Helios Underw Regulatory News (HUW)

23 May 2014

Helios Underwriting plc

("HUW" or the "Company")

Preliminary results for the year ended 31 December 2013

HUW is pleased to announce its preliminary results for the year ended 31 December 2013.

Financial highlights

Business overview 2013

· 2011 underwriting year of account profit return on capacity of 7.58%

· Operating profit return on net asset value of 13.03%

· New dividend policy of annual base plus specials

· Recommended total dividend for this year 4.5p per share

· Parent Company adjusted net assets plus Humphrey & Co valuation of the Group's underwriting subsidiaries of £14.7m or £1.72 per share

Commenting, Sir Michael Oliver, Chairman, said:

"The operating profit before tax for the year of £1,280,000 shows a significant improvement on 2012 and on this key measure 2013 is our best year to date. During 2013 we acquired four LLVs at what we believe to be attractive prices. Already in 2014 we have made three more acquisitions and have identified significant scope for further growth. The Board is pleased to recommend a maiden final dividend for 2013 of 1.5p per share together with a special dividend of 3.0p per share."

Commenting, Nigel Hanbury, Chief Executive, said:

"Our strategic objective is to underwrite at Lloyd's with superior capital efficiency, lower risk and higher return. We continue to see a strengthening flow of vehicles for sale at attractive prices. The combined ratio of HUW's portfolio for 2013 was a creditable 83.5% on this key measure, our best result to date. In summary, 2013 has been a transformational year for HUW. Over the past 12 months, we have redefined our strategy, refined our portfolio of existing syndicates, launched a 50% quota share with XL Re, made further acquisitions, implemented a new investment policy and strengthened the management and advisory teams. We look forward to the future with great enthusiasm."

For further information please contact:

About HUW

HUW 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). HUW's subsidiary underwriting vehicles trade within the Lloyd's insurance market as corporate members of Lloyd's writing £21 million of capacity for the 2014 account. The portfolio provides a good spread of classes of business being concentrated in property insurance and reinsurance. For further information about the Company please visit www.huwplc.com.

Chairman's statement

Your Board is pleased to report positive results for 2013 as Helios Underwriting plc ("HUW"). We continue to enjoy a close association with the Hampden Group of companies; however, as we enter this exciting stage in the Company's development we felt that the time was right for a more distinct identity under a new name. In Greek mythology, Helios was the sun god, the son of Hyperion, depicted as driving his chariot across the sky from east to west daily. Accordingly our new name emphasises our continued focus - to shine a light on the opportunities that exist within the Lloyd's market.

The profit after tax of £731,000 for the year ended 31 December 2013 compares with profit after tax of £763,000 for 2012. This result includes a net charge of £427,000 in respect of goodwill and amortisation. Excluding this, the operating profit before tax for the year of £1,280,000 shows a significant improvement on 2012 (£681,000) and on this key measure 2013 is our best year to date.

Net assets have increased to £9.8m which equates to £1.15 per share and when the unamortised value of capacity is added back it shows a value of £1.51 per share.

For the first time, we are pleased to have the ability to publish an independent valuation of the Group's Limited Liability Vehicles ("LLVs"). Humphrey & Co is the market's primary provider of vendor valuations of LLVs. The aggregate value as at 31 December 2013 of HUW's subsidiaries owned at that date is £7.6m. When combined with audited adjusted net assets of the holding company at the same date, we arrive at a total valuation of HUW of £14.7m or £1.72 per share.

During 2013 we acquired four LLVs at what we believe to be attractive prices. Already in 2014 we have made three more acquisitions and have identified significant scope for further growth.

In addition to increased underwriting, one of the key by-products of all these acquisitions was the increased exposure to their open years of 2011 (now closed), 2012 and 2013, which were at varying degrees of maturity at the time of purchase. While a price is paid for these open years, HUW benefits from any improvements between the acquisition date and closure, as well as affording us the opportunity to participate in future underwriting.

The total amount of premium limit purchased last year over the three open years was in excess of £11.6m. Furthermore some of the underwriting vehicles own significant Funds at Lloyd's. They may also have other assets which can be invested, or if surplus to underwriting requirements can be released to fund further purchases.

Our advisers expect that Lloyd's, as a whole, will continue to trade profitably in most years. Despite increased competition in most classes and the expectation of lower investment returns we will continue to seek to achieve our objective of market out-performance through a focus on quality syndicates, judicious use of reinsurance and continuing our acquisition strategy.

A major strategic development for HUW during the year was the introduction of our 50% quota share arrangement with XL Re. Not only does this help shape our risk/reward profile in a favourable direction, but the ability of HUW to attract a partner of the calibre and global scale of XL Re clearly reflects positively on our business, team, portfolio and prospects in general.

At this point, I would therefore like to thank Nigel for his crucial role in our achievements during 2013, his first full year with HUW as Chief Executive. His tireless efforts on behalf of the board and shareholders to drive the business forward lead me to have great confidence in our future prospects.

As the Group operates in the cyclical and volatile insurance market significant volatility in future results is to be expected. The Group manages its capital with a view to supporting the development of the business, including supporting increases in the Group's underwriting through the acquisition of further capacity, whilst maintaining the required level of stability of the Group to provide a degree of security to shareholders. We continue to support the principle of a share buy-back policy for occasions when the board feels it is prudent to do so, but it is not currently anticipated that the buy-back authority will be used at this time as the Group continues to focus on the growth of its underwriting business.

Against the backdrop of this capital management policy and our significant progress over the past year, the Board has concluded that it is the right time to introduce the payment of a modest and sustainable base annual dividend, to be paid as a single final dividend. This base annual dividend, which is not expected to grow significantly, will be supplemented, when circumstances allow, by an annual special dividend which, when paid, will target an amount between 20% and 30% of cash received by the Group in relation to the most recently closed year of account, such profits normally being finalised and received by the Group approximately 30 months following the end of the relevant calendar year. Payment of any special dividend will be dependent on the performance of the Group's underlying business, any business requirements resulting from major market events in the intervening period, and on opportunities for growth through the acquisition of additional capacity.

The Board is pleased to recommend a maiden final dividend for 2013 of 1.5p per share together with a special dividend of 3.0p per share payable to shareholders on the register on 6 June 2014. Both are subject to shareholder approval at the AGM. The special dividend equates to approximately 20% of the £1.3m cash released from the 2011 year of account net of Hampden Agencies' fees and profit commission, including the cash released from the three acquisitions completed in 2014 from which HUW will benefit. These dividends amount to an aggregate payment of £384,000. If approved, it is expected that the final and special dividend will be paid to shareholders as a single payment on 4 July 2014.

Sir Michael OliverNon-executive Chairman22 May 2014

Chief Executive's review

Highlights

• 2011 year of account produced a profit of £1,207,000, representing a profit of 7.58% on 2011 capacity

• We ended the year with approximately 75% of our capacity supporting syndicates rated either A or B by Hampden Agencies Limited

• Helios Underwriting's combined ratio strongly outperformed both the Lloyd's market and a peer group of eleven competing companies

• Our two largest classes of business remain reinsurance and US dollar property insurance

• New dividend policy of annual base plus specials

• Recommended total dividend for this year 4.5p per share

The 2011 underwriting year of account which closed at 31 December 2013 performed well, producing a profit of £1,207,000, compared to a profit of £401,000 for the 2010 year of account at 31 December 2012. This represents a profit of 7.58% on 2011 capacity (Lloyd's overall market result was 4.02%) compared to a profit of 2.55% for the 2010 account which was 0.06% above the Lloyd's market average result of 2.49%. The 2012 year of account is estimated to outperform Lloyd's with a profit of 7.51% at the mid-point estimate (Lloyd's 5.61%). The final result typically represents an improvement over the initial estimates.

A complete set of published estimates is not available for the 2013 year of account until the end of May 2014, however, we have already received estimates accounting for 57% of HUW's capacity averaging a 6.1% mid-point profit. Hampden Agencies retains its forecast of a profit in the range of 2.5% to 7.5% for the 2013 account for Hampden Agencies clients on average.

The traditional method for comparing the performance of competing insurance business is an analysis of the combined ratio, which is the sum of net claims and expenses divided by net earned premiums. The combined ratio of HUW's portfolio for 2013 was a creditable 83.5% on this key measure, our best result to date, with the underwriting result benefiting from a benign year for catastrophe losses. HUW strongly outperformed both the Lloyd's market combined ratio of 86.8% and a peer group of eleven competing insurance and reinsurance companies whose average combined ratio was 93.4%.

Net tangible assets per share fell marginally by 4% during 2013, principally as a result of the four acquisitions made in the year. Year end net tangible assets were £6.897m with the balance of Lloyd's minimum capital requirement in November 2013 of £11.088m being supplied by Letters of Credit from quota share reinsurance capital providers from which we benefit from both a fee and profit commission.

Our strategic objective is to underwrite at Lloyd's with superior capital efficiency, lower risk and higher return. Our quota share agreement with XL Re released over £4m from our Funds at Lloyd's ("FAL") to provide a modest war chest and during the year we acquired over £5m of underwriting capacity for the 2014 year of account through a series of transactions. We continue to see a strengthening flow of vehicles for sale at attractive prices. This is partly due to the age profile of the investor population, some of whom may wish to take profits after a long run of favourable results combined with tax benefits for those that wish to sell as going concerns.

The quota share has also improved our risk/reward ratio since we retain the earnings for the more certain underwriting years prior to 2013. I am pleased to report that the agreement has been renewed for the 2014 account. Increasing our scale has also allowed us to negotiate our fees with some of our advisers and while some of the terms have a delayed effect they will significantly improve results over time.

Classes of business for 2014

Helios Underwriting's portfolio for 2014 continues to provide a good spread of business across managing agents and classes of business with motor and liability providing a balance to the catastrophe exposed reinsurance and property business, as well as contributing through diversification to lower capital requirements. The two largest classes of business remain reinsurance and US dollar property insurance.

We continue to actively increase our exposure to higher quality syndicates and ended the year with approximately 75% of our capacity supporting syndicates rated either A (superior) or B (above average) by Hampden Agencies. HUW's portfolio for 2014 continues to provide a good spread of business across managing agents and classes of business. 25.6% of the capacity is in the three syndicates rated "A" by Hampden Agencies, being Syndicates 386, 609 and 2791, with Kiln Syndicate 510 being the largest holding at 13.6% of capacity. The top ten syndicates comprise 78.5% of the portfolio. Two new syndicates were joined for 2014. We have steadily improved our focus on our core six syndicate holdings whilst still maintaining appropriate diversification.

We welcome Paul Lumbis to the management team. Paul joined us on a consultancy basis in July 2013 and has since been appointed as Group Chief Financial Officer. Paul's financial acumen, his expertise in the world of corporate finance and long association with the insurance markets equips him extremely well to be of significant value as we continue to grow.

As we have grown we have also improved the infrastructure supporting the day to day functioning of the Company. In March this year we announced the appointment of Westhouse Securities Limited as the Company's broker. We have also appointed a new Group Company Secretary and retained Haggie Partners to provide public relations support. Smith & Williamson Corporate Finance Limited continue to act as our nominated adviser, with Hampden Group continuing to provide back office support and Hampden Agencies acting as our members' agent and Lloyd's adviser, as well as providing syndicate research. With continued significant opportunities for growth ahead, we are pleased to have the support of a broader advisory team, all of whom have extensive expertise and experience in the Lloyd's market.

A by-product of the worsening conditions in the reinsurance market is that some traditional reinsurance products are now once again available on terms acceptable to HUW. We will investigate whether we wish to avail ourselves of such opportunities with a view to further increasing our capital efficiency.

Our investment strategy announced last year remains unchanged with the majority of our portfolio being split roughly half in the CF Ruffer Total Return Fund and the CF Ruffer Absolute Return Fund (both managed by Ruffer LLP) and half in the Trojan Fund (managed by Troy Asset Management Limited). The amount invested has reduced significantly as a result of the investment in acquisitions but over the period the total return from the two funds has been 3.4% which has significantly beaten cash.

The investment of these assets gives the shareholder the ability to obtain an investment return as well as a return from taking underwriting risk. Over many years this double use of assets has been one of the attractions of investing at Lloyd's.

Outlook

The underwriting environment in 2014 continues to be challenging. Opportunities remain, however, particularly for higher quality syndicates, not least in the more effective purchase of better priced outward reinsurance, but also for nimble underwriting to exploit the more profitable niche classes for which Lloyd's has such a well earned reputation. HUW's strategy and business model is based on backing the best underwriters and syndicates as we seek out-performance of the average market experience. We will continue to explore options for making capital available for acquisitions, both through further potential quota share arrangements and through other capital raising alternatives.

In summary, 2013 has been a transformational year for HUW. Over the past 12 months, we have redefined our strategy, refined our portfolio of existing syndicates, launched a 50% quota share with XL Re, made further acquisitions, implemented a new investment policy and strengthened the management and advisory teams. We look forward to the future with great enthusiasm.

Nigel Hanbury

Chief Executive

22 May 2014

Lloyd's Advisers' Report

2013 major losses at Lloyd's were £873m (15 year average: £1,572m)

According to the latest Swiss Re Sigma study, issued in March 2014, insured losses from natural catastrophes and man-made disasters in 2013 were around $45bn compared with $81bn in 2012. Major insured losses in 2013 were just under the ten year average of $48bn a year at 2012 prices.

The most costly insured losses in 2013 were the flooding in June affecting central and eastern Europe costing $4.1bn, and hailstorm Andreas in Germany and France costing $3.8bn the following month. Floods in Canada in June 2013 cost $1.9bn while a deadly tornado in Moore, Oklahoma, in May 2013 is estimated to have cost $1.8bn in insured claims, the most from a single weather event in the US in 2013. The largest loss of life was from Typhoon Haiyan in the Philippines in November, where 7,500 died or went missing but insured losses were modest at $1.5bn compared with $12.5bn of economic losses.

As a market, 2013 was a benign year for catastrophes with Lloyd's net ultimate claims at 31 December 2013 estimated at £873m (£1.8bn in 2012), which is significantly below the 15 year average of £1.572bn and a significant reduction on the record claims suffered in 2011 of £4.7bn.

US property/casualty industry made its first underwriting profit in 2013 since 2007

The underwriting results of the US property/casualty insurance industry improved in 2013 with the first underwriting profit being declared since 2007, benefiting from reduced catastrophe losses and increasing rates. Net insured losses from catastrophes fell to $14.1bn from $33.1bn in 2012. Net gains from underwriting were $15.5bn compared with net losses the previous year of $15.4bn. Net investment gains (income and realised capital gains) enabled an improved overall net profit after tax of $63.8bn compared with $35.1bn in 2012. The return on average policyholders' surplus was 10.3%, its highest level since the 12.4% return in 2007.

Capital levels ended 2013 at record highs for both insurers and reinsurers

Capital levels at year end 2013 were again at record highs for both insurers and reinsurers. At Lloyd's total net resources increased by 4% in 2013 to a record £21.2bn with the solvency surplus improving marginally to a record £3.1bn. The policyholders' surplus of the US property/casualty industry, a proxy for underwriting capacity, grew by 11.3% ($66.3bn) in 2013 to a record $653.3bn. Reinsurance capital also grew, but by a more modest 7% ($35bn) to a record $540bn at year end 2013, according to reinsurance broker Aon Benfield.

Influx of alternative capital adds to record capital

During 2013, industry capital was boosted by improved operating results, in part driven by a sharp fall in insured losses from natural catastrophes and man-made disasters. The most significant trend to affect the reinsurance market in 2012/2013 was the growing supply of alternative capital which is both a threat and an opportunity to the traditional reinsurance equity backed model. Alternative capital may be used as quasi capital by the reinsurance industry but may also compete with traditional equity backed reinsurance companies. Investor interest has been generated from a wide range of sources including pension funds, life assurers, endowments and high net worth family trusts.

Reinsurance broker Guy Carpenter estimates that between January 2012 and December 2013 approximately $15bn of new capital has entered the reinsurance market and now provides total alternative capital of $45bn or 15% of global property reinsurance limits.

Insurance industry has become more disciplined at deploying its capital

Historically, the industry has on average been unsuccessful in controlling the supply of capacity, which has contributed to cyclical downturns benefiting policyholders rather than shareholders. In recent years, a number of companies have shown a willingness to return excess capital to shareholders through share buy backs or special dividends, demonstrating a focus on shareholder value and mitigating the pressure to deploy excess capital by writing additional business, which is likely to be under-priced.

Demand - positive signs continue for US insurance marketplace

Insurance demand, measured by premium, has grown over the long term, being linked to growth in GDP and levels of insurance penetration. During the great recession of 2007-2009 US net written insurance premiums fell by an aggregate 6.8% the first three year decline since 1930-1933. Growth in overall net premiums, a proxy for demand, accelerated in the US to 4.6% in 2013 from 4.3% in 2012.

Premium growth in Q4 2013 was the 15th consecutive quarter of growth with average commercial lines rates up for the tenth consecutive quarter. However, reinsurance demand has been adversely affected at 1 January 2014 by the trend of major insurance groups to retain more premium volume and risk on their own growing balance sheets, according to Willis Re.

The demand component has been boosted by a combination of increasing premium rates and the recovering US economy contributing to organic growth. Encouragingly, net written premium has now overtaken its previous peak in 2006. While demand for insurance continues to be impacted by sluggish economic conditions, the benefits of even slow growth will compound over time. US real GDP growth was 1.8% in 2011, 2.2% in 2012 and 1.9% in 2013.

Organic growth opportunities which would ordinarily use up surplus capital have been limited in this cycle with GDP growth, whether measured in nominal or real terms, being the slowest of any expansion since 1948. The economy's capacity utilisation is still below pre-recession levels with the US operating at 79.2% of industrial capacity in December 2013, although well above the June 2009 low of 66.9%.

Lloyd's is well placed to take advantage of an improving excess and surplus lines (E&S) segment of the US insurance market. In 2012, according to AM Best, Lloyd's had an 18.0% (18.6% in 2011) share of the US E&S market with its next biggest competitor being AIG with 14.5% (17.2% in 2011). Lloyd's total E&S premium grew by 10% from $5.7bn in 2011 to $6.3bn in 2012, benefiting from a combination of GDP growth and an increased flow of business as admitted carriers moved away from underwriting more difficult risks.

The investment environment

The investment environment remains critical in order to understand the insurance industry, both from a balance sheet perspective (the asset side) and from a profit and loss perspective. In an era of low inflation and low interest rates, the only way for an insurer to make an acceptable return on equity for its investors is to make an underwriting profit and repay surplus capital to shareholders.

At previous cycle turning points, premium rates have turned up due to capital being depleted either through a period of reserve deteriorations or through significant "market changing" catastrophe losses. In this cycle, the upturn in US insurance rates has begun without either of these factors being present. In our view, the principal reason for the upturn in US insurance rates is the investment environment of low interest rates with the US Federal Reserve actively signalling that it is determined to keep interest rates low until unemployment drops below 6.5% or until inflation expectations exceed 2.5%.

Even with the recent rises in interest rates, the treasury yield curve remains close to its most depressed level in at least 45 years. A US Treasury five year bond bought at a yield of 1.55% on 31 December 2008 on reinvestment on 31 December 2013 would only yield 1.75%. The significance of this is not lost on insurance company management who realise that combined ratios must be lower in today's depressed investment environment to generate a risk appropriate return on equity. In 2012, the Insurance Information Institute calculated that a combined ratio of about 100%, i.e. a break even underwriting result, would generate a return on equity of around 7% which compares with 10% in 2005 and 16% in 1979 for the same 100% combined ratio.

The investment component of the return on equity by line of business is particularly important in capital intensive lines such as reinsurance, or casualty business where claims may not be paid out for a number of years. Apart from controlling expenses the main way for insurance company management to compensate for this "lost investment income" is to encourage their underwriters to put rates up.

There has been a trend in declining yields from 2007. As of 30 April 2014 the two year US Treasury is yielding 0.42% and the five year 1.69%.

Rating - 2013 was a tale of two halves in reinsurance - momentum slows down for US reinsurance

The principal driver of underwriting profitability is the level of premium rates combined with policy terms and conditions.

The surge in alternative reinsurance capital supplied by third party investors had a greater-than-expected impact at the mid-year 2013 renewals, particularly for Florida, with Guy Carpenter reporting 15% rate reductions while loss-free US property catastrophe programmes decreased by between 12.5% and 30% at 1 July. The mid-year renewals were in marked contrast to the stable rates seen earlier in the year. The weighted average rate change for US property catastrophe reinsurance business in 2013 was approximately 7%. Rate reductions continued at the 1 January 2014 US renewals averaging 15% (9% compared with 1 January 2013 rates) with competition being spurred by the absence of a major hurricane in 2013.

Rate reductions continued at the 1 April 2014 renewals which comprise the entire Japanese market and a few large US programmes. Willis Re estimated that excess of loss covers for Japanese earthquake risks fell by 12.5% to 17.5% with typhoon rates falling by 10% to 15%. US premiums paid by nationwide insurers fell by 10% to 20% for catastrophe loss-free accounts and by up to 10% for loss-hit renewals. In addition, terms and conditions have begun to be relaxed and multi-year contracts offered.

The impact of terms and conditions on prospective underwriting return is much more difficult to measure than that of rate. It is only after a loss that the impact of a broadening of cover is fully appreciated. The 1 January 2014 renewal season brought signs that underwriters are now prepared to broaden cover and increasingly offer multi-year contracts, expansion of hours clauses, less punitive reinstatement provisions and expanded coverage for terrorism, cyber and workers' compensation risk have been mentioned. Willis Re comments that "experienced reinsurers will remember that the relaxation of terms and conditions more so than price reduction caused the real damage in the last soft market cycle". However, while rate using Guy Carpenter's rate on line index for US business is 20% down on the average between 2006 and 2013 at 1 January 2014, it is still 14% above rates in 2005.

In contrast, we are now seeing a sustained upturn in property and casualty insurance rates in the United States, which does not suffer from the ease of entry of alternative sources of capital seen in the reinsurance sector. After nearly eight years of decreases, the first increase we saw was in the third quarter of 2011 and by the first quarter of 2013 rate increases had accelerated to 5.2% using data supplied by the Council of Insurance Agents and Brokers, the largest increase since 2003. Rate increases moderated over the course of 2013, to 4.3% at Q2, to 3.4% at Q3 and to 2.1% at Q4. This has continued in 2014 with rates increasing by 1.5% in Q1 2014.

Going forward, the US insurance pricing cycle, given the absence of reserve deteriorations from the prior years at a market aggregate level, may prove more muted than in the past.

The implications for a more muted pricing cycle are that the upward trend in rates could slow down further or potentially come to an end during 2014. Already we have seen rates reduce for larger insurance risks such as energy, large property and aviation. Outside of the US, rate competition has returned to the UK motor market following the introduction of new legislation implemented in July 2013 with rates for comprehensive private car business falling by 14.1% in the twelve months to December 2013, according to the AA. In the first quarter of 2014 rates private car comprehensive rates fell a further 5.6%.

Insurance broker Marsh reports that global insurance rates, as tracked by the Marsh Risk Management Global Insurance Index, continued their downward trend in the fourth quarter of 2013. The only exception to the global trend was the US where the composite index showed a modest increase for the eighth consecutive quarter.

At an aggregate level, industry results and Lloyd's results continued to benefit from favourable prior year releases which are proving to be more persistent and higher than was envisaged even twelve months ago. This evidence suggests that the insurance industry is better at using technology, historical data and modelling to price new business and estimate losses, which should inherently translate into more stable profitability and pricing cycles.

Prospects for 2014

Our formal profit target for the 2014 account (assuming an average year for catastrophe losses) is a range of 0% to 7.5% on capacity, for the average Hampden client, which is lower than the 2.5% to 7.5% we set for the 2013 account in September 2012, and reflects, in the main, the softening of reinsurance rates.

We expect rate increases to continue in 2014 for small and medium US property and casualty accounts but at a lower level of increase than seen in 2013. Risks to this expectation are if there is renewed economic weakness affecting demand compared with the current moderate GDP growth or if rate competition were to increase in part due to reductions in reinsurance pricing.

Overall we estimate that rates will reduce by 4.1% in 2014, which compares with our initial estimate of a reduction of 2.3% on average. Further reductions in reinsurance rates are expected in July following on from the reductions at mid-year in 2013, 1 January 2014 and the reductions at 1 January, 1 April, and 1 June 2014.

Since 2006 US reinsurance rates have been amongst the most attractive of any class of business and have made a significant contribution to Lloyd's profitability in this period. Despite rate reductions, there remains a reasonable technical margin on US business, albeit not the exceptional margin experienced between 2006 and 2009. The influx of alternative capital is not only squeezing margins on reinsurance business but also leading to pressure on signings and therefore adding to the potential for reduced income. The traditional reinsurance market has also responded to increasing competition by relaxing policy terms and conditions as well as being prepared to enter multi-year contracts. Due to reinsurance rate reductions, the balance of risk and reward on US business is beginning to shift from net sellers of reinsurance to net buyers of reinsurance.

Despite our continued optimism on the rate outlook for US insurance business, additional capital is being deployed by Berkshire Hathaway with its entry into the US excess and surplus lines market and its participation on 7.5% of Aon's retail placements with Lloyd's participation. Both moves have the potential to impact margins negatively in 2014 and beyond. The effect should be mitigated by Berkshire Hathaway's reputation for pricing discipline. As the reinsurance market softens more reinsurers are expected to follow Berkshire Hathaway's lead by allocating capital to insurance operations.

Top ten syndicates for 2014

Consolidated income statementYear ended 31 December 2013

The profit attributable to equity shareholders and earnings per share set out above are in respect of continuing operations.

Consolidated statement of financial positionAt 31 December 2013

Consolidated statement of cash flowsYear ended 31 December 2013

Statements of changes in shareholders' equityYear ended 31 December 2013

Notes to the financial informationYear ended 31 December 2013

1. General information

The Company is a public limited company listed on AIM and incorporated and domiciled in the UK.

2. Accounting policies

The principal accounting policies adopted in the preparation of the preparation of the financial information set out in this announcement are set out in the full financial statements for the year ended 31 December 2013 (the "Financial Statements").

3. Segmental information

The Group has three segments that represent the primary way in which the Group is managed:

· syndicate participation;

· investment management; and

· other corporate activities.

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 2013 other corporate activities totalling £22,000 represents the 2013 underwriting year of account net Group quota share reinsurance premium payable to Hampden Insurance PCC (Guernsey) Limited - Cell 6 for Hampden Corporate Member Limited, Nameco (No. 365) Limited, Nameco (No. 605) Limited, Nameco (No. 321) Limited, Nameco (No. 917) Limited, Nameco (No. 229) Limited and Nameco (No. 518) Limited. This net quota share reinsurance premium payable is included within 'reinsurance premium ceded' in the Consolidated Income Statement.

All of the Group's limited liability vehicles have entered into a Group quota share reinsurance contract with Hampden Insurance PCC (Guernsey) Limited - Cell 6 for the 2014 underwriting year of account.

4. Operating profit before goodwill and amortisation

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 fees.

5. Net investment income

6. Operating profit before tax

The Group has no employees other than the Directors of the Company.

The Chief Executive Nigel Hanbury has a bonus incentive scheme in addition to his basic remuneration. The above figures include an accrual for the year of £89,000 (2012: £nil) in respect of this scheme. No other Directors derive other benefits, pension contributions or incentives from the Group. At 31 December 2013 no share options were held by the Directors (2012: nil).

The Company established a Nomination and Remuneration Committee during the year.

7. Earnings per share

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

The Group has no dilutive potential ordinary shares.

Earnings per share has been calculated in accordance with IAS 33.

The earnings and weighted average number of shares used in the calculation are set out below:

8. Financial statements

The financial information set out in this announcement does not constitute statutory accounts but has been extracted from the Group's Financial Statements which have not yet been delivered to the Registrar. The Group's annual report will be posted to shareholders shortly and further copies will be available from the Company's registered office: Hampden House, Great Hampden, Great Missenden, Buckinghamshire HP16 9RD and on the Company's website www.huwplc.com.