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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 | 33,691 | 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 : 2423C
Helios Underwriting Plc
28 September 2018
Helios Underwriting plc
("Helios" or the "Company")
Interim results for the six months ended 30 June 2018
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 2018.
The highlights are as follows:
-- The operating profits before goodwill and impairment are GBP153,000 (30 June 2017 - GBP365,000)
-- The contributions from the open underwriting years have reduced as the forecast improvements for the profitability for the older underwriting years - 2016 and 2017 - are lower.
-- Two acquisitions have been completed in the post balance sheet period of these Financial Statements, with capacity of GBP1.4m. There is now a good flow of Limited Liability Vehicles (LLV's) for sale and we believe that we will be able to acquire a number of those currently available at prices that will be accretive to shareholder value. There have been 35 LLV's offered for sale so far in 2018 of which 15 remain unsold.
-- The value of Lloyds' syndicate capacity is 30% lower in 2018 than the previous year and this provides an opportunity to continue to build the capacity fund to create value for shareholders.
-- The first six months of 2018 experienced lower loss activity than 2017 which incurred significant losses from natural catastrophes.
-- Small premium rate increases were achieved by underwriters in the first six months of 2018 which together with greater discipline encouraged by the Franchise Board at Lloyds in underwriting profitable portfolios should allow a return to profitable underwriting.
-- Other income is in line with expectations and we continue to benefit from the fees and profit commissions payable by the quota share reinsurers. The investments held in Funds at Lloyds incurred a small negative return during the period.
-- Earnings per share is 1.25p per share (30 June 2017 - 2.03p)
-- The Adjusted Net Asset Value per share is GBP1.61 per share (31(st) December 2017 - GBP1.60p per share)
Hot Features
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SUMMARY FINANCIAL INFORMATION
6 months to 30th June 31(st) December
2018 2017 2017
GBP000's GBP000's GBP000's
Underwriting profits 741 1,070 183
Other income 18 391 1,278
Costs (606) (1,096) (1,867)
----------- ----------- ----------------
Operating profit/(loss) for the period
before impairment and goodwill 153 365 (406)
----------- ----------- ----------------
Profit/(loss) after tax 182 297 (694)
Earnings (Loss) per share 1.25p 2.03p (4.75p)
Adjusted Net Asset Value per Share GBP1.61 GBP1.93 GBP1.6
-----------
The contribution from the older underwriting years (2016 and 2017) is lower than the same period last year. Although the loss activity has been muted in the first six months of 2018, the full effect of the actual loss activity will be reflected in the full year results.
Helios remains one of very few 'consolidators' of LLV's in the Lloyds market and the only one with a listing on an investment exchange. To date we have bought 30 such vehicles over a number of years. However, we are now seeing a significantly increased flow of attractive targets. The lack of buyers and increased supply is leading to prices that are more competitive.
Smaller investors are finding their costs increasing combined with an expectation of lower returns which can partially explain the increased flow. There are no accurate statistics as to the age of the 'decision makers 'within the community of LLV owners but the directors feel that many are aged and executor sales are a common feature. The complexity inherent in the business of running an LLV, more onerous regulatory requirements, rising costs and falling profits is a powerful incentive to put a vehicle up for sale and we strongly feel that the flow will increase in the coming months and years until a new equilibrium is reached based around fewer, larger investors. A window of opportunity has been opened which is exciting for Helios. We intend to take advantage of this opportunity before it closes and the Board is considering options to source the funds to acquire further LLV's.
Capacity acquired
Since the beginning of 2018 two corporate members have been acquired that has increased the capacity for the 2016 to 2018 years of account as follows:
Year of account - GBPm
----------------------------------
2016 2017 2018
---------------------------------- -------- ------- -------
Capacity at 1 January 2018 37.8 37.0 41.0
Acquired during 2018 1.3 1.3 1.4
---------------------------------- -------- ------- -------
Capacity at 28(th) September 2018 39.1 38.3 42.4
Helios Retained Capacity 19.5 13.0 12.7
---------------------------------- -------- ------- -------
Proportion of Capacity retained 50% 34% 30%
---------------------------------- -------- ------- -------
Our strategy of building the portfolio of syndicate capacity continues to rely on the flow of LLV's for sale at reasonable prices. The flow of companies put up for sale was late in starting as the full effect of the 2017 losses and lower capacity values had to be factored into the valuations. Since July, there has been a steady flow of vehicles being offered for sale. We have been active in assessing the potential acquisitions and would hope to be able to complete further acquisitions in the near future. We continue to remain selective on the vehicles acquired and several have been sold recently at prices that were unattractive to us.
We continue to reduce our exposure by 70% on the open underwriting year 2018 through quota share reinsurance. The quota share reinsurers fund their share of the capital requirements and pay Helios a fee and a profit commission. Stop loss reinsurance is bought for the remaining 30% to limit the Group's exposure in the event of large underwriting losses. As the size of our capacity fund increases more reinsurance can be ceded which in turn should increase our flow of fees and profit commission. Our costs should not increase at the same pace.
The Adjusted Net Asset Value per share is GBP1.61 per share (Dec 2017 - GBP1.60 per share). It is expected that there will continue to be demand for the top syndicates that make up a significant proportion of the Helios Capacity Fund at the Lloyds Capacity Auctions that take place later this year.
The company has commenced a program of buying back its own shares and to date has acquired 136,778 shares at an average price of 125p a significant discount to Adjusted Net Asset Value. We expect to continue this share buyback program.
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 result
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 Limited
Robert Finlay 020 7601 6100
David Coaten
Financial results summary
Six months ended 30 June 2018
6 months to 6 months to 30 Year to 31 December
30 June 2018 June 2017 2017
Underwriting profits 741 1,070 183
Other Income
Fees from reinsurers 400 233 426
Corporate reinsurance recoveries (179) 629
Goodwill on bargain purchase - 65
Investment income (203) 158 158
Total Other Income 18 391 1278
Costs
Pre - acquisition - (126) 38
Stop loss costs (30) (113) (259)
Operating costs (576) (857) (1646)
Total Costs (606) (1,096) (1867)
Profit for the year 153 365 (406)
Impairment charge 82 8 (899)
Tax (53) (76) 611
Retained Profit 182 297 (694)
============== =============== ====================
Period to 30(th) June 2018
Helios retained Total profi/(loss)t
capacity at currently % earned Helios
30 June 2018 Portfolio mid estimated in the 2018 half year Profits
Underwriting Year GBPm point forecasts GBP'000 calendar GBP'000
2016 17.8 5.40% 952 38% 366
2017 12 (7.4)% (888) (57)% 510
2018 12.3 N/A (135)
------------------ --------------- ---------------- ------------------- ---------------------- --------
741
------------------ --------------- ---------------- ------------------- ---------------------- --------
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
------------------ --------------- ---------------- ------------ ---------------------- --------
Year to 31 December 2017
Helios retained
capacity at Total profit
31 December currently % earned Helios
2017 Portfolio mid estimated in the 2017 half year Profits
Underwriting Year GBPm point forecasts GBP'000 calendar GBP'000
------------------ --------------- ---------------- ------------ ---------------------- --------
2015 19.7 12.9% 2,547 51% 1,294
2016 18.3 3.5% 641 116% 741
2017 12.0 N/A (1,852)
------------------ --------------- ---------------- ------------ ---------------------- --------
183
------------------ --------------- ---------------- ------------ ---------------------- --------
Summary Balance Sheet
The summary Group balance sheet excludes items relating to syndicate participations. See Note 15 for further information.
6 Months to June 2018 6 Months to June 2017 Year to 31 December 2017
GBP'000 GBP'000 GBP'000
------------------ --------------------- ----------------------- ------------------------
Intangible assets 12,257 12,495 12,175
Funds at Lloyd's 7,785 6,884 10,489
Other cash 4,480 5,832 1,078
Other assets 4,479 2,383 6,669
------------------ --------------------- ----------------------- ------------------------
Total assets 29,001 27,594 30,411
------------------ --------------------- ----------------------- ------------------------
Deferred tax 2,094 2,943 2,963
Borrowings - - 1,094
------------------ --------------------- ----------------------- ------------------------
Other liabilities 2,504 5,903 4,390
------------------ --------------------- ----------------------- ------------------------
Total liabilities 4,598 8,846 8,447
------------------ --------------------- ----------------------- ------------------------
Syndicate equity (3,430) 3,253 (954)
------------------ --------------------- ----------------------- ------------------------
Total equity 20,973 22,001 21,010
------------------ --------------------- ----------------------- ------------------------
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 2018 June 2017 2017
GBP'000 GBP'000 GBP'000
Opening Balance (free cash) 1,078 7,229 7,229
Income
Acquired on acquisition - 237 420
Distribution of profits (net
of tax retentions) 3,177 4,490 4,064
Transfers from Funds at Lloyds' 3,887 66 2,211
Investment income 8 25 300
Other income - - -
Sale of investments - - -
Borrowings (1,094) - 1,094
Expenditure
Operating costs (inc Hampden
/ Nomina fees) (447) (646) (1,294)
Reinsurance Cost (122) (115) (262)
Payments to QS reinsurers (1,279) - (550)
Acquisition of LLV's - (4,080) (4,858)
Transfers to Funds at Lloyds' (728) (560) (5,818)
Tax - (2) (655)
Dividends paid - (812) (803)
Closing balance 4,480 5,832 1,078
-------------- --------------- ------------------------------
Adjusted NAV
6 months to 6 months to 30 Year to 31 December
30 June 2018 June 2017 2017
GBP'000 GBP'000 GBP'000
Net tangible assets 8,716 9,506 8,835
Group letters of credit 1,711 2,160 1,532
Value of capacity (WAV) 13,046 16,484 13,046
-------------- --------------- --------------------
23,473 28,150 23,413
-------------- --------------- --------------------
Share in issue - basic &
diluted 14,604 14,604 14,604
Adjusted net asset value
per share GBP 1.61 1.93 1.60
Interim condensed consolidated statement of comprehensive income
Six months ended 30 June 2018
6 months 12 months
ended 6 months ended
30 June ended 31 December
2018 30 June 2017
Unaudited 2017 Unaudited Audited
Note GBP'000 GBP'000 GBP'000
------------------------------------------------------- ----- ---------- --------------- ------------
Gross premium written 4 20,647 17,061 34,701
Reinsurance premium ceded (6,043) (5,119) (6,717)
------------------------------------------------------- ----- ---------- --------------- ------------
Net premium written 4 14,604 11,942 27,984
------------------------------------------------------- ----- ---------- --------------- ------------
Change in unearned gross premium provision 5 (3,793) (432) 1,761
Change in unearned reinsurance premium provision 5 1,946 771 (319)
------------------------------------------------------- ----- ---------- --------------- ------------
5 (1,847) 339 1,442
------------------------------------------------------- ----- ---------- --------------- ------------
Net earned premium 3,4 12,757 12,281 29,426
Net investment income 6 (87) 581 1,010
Other underwriting income - - 267
Other income 344 255 (35)
------------------------------------------------------- ----- ---------- --------------- ------------
Revenue 13,014 13,117 30,668
------------------------------------------------------- ----- ---------- --------------- ------------
Gross claims paid (10,543) (8,108) (19,204)
Reinsurers' share of gross claims paid 2,083 1,038 4,905
------------------------------------------------------- ----- ---------- --------------- ------------
Claims paid, net of reinsurance (8,460) (7,070) (14,299)
------------------------------------------------------- ----- ---------- --------------- ------------
Change in provision for gross claims 5 4,255 (1,810) (8,761)
Reinsurers' share of change in provision for gross
claims 5 (4,320) 678 5,028
------------------------------------------------------- ----- ---------- --------------- ------------
Net change in provision for claims 5 (65) (1,132) (3,733)
------------------------------------------------------- ----- ---------- --------------- ------------
Net insurance claims and loss adjustment expenses 4 (8,525) (8,202) (18,032)
------------------------------------------------------- ----- ---------- --------------- ------------
Expenses incurred in insurance activities (3,992) (3,967) (11,819)
Other operating expenses (344) (583) (1,288)
------------------------------------------------------- ----- ---------- --------------- ------------
Operating expenses (4,336) (4,550) (13,107)
------------------------------------------------------- ----- ---------- --------------- ------------
Operating profit before goodwill and impairment 4 153 365 (471)
Goodwill on bargain purchase - - 65
Impairment of goodwill - - -
Impairment of syndicate capacity 82 8 (899)
------------------------------------------------------- ----- ---------- --------------- ------------
Profit before tax 235 373 (1,305)
Income tax charge 7 (53) (76) 611
------------------------------------------------------- ----- ---------- --------------- ------------
Profit for the period 182 297 (694)
------------------------------------------------------- ----- ---------- --------------- ------------
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 182 297 (694)
------------------------------------------------------- ----- ---------- --------------- ------------
Profit for the period attributable to owners of
the Parent 182 297 (694)
------------------------------------------------------- ----- ---------- --------------- ------------
Total comprehensive income for the period attributable
to owners of the Parent 182 297 (694)
------------------------------------------------------- ----- ---------- --------------- ------------
Earnings per share attributable to owners of the
Parent
Basic 8 1.25p 2.03p (4.75)p
Diluted 8 1.20p 2.03p (4.74)p
------------------------------------------------------- ----- ---------- --------------- ------------
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 2018
6 months
ended 6 months 12 months
30 June ended 30 ended
2018 June 2017 31 December
Unaudited Unaudited 2017 Audited
Note GBP'000 GBP'000 GBP'000
------------------------------------------------------- ----- ---------- ---------- -------------
Assets
Intangible assets 12,257 12,495 12,175
Financial assets at fair value through profit or
loss 41,711 43,886 48,074
Reinsurance assets:
- reinsurers' share of claims outstanding 5 14,164 8,840 14,836
- reinsurers' share of unearned premium 5 4,791 3,976 2,354
Other receivables, including insurance and reinsurance
receivables 36,179 28,967 32,949
Deferred acquisition costs 4,382 4,218 4,420
Prepayments and accrued income 642 364 268
Cash and cash equivalents 8,039 6,853 2,844
------------------------------------------------------- ----- ---------- ---------- -------------
Total assets 122,165 109,599 117,920
------------------------------------------------------- ----- ---------- ---------- -------------
Liabilities
Insurance liabilities:
- claims outstanding 5 55,685 45,772 59,833
- unearned premium 5 20,773 19,193 15,916
Deferred income tax liabilities 2,094 2,943 2,963
Borrowings - - 1,094
Other payables, including insurance and reinsurance
payables 21,509 15,273 15,558
Accruals and deferred income 1,131 4,417 1,546
------------------------------------------------------- ----- ---------- ---------- -------------
Total liabilities 101,192 87,598 96,910
------------------------------------------------------- ----- ---------- ---------- -------------
Equity
Equity attributable to owners of the Parent:
Share capital 11 1,510 1,460 1,510
Share premium 11 15,387 15,387 15,387
Other reserves - treasury shares 11 (50) - (50)
Retained earnings 4,126 5,154 4,163
------------------------------------------------------- ----- ---------- ---------- -------------
Total equity 20,973 22,001 21,010
------------------------------------------------------- ----- ---------- ---------- -------------
Total liabilities and equity 122,165 109,599 117,920
------------------------------------------------------- ----- ---------- ---------- -------------
The Financial Statements were approved and authorised for issue by the Board of Directors on 27 September 2018, and were signed on its behalf by:
Nigel Hanbury
Chief Executive
The notes are an integral part of these Financial Statements.
Interim condensed consolidated statement of changes in equity
Six months ended 30 June 2018
Attributable to owners
of the Parent
----------------------------------------------------
Note Share Share Other Retained
capital premium reserves earnings Total
Consolidated GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- ----- -------- --------- ---------- --------- --------
At 1 January 2018 1,510 15,387 (50) 4,163 21,010
Total comprehensive income for the year:
Profit for the year - - - 182 182
Other comprehensive income, net of tax - - - - -
----------------------------------------- ----- -------- --------- ---------- --------- --------
Total comprehensive income for the year - - - 182 182
----------------------------------------- ----- -------- --------- ---------- --------- --------
Transactions with owners:
Dividends paid 9 - - - (219) (219)
Other - - - - -
----------------------------------------- ----- -------- --------- ---------- --------- --------
Total transactions with owners - - - (219) (219)
At 30 June 2018 1,510 15,387 (50) 4,126 20,973
----------------------------------------- ----- -------- --------- ---------- --------- --------
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 - - - (803) (803)
Share issue - (12) - - (12)
----------------------------------------- ----- -------- --------- ---------- --------- --------
Total transactions with owners - (12) - (803) (815)
----------------------------------------- ----- -------- --------- ---------- --------- --------
At 30 June 2017 1,460 15,387 - 5,154 22,001
----------------------------------------- ----- -------- --------- ---------- --------- --------
At 1 January 2017 1,460 15,399 - 5,660 22,519
Total comprehensive income for the year:
Profit for the year - - - (694) (694)
Other comprehensive income, net of tax - - - - -
----------------------------------------- ----- -------- --------- ---------- --------- --------
Total comprehensive income for the year - - - (694) (694)
----------------------------------------- ----- -------- --------- ---------- --------- --------
Transactions with owners:
Dividends paid - - - (803) (803)
Treasury shares (JSOP) 11 - - (50) - (50)
Share issue 11 50 (12) - 38
----------------------------------------- ----- -------- --------- ---------- --------- --------
Total transactions with owners 50 (12) (50) (803) (815)
----------------------------------------- ----- -------- --------- ---------- --------- --------
At 31 December 2017 1,510 15,387 (50) 4,163 21,010
----------------------------------------- ----- -------- --------- ---------- --------- --------
The notes are an integral part of these Financial Statements.
Interim condensed consolidated statement of cash flows
Six months ended 30 June 2018
Note 6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2018 2017 Unaudited 2017
Unaudited GBP'000 Audited
GBP'000 GBP'000
-------------------------------------------------------------- ----- ---------- --------------- ------------
Cash flows from operating activities
Profit before tax 235 373 (1,305)
Adjustments for:
- Other comprehensive income, gross of tax - - -
- Interest received (6) (2) (126)
- Investment income 6 (100) (526) (731)
- Goodwill on bargain purchase - - 65
- Impairment of goodwill - - -
- (Profit)/loss on sale of intangible assets - - (4)
- Impairment of intangible assets (82) (8) 899
- Goodwill on acquisition - (134) -
Changes in working capital:
* change in fair value of financial assets held at fair
value through profit or loss (46) (105) 426
* (increase)/decrease in financial assets at fair value
through profit or loss 7,248 5,835 2,314
- (increase)/decrease in other receivables (3,566) 5,636 2,920
- (increase)/decrease in other payables 3,775 (463) (1,790)
- net (increase)/decrease in technical provisions (1,056) (7,017) (2,801)
-------------------------------------------------------------- ----- ---------- --------------- ------------
Cash generated/(utilised) from operations 6,402 3,589 (262)
-------------------------------------------------------------- ----- ---------- --------------- ------------
Income tax paid - 2 (630)
-------------------------------------------------------------- ----- ---------- --------------- ------------
Net cash inflow from operating activities 6,402 3,591 (893)
-------------------------------------------------------------- ----- ---------- --------------- ------------
Cash flows from investing activities
Interest received 6 2 126
Investment income 100 526 731
Purchase of intangible assets - - (180)
Proceeds from disposal of intangible assets - - 28
Acquisition of subsidiaries, net of cash acquired - (3,478) (3,471)
-------------------------------------------------------------- ----- ---------- --------------- ------------
Net cash inflow from investing activities 106 (2,950) (2,766)
-------------------------------------------------------------- ----- ---------- --------------- ------------
Cash flows from financing activities
-------------------------------------------------------------- ----- ---------- --------------- ------------
Net proceeds from issue of ordinary share capital - - -
Borrowings (1,094) - 1,094 Dividends paid to owners of the Parent (219) - (803) -------------------------------------------------------------- ----- ---------- --------------- ------------ Net cash outflow from financing activities (1,313) - 291 -------------------------------------------------------------- ----- ---------- --------------- ------------ Net increase in cash and cash equivalents 5,195 641 (3,368) Cash and cash equivalents at beginning of period 2,844 6,212 6,212 -------------------------------------------------------------- ----- ---------- --------------- ------------ Cash and cash equivalents at end of period 8,039 6,853 2,844 -------------------------------------------------------------- ----- ---------- --------------- ------------
Cash held within the syndicates' accounts is GBP3,900,000 (2017: GBP4,439,000 ) of the total cash and cash equivalents held at the end of the period GBP8,039,000 (2017: GBP6,853,000). 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.
The notes are an integral part of these Financial Statements.
Notes to the financial statements
Six months ended 30 June 2018
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 2018.
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, Chapman Underwriting Limited, RBC CEES Trustees Limtied, Helios UTG Partner Limited, Nomina No 035 LLP, Nomina No 342 LLP, Nomina No 380 LLP, Nomina No 372 LLP ,Salviscount LLP and Inversanda LLP (Note 10).
The Condensed Consolidated Interim Financial Statements for the six months ended 30 June 2018 and 2017 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 2017.
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 2017. The new standards and amendments to standards and interpretations effective after 1 January 2018, as disclosed in the Annual Report for the year ended 31 December 2017, have not had a significant impact on the Condensed Consolidated Interim Financial Statements at 30 June 2018.
New standards effective from 1 January 2018:-
-- IFRS 9 "Financial Instruments", issued on 24 July 2014 (effective 1 January 2018).
-- IFRS 15 "Revenue from Contracts with Customers", issued on 27 May 2014, including amendments to IFRS 15, issued on 11 September 2015 (effective 1 January 2018).]
-- IFRS 16 "Leases", issued on 13 January 2016 (effective 1 January 2019).
-- Clarifications to IFRS 15 "Revenue from Contracts with Customers", issued on 12 April 2014 (effective 1 January 2018).
-- Amendments to IFRS 12: Classification and Measurement of Share-based Payment Transactions, issued on 20 June 2016 (effective 1 January 2018).
-- Amendments to IFRS 4: Applying IFRS 9 "Financial Instruments" with IFRS 4 "Insurance Contracts", issued on 12 September 2016 (effective 1 January 2018).
-- IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration, issued on 8 December 2016 (effective 1 January 2018).
-- Amendments to IAS 40: Transfers of Investment Property, issued on 8 December 2016 (effective 1 January 2018).
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 2018 Unaudited GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- -------------- ----------- ----------- --------
Net earned premium 14,012 - (1,255) 12,757
Net investment income (102) 15 - (87)
Other income - - 344 344
Net insurance claims and loss adjustment
expenses (8,525) - - (8,525)
Expenses incurred in insurance activities (2,851) - (1,141) (3,992)
Other operating expenses - - (344) (344)
Goodwill on bargain purchase - - - -
Impairment of goodwill - - - -
Impairment of syndicate capacity (see Note
13) - - 82 82
------------------------------------------- -------------- ----------- ----------- --------
Profit before tax 2,534 15 (2,314) 235
------------------------------------------- -------------- ----------- ----------- --------
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
12 months ended 31 December 2017 Audited GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- -------------- ----------- ----------- -------- Net earned premium 29,426 - - 29,426 Net investment income 909 101 - 1,010 Other income (169) - 401 232 Net insurance claims and loss adjustment expenses (19,621) - 1,589 (18,032) Expenses incurred in insurance activities (11,543) - (276) (11,819) Other operating expenses 30 - (1,318) (1,288) Goodwill on bargain purchase - - 65 65 Impairment of goodwill - - - - Impairment of syndicate capacity (see Note 13) - - (899) (899) ------------------------------------------- -------------- ----------- ----------- -------- Profit before tax (968) 101 (4,38) (1,305) ------------------------------------------- -------------- ----------- ----------- --------
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 2018 other corporate activities totalling GBP1,255,000 (2017:1,457,000 - 2015, 2016 and 2017 years of account) represents the 2016, 2017 and 2018 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 Statement of Comprehensive Income of the period.
4. Operating profit before goodwill and impairment
Underwriting year of account*
-------------------------------------------
2016 and Pre- Corporate Other
6 months ended 30 prior 2017 2018 Sub-total acquisition reinsurance corporate Total
June 2018 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------- --------- --------- ----------- ------------ ------------ ---------- --------
Gross premium written 337 2,940 17,370 20,647 - - - 20,647
Reinsurance ceded 103 (542) (4,319) (4,758) - (1,255) (30) (6,043)
----------------------- -------- --------- --------- ----------- ------------ ------------ ---------- --------
Net premium written 440 2,398 13,051 15,888 - (1,255) (30) 14,604
----------------------- -------- --------- --------- ----------- ------------ ------------ ---------- --------
Net earned premium 1,764 8,511 3,767 14,042 - (1,255) (30) 12,757
Other income 195 (139) 3 59 - 400 (202) 257
Net insurance claims
and loss adjustment
expenses (333) (4,581) (3,432) (8,346) - - (179) (8,525)
Operating expenses (608) (2,362) (790) (3,760) - - (576) (4,336)
----------------------- -------- --------- --------- ----------- ------------ ------------ ---------- --------
Operating profit
before goodwill and
impairment 1,017 1,430 (452) 1,995 - (855) (987) 153
----------------------- -------- --------- --------- ----------- ------------ ------------ ---------- --------
Quota share adjustment (651) (920) 317 (1,254) - 1,254 - -
----------------------- -------- --------- --------- ----------- ------------ ------------ ---------- --------
Operating profit
before goodwill and
impairment after
quota share adjustment 366 510 (135) 741 - 399 (987) 153
----------------------- -------- --------- --------- ----------- ------------ ------------ ---------- --------
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*
--------------------------------------------
2015 Pre- Corporate Other
12 months ended 31 and prior 2016 2017 Sub-total acquisition reinsurance corporate Total
December 2017 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ---------- --------- --------- ---------- ------------ ------------ ---------- --------
Gross premium written 15 4,688 32,021 36,724 (2,023) - - 34,701
Reinsurance ceded 128 (789) (6,244) (6,905) 447 - (259) (6,717)
---------------------- ---------- --------- --------- ---------- ------------ ------------ ---------- --------
Net premium written 143 3,899 25,777 29,819 (1,576) - (259) 27,984
---------------------- ---------- --------- --------- ---------- ------------ ------------ ---------- --------
Net earned premium 1,974 15,063 14,151 31,188 (1,503) - (259) 29,426
Other income 211 313 233 757 (98) 425 158 1,242
Net insurance claims
and loss adjustment
expenses 1,742 (8,524) (14,458) (21,240) 990 1,589 629 (18,032)
Operating expenses (1,588) (4,825) (5,697) (12,110) 649 - (1,646) (13,107)
---------------------- ---------- --------- --------- ---------- ------------ ------------ ---------- --------
Operating profit
before goodwill and
impairment 2,339 2,027 (5,771) (1,405) 38 2,014 (1,118) (471)
---------------------- ---------- --------- --------- ---------- ------------ ------------ ---------- --------
Quota share adjustment (1,004) (1,287) 3,920 1,589 - (1,589) - -
---------------------- ---------- --------- --------- ---------- ------------ ------------ ---------- --------
-Operating profit
before goodwill and
impairment after
quota share
adjustment 1,294 741 (1,852) 183 38 425 (1,118) (471)
---------------------- ---------- --------- --------- ---------- ------------ ------------ ---------- --------
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 2018 59,833 14,836 44,997
Increase in reserves arising from acquisition of
subsidiary undertakings - - -
Movement of reserves (4,255) (4,320) 65
Other movements 107 3,648 (3,541)
------------------------------------------------- -------- ----------- --------
At 30 June 2018 55,685 14,164 41,521
------------------------------------------------- -------- ----------- --------
Movement in unearned premium
Gross Reinsurance Net
GBP'000 GBP'000 GBP'000
------------------------------------------------- -------- ----------- --------
At 1 January 2018 15,916 2,354 13,562
Increase in reserves arising from acquisition of
subsidiary undertakings - - -
Movement of reserves 3,793 1,946 1,847
Other movements 1,064 491 573
------------------------------------------------- -------- ----------- --------
At 30 June 2018 20,773 4,791 15,982
------------------------------------------------- -------- ----------- --------
Included within other movements are the 2015 and prior years' claims reserves reinsured into the 2016 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 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 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 2017 50,087 9,674 40,413
Increase in reserves arising from acquisition of
subsidiary undertakings 6,390 1,467 4,923
Movement of reserves 8,761 5,028 3,733
Other movements (5,405) (1,333) (4,072)
------------------------------------------------- -------- ----------- --------
At 31 December 2017 59,833 14,836 44,997
------------------------------------------------- -------- ----------- --------
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 2,909 291 2,617
Movement of reserves (1,761) (319) (1,442)
Other movements (2,053) (166) (1,886)
------------------------------------------------- -------- ----------- --------
At 31 December 2017 15,916 2,354 13,562
------------------------------------------------- -------- ----------- --------
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.
6. Net investment income
6 months 6 months 12 months
ended ended ended 31
30 June 30 June December
2018 Unaudited 2017 Unaudited 2017 Audited
GBP'000 GBP'000 GBP'000
------------------------------------------------------ --------------- ---------------- -------------
Investment income 100 526 731
Realised (losses)/gains on financial assets at fair
value through profit or loss (38) 193 652
Unrealised (losses)/gains on financial assets at fair
value through profit or loss (155) (139) (426)
Investment management expenses - (1) (73)
Bank interest 6 2 126
------------------------------------------------------ --------------- ---------------- -------------
Net investment income (87) 581 1,010
------------------------------------------------------ --------------- ---------------- -------------
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
2018 Unaudited 2017 Unaudited 2017 Audited
GBP'000 GBP'000 GBP'000
------------------ --------------- ---------------- -------------
Income tax charge 53 179 (611)
------------------ --------------- ---------------- -------------
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 19.25% (2017: 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:
6 months 6 months 12 months
ended 30 ended 30 ended 31
June 2018 June 2017 December
Unaudited Unaudited 2017 Audited
--------------------------------------------------------- ---------- ----------- -------------
Profit for the period after tax attributable to ordinary
shareholders GBP182,000 GBP297,000 GBP(694,000)
--------------------------------------------------------- ---------- ----------- -------------
Weighted average number of shares in issue 14,604,240 14,604,240 14,604,240
--------------------------------------------------------- ---------- ----------- -------------
Basic earnings per share 1.25p 2.03p (4.75)p
--------------------------------------------------------- ---------- ----------- -------------
Diluted earnings per share 1.20p 2.03p (4.74)p
--------------------------------------------------------- ---------- ----------- -------------
9. Dividends paid or proposed
A final dividend of 1.5p per share was proposed and agreed at the AGM on 27 June 2018 (2017: 5.5p), amounting to a total of GBP219,000. The dividend payment was settled on 6 July 2018.
10. Investments in subsidiaries
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
------ -------- -------- -----------
Total 15,456 23,015 15,456
------ -------- -------- -----------
At 30 June 2018 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 31 December
interest 2018 2017 2017
Company or partnership ownership 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% 100% 100% vehicle
Charmac Underwriting Lloyd's of London corporate
Limited Direct 100% 100% 100% vehicle
Lloyd's of London corporate
Nottus (No 51) Limited Direct 100% 100% 100% vehicle
Chapman Underwriting Lloyd's of London corporate
Limited Direct 100% - 100% vehicle
Joint Share Ownership
RBC CEES Trustees Limited Direct 100% - 100% Plan
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% 100% vehicle
Lloyd's of London corporate
Inversanda 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, Salviscount LLP and Inversanda LLP.
There were no acquisitions during this period.
For details of all new acquisitions made during the post balance sheet period refer to note 17.
11. Share capital and share premium
Number Partly
of shares paid
Ordinary ordinary
share share Share
capital capital premium Total
Allotted, called up and fully paid GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------- ----------- -------- --------- -------- --------
Ordinary shares of 10p each and share premium
at 30 June 2017 14,604,240 1,460 - 15,387 16,847
---------------------------------------------- ----------- -------- --------- -------- --------
Ordinary shares of 10p each and share premium
at 31 December 2017 15,104,240 1,460 50 15,387 16,897
---------------------------------------------- ----------- -------- --------- -------- --------
Ordinary shares of 10p each and share premium
at 30 June 2018 15,104,240 1,460 50 15,387 16,897
---------------------------------------------- ----------- -------- --------- -------- --------
The party paid ordinary shares are not entitled to dividend distribution rights during the period.
12. 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 2018 are set out below:
30 June 30 June 31 December
2018 Unaudited 2017 Unaudited 2017
Company GBP'000 GBP'000 GBP'000
----------------------------------------------------- --------------- --------------- -----------
Balances due from/(to) Group companies at the period
end:
Hampden Corporate Member Limited (103) (363) 136
Nameco (No. 365) Limited (61) (54) (50)
Nameco (No. 605) Limited (153) (282) (64)
Nameco (No. 321) Limited (9) (73) (10)
Nameco (No. 917) Limited 6,483 3,989 7,647
Nameco (No. 229) Limited (10) (4) (7)
Nameco (No. 518) Limited (40) (81) (9)
Nameco (No. 804) Limited 11 (69) 188
Halperin Underwriting Limited (29) (43) (18)
Bernul Limited 13 2 10
Dumasco Limited (43) (194) (44)
Nameco (No. 311) Limited (37) (115) (34)
Nameco (No. 402) Limited (194) (275) (191)
Updown Underwriting Limited 53 525 80
Nameco (No. 507) Limited 32 (252) (4)
Nameco (No. 76) Limited (41) (90) 55
Kempton Underwriting Limited 62 18 154
Devon Underwriting Limited 220 105 47
Nameco (No 346) Limited (93) (703) (321)
Pooks Limited 464 - 346
Charmac Underwriting Limited (378) 511 (513)
Nottus (No 51) Limited 232 (316) 230
Chapman /underwriting Limited 590 - 358
Nomina No 035 LLP - - -
Nomina No 342 LLP - - -
Nomina No 380 LLP - - -
Nomina No 372 LLP - - -
Salviscount LLP - - -
Inversanda LLP - - -
Helios UTG Partner Limited 1,113 735 1,241
RBC CEES Trustee Limited 50 - 50
----------------------------------------------------- --------------- --------------- -----------
Total (note 15) 8,132 2,971 9,285
----------------------------------------------------- --------------- --------------- -----------
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 GBP160,000 (2017: GBP154,000 ).
13. Related party transactions
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 2018 are set out below:
30 June 30 June 31 December
2018 Unaudited 2017 Unaudited 2017
Company GBP'000 GBP'000 GBP'000
--------------------------------- --------------- --------------- -----------
Hampden Corporate Member Limited - - -
Nameco (No. 365) Limited - - -
Nameco (No. 605) Limited - - -
Nameco (No. 321) Limited - - -
Nameco (No. 917) Limited 58 70 70
Nameco (No. 229) Limited - - -
Nameco (No. 518) Limited - - -
Nameco (No. 804) Limited - - -
Halperin Underwriting Limited - - -
Bernul Limited - - -
Dumasco Limited - - -
Nameco (No. 311) Limited 10 13 13
Nameco (No. 402) Limited 11 14 14
Updown Underwriting Limited - - -
Nameco (No. 507) Limited 15 24 24
Nameco (No. 76) Limited 2 13 13
Kempton Underwriting Limited 2 3 3
Devon Underwriting Limited 7 8 8
Nameco (No 346) Limited 44 49 49
Pooks Limited 6 1 1
Charmac Underwriting Limited 22 25 25
Nottus (No 51) Limited 13 14 14
Chapman Underwriting Limited - - 15
Nomina No 035 LLP - - -
Nomina No 342 LLP - - -
Nomina No 380 LLP - 19 19
Nomina No 372 LLP - 15 15
Salviscount LLP 18 21 21
Inversanda LLP - - 9
--------------------------------- --------------- --------------- -----------
Total 208 289 313
--------------------------------- --------------- --------------- -----------
The Group entered into quota share reinsurance contracts for the 2016, 2017 and 2018 years of account with protected cell companies of Hampden Insurance PCC (Guernsey) Limited. The Limited Liability Vehicles' underwriting year of account quota share participations are set out below:
Company or partnership 2016 2017 2018 ------------------------------ ---- ---- ---- Hampden Corporate Member Limited - - - Nameco (No. 365) Limited - - - Nameco (No. 605) Limited - - - Nameco (No. 321) Limited - - - Nameco (No. 917) Limited 70% 70% 70% 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 70% 70% 70% Nameco (No. 346) Limited 70% 70% 70% Pooks Limited - 70% 70% Charmac Underwriting Limited - 70% 70% Nottus (No 51) Limited - 70% 70% Chapman Underwriting Limited - - 70% Helios UTG Partner Limited - - - Nomina No 035 LLP - - - Nomina No 342 LLP - - - Nomina No 380 LLP - - - Nomina No 372 LLP - - - Salviscount LLP - 70% 70% Inversanda LLP - 70% 70% ------------------------------ ---- ---- ----
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. 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 GBP1,474,000 (2017: GBP2,910,000) 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
------------------------ -------------------------------------- ----------------------------------------------
2015 2016(]) 2017 2018
Syndicate or MAPA number Managing or members' agent GBP GBP GBP GBP
------------------------ -------------------------------------- ---------- ---------- ---------- ----------
33 Hiscox Syndicates Limited 2,871,019 3,064,799 3,580,867 5,297,171
218 ERS Syndicate Management Limited 1,428,916 1,546,728 2,035,707 3,620,710
308 Tokio Marine Kiln Syndicates Limited 184,528 100,000 100,000 -
386 QBE Underwriting Limited 796,734 885,658 672,969 747,513
510 Tokio Marine Kiln Syndicates Limited 5,087,827 5,362,274 5,809,920 6,116,592
557 Tokio Marine Kiln Syndicates Limited 553,433 575,567 580,415 600,201
609 Atrium Underwriters Limited 3,142,475 3,365,822 3,422,705 3,905,698
623 Beazley Furlonge Limited 3,460,226 4,167,460 5,013,065 6,147,506
727 S A Meacock & Company Limited 1,011,479 1,038,878 1,046,360 1,070,909
958 Canopius Managing Agents Limited 268,646 - - -
1176 Chaucer Syndicates Limited 556,986 661,905 722,837 949,535
1200 Argo Managing Agency Limited 293,819 267,554 77,143 -
1729 Asta Managing Agency Limited 123,314 65,468 24,334 -
1884 Charles Taylor Managing Agency Limited 25,000 - - -
1910 Asta Managing Agency Limited - 1,257,270 - -
1991 R&O Managing Agency Limited 89,245 26,001 - -
2010 Cathedral Underwriting Limited 891,939 971,014 991,475 1,068,231
2014 Pembroke Managing Agency Limited 1,600,287 1,632,349 1,027,113 -
2121 Argenta Syndicate Management Limited 260,341 - - -
2525 Asta Managing Agency Limited 173,799 217,715 219,859 301,196
2689 Asta Managing Agency Limited - - 835,100 -
2791 Managing Agency Partners Limited 3,923,678 4,128,424 4,179,131 4,390,188
2988 Brit Syndicates Limited - - 47,511 -
4444 Canopius Managing Agents Limited - 101,429 - 548,447
5820 ANV Syndicates Limited 331,535 154,479 - -
5886 Asta Managing Agency Limited - - - 33,211
6103 Managing Agency Partners Limited 237,410 265,895 299,357 1,168,071
6104 Hiscox Syndicates Limited 1,357,666 1,324,201 950,646 954,481
6105 Ark Syndicate Management Limited 695,838 - - -
6107 Beazley Furlonge Limited 453,737 453,737 635,222 950,004
6111 Catlin Underwriting Agencies Limited 1,659,850 1,902,876 - -
6117 Argo Managing Agency Limited 948,091 1,885,281 2,649,897 2,810,000
7200 Members' agent pooling arrangement 372,157 204,504 163,920 -
7201 Members' agent pooling arrangement 1,896,583 1,046,079 866,838 -
7202 Members' agent pooling arrangement 674,602 378,539 313,269 -
7203 Members' agent pooling arrangement 218,791 101,811 97,098 -
7211 Members' agent pooling arrangement 272,262 175,265 192,184 -
7215 Members' agent pooling arrangement 150,468 150,917 164,129 -
7217 Members' agent pooling arrangement 246,987 260,707 274,428 332,876
7227 Members' agent pooling arrangement 42,705 80,070 3,613 4,817
------------------------ -------------------------------------- ---------- ---------- ---------- ----------
Total 36,302,373 37,820,676 36,997,112 41,017,357
------------------------ -------------------------------------- ---------- ---------- ---------- ----------
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 2018 30 June 2017 31 December 2017
------------------------- ----------------------------- ----------------------------- -----------------------------
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 12,257 - 12,257 12,495 - 12,495 12,175 - 12,175
Financial assets at fair
value through profit or
loss 8,124 33,587 41,711 10,302 33,584 43,886 10,489 37,585 48,074
Reinsurance assets:
- reinsurers' share of
claims outstanding 449 13,715 14,164 - 8,840 8,840 - 14,836 14,836
- reinsurers' share of
unearned premium - 4,791 4,791 - 3,976 3,976 - 2,354 2,354
Other receivables,
including
insurance and
reinsurance
receivables 3,772 32,407 36,179 2,315 26,652 28,967 6,669 26,280 32,949
Deferred acquisition
costs - 4,382 4,382 - 4,218 4,218 - 4,420 4,420
Prepayments and accrued
income 260 382 642 68 296 364 - 268 268 Cash and cash equivalents 4,139 3,900 8,039 2,414 4,439 6,853 1,078 1,766 2,844 ------------------------- -------- --------- -------- -------- --------- -------- -------- --------- -------- Total assets 29,001 93,164 122,165 27,594 82,005 109,597 30,411 87,509 117,920 ------------------------- -------- --------- -------- -------- --------- -------- -------- --------- -------- Liabilities Insurance liabilities: - claims outstanding - 55,685 55,685 - 45,772 45,772 - 59,833 59,833 - unearned premium - 20,773 20,773 - 19,193 19,193 - 15,916 15,916 Deferred income tax liabilities 2,094 - 2,094 2,943 - 2,943 2,963 - 2,963 Borrowings - - - - - - 1,094 - 1,094 Other payables, including insurance and reinsurance payables 1,678 19,831 21,509 1,915 13,358 15,273 3,397 12,161 15,558 Accruals and deferred income 826 305 1,131 3,988 429 4,417 993 553 1,546 ------------------------- -------- --------- -------- -------- --------- -------- -------- --------- -------- Total liabilities 4,598 96,594 101,192 8,846 78,752 87,598 8,447 88,436 96,910 ------------------------- -------- --------- -------- -------- --------- -------- -------- --------- -------- Equity attributable to owners of the Parent Share capital 1,510 - 1,510 1,460 - 1,460 1,510 - 1,510 Share premium 15,387 - 15,387 15,387 - 15,387 15,387 - 15,387 Other reserves (50) - (50) - - - (50) - (50) Retained earnings 7,556 (3,430) 4,126 1,901 3,253 5,154 5,117 (954) 4,163 ------------------------- -------- --------- -------- -------- --------- -------- -------- --------- -------- Total equity 24,403 (3,430) 20,973 18,748 3,253 22,001 21,964 (954) 21,010 ------------------------- -------- --------- -------- -------- --------- -------- -------- --------- -------- Total liabilities and equity 29,001 93,164 122,165 27,594 82,005 109,599 30,412 87,509 117,920 ------------------------- -------- --------- -------- -------- --------- -------- -------- --------- --------
17. Events after the financial reporting period
Fyshe Underwriting LLP
On 31 August 2018, Helios UTG Partner Limited, a 100% subsidiary of the Company, became a 100% corporate partner in Fyshe Underwriting LLP for a total consideration of GBP69,000. Fyshe Underwriting LLP is incorporated in England and Wales and is a corporate member of Lloyds.
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 GBP92,000 giving rise to Negative Goodwill of GBP23,000 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 - 154 154
Financial assets at fair value through profit or
loss 506 - 506
Reinsurance assets:
- reinsurers' share of claims outstanding 249 - 249
- reinsurers' share of unearned premium 36 - 36
Other receivables, including insurance and reinsurance
receivables 320 - 320
Deferred acquisition costs 64 - 64
Prepayments and accrued income 2 - 2
Financial assets at fair value through profit or
loss
Cash and cash equivalents 89 - 89
Insurance liabilities:
- claims outstanding (916) - (916)
- unearned premium (221) - (221)
Deferred income tax liabilities - (29) (29)
Other payables, including insurance and reinsurance
payables (142) - (142)
Accruals and deferred income (20) - (20)
------------------------------------------------------- -------- ----------- ----------
Net assets acquired (33) (125) 92
------------------------------------------------------- -------- ----------- ----------
Satisfied by:
Cash and cash equivalents 69 - 69
Total consideration 69 - 69
------------------------------------------------------- -------- ----------- ----------
Goodwill 102 - (23)
------------------------------------------------------- -------- ----------- ----------
2016 year 2017 year 2018 year
of account of account of account
------------------ ----------- ----------- -----------
Capacity acquired 495,450 486,041 500,150
------------------ ----------- ----------- -----------
Nomina No 505 LLP
On 25 September 2018, Helios UTG Partner Limited, a 100% subsidiary of the Company, became a 100% corporate partner in Nomina No 505 LLP for a total consideration of GBP318,000. Nomina No 505 LLP is incorporated in England and Wales and is a corporate member of Lloyds.
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 GBP254,000 giving rise to positive Goodwill of GBP64,000 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 4 214 218
Financial assets at fair value through profit or
loss 815 - 815
Reinsurance assets: - - -
- reinsurers' share of claims outstanding 388 - 388
- reinsurers' share of unearned premium 53 - 53
Other receivables, including insurance and reinsurance
receivables 515 217 732
Deferred acquisition costs 118 - 118
Prepayments and accrued income 6 - 6
Financial assets at fair value through profit or
loss
Cash and cash equivalents 116 - 116
Insurance liabilities:
- claims outstanding (1,427) - (1,427)
- unearned premium (395) - (395)
Deferred income tax liabilities - (82) (82)
Other payables, including insurance and reinsurance
payables (263) - (263)
Accruals and deferred income (25) - (25)
------------------------------------------------------- -------- ----------- ----------
Net assets acquired (95) 349 254
------------------------------------------------------- -------- ----------- ----------
Satisfied by:
Cash and cash equivalents 318 - 318
Total consideration 318 - 318
------------------------------------------------------- -------- ----------- ----------
Goodwill 413 - 64
------------------------------------------------------- -------- ----------- ----------
2016 year 2017 year 2018 year
of account of account of account
------------------ ----------- ----------- ----------- Capacity acquired 796,755 852,255 922,937 ------------------ ----------- ----------- -----------
Share buy back
Since the balance sheet date, the Company has started a share buyback programme. The Company has purchased 136,778 shares for a total consideration of GBP171,000 as the time of these Financial Statements being signed. These shares will be held in Treasury. This brings the total shares in issue at (excluding Treasury shares) to 14,467,462 (note 11).
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 news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR QDLFLVKFZBBF
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September 28, 2018 02:01 ET (06:01 GMT)
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