Helios Underw Regulatory News (HUW)

26 September 2013

Hampden Underwriting plc

("Hampden Underwriting" or the "Company")

Interim results for the six months ended 30 June 2013

Hampden 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 2013.

Highlights

· Premium written during the period totalled £7.2m (an increase of 42% over the same period last year).

· Net profit of £462,000 (compared to a profit of £247,000 over the same period last year).

· Earnings per share of 5.42p (compared to 3.33p over the same period last year).

· Net assets increased to £9.6m from £9.1m at 31 December 2012.

Commenting upon these results Chairman, Sir Michael Oliver said:

"The six months ended 30 June 2013 shows some significantly improved figures. This has occurred both as a result of good overall results in the Lloyd's market and the benefit of our acquisitions of Lloyd's Limited Liability Vehicles, made over the last few years, delivering a performance commensurate with the Directors' expectations at the time of purchase."

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Chairman's Statement

The six months ended 30 June 2013 shows some significantly improved figures. This has occurred both as a result of good overall results in the Lloyd's market and the benefit of our acquisitions of Lloyd's Limited Liability Vehicles (LLVs), made over the last few years, delivering a performance commensurate with the Directors' expectations at the time of purchase.

Over the comparable period last year, premium written is up 42% and net profit is up from £247,000 to £462,000. Earnings per share stand at 5.42p compared to 3.33p and net assets have increased to £9.6m from £9.1m at 31 December 2012.

Our investment portfolio is now invested in long term low volatility funds which have performed within expected parameters and more details of this will be set out in our next annual report.

In July we were able to announce the signing of a quota share arrangement, in effect a reinsurance of half our 2013 year of account portfolio in exchange for a fee and a ratcheted performance based profit commission. This has released £4.1m of capital to HUW which had previously been allocated as Funds at Lloyd's. The plan is to put this capital back to work with new underwriting capacity and we are currently negotiating on three possible acquisitions. We will be actively seeking more should suitable opportunities present themselves.

There are a number of potentially rewarding uses of our capital but the acquisition of further LLVs would seem the most attractive for the time being. As and when we are successful we will make the appropriate announcements.

Sir Michael Oliver

Non-executive Chairman

25 September 2013

Condensed Consolidated Statement of Comprehensive Income

Condensed Consolidated Statement of Financial Position

At 30 June 2013

Condensed Consolidated Statement of Cash Flows

Six months ended 30 June 2013

Condensed Statement of Changes in Shareholders' Equity

For the six months ended 30 June 2013

For the six months ended 30 June 2012

For the twelve months ended 31 December 2012

Notes to the Interim Financial Statements

Six months ended 30 June 2013

1. 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 2013.

The Condensed Consolidated Interim Financial Statements incorporate the results of Hampden Underwriting plc, 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.

The Condensed Consolidated Interim Financial Statements are unaudited, but have been subject to review by the Group's auditors. The Interim Financial Statements have been prepared in accordance with the accounting policies adopted for the year ended 31 December 2012.

The comparative figures are based upon the Group Financial Statements for the year ended 31 December 2012, and have been reported on by the Group's auditors and were delivered to the Registrar of Companies on 27 June 2013.

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 2012. The new standards and amendments to standards and interpretations effective after 1 January 2013, as disclosed in the Annual Report for the year ended 31 December 2012, have not had a significant impact on the Condensed Consolidated Interim Financial Statements at 30 June 2013.

2. Segmental information

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

· Syndicate participation;

· Investment management;

· 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.

3. Insurance liabilities and reinsurance balances

Movement in claims outstanding

Included within other movements are the 2010 and prior years' claims reserves reinsured into the 2011 year of account and currency exchange differences.

Movement in unearned premium

4. Net investment income

5. Income tax expense

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 23.25% (2012: 24.50%). Material disallowed items have been adjusted for in the income tax calculation.

6. 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 have been calculated in accordance with IAS 33.

Reconciliation of the earnings and weighted average number of shares used in the calculation is set out below. 

7. Dividends

No equity dividends were proposed, declared or paid in the period (2012 - £Nil).

8. Financial assets at fair value

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

As at 30 June 2013, the Group held £17,709,000 (31 December 2012: £19,275,000) Level 1 Financial Assets and £2,108,000 (31 December 2012: £1,703,000) Level 2 Financial Assets. The Group has no level 3 investments (31 December 2012 £Nil).

9. Share capital and share premium

10. Retained earnings

11. Related party transactions

Hampden Underwriting plc has provided inter-company loans to Hampden Corporate Member Limited, Nameco (No. 365) Limited, Nameco (No. 605) Limited, Nameco (No. 321) Limited, Nameco (No. 917) Limited and Nameco (No. 229) Limited ("Corporate Members"), all 100% subsidiaries of the Company. Nameco (No. 518) Limited, a 100% subsidiary of the Company, has provided inter-company loans to the Company. Interest is charged on the loans at base rate plus 0.125%. The loans are repayable on three months' notice provided it does not jeopardise the ability of the Corporate Members to meet their liabilities as they fall due. The amounts outstanding as at 30 June 2013 are set out below:

The Corporate Members are 100% subsidiaries of the Company and have entered into a management agreement with Nomina plc. Jeremy Evans, a Director of Hampden Underwriting plc and the Corporate Members 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 £2,750 (2012: £2,750) per Corporate Member.

The Corporate Members are 100% subsidiaries of the Company and have entered into a member's agent agreement with Hampden Agencies Limited. Jeremy Evans, a Director of Hampden Underwriting plc and the Corporate Members, is also Director of Hampden Capital plc which controls Hampden Agencies Limited. Under the agreement the Corporate Members will pay Hampden Agencies Limited a fee based on a fixed amount, which will vary depending upon the number of syndicates the Corporate Members underwrite on a bespoke basis, and a variable amount depending on the level of underwriting through the members' agent pooling arrangements. In addition, the Corporate Members 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 2013 are set out below:

Hampden Underwriting plc has entered into a company secretarial agreement with Hampden Legal plc. Under the agreement, Hampden Legal plc provides company secretarial services to the Group for an annual fee of £38,000. During the period, company secretarial fees of £17,500 (2012: £17,500) were charged to Hampden Underwriting plc. Hampden Holdings Limited has a controlling interest in both Hampden Legal plc and Hampden Capital plc.

The Corporate Members have entered into a quota share reinsurance arrangement with Hampden Insurance PCC (Guernsey) Limited - Cell 6. Under this the agreement, the Corporate members have 50% quota share reinsurance. The Corporate Members in return charge Hampden Insurance PCC (Guernsey) Limited - Cell 6 a profit commission fee based on the group's aggregate underwriting profits. A Fund fee of 1.5% of the security provided by the reinsurer (less expenses) is also charged by the Corporate Members to Hampden Insurance PCC (Guernsey) Limited - Cell 6.

12. Syndicate participations

The syndicates and members' agent pooling arrangements ("MAPA") in which the Company's subsidiaries participate as corporate members of Lloyd's as are follows:

13. Group owned net assets

The Group balance sheet 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 Group balance sheet between Group and syndicate assets and liabilities.

14. Announcement

A copy of this announcement will be available on the Company's website, www.hampdenplc.com.