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1 Dec 2020 07:00
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 £110m 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 183% to £59m."
Capacity Update
Helios announces that the underwriting capacity for Helios for the 2021 year of account will be £110m a 60% increase in the capacity underwritten at the start of 2020.
Helios - 2021 Year of Account Capacity | |||
£m | 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 £59m, 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 this 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 |
| £m | £m | £m |
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 31st December 2020 using the weighted average prices of capacity from the 2020 Lloyd's capacity auctions has increased to £30.8m (31st December 2019: £26.3m).
| Capacity | Value of Capacity |
| £m | £m |
2020 Capacity at 31 Dec 2019 | 69.11 | 26.35 |
Capacity acquired with LLV's in 2020 | 10.88 | 4.93 |
Capacity revaluation having included pre-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 value | 57.84 | 82.76 |
Free capacity | 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 £10.9m, which were valued at 2019 capacity prices at £4.9m.
The syndicates supported by Helios offered free capacity of £10.7m 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 £0.8m.
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 £12.8m in total on these two syndicates. In addition, £2.4m of capacity was sold at the auctions to raise additional net cash of £1.3m.
For further information please contact:
Helios Underwriting plc
Nigel Hanbury - Chief Executive 07787 530404 / nigel.hanbury@huwplc.com
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 £110m 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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