Helios outperforms Lloyd's market in pandemic-hit year

Lloyd’s underwriting capacity investor Helios reported a 5.7% outperformance against the Lloyd's of London market in its final results on Friday, as its capacity portfolio grew by 31%, after five acquisitions were made for a total of £10m.

The AIM-traded firm said a total of £75m of new capital was raised in the year ended 31 December 2020, and 2021 so far.

Profit before impairments and tax for the year fell to £0.34m from £2.43m, however, which the board said reflected poor underwriting conditions and the impact of Covid-19-related losses.

Basic earnings per share slid to 1.59p from 25.64p.

Its net tangible asset value fell to £1.51 per share from a restated £1.91 per share in 2019, which Helios put down to the impact of the November equity raise.

The company’s capacity portfolio was increased by 60% to £110m for the 2021 year of account, from £69m in 2020.

Helios said the impact of the Covid-19 pandemic had added losses of 7% capacity, but said that was expected to fall mainly on the 2019 year of accounts, adding that the stop loss in 2021 was still protecting the downside, and providing underwriting capital support.

The directors recommended a total dividend for 2020 of 3p per share, compared to the nil distribution for 2020.

Discussions with vendors of eight limited liability vehicles with £10.9m capacity were continuing, with outline terms agreed.

The board said the improvement in market conditions had resulted in a reduction in the discounts that were being achieved relative to the Humphrey valuation.

Vendor expectations of value had increased, and other purchasers were said to be encouraged to pay higher prices given the improved prospects, the directors explained.

“Whilst the results for 2020 were impacted by the poor underwriting conditions and the impact of Covid-19, which severely tested the insurance industry, Helios has nevertheless continued to pursue its growth strategy,” said chief executive officer Nigel Hanbury.

“We successfully raised £75m of new capital to acquire limited liability vehicles and take up pre-emption capacity.

“We have grown our portfolio of capacity for 2021 to £110m by acquiring five LLV's in 2020, taking up freehold capacity offered for nil cost by way of preemptions and building stakes on syndicates with good prospects offering tenancy capacity.”

Hanbury noted that the company increased the value of its capacity fund by 17% to £30.8m, as pre-emption capacity acquired for no cost increased the value of the portfolio by £2.4m.

“It is pleasing to note that we outperformed the Lloyd's market by 5.7%.

“Looking ahead, the strong upward momentum in premium rates on renewal business is expected to continue and should continue to enhance the underwriting performance in 2021 and 2022.

“We see opportunity for further growth and we intend to continue to take advantage of the improving market environment, whilst judiciously optimising our portfolio to enhance value for shareholders.”

At 0803 BST, shares in Helios Underwriting were up 1.59% at 160p.