurers' share of unearned premium 38 - 38
Other receivables, including insurance and reinsurance
receivables 914 - 914
Deferred acquisition costs 64 - 64
Prepayments and accrued income 5 - 5
Financial assets at fair value through profit or
loss
Cash and cash equivalents 104 - 104
Insurance liabilities:
- claims outstanding (1,019) - (1,019)
- unearned premium (327) - (327)
Deferred income tax liabilities - (98) (98)
Other payables, including insurance and reinsurance
payables (839) - (839)
Accruals and deferred income (32) - (32)
------------------------------------------------------- -------- ------------- ----------
Net assets acquired (139) 418 279
------------------------------------------------------- -------- ------------- ----------
Satisfied by:
Cash and cash equivalents 871 - 871
Loan paid on acquisition (563) - (563)
Acquisition costs paid - - -
------------------------------------------------------- -------- ------------- ----------
Total consideration 308 - 308
------------------------------------------------------- -------- ------------- ----------
Goodwill 447 418 29
------------------------------------------------------- -------- ------------- ----------
2014 year 2015 year 2016 year
of account of account of account
------------------ ----------- ----------- -----------
Capacity acquired 749,927 756,697 784,666
------------------ ----------- ----------- -----------
The net earned premium and profit of Pooks Limited for the period since the acquisition date to 30 June 2017 are GBP353,000 and GBP119,000 respectively.
Goodwill has arisen on the acquisition of Pooks Limited as a result of the purchase consideration being in excess of the fair value of net assets acquired.
Charmac Underwriting Limited
On 4 April 2017, Helios Underwriting plc acquired 100% of the issued share capital of Charmac Underwriting Limited for a total consideration of GBP2,240,000. Charmac Underwriting Limited is incorporated in England and Wales and is a corporate member of Lloyd's.
The acquisition has been accounted for using the acquisition method of accounting. After the alignment of accounting policies and other adjustments to the valuation of assets and liabilities to reflect their fair value at acquisition, the fair value of the net assets was GBP2,137,000. Goodwill of GBP103,000 arose on acquisition, which has been recognised as an intangible asset and will be assessed at each period end for impairment. The following table explains the fair value adjustments made to the carrying values of the major categories of assets and liabilities at the date of acquisition:
Carrying
value Adjustments Fair value
GBP'000 GBP'000 GBP'000
------------------------------------------------------- -------- ----------- ----------
Intangible assets 38 642 680
Financial assets at fair value through profit or
loss 1,692 - 1,692
Reinsurance assets:
- reinsurers' share of claims outstanding 439 - 439
- reinsurers' share of unearned premium 119 - 119
Other receivables, including insurance and reinsurance
receivables 2,086 277 2,363
Deferred acquisition costs 250 - 250
Prepayments and accrued income 9 - 9
Financial assets at fair value through profit or
loss
Cash and cash equivalents 431 - 431
Insurance liabilities:
- claims outstanding (2,120) - (2,120)
- unearned premium (832) - (832)
Deferred income tax liabilities (73) (175) (248)
Other payables, including insurance and reinsurance
payables (574) - (574)
Accruals and deferred income (72) - (72)
------------------------------------------------------- -------- ----------- ----------
Net assets acquired 1,393 744 2,137
------------------------------------------------------- -------- ----------- ----------
Satisfied by:
Cash and cash equivalents 2,240 - 2,240
Total consideration 2,240 - 2,240
------------------------------------------------------- -------- ----------- ----------
Goodwill 847 744 103
------------------------------------------------------- -------- ----------- ----------
2015 year 2016 year 2017 year
of account of account of account
------------------ ----------- ----------- -----------
Capacity acquired 1,417,006 1,491,671 1,622,890
------------------ ----------- ----------- -----------
The net earned premium and profit of Charmac Underwriting Limited for the period since the acquisition date to 30 June 2017 are GBP296,000 and GBP30,000 respectively.
Goodwill has arisen on the acquisition of Charmac Underwriting Limited as a result of the purchase consideration being in excess of the fair value of net assets acquired.
Nottus (No 51) Limited
On 8 June 2017, Helios Underwriting plc acquired 100% of the issued share capital of Nottus (No 51) Limited for a total consideration of GBP96,000. Nottus (No 51) Limited is incorporated in England and Wales and is a corporate member of Lloyd's.
The acquisition has been accounted for using the acquisition method of accounting. After the alignment of accounting policies and other adjustments to the valuation of assets and liabilities to reflect their fair value at acquisition, the fair value of the net assets was GBP962,000. Goodwill of GBP3,000 arose on acquisition, which has been recognised as an intangible asset and will be assessed at each period end for impairment. The following table explains the fair value adjustments made to the carrying values of the major categories of assets and liabilities at the date of acquisition:
Carrying
value Adjustments Fair value
GBP'000 GBP'000 GBP'000
------------------------------------------------------- -------- ----------- ----------
Intangible assets - 370 370
Financial assets at fair value through profit or
loss 1,061 - 1,061
Reinsurance assets:
- reinsurers' share of claims outstanding 240 - 240
- reinsurers' share of unearned premium 49 - 49
Other receivables, including insurance and reinsurance
receivables 813 - 813
Deferred acquisition costs 78 - 78
Prepayments and accrued income 4 - 4
Financial assets at fair value through profit or
loss
Cash and cash equivalents 62 - 62
Insurance liabilities:
- claims outstanding (975) - (975)
- unearned premium (300) - (300)
Deferred income tax liabilities (61) (70) (131)
Other payables, including insurance and reinsurance
payables (276) - (276)
Accruals and deferred income (33) - (33)
------------------------------------------------------- -------- ----------- ----------
Net assets acquired 662 300 962
------------------------------------------------------- -------- ----------- ----------
Satisfied by:
Cash and cash equivalents 965 - 965
Total consideration 965 - 965
------------------------------------------------------- -------- ----------- ----------
Goodwill 303 300 3
------------------------------------------------------- -------- ----------- ----------
2015 year 2016 year 2017 year
of account of account of account
------------------ ----------- ----------- -----------
Capacity acquired 619,244 634,067 669,597
------------------ ----------- ----------- -----------
The net earned premium and profit of Nottus (No 51) Limited for the period since the acquisition date to 30 June 2017 are GBP28,000 and GBP10,000 respectively.
Goodwill has arisen on the acquisition of Nottus (No 51) Limited as a result of the purchase consideration being in excess of the fair value of net assets acquired.
Had the two Limited Liability Vehicles been consolidated from 1 January 2017, the Consolidated Statement of Comprehensive Income would show net earned premium of GBP12,862,000 and a profit after tax of GBP286,000.
13. Related party transactions
Helios Underwriting plc has inter-company loans with its subsidiaries which are repayable on three months' notice provided it does not jeopardise each company's ability to meet its liabilities as they fall due. All inter-company loans are therefore classed as falling due within one year. The amounts outstanding as at 30 June 2017 are set out below:
30 June 30 June 31 December
2017 Unaudited 2016 Unaudited 2016
Company GBP'000 GBP'000 GBP'000
----------------------------------------------------- --------------- --------------- -----------
Balances due from/(to) Group companies at the period
end:
Hampden Corporate Member Limited (363) 34 (82)
Nameco (No. 365) Limited (54) 7 (34)
Nameco (No. 605) Limited (282) 34 (164)
Nameco (No. 321) Limited (73) 10 (43)
Nameco (No. 917) Limited 3,989 121 3,397
Nameco (No. 229) Limited (4) 9 28
Nameco (No. 518) Limited (81) 13 (35)
Nameco (No. 804) Limited (69) 23 104
Halperin Underwriting Limited (43) - (16)
Bernul Limited 2 - 27
Dumasco Limited (194) - (37)
Nameco (No. 311) Limited (115) 12 (29)
Nameco (No. 402) Limited (275) 12 (181)
Updown Underwriting Limited 525 - 644
Nameco (No. 507) Limited (252) 21 (80)
Nameco (No. 76) Limited (90) 12 8
Kempton Underwriting Limited 18 - 128
Devon Underwriting Limited 105 9 110
Nameco (No 346) Limited (703) 51 (382)
Pooks Limited - - -
Charmac Underwriting Limited 511 - -
Nottus (No 51) Limited (316) - -
Nomina No 035 LLP - 10 -
Nomina No 342 LLP - 9 -
Nomina No 380 LLP - 15 -
Nomina No 372 LLP - 10 -
Salviscount LLP - -
Helios UTG Partner Limited 735 - 909
----------------------------------------------------- --------------- --------------- -----------
Total (note 15) 2,971 412 4,272
----------------------------------------------------- --------------- --------------- -----------
Helios Underwriting plc and its subsidiaries have entered into a management agreement with Nomina plc. Jeremy Evans, a Director of Helios Underwriting plc and its subsidiary companies, is also a Director of Nomina plc. Under the agreement, Nomina plc provides management and administration, financial, tax and accounting services to the Group for an annual fee of GBP154,000 (2016: GBP142,000).
The Limited Liability Vehicles have entered into a members' agent agreement with Hampden Agencies Limited. Jeremy Evans, a Director of Helios Underwriting plc and its subsidiary companies, is also a director of Hampden Capital plc, which controls Hampden Agencies Limited. Under the agreement, the Limited Liability Vehicles will pay Hampden Agencies Limited a fee based on a fixed amount, which will vary depending upon the number of syndicates the Limited Liability Vehicles underwrite on a bespoke basis, and a variable amount depending on the level of underwriting through the members' agent pooling arrangements. In addition, the Limited Liability Vehicles will pay profit commission on a sliding scale from 1% of the net profit up to a maximum of 10%. The total fees payable for 2017 are set out below:
30 June 30 June 31 December
2017 Unaudited 2016 Unaudited 2016
Company GBP'000 GBP'000 GBP'000
--------------------------------- --------------- --------------- -----------
Hampden Corporate Member Limited - 34 34
Nameco (No. 365) Limited - 7 7
Nameco (No. 605) Limited - 34 34
Nameco (No. 321) Limited - 10 10
Nameco (No. 917) Limited 70 121 121
Nameco (No. 229) Limited - 9 9
Nameco (No. 518) Limited - 13 13
Nameco (No. 804) Limited - 23 23
Halperin Underwriting Limited - - 10
Bernul Limited - - -
Dumasco Limited - - -
Nameco (No. 311) Limited 13 12 12
Nameco (No. 402) Limited 14 12 12
Updown Underwriting Limited - - -
Nameco (No. 507) Limited 24 21 21
Nameco (No. 76) Limited 13 12 12
Kempton Underwriting Limited 3 - -
Devon Underwriting Limited 8 9 9
Nameco (No 346) Limited 49 51 51
Pooks Limited 1 -
Charmac Underwriting Limited 25 -
Nottus (No 51) Limited 14 -
Nomina No 035 LLP - 10 10
Nomina No 342 LLP - 9 9
Nomina No 380 LLP 19 15 15
Nomina No 372 LLP 15 10 11
Salviscount LLP 21 20
Helios UTG Partner Limited - - -
--------------------------------- --------------- --------------- -----------
Total 289 412 443
--------------------------------- --------------- --------------- -----------
The Group entered into quota share reinsurance contracts for the 2015, 2016 and 2017 years of account with Hampden Insurance PCC (Guernsey) Limited - Cell 6. The Limited Liability Vehicles' underwriting year of account quota share participations are set out below:
Company or partnership 2015 2016 2017 ------------------------------ ---- ---- ---- Hampden Corporate Member Limited 70% - - Nameco (No. 365) Limited 70% - - Nameco (No. 605) Limited 70% - - Nameco (No. 321) Limited 70% - - Nameco (No. 917) Limited 70% 70% 70% Nameco (No. 229) Limited 70% - - Nameco (No. 518) Limited 70% - - Nameco (No. 804) Limited 70% - - Halperin Underwriting Limited 70% - - Bernul Limited 70% - - Dumasco Limited - - - Nameco (No. 311) Limited 70% - - Nameco (No. 402) Limited 70% - - Updown Underwriting Limited 70% - - Nameco (No. 507) Limited - - - Nameco (No. 76) Limited - - - Kempton Underwriting Limited - - - Devon Underwriting Limited - 70% 70% Nameco (No. 346) Limited - 70% 70% Pooks Limited - - 70% Charmac Underwriting Limited - - 70% Nottus (No 51) Limited - - 70% Helios UTG Partner Limited - - - Nomina No 035 LLP 70% - - Nomina No 342 LLP 70% - - Nomina No 380 LLP 70% - - Nomina No 372 LLP 70% - - Salviscount LLP - - 100% ------------------------------ ---- ---- ----
Nigel Hanbury, a Director of Helios Underwriting plc and its subsidiary companies, is also a director and majority shareholder in Hampden Insurance Guernsey PCC Limited - Cell 6. Hampden Capital plc, a substantial shareholder in Helios Underwriting plc, is also a substantial shareholder in Hampden Insurance Guernsey PCC Limited - Cell 6. Under the agreement, the Group accrued a net reinsurance premium payable of GBP2,910,000 (2016: GBP1,768,000) during the period.
14. Ultimate controlling party
The Directors consider that the Group has no ultimate controlling party.
15. Syndicate participations
The syndicates and members' agent pooling arrangements ("MAPA") in which the Company's subsidiaries participate as corporate members of Lloyd's are as follows:
Allocated capacity per year
of account
--------- -------------------------------------- ----------------------------------------------
Syndicate
or MAPA 2017* 2016* 2015* 2014
number Managing or members' agent GBP GBP GBP GBP
--------- -------------------------------------- ---------- ---------- ---------- ----------
33 Hiscox Syndicates Limited 3,485,689 2,982,036 2,788,256 2,637,836
218 ERS Syndicate Management Limited 1,994,934 1,505,955 1,389,275 1,672,479
308 Tokio Marine Kiln Syndicates Limited 100,000 100,000 184,528 244,528
386 QBE Underwriting Limited 605,840 811,005 722,081 741,868
510 Tokio Marine Kiln Syndicates Limited 5,685,556 5,246,046 4,971,599 4,637,953
557 Tokio Marine Kiln Syndicates Limited 580,415 575,567 553,433 543,871
609 Atrium Underwriters Limited 3,349,435 3,292,552 3,069,205 2,908,062
623 Beazley Furlonge Limited 4,978,151 4,137,922 3,433,853 3,397,299
727 S A Meacock & Company Limited 998,560 991,078 963,679 916,256
958 Canopius Managing Agents Limited - - 268,646 753,749
1176 Chaucer Syndicates Limited 722,837 661,905 556,986 522,886
1200 Argo Managing Agency Limited 77,143 267,554 293,819 358,071
1729 Asta Managing Agency Limited - 42,000 103,758 139,443
1884 Charles Taylor Managing Agency Limited - - 25,000 -
1910 Asta Managing Agency Limited - 1,247,268 - -
1991 R&Q Managing Agency Limited - - 60,000 118,995
2010 Cathedral Underwriting Limited 931,506 911,045 831,970 863,695
2014 Pembroke Managing Agency Limited 1,012,113 1,617,349 1,585,287 1,569,358
2121 Argenta Syndicate Management Limited - - 260,341 160,341
2525 Asta Managing Agency Limited 173,558 171,414 134,698 116,690
2689 Asta Managing Agency Limited 835,100 - - -
2791 Managing Agency Partners Limited 4,107,191 4,056,484 3,851,738 4,113,012
2988 Brit Syndicates Limited 47,511 - - -
4444 Canopius Managing Agents Limited - 101,429 - -
5820 ANV Syndicates Limited - 139,479 316,535 416.145
6103 Managing Agency Partners Limited 299,357 261,937 233,876 580,708
6104 Hiscox Syndicates Limited 932,970 1,296,995 1,323,728 1,371,954
6105 Ark Syndicate Management Limited - - 668,070 647,738
6107 Beazley Furlonge Limited 635,222 453,737 453,737 453,737
6111 Catlin Underwriting Agencies Limited - 1,902,876 1,659,850 1,597,305
6113 Barbican Managing Agency Limited - - - 160,528
6117 Asta Managing Agency Limited 2,616,798 1,870,283 929,036 1,400,144
7200 Members' agent pooling arrangement 101,019 145,078 314,067 477,466
7201 Members' agent pooling arrangement 531,055 739,931 1,599,412 2,436,667
7202 Members' agent pooling arrangement 196,563 270,988 570,574 875,976
7203 Members' agent pooling arrangement 77,697 84,378 202,119 260,095
7211 Members' agent pooling arrangement 192,184 175,265 272,262 972,513
7215 Members' agent pooling arrangement 164,129 150,917 150,468 -
7217 Members' agent pooling arrangement 274,428 260,707 246,987 219,547
7227 Members' agent pooling arrangement 3,613 80,070 42,705 -
--------- -------------------------------------- ---------- ---------- ---------- ----------
Total 35,710,574 36,551,250 35,031,578 38,286,915
--------- -------------------------------------- ---------- ---------- ---------- ----------
* Including the new acquisitions in 2017.
16. Group-owned net assets
The Group statement of financial position includes the following assets and liabilities held by the syndicates on which the Group participates. These assets are subject to trust deeds for the benefit of the relevant syndicates' insurance creditors. The table below shows the split of the statement of financial position between Group and syndicate assets and liabilities:
30 June 2017 Restated 30 June 2016 31 December 2016
------------------------- ----------------------------- ----------------------------- -----------------------------
Group Syndicate Total Group Syndicate Total Group Syndicate Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------- --------- -------- -------- --------- -------- -------- --------- --------
Assets
Intangible assets 12,495 - 12,495 10,907 - 10,907 10,732 - 10,732
Financial assets at fair
value through profit or
loss 10,302 33,584 43,886 5,717 32,287 38,004 7,263 38,317 45,580
Reinsurance assets:
- reinsurers' share of
claims outstanding - 8,840 8,840 - 7,689 7,689 - 9,674 9,674
- reinsurers' share of
unearned premium - 3,976 3,976 - 3,527 3,527 - 2,548 2,548
Other receivables,
including
insurance and
reinsurance
receivables 2,315 26,652 28,967 1,178 27,401 28,579 3,480 26,763 30,243
Deferred acquisition
costs - 4,218 4,218 - 4,204 4,204 - 4,255 4,255
Prepayments and accrued
income 67 296 364 126 288 414 - 187 187
Cash and cash equivalents 2,414 4,439 6,853 2,212 3,456 5,668 4,049 2,163 6,212
------------------------- -------- --------- -------- -------- --------- -------- -------- --------- --------
Total assets 27,594 82,004 109,599 20,140 78,852 98,992 25,524 83,907 109,431
------------------------- -------- --------- -------- -------- --------- -------- -------- --------- --------
Liabilities
Insurance liabilities:
- claims outstanding - 45,772 45,772 - 43,060 43,060 - 50,087 50,087 - unearned premium - 19,193 19,193 - 18,054 18,054 - 16,821 16,821 Deferred income tax liabilities 2,943 - 2,943 3,002 - 3,002 3.581 - 3,581 Other payables, including insurance and reinsurance payables 1,915 13,358 15,273 965 12,983 13,948 3,028 11,680 14,708 Accruals and deferred income 3,988 429 4,417 3,757 387 4,144 1,590 125 1,715 ------------------------- -------- --------- -------- -------- --------- -------- -------- --------- -------- Total liabilities 8,846 78,752 87,598 7,725 74,484 82,209 8,199 78,713 86,912 ------------------------- -------- --------- -------- -------- --------- -------- -------- --------- -------- Equity attributable to owners of the Parent Share capital 1,460 - 1,460 1,050 - 1,050 1,460 - 1,460 Share premium 15,387 - 15,387 9,901 - 9,901 15,399 - 15,399 Other reserves - - - - - - - - - Retained earnings 1,901 3,253 5,154 1,465 4,368 5,833 466 5,194 5,660 ------------------------- -------- --------- -------- -------- --------- -------- -------- --------- -------- Total equity 18,748 3,253 22,001 12,416 4,368 16,784 17,325 5,194 22,519 ------------------------- -------- --------- -------- -------- --------- -------- -------- --------- -------- Total liabilities and equity 27,594 82,005 109,599 20,141 78,852 98,993 25,524 83,907 109,431 ------------------------- -------- --------- -------- -------- --------- -------- -------- --------- --------
17. Events after the financial reporting period
Effects of reclassification in the 30 June 2016 comparatives
The period ended 30 June 2016 comparative, at consolidation level, in these financial statements include the effects of the reclassification of the foreign exchange differences originally included in the other comprehensive income, net of tax, amounting to GBP216,000, and now reclassified into the income statement, within the other income line. As a result of the reclassification the earnings per share for the period ending 30 June 2016 comparative, at consolidation level has increased by 2.06p to 8.44p.
These foreign exchange differences arose as a result of the retranslation of the syndicates' results whose functional currency is not the Pound Sterling, into the Pound Sterling as the reporting currency to Lloyd's. Hence, such foreign exchange differences were accounted for as other comprehensive income within the syndicates' reported results.
As the functional and presentation currency of the Helios Group is the Pound Sterling, such foreign exchange differences were accounted for as other income in the income statement in the consolidated Financial Statements of the year ended 31 December 2016 and the period ended 30 June 2017
18. Events after the financial reporting period
A final dividend of 5.5p per share was agreed at the AGM on 28 June 2017 and has been accrued at the period end. The dividend payment was settled on 7(th) July 2017.
Invansander Limited
On 25 September 2017, Helios Underwriting plc acquired 100% of the issued share capital of Invansander Limited for a total consideration of GBP235,000.Invansander Limited is incorporated in England and Wales and is a corporate member of Lloyd's.
After the alignment of accounting policies and other adjustments to the valuation of assets and liabilities to reflect their fair value at acquisition, the provisional fair value of the net assets at the date of acquistion was GBP240,000 giving rise to Negative Goodwill of GBP5,000 on acquisition. The following table explains the fair value adjustments made to the carrying values of the major categories of assets and liabilities at the date of acquisition:
Carrying
value Adjustments Fair value
GBP'000 GBP'000 GBP'000
------------------------------------------------------- -------- ----------- ----------
Intangible assets 87 202 289
Financial assets at fair value through profit or
loss 308 - 308
Reinsurance assets:
- reinsurers' share of claims outstanding 18 - 18
- reinsurers' share of unearned premium 43 - 43
Other receivables, including insurance and reinsurance
receivables 283 - 283
Deferred acquisition costs 73 - 73
Prepayments and accrued income 3 - 3
Financial assets at fair value through profit or
loss
Cash and cash equivalents 44 - 44
Insurance liabilities:
- claims outstanding (395) - (395)
- unearned premium (288) - (288)
Deferred income tax liabilities - (38) (38)
Other payables, including insurance and reinsurance
payables (92) - (92)
Accruals and deferred income (8) - (8)
------------------------------------------------------- -------- ----------- ----------
Net assets acquired 76 164 240
------------------------------------------------------- -------- ----------- ----------
Satisfied by:
Cash and cash equivalents 235 - 235
Total consideration 235 - 235
------------------------------------------------------- -------- ----------- ----------
Goodwill 159 164 (5)
------------------------------------------------------- -------- ----------- ----------
2015 year 2016 year 2017 year
of account of account of account
------------------ ----------- ----------- -----------
Capacity acquired 646,587 634,095 616,211
------------------ ----------- ----------- -----------
Reinsurance commuted
In August 2017 the Company increased the retained capacity on the 2016 underwriting year by GBP3.3m as certain quota contracts with capital providers for 2016 underwriting year of account have been commuted for a total fee of GBP113,000.
The Interim Report will be made available in electronic format on the Company's website, www.huwplc.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR QVLFLDKFEBBF
(END) Dow Jones Newswires
September 29, 2017 02:01 ET (06:01 GMT)
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