Helios Underwriting Plc Material Capacity Increase (0057H)

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RNS Number : 0057H

Helios Underwriting Plc

01 December 2020

Helios Underwriting plc

("Helios" or the "Company")

Material Capacity Increase

Helios, the unique investment vehicle which acquires and consolidates underwriting capacity at Lloyd's is pleased to announce an update on the Company's capacity portfolio and its value for 2021 year of account.

Nigel Hanbury, Chief Executive of Helios, commented:

"I am delighted that the capacity portfolio will underwrite GBP110m for the 2021 underwriting year, a 60% increase on the size of the portfolio in January 2019 and an increase in the capacity retained by Helios' shareholders of 18 3 % to GBP5 9 m ."

Capacity Update

Helios announces that the underwriting capacity for Helios for the 2021 year of account will be GBP110m a 60 % increase in the capacity underwritten at the start of 2020.

 
           Helios - 2021 Year of Account Capacity 
 GBPm                          Retained   Reinsured   Total 
 Capacity as at 1st January 
  2021                             58.7        51.5   110.3 
 Capacity as at 1st January 
  2020                             20.7        48.4    69.1 
 % Increase                        183%          7%     60% 
 

Helios will only slightly increase the level of capacity reinsured in 2021 thereby increasing its retained capacity to approximately GBP59m , an increase of 183% over the retained capacity for 2020 underwriting year. Given the much improved underwriting pricing going into 2021, the prospects for underwriting profitability have substantially improved and th is increase in the retained capacity should benefit the Company's shareholders. The reinsurance of the "on-risk" open year of account both mitigates the downside risk and provides the necessary underwriting capital for that proportion of the portfolio.

Following the recent announcement of the acquisition of four LLVs, the split of capacity between retained and that reinsured for the current open years of account is as follows:

 
         2018 to 2020 Years of Account 
                             2018   2019   2020 
                             GBPm   GBPm   GBPm 
 Capacity - Position as 
  at 1st Jan 2020            64.5   61.1   69.1 
                            -----  -----  ----- 
 Retained                    26.3   22.1   20.7 
 Reinsured                   38.2   39.0   48.4 
 Capacity acquired during 
  2020 
 Retained                    9.8    9.2    10.1 
 Reinsured                   0.0    0.0    0.8 
 Capacity - Position as 
  at 1st Dec 2020 
 Retained                    36.1   31.3   30.9 
 Reinsured                   38.2   39.0   49.1 
                             74.3   70.3   80.0 
                            =====  =====  ===== 
 

The increased retained capacity on the 2018 to 2020 years of account, substantially "off-risk" underwriting years, is expected to contribute to the recognised future profits of the Company .

Capacity Value

The value of the capacity fund as at 31 (st) December 2020 using the weighted average prices of capacity from the 2020 Lloyd's capacity auctions has increased to GBP30.8m ( 31 (st) December 2019: GBP26.3m).

 
                                     Capacity          Value 
                                                 of Capacity 
                                         GBPm           GBPm 
 2020 Capacity at 31 Dec 2019           69.11          26.35 
 Capacity acquired with LLV's 
  in 2020                               10.88           4.93 
 Capacity r evaluation having 
  included p re-emptions                10.69           0.85 
 Net increase in capacity 
  after disposals at the capacity 
  auction                               19.58          -1.30 
 2021 Capacity at 31 Dec 2020          110.26          30.83 
                                    =========  ============= 
 
                                         2019           2020 
 Capacity with v alue                   57.84          82.76 
 Free c apacity                         11.27          27.49 
                                        69.11         110.26 
                                    =========  ============= 
 

A summary of the movements in capacity and its value are:

Helios acquired five LLVs during 2020 with capacity of GBP10.9m, which were valued at 2019 capacity prices at GBP4.9m.

The syndicates supported by Helios offered free capacity of GBP10.7m by way of pre-emptions to support the improved underwriting market. The overall change in average prices from 2019 together with the value of the pre-emptions taken up have increased the value of the portfolio by GBP0.8m .

Helios continued to manage the capacity portfolio discarding unwanted syndicates and taking positions on new syndicates, in particular syndicate 4242 and syndicate 2010 , taking additional capacity of GBP12.8m in total on these two syndicates. In addition, GBP2.4m of capacity was sold at the auctions to raise additional net cash of GBP1.3m.

For further information please contact:

Helios Underwriting plc

   Nigel Hanbury - Chief Executive                                             07787  530404 / [e-mail] 
   Arthur Manners - Chief Financial Officer                              07754 965 917 

Shore Capital

   Robert Finlay/David Coaten                                                     020 7408 4090 

Buchanan

   Helen Tarbet/ Henry Wilson /George Beale                          020 7466 5000 

About Helios

Helios provides a limited liability direct investment into the Lloyd's insurance market and is quoted on the London Stock Exchange's AIM market (ticker: HUW). Helios trades within the Lloyd's insurance market writing approximately GBP110m of capacity for the 2021 account. The portfolio provides a good spread of business being concentrated in property insurance and reinsurance. For further information please visit www.huwplc.com.

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December 01, 2020 02:00 ET (07:00 GMT)