30th May 2024
Helios Underwriting
plc
Final results for the year
ended 31 December 2023
Significant rise in profits and distributions driven by outstanding
Lloyd's market conditions
Helios Underwriting ('Helios' or the 'Company'), the only publicly
traded investment company offering instant access to a diverse
portfolio at Lloyd's of London, the world's largest insurance
market, is pleased to announce its audited financial results for
the year ended 31 December 2023.
Helios has positioned itself to
maximise growth opportunities by doubling the size of its capacity
portfolio over the last two years to £507 million for 2024, as the
market experiences outstanding financial performance underpinned by
strong pricing and underwriting discipline.
Full year 2023: key financial highlights
• Gross
premium written increased by 26% to £308m (2022:£244m)
• Capacity
portfolio at Lloyd's of £507m, up 63% (2022: £311m)
• Capacity
portfolio combined ratio of 86% 2022 (2022: 96%)
• Profit
before tax of £22.7m (2022 - loss of £3.9m)
• £18m
profit from the revaluation of capacity (2022: £2.7m)
• Total
comprehensive profit of £29.9m (2022: loss of
£0.1m)
• 25%
increase in net tangible asset value at £1.89p per share (2022:
£1.51p)
• Issue of
$75m Unsecured Loan Notes with a rating of A- by
KBRA
• Earnings
per share 22p (2022 - Loss (3.08)p)
• Dividend
and total return of capital of 19p (2022: 3p) of which a base cash
dividend of 6p will be paid
Chief Executive, Martin Reith, commented:
"Helios is the smartest way to
invest at Lloyd's of London and the excellent 2023 financial
performance reflects the strength of our unique proposition, our
continued strategic delivery and some of the best underwriting
conditions the market has experienced in a
generation.
"We have focused on growing scale
and relevance to ensure we maximise these market opportunities: we
have grown by 63% in the past year alone, across all parts of the
portfolio and through increased fee income. We continue to actively
seek out new opportunities to expand our presence by supporting the
best management teams and new ventures at Lloyd's where our
capacity, insights and experience add real value.
"Lloyd's is the home of insurance
innovation, providing solutions for many of the world's most
pressing issues - from climate change, to the energy transition,
and cyber risks. I'm proud of the way Helios has developed into a
key partner for syndicates at Lloyd's and the pre-eminent provider
of private capital into the market.
"Looking ahead I am excited by
further unlocking the potential of Helios and I am confident in our
ability to capitalise on the market opportunities and continue to
offer uncorrelated returns by generating long-term growth and
regular income for our investors."
For
more information, please contact:
|
Helios Underwriting plc
Martin Reith (Chief
Executive)
Arthur Manners (Chief Financial
Officer)
|
+44 (0)203 965 6441
|
|
|
|
|
FTI Consulting
Ed Berry
Nathan Hambrook-Skinner
Tom O'Brien
|
+44 (0)7703330199
+44 (0)7977817092
+44 (0)7929021492
|
Helios Underwriting
plc
Preliminary results
for the year ended 2023
Chairman's statement
Improved rating delivers improved
profitability
"We are confident that the Helios portfolio
will deliver value to shareholders."
Michael Wade
Non-executive Chairman
£22.7m
Profit before tax - £22.7m (2022: loss of
£3.9m)
£18m
Gain on revaluation capacity £18m (2022:
£2.7m)
£29.9m
Total comprehensive profit of £29.9m (2022
loss: £0.1m)
£1.89
Net asset value at £1.89 per share (2022:
£1.51)
19p
Return of capital in 2023 and 2024 expected to
be
19p per share
6p
A final dividend of 6p per share is being
recommended (2022: 3p)
Growth in retained capacity.
132% CAGR
2024
392
2023
245
2022
178
2021
99
In summary
• Gross premium written
increased by 26% to £308m
• Profit before tax of
£22.7m - (2022: loss of £3.9m)
• Profit from the
revaluation of capacity £18.0m - (2022: profit of £2.7m)
• Total comprehensive
profit of £29.9m (2022: loss of £0.1m)
• 25% increase in net
tangible asset value at £1.89 per share (2022: £1.51)
• Capacity portfolio
combined ratio of 86%
• Earnings per share
22p
• Dividend and total
return of capital of 19p of which a base cash dividend of 6p will
be paid (2022: 3p)
I am delighted to be able to report a
significant improvement in the profitability of the Company as the
growth in the retained capacity over the last three years has
started to deliver the expected profitability and growth in
shareholder value.
The Lloyd's market has continued to regain its
strength and profitability; these results are the beginning of a
period where we can see attractive pipeline returns derived from
our spread portfolio of syndicate participations through ownership
of subsidiary corporate members of Lloyd's.
The net asset value ("NAV") of the Company has
grown from a combination of underwriting profitability, investment
income returns and the increasing value of the Lloyd's syndicate
portfolio where we have capacity value and pre-emption
rights.
Return of Capital
The Company is committed to returning capital to
its shareholders and does so by way of dividends and share
buy-backs. In 2023 a total of £5.5m was returned to shareholders
comprising a base dividend of 3p per share (£2.3m) and the buying
back of 2.24m shares, for a total consideration of £3.2m in 2023 at
an average price that has been accretive to net asset value per
share.
In 2024, the Board is proposing to further
enhance capital returns to shareholders. A base dividend of 6p per
share (£4.5m) is proposed together with a further buy back of
shares of value up to £3.7m by 31 December 2024. This, alongside
the £1m in share-buyback already completed, will result in the
total capital returned to shareholders in 2024 being up to
£9.0m.
The aggregate capital returned to shareholder in
2023 and 2024 is expected to be up to £14.5m - 19p per
share.
This return of capital reflects the Board's
confidence in future cash flow and the prospects for profitable
underwriting. The Board believes that the illiquidity in the
Company's shares can create significant volatility in the share
price and some liquidity provided by the Company through share
buybacks will assist in managing trading in the shares.
There will be the option to take new ordinary
shares in lieu of the base dividend.
Capacity Portfolio
The information on the capacity portfolio will
enable analysts to estimate pipeline profits from the 2022 and 2023
Lloyd's underwriting year of accounts within the notes to the
accounts. We anticipate attractive results receivable in the 2025
and 2026 calendar years.
As we commence 2024, shareholders should be
encouraged to note, as explained further in our Chief Executive's
Report, Helios now manages over £500m of the Capacity Portfolio
across 40 syndicates, of which 77% is retained for our shareholders
and 23% acting for third party capital providers and where Helios
will generate fees and commissions.
The freehold capacity on well-established
syndicates at Lloyd's continues to form the cornerstone of the
capacity portfolio. When these syndicates wish to grow their
businesses, the existing owners of the capacity have pre-emptive
rights to receive additional capacity pro rata to the scale of
increase in the underlying business. The additional capacity is
free of acquisition cost and the value of this additional capacity
increases our asset valuation, albeit requiring additional capital
to meet Funds at Lloyd's. During 2023, the value of the capacity
fund increased by 32% from the free capacity offered from
pre-emptions, from capacity acquired with the acquisition of LLVs
and from an increase in the average prices traded at the Lloyd's
auctions in 2023.
Helios actively manages capital. We have a
number of strategic options we can turn to increase or decrease our
exposure. Fee income remains an attractive earnings stream which
complements our underwriting returns. For the 2024 Year of Account
we launched a "sidecar" facility for third party capital that can
access the Helios Capacity Portfolio. As the market cycle evolves,
we evaluate opportunities to maintain underwriting exposure and
cede risk for fees.
Performance
It is important to understand that there is a
three-year delay in the realisation of underwriting profits in our
accounts so at the moment we are benefiting from the profits
realised from the 2021 and 2022 underwriting years. In addition,
the benign catastrophe year in 2023 has allowed the 2023 Year of
Account to recognise an underwriting profit at 12 months of £7.7m
(2022: loss of £9.5m), which has contributed to the overall
result.
The results for the year ended 31 December 2023
show an operating profit for the year of £22.7m (2022: loss of
£3.9m) and total comprehensive income of £29.9m The net asset value
of the Group is £1.89 per share (2022: £1.51).
Summary financial information
|
|
|
|
|
|
|
|
Gross written premium
|
307,770
|
244,614
|
|
Net earned premium
|
200,980
|
150,393
|
|
Underwriting profits
|
31,560
|
116
|
|
Other income
|
4,130
|
2,458
|
|
|
|
|
|
|
|
|
|
Revaluation of syndicate capacity
|
17,987
|
2,670
|
|
|
|
|
Total comprehensive
income
|
|
|
|
Earnings per share
|
21.56p
|
(3.08)p
|
|
|
|
|
During 2023, the opportunity to raise long-term
debt and raised $75m with a seven-year term and a fixed coupon of
9.5% (currently a net cost of approximately £5.7m per annum). This
additional finance allowed us to re-finance some existing bank
Funds at Lloyd's facilities and it further assists in matching our
asset base to the underlying insurance exposures which are mainly
in US dollars. We would expect that this additional finance will be
lodged as funds at Lloyd's to support underwriting in the
future.
Board Changes
My sincere thanks to my predecessor Michael
Cunningham for his wise custodianship of the Helios Board and
assisting me to take over as your Chairman last June. In addition
to the retirement of Michael Cunningham, the Duke of Norfolk left
the Board in April and we thank him for his service and independent
counsel. We have appointed a specialist search firm to assist us in
bringing two new independent Non-executive Directors where there
are skill sets of risk and audit respectively.
Future prospects
We envisage further opportunities during 2024
and into 2025 and will position the portfolio accordingly. We
expect the majority of the syndicates we support to pre-empt in
order to benefit from the attractive rating environment and market
discipline. In addition, we are evaluating new opportunities for
Helios that will give shareholders further diversification. It is
our hope that, with these prospects, the AIM stock market will
value more appropriately and attract better liquidity for our
shares.
Michael Wade
Non-executive Chairman
29 May 2024
Chief Executive Officer's review
Helios has evolved into a hard hitting
preferred capital provider at Lloyd's
"Substantial increase in profitability and the
growth in the capacity portfolio driving value"
Martin Reith
Chief Executive Officer
£42.7m
Portfolio underwriting result of £42.7m (2022:
£2.0m)
£29.9m
Total comprehensive income £29.9m (2022: loss
of £0.1m)
£1.89
Net asset value £1.89 (2022: £1.51)
25%
Growth in Net Asset value
34%
Growth in net earned premium (2022:
117%)
86%
Combined ratio for the overall
portfolio
Operating profit
• Capacity Portfolio
£507m
• Revaluation of
Capacity - Gain of £18m
• Dividend per share -
6p
• Return of capital per
share 19p
• Debt raise
$75m
• Earnings Per Share
22p
• Net Tangible assets
£140m/GWP £308m
The Lloyd's insurance market is experiencing the
most attractive underwriting conditions for a generation with
record profits for 2023 driven by disciplined underwriting and
investment returns. The market reported a net combined ratio of
84%, £5.2bn investment returns and delivering profits of £10.7bn.
The market has witnessed significant premium growth from pricing
correction and new opportunities and for 2024; the expectation is
to write £60bn, up 11% from 2023.
In an increasingly challenging global
environment - politically, environmentally and fiscally - we
continue to scrutinise and assess likely impacts and adjust our
stance accordingly. The market is still in the grip of a peril from
Russia's invasion of Ukraine and Israel's' continuing military
action in Gaza. Casualty reserves and adequacy remain a concern
with rising inflation, albeit mitigated to some extent by the rise
in interest rates.
The market continues to focus on becoming more
efficient with a steadfast focus on underwriting discipline and
increased adoption of digitalisation. The arrival of technology,
enriching the underwriting process, will create new opportunities
to evaluate more risks faster and more efficiently. As technology
enhances and enriches the process of underwriting risks at Lloyd's,
this could create an opportunity to further increase participation
in the future. The bifurcation of the lead/follow will create new
opportunities where we expect to benefit across our
portfolio.
Changes in 2024 planned capacity by 2022
combined ratio quartile (%)
Helios Lloyd's
First quartile
52%
6%
Second quartile
44%
(5%)
Third quartile
49%
7%
Fourth quartile
15%
13%
2024 Capacity by 2022 Quartile
First Quartile, 24%
Second Quartile, 26%
Third Quartile, 13%
Fourth Quartile, 17%
New, 20%
Once again, Helios has sought to position the
portfolio to maximise market opportunities. Market discipline and
pricing adequacy remains strong and the capacity portfolio has
doubled over the past two years and stands at £507m for 2024. Our
portfolio, increasingly diversified and volatility managed, is
seeing growth across all sectors of the portfolio.
Overall, we have grown by 63% from 2023 in to
2024, increasing our retained position and growing our fee earning
aspect with third party capital. Our strategy is to manage a
diversified portfolio of underwriting capacity. During this year,
the Helios-retained capacity has grown from £245m to £392m, a 60%
increase. We have built our portfolio across the 4 quartiles as
illustrated in the chart above. Helios has increased the proportion
of capacity in each of the top three Lloyd's quartiles by over 40%.
This growth rate is significantly higher than that of the entire
Lloyd's market.
There is little doubt that our impact and
relevance is growing in the market. We are often approached to
support new syndicates and lead their funds at Lloyd's placement.
We have been able to grow beyond the pre-emption amounts in some
occasions, benefiting from our market-wide
relationships.
Our analytical skills continue to grow as we
interrogate our portfolio using data and analytics to ensure
balance, capital management and curation. Since the last report, I
am delighted to welcome Jen Tan as our Head of Portfolio Strategy,
Michelle Faithful as our syndicate and portfolio analyst and our
new Chief Operating Officer, Adhiraj Maitra. These are significant
developments that will position us well to develop our cycle
managed strategies.
You will see later in this report some greater
granularity around our portfolio characteristics.
As we look forward, we shall continue to tailor
the portfolio, using data and analytics, to optimise opportunities
mindful of market conditions and origination opportunities. We are
in active discussions with Lloyd's to ensure we are in tune with
the market's ambitions, views and strategies as we seek
opportunities to optimise the portfolio and to access the market
beyond the current capacity portfolio.
We have evolved to become a hard-hitting
preferred Funds at Lloyd's capital provider deploying significant
capacity and capital on opportunities that meet or exceed our
return requirements. We try to be innovative and creative, working
with our portfolio to determine new ways to build our relationships
and relevance. At the heart of what we do is supporting
extraordinary Executives across management and underwriting. They
are the ones that build and drive their businesses and Helios
supports them in that quest with access to knowledgeable committed
capital.
Our share price performance remains
disappointing and not reflective of the Company's performance. It
is clear we need to sharpen our messaging and communication to
ensure that our various stakeholders and audiences understand our
value proposition.
The Board is committed to returning capital to
shareholders and we are confident that we shall be able to make
significant strides in this respect.
Helios punches above its weight given the staff
numbers and impact. My sincere thanks to the Helios team for all
their hard work and welcome to those new joiners.
Martin Reith
Chief Executive Officer
29 May 2024
Portfolio Management report
Introduction
While we continue to work closely with our
Members Agents, the growth of the Company, in particular the
Portfolio Management function, has allowed us to develop in-house
analytical capabilities.
Our portfolio management and strategy is rooted
in a rigorous interrogation process for syndicate selection. This
involves a thorough examination of multiple aspects for every
syndicate in our portfolio. We review business plans in detail,
evaluating every aspect from financial projections to strategic
directions. We also use different data and analytical tools (e.g.
stress and scenario tests) to evaluate the impact of a syndicate's
potential impact on the overall portfolio and make informed
decisions. This is an evolving process and we are looking to
introduce stochastic modelling techniques in the business as usual
evaluation process.
We aim to optimise and diversify the portfolio,
ensuring we have a balanced mix of syndicates capable of
withstanding market losses and with the intention of providing
consistent superior performance.
The final decision to include a syndicate in our
portfolio rests with the Board, ensuring accountability and
alignment with our overall strategy.
We actively monitor performance and adjust our
strategies as necessary, tailoring our portfolio in response to
market conditions and pricing.
Overview of our portfolio
The Capacity Portfolio is positioned to maximise
underwriting returns, and take advantage of favourable market
conditions we are enjoying in 2023 and beyond. There has been
increased focus and curation from the 2022 to 2023 portfolio with
an emphasis on:
• managing exposure to
natural catastrophe;
• growth into specialty
lines;
• targeting risks,
classes and geographies that diversify the portfolio;
• building relationships
with syndicates that attract non-correlating exposure;
and
• identifying new
relationship capacity with excellent growth prospects.
The chart below is an illustration of the
process followed in reviewing new opportunities for the Helios
Capacity Portfolio.
Evaluation process
Initial review
• Submission
review
• Meetings with
syndicate and brokers
• Q&A
sessions
Syndicate deep dive
• Business plan
review
• Historical performance
analysis
• Capital
modelling
• Syndicate
scoring
• Performance and
volatility modelling
Portfolio impact
• Financial
projection
• Portfolio
mix
• Large loss
exposure
• Aggregation /
Diversification
• Stress
testing
• Portfolio
modelling
Decision making
• Recommendation
presented to the Portfolio Management Committee
• Decision approved by
the CEO and Board
2024 Portfolio Review
Helios' capacity portfolio has grown from £311m
for 2023 year of account ("YOA") to £507m for 2024 YOA. This 63%
increase has been achieved through growth beyond pre-emptions in
several syndicates, cementing that demand and desire to have Helios
capital.
The addition of eight new syndicates has
generated further diversification on the portfolio and an increase
in classes of business and expansion into geographical areas where
we historically had limited exposure.
We actively seek out new, niche and high-quality
syndicates that may become difficult to access in the
future.
Freehold
syndicates - Participations in syndicates
managed by these managing agents represent shares in the
long-established businesses at Lloyd's. We strive to acquire LLVs
with portfolios that comprise these quality syndicates, thereby
having to pay the average auction prices to get access. This
proportion of the portfolio provides diversified exposure to
syndicates that have experienced underwriting teams and
well-established portfolios where each management team allocates
capital to the business areas with the better risk adjusted
returns.
Number of syndicates
Established New
2022
25
3
28
2023
27
5
32
2024
30
10
40
Growth in capacity £m
Retained capacity Third party
capacity
2022
182
63
245
2023
245
66
311
2024
392
115
507
Tenancy syndicates - We
have a mix of longstanding relationship capacity and syndicates
that we are supporting for the first time. In reality, while we
hope to have secured capacity over the long term, we need to renew
for each YOA and that adds to our overall portfolio
construction.
Curation of the portfolio
The table shows the movement in the portfolio to
position for the 2024 year of account. The portfolio has been
actively managed during the year to achieve the
following:
|
|
|
|
|
|
2023 YOA capacity
|
147.3
|
155.5
|
310.8
|
|
Acquisitions
|
7.4
|
0.7
|
8.1
|
|
Pre-emptions
|
14.7
|
27.1
|
41.8
|
|
New syndicates
|
-
|
100.8
|
100.8
|
|
Auction - buy
|
6.5
|
-
|
6.5
|
|
Portfolio management
|
-
|
55.8
|
55.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-emptions - £41.8m -
the syndicates supported grew their businesses on average by 13%
for the 2024 year of account and we took up these pre-emptions for
no cost.
New syndicates - We have
been active in supporting leading management teams wanting to take
advantage of the Lloyd's licences and infrastructure to start new
syndicates that either have a unique proposition or will be
underwriting existing portfolios with a profitable track record. It
is essential for the new opportunities to have strategic alignment
with the Helios Capacity Portfolio, increase diversification and
meet our risk appetite requirements.
Details of some of the syndicates (new and
established) added to our portfolio are outlined
below.
We invested in Wildfire Defense Syndicate 1996
(WDS). This new Syndicate in a Box focuses on loss prevention and
is committed to reducing wildfire losses across the insurance
industry focusing initially on California. The WDS's response
actions on properties threatened by wildfires lead to significant
savings. It prevents structures from being lost to wildfires, which
in turn reduces carbon emissions from structure combustion and
reconstruction.
Nephila 2358, two new Special Purpose
Arrangements (Envelop 1925 and AdA 1492) and two Syndicates in a
Box (Volante 2358 and Parsyl 1796) were also added to our portfolio
in 2023.
In 2024, we provided further capital support to
four new Syndicates in a Box with different and uncorrelated risk
profiles.
We made a strategic investment by providing
capital to MCI Syndicate 1966, an innovative venture that was
officially launched in April of 2024.
Syndicate 1966 is unique in that it introduces a
revolutionary new product that offers insurance for clinical trial
funding, specifically designed for the rapidly growing
biotechnology industry. This product is not just an insurance
policy, it is a tool that has the potential to greatly impact the
future of medical research and development.
The syndicate leverages advanced technology,
employing an Artificial Intelligence (AI) model, to predict the
success rate of clinical trials. This predictive model is a key
aspect of their business strategy, as it allows for more accurate
and efficient allocation of resources. By doing so, Syndicate 1966
not only mitigates risks but also actively promotes medical
innovation.
The other three new additions, namely NormanMax
3939, Agile 2427 and African Specialty Risk 2454 (ASR), have all
demonstrated a consistent proven track record of profitability
through their MGA historical performance.
NormanMax offers a unique parametric product
that is light on our portfolio.
On the other hand, Agile predominantly
underwrite Australian and New Zealand risks.
ASR specialises in insuring African countries.
These geographic focuses brings a level of diversification to our
portfolio, as it strays from more common regions of our existing
portfolio.
Therefore, these syndicates are expected to not
only contribute positively to our bottom line but also bring about
strategic advantages in terms of portfolio
diversification.
Auction - buy - £6.5m -
we again took advantage of lower-than-expected prices on certain
syndicates to purchase additional capacity. These syndicates have
good prospects in the future, particularly for gains on the price
on capacity rights.
Acquisitions - £8.1m -
the capacity acquired supplemented the existing freehold capacity
participations.
Portfolio management -
£55.8m - Helios leveraged its strong relationships with the
syndicates it supports to increase participation in several
high-performing syndicates, beyond pre-emptions, in order to
benefit from favourable market conditions.
Discarded capacity -
£8.6m - as part of the portfolio evaluation and monitoring, we
reduced our participations on specific syndicates to aid the
balance and contributions across the portfolio.
Declined opportunities:
We have seen and declined a number of opportunities where we
are unconvinced of the strategic direction, projected financial
performance or scope of cover.
Mix of syndicates
Helios is a true spread vehicle with a portfolio
across 40 syndicates. Among these, 63% are established syndicates
(>three years of underwriting); 22% have less than three years
of operating experience and 15% are new syndicates which commenced
business operations in 2024.
The number of new syndicates supported in 2024
increased as Helios looked to optimise in the current strong
market. Helios is presented with many new opportunities; each of
these are thoroughly evaluated and analysed before any support
decisions are made. We have declined opportunities which are not
aligned with the Company's strategic objectives for the portfolio
and cautiously allocate small capacity support on new
syndicates.
Beazley 623, 32.7m
TMK 510, 30.3m
Apollo 1969, 25.5m
Arch 1955, 20.0m
Atrium 609, 19.5m
Hiscox 33, 15.4m
Beat 4242,15.0m
Agile 2427, 15.0m
MCI 1902, 12.6m
Dale 1729, 25.1m
Flux 1985, 20.0m
ERS 218,17.7m
CFC 1988, 15.1m
Envelop 1925, 12.5m
WDS 1996, 9.5m
ADA 1492, 8.5m
Lancashire 2010 7.3m
Blenheim 5886, 30.8m
NormanMax 3939, 12.0m
Parsyl 1796, 7.0m
Other participations totalling 36.2m
Beazley 5623, 27.0m
Apollo 1971, 25.0m
Nephila 2358, 20.0m
MAPL 2791, 16.4m
MCI 2 CTF, 15.0m
Hiscox 6104, 10.0m
ASR, 5.8m
Financial analysis
Portfolio underwriting result
The portfolio achieved a net combined ratio of
86% in comparison with the combined ratio for the Lloyd's market of
84%. The portfolio's combined ratio is affected by the early
earning development of new syndicates and their inherently cautious
loss ratios. However, if we exclude the new syndicates, the
established ones within the portfolio align with the market. Over
time, as these new syndicates mature and their earnings grow, we
expect the associated combined ratios to improve.
Established syndicate, 63%
Less than three years, 22%
New, 15%
2023 Helios calendar year net combined ratio
analysis
|
|
|
|
|
|
|
Capacity %
|
|
11.2%
|
88.8%
|
62.3%
|
37.7%
|
|
Net claims ratio
|
49.4%
|
55.1%
|
48.9%
|
48.1%
|
51.4%
|
|
Acquisition cost ratio
|
25.8%
|
25.4%
|
25.9%
|
26.6%
|
24.6%
|
|
Expenses ratio
|
10.6%
|
16.6%
|
10.0%
|
11.2%
|
9.7%
|
Net combined ratio (NCOR)
|
|
|
|
|
|
|
|
|
|
|
|
|
* Before Helios
reinsurance and expenses.
Portfolio underwriting result
The contribution from the 2021,2022 and 2023
years of account to the underwriting result for the capacity
portfolio in 2023 is as follows:
|
|
|
|
|
|
|
|
Portfolio capacity by underwriting year
£m
|
157.3
|
245.2
|
310.8
|
|
|
|
Gross underwriting result £m
|
4.6
|
21.6
|
5.9
|
32.1
|
5.6
|
|
|
|
|
|
|
|
Portfolio result by underwriting year
£m
|
|
|
|
|
|
|
Gross result as % of capacity
|
5.9%
|
10.4%
|
2.5%
|
|
|
|
Retained capacity £m
|
105.8
|
184.5
|
244.5
|
|
|
|
|
|
|
|
|
|
Helios share of the portfolio result
£m
|
|
|
|
|
|
Financial Analysis
The strategy to take advantage of the excellent
underwriting conditions, to grow the capacity portfolio over the
last three years and to increase retained Helios share of the
capacity portfolio has increased capacity portfolio underwriting
result to £42.7m (2022: £2.1m).
a) The growth in the capacity
portfolio to £245m for 2023 year of account and the improved
pricing has contributed an underwriting profit of
£25.3m.
b) Helios' increased share of
the portfolio for the 2023 underwriting year, increasing to 79%,
has made a contribution of £5.8m in 2023 (2022: loss of £7.1m),
given the lower incidence of catastrophe losses that were incurred
by the supported syndicates.
The development of the earned profits by year of
account is shown below.
|
|
|
|
|
|
Portfolio profits/(losses) bought
forward
|
0.9%
|
(4.0%)
|
-
|
Portfolio profits earned in the year
|
|
|
|
Final result/cumulative profits earned to
date
|
|
|
|
Final result/mid-point estimates as at 31
December
|
|
|
|
During 2023, the 2021 underwriting year result
improved from a mid-point result as at 31 December 2022 of 2.4% to
a final result of 6.8%, an improvement of 4.4%. There remains
uncertainty over the reserves required for the aviation losses
incurred in Ukraine. Syndicate 609 - Atrium - has kept the 2021
year of account open, pending the ongoing discussions regarding the
potential liability for the aviation losses.
The 2022 year of account was impacted by
Hurricane Ian - an insured industry loss of USD55bn which resulted
in a loss to the portfolio of 6.1%. Having booked this loss, the
mid-point estimate for the 2022 underwriting year at 31 December
2023 is a profit of 8.1% which is expected to improve in 2024, with
the remaining profits from this year of account to be earned in
2024. The mid-point estimate for 2023 has initially been reported
at 12.0%, an underwriting year that was not materially impacted by
catastrophe events. This absence of large losses allowed profits to
be recognised at the 12-month stage and the initial mid-point
result for 2023 is very promising.
We expect the GAAP earnings in 2024 from the
2023 and 2022 underwriting years to make a significant contribution
to Helios' earnings, both from the profitability in the underlying
portfolios and with further positive investment returns continuing
to be recognised.
Insurance price index (base year 2017 =
100)
2017
100
2018
103
2019
109
2020
121
2021
134
2022
144
2023
151
The Lloyd's market has been in remediation and
market-wide pricing correction since 2018 and we have seen seven
consecutive years of rate hardening. The 2023 Lloyd's result was
the best in recent history, achieving a combined ratio of 84%,
evidencing the current rate levels are adequate and resilient to
loss activities.
Net combined ratio (%)
Helios Lloyd's
2023*
86
2023*
84
2022
93
2022
92
2021
94
2021
94
2020
103
2020
110
The below chart shows the return on capital for
the Helios capacity portfolio against the returns that could be
achieved by the aggregate for capital provided to Lloyd's to
support underwriting. Helios portfolio's return on capital
outperforms that of Lloyd's by an average of 9.0% over the last
four years.
Source: Corporation of Lloyd's
Return on Capital Helios vs Lloyd's Market
Performance (%)
Helios Lloyd's of London Helios relative
performance
Return on capital has been calculated
as:
Helios - The YOA return* on the opening capacity
for that YOA as a percentage of the previous year's calendar year*
closing Funds at Lloyd's (including reinsurance and solvency
adjustments).
Lloyd's - The YOA return* as a percentage of
FAL, calculated as the calendar year* closing members, Funds at
Lloyd's*.
* Calendar year has
been used as a proxy for the YOA capital support.
* YOA return includes
prior year movements.
Other income
Helios generates additional income at Group
level from the following:
|
|
|
|
|
Fees from reinsurers
|
1,408
|
562
|
|
Corporate reinsurance policies
|
-
|
33
|
|
Amortisation of goodwill
|
619
|
1,216
|
|
|
|
|
|
|
|
|
The investment returns on the assets managed by
the supported syndicates are included in the overall portfolio
underwriting result.
|
|
|
|
|
|
Syndicate investment assets
|
217,444
|
10,373
|
4.7%
|
|
|
|
|
|
|
|
|
|
|
Helios' share of the syndicate investments have
generated an investment return of 4.7% (2022: loss of 2.2%) and the
yields on our investment funds have also improved. These investment
funds are now fully invested in a short duration bond portfolio.
The share of the syndicate investments have increased by 42% in the
year and this is expected to continue to increase, reflecting the
growth of the capacity portfolio.
Fees from the quota share reinsurers reflect the
fee payable on the Funds at Lloyd's provided and profit commission
relating to profits earned on the 2021, 2022 and 2023 years of
account has been accrued.
Total costs
The total costs comprise the cost of the stop
loss protection bought to mitigate the downside from large
underwriting losses, the cost of providing recourse and
non-recourse debt to assist in the financing of the capital
requirements of the retained capacity and the operating
expenses.
|
|
|
|
|
Pre-acquisition
|
494
|
46
|
|
Portfolio stop loss
|
2,561
|
1,002
|
|
Portfolio funds at Lloyd's Financing
|
3,112
|
1,446
|
|
|
|
|
|
|
|
|
The stop loss costs incurred in 2022 have been
partially deferred to reflect the exposure of the portfolio that
extends over two years. The increased the charge in 2023 reflects
the continuation of the spreading of the costs over two years and
as the retained capacity increased in 2023. The stop loss provides
short-term financing to fund a loss in excess of 7.5% of
capacity.
The financing of the retained capacity using
excess of loss and bank facilities is also spread over two years.
£41m of additional underwriting capital was sourced in 2023 through
a reinsurance contract and a £15m bank facility at a cost of
£2.8m.
The operating costs have increased as the
portfolio management skills have been expanded following the
appointment of Martin Reith. In addition, the 2023 costs include a
bonus accrual of £1.25m and a provision for FX losses of
£0.9m.
Net tangible asset value per share
The growth in the net asset value per share
remains a key management metric for determining growth in value to
shareholders.
|
|
|
|
|
Net tangible assets
|
57,665
|
55,743
|
Fair value and capacity ("WAV")
|
|
|
|
|
|
|
|
Shares in issue (Note 21)
|
74,186
|
76,218
|
Net tangible asset value per share
(£)
|
|
|
The capital employed per share, the assets used
to generate earnings which exclude the deferred tax liability on
capacity value, is as follows:
|
|
|
|
|
Net assets
|
140,101
|
115,710
|
|
Deferred tax provision on capacity
value
|
20,136
|
14,139
|
|
Capital employed
|
160,237
|
129,849
|
|
Shares in issue (Note 21)
|
74,186
|
76,218
|
Capital employed per share (£)
|
|
|
The deferred tax provision on capacity value
could potentially be incurred should the entire portfolio be sold.
The capital employed by share is 32p (2022: 18p), higher than the
net tangible asset value per share.
The value of capacity is subject to fluctuation
and reflects the activity in the capacity auctions held in the
autumn of each year.
Return of capital to shareholders
The Company returns capital to shareholders by
way of dividends and share buy-backs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share buyback - Actual
|
3.2
|
4
|
|
0.8
|
1
|
|
4.0
|
5
|
|
- Proposed
|
|
|
|
3.7
|
5
|
|
3.7
|
5
|
|
Dividend
- Actual
|
2.3
|
3
|
|
|
|
|
2.3
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company returns capital to shareholders by
way of dividends and share buy-backs. In 2023 a total of £5.5m was
returned to shareholders comprising a base dividend of 3p per share
and the buying back of shares of £2.3m in 2023 at an average price
of £1.42p per share thereby enhancing shareholder value.
In 2024 it is proposed to increase the capital
returned to shareholders to £9.0m. A base dividend of 6p per share
(£4.5m) is proposed together with a further buy back of shares of
up to £3.7m by 31 December 2024.
The aggregate capital returned to shareholder in
2023 and 2024 is expected to be £14.5m - 19p per share.
Capacity value
The value of the portfolio of the syndicate
capacity remains the major asset of Helios and an important factor
in delivering overall returns to shareholders. The growth in the
net asset value ("NAV"), being the value of the net tangible assets
of the Company, together with the current value of the portfolio
capacity, is a key management metric in determining growth in value
to shareholders.
|
|
|
|
|
|
Capacity value at 31 Dec 2022
|
147.3
|
60.0
|
41p
|
|
Capacity acquired with LLVs in 2023
|
7.4
|
3.5
|
|
|
Value of pre-emption capacity
|
14.7
|
7.0
|
|
|
Acquisition of capacity in the capacity
auction
|
6.5
|
0.4
|
|
Increase in portfolio value
|
|
|
|
Capacity value as at 31 Dec
2023
|
|
|
|
The average price per £ of freehold capacity has
increased by 15% to 47p per £ of capacity, reflecting the demand
from third party capital for access to the syndicates offering
freehold capacity. In addition, the pre-emptions offered increased
the value of the portfolio by £7m.
Impact on net asset value
|
|
|
Value of pre-emption capacity
|
7.0
|
Increase in portfolio value
|
|
|
|
18.5
|
Deferred tax provision - 25%
|
|
Net increase in tangible net assets
|
|
|
Number of shares in issue
|
74.2
|
Increase in net asset value per
share
|
|
The Board recognises that the average prices
derived from the annual capacity auctions managed by the
corporation of Lloyd's could be subject to material change if the
level of demand for syndicate capacity reduces or if the supply of
capacity for sale should increase.
A sensitivity analysis of the potential change
to the NAV per share from changes to the value of the capacity
portfolio is set out below:
|
|
|
|
|
Current value - £m
|
82.4
|
1.89
|
|
Decrease of 10%
|
74.2
|
1.81
|
|
|
|
|
Each 10% reduction in the capacity values at the
2024 auctions will reduce the NAV by approximately 8p per share
(2022: 6p per share). The increase in capital base has reduced the
impact on NAV per share from changes in capacity value. Any
reduction in the value will be mitigated by any pre-emption
capacity on syndicates that have a value at auction.
Acquisition strategy
Helios acquired four LLVs in 2023 (2022: three),
maintaining an interest in the market for the sale of LLVs in 2023.
Given that the improvement in market conditions is now being
reflected in the syndicate underwriting results - the interest in
the small numbers of LLVs for sale has increased. We will continue
to communicate with the owners of LLVs, which has the advantage
of:
• raising the profile of
Helios;
• allowing owners of
LLVs who were potentially considering ceasing underwriting at
Lloyd's to have the opportunity to realise the value of their
investment quickly;
• allowing vendors a
tax-efficient exit if they wish to cease underwriting.
Risk Management
During 2023, a further four LLVs were
acquired.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
7.1
|
8.2
|
8.0
|
12%
|
|
364
|
|
|
2022
|
5.7
|
5.7
|
6.3
|
10%
|
|
|
374
|
|
|
|
|
|
|
|
|
|
The four (2022: three) acquisitions in 2023 were
purchased for a total consideration of £7.1m (2022: £5.7m), of
which £3.2m (2022: £2.6m) was attributed to the value of capacity
acquired. Although the LLVs acquired in 2023 were at discount to
Humphrey's, subsequently the availability of LLVs at reasonable
value has diminished. As the prospect for profitable underwriting
has increased, there is greater interest in the LLVs that are
available for sale.
The goodwill that is recognised on an
acquisition is now amortised in the Financial Statements over three
years and in 2023 £619,000 of negative goodwill has been amortised
in 2023.
Third party capital
Underwriting capital provided by third parties
will form an increasing part of the capital stack of the Helios
Capacity Portfolio. Helios has used quota share reinsurance for a
number of years to provide access to the Lloyd's underwriting
exposures for reinsurers and for the 2024 year of account third
party members provided a new source of capital to support the
capacity portfolio.
|
|
|
|
|
|
Current total capacity - £m
|
QS
reinsurers
|
66.3
|
63.5
|
|
|
|
|
|
Total third party capital
|
|
|
|
|
Helios Capacity Fund - total
capacity
|
|
310.8
|
507.1
|
Helios' share of capacity fund
|
|
|
|
Third party capital has successfully reduced the
exposure of Helios shareholders in recent years and assists in the
financing of the underwriting capital. Helios has almost doubled
the third party capacity support for the capacity portfolio in 2024
to £115m. It is expected that the support from third party capital
will further increase for the 2025 year of account.
For the 2024 year of account, a new structure of
participation was offered to existing private capital participants.
In conjunction with Argenta Private Capital Limited, its clients
were offered the opportunity to participate on the Helios Capacity
Portfolio MAPA, including participations on freehold syndicates
without having to fund the upfront cost of the freehold capacity
rights. Helios is renting the freehold capacity rights to these
capital providers with the intention of improving the return on
capital for these investors.
The concept of offering private capital
participations on the Helios Capacity Portfolio was evolved by
setting up ten new LLVs to commence trading for the 2024 year of
account with an allocation of the Helios Capacity Portfolio that
was initially funded by Helios.
These new LLVs were then offered for sale by
Argenta Private Capital and all these LLVs have either been sold or
are under offer and the Helios initial funding will be refunded.
Helios intention is to retain an LLV with capacity of £4.7m so that
Helios staff can commit funds at Lloyd's by way of a deferred bonus
scheme to participate on the Helios MAPA.
Issue of A-rated - $75m Unsecured Loan
Notes
In December 2023, the Company issued $75m of
Unsecured Loan Notes with a rating of A- by KBRA. This loan has a
fixed coupon on 9.5% and is repayable after seven years in December
2030. The debt was raised to replace an existing £15m bank facility
that was used to assist in the financing of funds at Lloyd's, to
fund future underwriting capital requirements and provide general
liquidity in the business.
The Notes have a covenant whereby if debt
exceeds more than 40% gross assets, then a proportion of the free
cash flow has to be utilised to pay down the debt so that the gross
asset test is no longer exceeded. See Summary Financial Information
for further analysis.
Risk management
At Helios, the effective management of risk is
central to our business. We are committed to maintaining a robust
risk management framework, which includes comprehensive strategies,
policies and procedures to manage risk across all levels of our
operations.
Our team has regular communication with
syndicates to understand how they manage a wide range of risks,
including underwriting, operational, market, credit and liquidity
risks. We also understand the importance of stress testing and
scenario analysis in managing risk. We regularly conduct these
exercises to assess the resilience of the Helios Capacity Portfolio
under different conditions. The results of these analyses are used
to inform our strategic decision making and capital allocation
processes.
Designing and implementing an effective risk
management framework is a continuous process, and we are committed
to its ongoing development to ensure that it remains fit for
purpose as our business evolves. We are confident that our approach
to risk management positions us well to mitigate potential risks
and capitalise on opportunities as they arise.
Strategic risk
We construct the portfolio for each year while
considering a number of key strategic risks. First and foremost, we
review performance to date and the strategic direction across the
portfolio for future underwriting. Against this we assess in light
of our own view of risk, market conditions, pricing adequacy,
vulnerability to shock and attritional loss while managing the
capital to achieve a diversified, volatility managed and optimised
portfolio The maintenance and construction of a portfolio of
Lloyd's syndicates remains the strategic objective of the Group.
Participations can vary as will the mix in order to optimise the
portfolio. The 2023 and 2024 portfolios were built against a
backdrop of exceptional market conditions.
Liquidity risk
Liquidity risk is the risk that a company may
not be able to meet short-term financial demands. Liquidity risk
for an insurance capital provider like Helios can arise from
numerous factors. Large claim payouts following a significant loss
event which requires further funding of funds at Lloyd's to cover
expected syndicate losses can strain cash reserves. Helios
financial demands might necessitate asset liquidation, potentially
leading to losses in unfavourable market conditions. Large losses
could cause breaches of loan covenants, triggering further
liquidity pressure. An inability to promptly pay out claims could
harm reputation and potentially lead to future business
losses.
To mitigate liquidity strains, Helios has
arranged short-term financing of £35m for 2024 (2023: £24m) as part
of the stop loss reinsurance for its 69% (2023 YOA: 80%) share of
the portfolio. The facility can be drawn down if the solvency loss
for the 2024 year of account exceeds 7.5% of capacity at any
quarter end. In addition, Helios has a committed bank facility of
£10m to assist in any short-term financing requirements.
To mitigate these risks, Helios maintains a
robust liquidity risk management framework, which includes
maintaining sufficient cash reserves, diversifying our portfolio,
implementing a comprehensive reinsurance programme, regularly
stress testing for large loss scenarios and maintaining strong
relationships with reinsurers, lenders and investors.
Underwriting risk
Underwriting risk can arise from inaccurate risk
assessment by our syndicates leading to insufficient premiums, more
frequent or severe claims than expected, inadequate pricing due to
outdated models or market pressure and changes in claim trends
post-underwriting due to legal, societal or economic shifts. These
can cause a mismatch between premiums charged and claims
made.
When assessing a syndicate, it is essential for
us that they have effective risk management in place to mitigate
underwriting risks. This includes setting appropriate underwriting
guidelines, using updated and accurate pricing models and
diversifying the risks underwritten to avoid concentration in
high-risk areas. Furthermore, syndicates will need to prove to us
that prudent underwriting practices and rigorous claims management
are in place to control underwriting risk. Helios will also need to
be satisfied that adequate reinsurance has been arranged by the
syndicates.
At Helios, we are proactive in monitoring the
rating environment for each class of our business. We understand
that in the dynamic market conditions of today, pricing adequacy
can vary significantly across different business classes.
Therefore, we use advanced analytical tools and techniques to keep
a close eye on the pricing environment across all our business
classes. If we identify a class with low pricing adequacy, we are
quick to respond, reducing our participation in that class to
manage risk and protect our portfolio. This approach allows us to
ensure that we maintain a healthy balance in our portfolio,
optimising our returns while managing risk effectively. Helios
continues to ensure that the portfolio is well diversified across
classes of businesses and managing agents at Lloyd's.
The biggest single risk faced by insurers arises
from the possibility of mispricing insurance on a large scale. The
recent correction in terms and conditions and the actions of
Lloyd's to force syndicates to remediate underperforming areas of
their books demonstrate the mispricing that has prevailed over the
past few years. The results of this remediation work by Lloyd's is
starting to be reflected in the results announced by the syndicates
supported.
These management teams have weathered multiple
market cycles and the risk management skills employed should reduce
the possibility of substantial under-reserving of previous year
underwriting. There is acceptance that catastrophe exposures were
generally under-priced and hence the syndicate managers have been
reducing their catastrophe exposures. The broad reinsurance market
correction is a fundamental shift in risk versus return metrics
presenting opportunities to pivot the portfolio in the
future.
We assess the downside risk in the event of a
major loss through the≈monitoring of the aggregate net losses
estimated by managing agents to the catastrophe risk scenarios
("CRS") prescribed by Lloyd's.
The individual syndicate net exposures will
depend on the business underwritten during the year and the
reinsurance protections purchased at syndicate level.
The aggregate exceedance probability ("AEP")
assesses the potential impact on the balance sheet across the
portfolio from either single or multiple large losses with a
probability of occurring greater than once in a 30-year
period.
In addition, Helios purchases stop loss
reinsurance with an indemnity of £35m (2022 YOA: £24m) share of the
portfolio with an indemnity of 10% of its share of the capacity and
a claim can be made if the loss for the year of account at 36
months exceeds 7.5% of capacity.
The impact on the net asset value of Helios from
the disclosed large loss scenarios are as follows:
|
|
Expected
loss
as % of
capacity
|
|
Impact on
net asset
value
|
|
|
|
|
|
|
|
|
AEP 1 in 30 - whole world natural
catastrophe
|
16.2%
|
14.3%
|
|
15.6%
|
11.4%
|
|
AEP 1 in 30 US/GOM windstorm
|
10.5%
|
10.2%
|
|
15.6%
|
11.4%
|
|
Terrorism
|
7.6%
|
8.4%
|
|
15.6%
|
11.4%
|
|
|
|
|
|
|
|
The assessment of the impact of the specified
events is net of all applicable quota share, stop loss reinsurance
contracts and corporation tax but before the likely profits to be
generated from the balance of the portfolio in any year.
Notwithstanding the reduction in the natural catastrophe exposure
in the 2023 portfolio, the impact on net assets has increased as
the retained capacity has increased. The similarity on the impact
on the net assets from a loss arises as the expected loss will
result in only a net retention from the stop loss of 7.5% of
capacity.
The graph below shows the impact of the largest
losses over the past five years on the Helios portfolio. It gives
an indication of the size of insurance market-wide insured loss
against the Helios portfolio aggregate losses incurred by supported
syndicates at the time of the loss (shown as a percentage of
capacity). Despite these major losses, Helios' return on capacity
remains positive for each year in the given five-year period,
ranging from 3% in 2019 to 12% in 2023*, demonstrating the strength
and resilience of the portfolio. The coronavirus loss incurred a
loss of 7.4% of 2022 capacity, the largest impact
recently.
Largest major losses 2019-2023
Industry insured loss ($bn) Loss to Helios as a
% of capacity
* 2022 and 2023
positive returns are based on the latest syndicate
forecasts.
Capital position
The underwriting capital required by Lloyd's for
the Helios portfolio comprises the funds to support the economic
capital requirement of the portfolio and the solvency II
adjustments are as follows:
Underwriting capital on underwriting
year
|
|
|
|
Third party capital
|
31.3
|
27.8
|
|
Excess of loss Funds at Lloyd's
|
25.8
|
41.2
|
|
Helios' own funds
|
69.9
|
60.4
|
|
|
|
|
|
|
|
|
|
Capacity as at
|
507.1
|
310.8
|
Economic capital assessment (ECA)
|
|
|
|
|
|
|
The capital ratio has benefited from the growth
of the portfolio and this reduction in the capital ratio to 35% is
expected to reverse over the next few years. The increase in the
solvency credits to £47m reflects the recognised but undistributed
syndicate profits as at the end of the year that is currently being
used as Funds at Lloyd's to support underwriting requirements. If
solvency credits are utilised to support current underwriting
capital requirements, any solvency deficits arising from losses in
the current year would have to be funded by Helios.
Environmental, social and governance ("ESG")
responsibility
Strategy
Helios offers investors exposure to a
diversified portfolio of syndicates at Lloyd's of London. As a
consequence, Helios is inexorably aligned to the approach Lloyd's
takes with regard to the society as a whole in addition to those
adopted by the various managing agencies.
Helios currently does not underwrite any risk.
We participate in risks written by the syndicates operating in the
market, providing private capital support. However, we recognise
our responsibility to all our stakeholders and the wider
communities in which we do business, and we choose to hold
ourselves to high standards of humanity, respect, honesty,
individuality and empowerment.
The overarching aim is to generate lasting value
through the adoption of sustainable approaches that balance
environmental stewardship, social responsibility and sound
governance, alongside our remit to achieve sound financial
performance.
As a key principle, we aim to take a balanced
and reasonable approach to assessing ESG risks as the legal and
regulatory frameworks evolve globally. Complying with its
regulatory obligations in the UK is of utmost importance, while
also recognising its fiduciary duty to its investors to provide
investment management services within this evolving
framework.
To assist us on this roadmap, we are now a
signatory to the UN Principles for Responsible Investment and we
strive to adopt the six key principles for responsible investment.
Furthermore, we have identified the following tenets to help
realise our long-term ESG strategy.
Governance practices
The Board is committed to a high standard of
corporate governance and is compliant with the principles of the
Quoted Companies Alliance's Corporate Governance Code (the "QCA
Code"). The Directors have complied with their responsibilities
under Section 172 of the Companies Act 2006 which requires them to
act in the way they consider, in good faith, would be most likely
to promote the success of the Company for the benefit of its
members as a whole. Further information is provided on page 21 in
this report and accounts. Additionally, for portfolio management we
operate a "three lines of defence" risk governance
model.
First line of defence:
The first line of defence includes the portfolio
management team involved in business as usual ("BAU") monitoring of
risks on the portfolio, data analysis and assessment of new
opportunities. This is led by our Head of Portfolio
Strategy.
Key considerations are given to human rights
related breaches, any regulatory fines and compliance to regulatory
requirements when selecting syndicates/partners for our
portfolio.
Environmental, social and governance ("ESG")
responsibility
Second line of defence:
A working group reviews the information
received, any early warning indicators and impact on our portfolio.
This group is chaired by the Head of Portfolio Strategy and
includes our Head of Distribution and other stakeholders in the
business. This group provides oversight and challenge to the first
line, reviews overall impact on the portfolio and reviews
reputational credentials of the new partners.
Third line of defence:
An independent Committee of key Executives
chaired by the CEO reviews the recommendations of the working group
before a final decision is taken on the opportunities.
Social responsibility initiatives
• Community engagement
activities and philanthropic endeavours form a key area of focus
for Helios. A new charity policy was developed in 2023 and we have
sponsored several projects that ranged from supporting local
communities to collaborating projects aimed at addressing societal
and local issues.
• Diversity and
inclusion initiatives are essential for fostering an environment
where everyone feels valued, respected and empowered. This is a key
metric for our success. While Helios' workforce is small and
growing, we aim to organically promote and provide equitable
opportunities for growth and success to not only employees but also
external partners, where possible.
Environmental initiatives and risk
management
In the current model, Helios supports the
Lloyd's market i.e. syndicates via third party capital. We have a
share of the entire portfolio of syndicates we participate in and
do not have the ability to select specific risks within a
portfolio. The portfolio is a mix of syndicates - including both
well-established top quartile performers and new
entrants.
While we do not directly and exclusively
participate in thermal coal-fired plants, thermal coal mines, oil
sands or Arctic energy exploration, we may have indirect exposure
through participation in syndicates operating in the Lloyd's
market.
We expect that every syndicate in the market is
aligned with the expectations set by Lloyd's on ESG. We understand
this is a transitional process but, where they fail to meet minimum
standards, we will review our involvement in those
operations.
To summarise, as an organisation that is
evolving, we recognise responsibility to our stakeholders and the
wider community and are committed to taking a balanced and
sustainable approach to developing and implementing our ESG
strategy that is aligned with the regulatory expectations in the
jurisdictions we operate in.
Catastrophe risk scenarios ("CRS") - net of
syndicate reinsurance (%)
AEP 1 in 30 - whole world natural
catastrophes
2024
16.2
2023
14.3
AEP 1 in 30 - US/GOM windstorm
2024
10.5
2023
10.2
RDS terrorism - Rockefeller Center
2024
7.8
2023
8.4
Cyber - cloud cascade
2024
8.3
2023
6.8
Summary financial information
The information set out below is a summary of
the key items that the Board assesses in estimating the financial
position of the Group. Given the Board has no active role in the
management of the syndicates within the portfolio, the following
approach is taken:
a) It relies on the financial
information provided by each syndicate.
b) It calculates the amounts
due to/from the quota share reinsurers in respect of their share of
the profits/losses as well as fees and commissions due.
c) An adjustment is made to
exclude pre-acquisition profits on companies bought in the
year.
d) Costs relating to stop loss
reinsurance and operating costs are deducted.
|
|
|
|
|
|
|
|
|
|
|
|
Other income:
|
|
|
|
- fees from reinsurers
|
1,408
|
562
|
|
- corporate reinsurance policies
|
-
|
33
|
|
- goodwill on bargain purchase
|
-
|
-
|
|
Amortisation of Goodwill
|
619
|
1,216
|
|
|
|
|
|
|
|
|
|
Costs:
|
|
|
|
- pre-acquisition
|
(494)
|
(46)
|
|
- stop loss costs
|
(4,138)
|
(1,261)
|
|
|
|
|
|
|
|
|
|
Operating profit before impairments of goodwill
and capacity
|
22,704
|
(3,953)
|
|
Tax
|
(6,334)
|
1,852
|
|
Revaluation of syndicate capacity
|
17,987
|
2,670
|
Income tax relating to the components of other
comprehensive income
|
|
|
Comprehensive income/loss
|
|
|
Year to 31 December 2023
|
|
Helios
retained
capacity at
31
December
2023
£m
|
Portfolio
mid-point
forecasts
|
|
|
2021
|
102.3
|
6.8%
|
6,831
|
|
2022
|
180.9
|
8.1%
|
18,949
|
|
|
|
|
|
|
|
|
|
|
Year to 31 December 2022
|
|
Helios
retained
capacity
at
31
December
2022
£m
|
Portfolio
mid-point
forecasts
|
|
|
2020
|
72.0
|
3.1%
|
2,647
|
|
2021
|
99.3
|
2.4%
|
4,546
|
|
|
|
|
|
|
|
|
|
|
Summary balance sheet (excluding assets and
liabilities held by syndicates)
See Note 28 for further information
|
|
|
|
|
Intangible assets
|
82,117
|
59,375
|
|
Funds at Lloyd's
|
70,754
|
73,771
|
|
Other cash
|
40,913
|
10,254
|
|
|
|
|
|
|
|
|
|
Deferred tax
|
22,277
|
11,228
|
|
Borrowings
|
59,055
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow
|
|
|
Analysis of free working capital
|
|
|
|
Opening Balance
|
10,254
|
16,178
|
|
Distribution of profits (net of tax retentions
& QS Payments )
|
2,530
|
2,736
|
|
Transfers from Funds at Lloyd's
|
9,984
|
4,772
|
|
Other income
|
2,727
|
280
|
|
Sale / Purchase of capacity
|
(500)
|
5,051
|
|
Operating costs (inc Hampden / Nomina
fees)
|
(7,716)
|
(4,099)
|
|
Reinsurance costs
|
(3,520)
|
(3,377)
|
|
Tax
|
(236)
|
(342)
|
|
Return of capital to shareholders
|
(5,181)
|
(2,034)
|
Transfers to Funds at Lloyd's
|
|
|
|
Free cash Flow
|
(6,243)
|
(16,170)
|
|
Senior debt principal
|
59,055
|
15,000
|
|
Repayment of Borrowings
|
(15,000)
|
-
|
|
Proceeds from issue of shares
|
-
|
12,421
|
|
Acquisitions
|
(7,153)
|
(4,754)
|
Net cash flow in the year
|
|
|
|
|
|
|
|
|
|
|
|
Net Assets
|
140,101
|
117,178
|
|
Add Total Debt
|
59,055
|
15,000
|
Add Deferred Tax on Intangible Asset
|
|
|
|
|
|
|
|
|
|
|
Summary Financial Information
|
|
|
|
|
|
|
|
Net assets less intangible assets
|
57,665
|
55,152
|
Fair value of capacity ("WAV")
|
|
|
|
|
|
|
|
Shares in issue - on the market (Note
21)
|
74,186
|
76,218
|
|
Shares in issue - total of on the market and
JSOP shares (Note 21)
|
75,286
|
77,318
|
|
Net tangible asset value per share £ - on the
market
|
1.89
|
1.51
|
Net tangible asset value per share £ - on the
market and JSOP shares
|
|
|
Combined ratio summary of Helios' portfolio
(see Note 6)
|
|
|
|
Net premiums earned
|
219,440
|
156,606
|
|
Net insurance claims
|
(107,909)
|
(96,796)
|
Operating expenses included in underwriting
result
|
|
|
|
|
|
|
|
|
|
|
Consolidated statement of comprehensive income
- Year ended 31 December 2023
|
|
|
Year
ended
31
December
2023
£'000
|
Year ended
31
December
2022
£'000
|
|
Technical account
|
|
|
|
|
Gross premium written
|
6
|
307,770
|
244,615
|
Reinsurance premium ceded
|
|
|
|
|
|
|
|
|
|
Change in unearned gross premium
provision
|
7
|
(30,420)
|
(45,723)
|
Change in unearned reinsurance premium
provision
|
|
|
|
Net change in unearned premium and reinsurance
provision
|
|
|
|
|
Net earned premium
|
5,6
|
200,980
|
150,393
|
|
Net investment income
|
8
|
11,073
|
(3,442)
|
Other underwriting income
|
|
|
|
|
|
|
|
|
|
Gross claims paid
|
|
(92,697)
|
(66,652)
|
Reinsurers' share of gross claims
paid
|
|
|
|
Claims paid, net of reinsurance
|
|
|
|
|
Change in provision for gross claims
|
7
|
(33,429)
|
(63,339)
|
Reinsurers' share of change in provision for
gross claims
|
|
|
|
Net change in provision for claims
|
|
|
|
Net insurance claims incurred and
loss adjustment expenses
|
|
|
|
Expenses incurred in insurance
activities
|
|
|
|
|
|
|
|
|
|
Non-technical account
|
|
|
|
|
Net investment income
|
8
|
1,986
|
666
|
|
Other income
|
|
(63)
|
(399)
|
|
|
|
|
|
Total non-technical
account
|
|
|
|
|
Operating profit before impairments
of goodwill and capacity
|
6
|
22,086
|
(5,169)
|
|
|
|
|
|
|
|
|
|
|
Income tax (charge)/credit
|
|
|
|
Profit/(loss) for the
year
|
|
|
|
|
Other comprehensive
income
|
|
|
|
|
Revaluation of syndicate capacity
|
|
17,987
|
2,670
|
Deferred tax relating to the components of
other comprehensive income
|
|
|
|
Other comprehensive income for the year, net of
tax
|
|
|
|
Total comprehensive income/(loss)
for the year
|
|
|
|
Profit/(loss) for the year
attributable to owners of the Parent
|
|
|
|
Total comprehensive income/(loss)
for the year attributable to owners of the Parent
|
|
|
|
|
Profit/(loss) per share attributable
to owners of the Parent
|
|
|
|
|
Basic
|
11
|
21.56p
|
(3.08)p
|
|
|
|
|
|
The profit/(loss) attributable to owners of the
Parent, the total comprehensive income/(loss) and the earnings per
share set out above are in respect of continuing
operations.
The notes are an integral part of these
Financial Statements.
Consolidated statement of financial position -
At 31 December 2023
Company number: 05892671
|
|
|
|
|
|
Assets
|
|
|
|
|
Intangible assets:
|
|
|
|
|
- Capacity
|
13
|
82,436
|
59,966
|
|
- Positive goodwill
|
13
|
348
|
482
|
|
- Negative goodwill
|
13
|
(667)
|
(1,073)
|
|
Financial assets at fair value through profit
or loss
|
15
|
288,198
|
226,013
|
|
Reinsurance assets:
|
|
|
|
|
- reinsurers' share of claims
outstanding
|
7
|
83,008
|
80,726
|
|
- reinsurers' share of unearned
premium
|
7
|
23,962
|
21,333
|
|
Other receivables, including insurance and
reinsurance receivables
|
16
|
172,932
|
147,676
|
|
Cash and cash equivalents
|
|
66,812
|
25,300
|
|
Prepayments and accrued income
|
|
7,281
|
5,076
|
Deferred acquisition costs
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Equity
|
|
|
|
|
Equity attributable to owners of the
Parent:
|
|
|
|
|
Share capital
|
21
|
7,795
|
7,774
|
|
Share premium
|
21
|
98,596
|
98,268
|
|
Revaluation reserve
|
|
24,840
|
11,350
|
|
Other reserves - treasury shares (JSOP and
LTIP)
|
|
190
|
(110)
|
|
|
|
|
|
|
|
|
|
|
|
Technical provisions
|
|
|
|
|
- claims outstanding
|
7
|
309,188
|
272,015
|
|
- unearned premium
|
7
|
143,610
|
114,663
|
|
Deferred income tax liabilities
|
18
|
22,335
|
11,312
|
|
Borrowings
|
19
|
59,055
|
15,000
|
|
Other payables, including insurance and
reinsurance payables
|
20
|
70,594
|
54,893
|
Accruals and deferred income
|
|
|
|
|
|
|
|
|
Total liabilities and
equity
|
|
|
|
The Financial Statements were approved and
authorised for issue by the Board of Directors on 29 May 2024, and
were signed on its behalf by:
Martin Reith
Chief Executive Officer
29 May 2024
The notes are an integral part of these
Financial Statements.
Parent Company statement of financial position
- At 31 December 2023
Company number: 05892671
|
|
|
|
|
|
Assets
|
|
|
|
|
Investments in subsidiaries
|
14
|
80,005
|
65,546
|
|
Financial assets at fair value through profit
or loss
|
15
|
898
|
731
|
|
Other receivables
|
16
|
74,120
|
74,783
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Borrowings
|
19
|
59,055
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Equity attributable to owners of the
Parent:
|
|
|
|
|
Share capital
|
21
|
7,795
|
7,774
|
|
Share premium
|
21
|
98,596
|
98,268
|
|
|
|
|
|
|
|
|
|
|
|
Retained earnings:
|
|
|
|
|
At 1 January
|
|
24,236
|
27,112
|
|
Profit/(loss) for the year
|
|
2,318
|
(842)
|
Other changes in retained earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
equity
|
|
|
|
The Financial Statements were approved and
authorised for issue by the Board of Directors on 29 May 2024, and
were signed on its behalf by:
Martin Reith
Chief Executive Officer
29 May 2024
The notes are an integral part of these
Financial Statements.
Consolidated statement of changes in equity -
Year ended 31 December 2023
|
|
|
Attributable to
owners of the Parent
|
|
|
|
|
|
|
|
Other
reserves
(JSOP)
£'000
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the
year:
|
|
|
|
|
|
|
|
|
Loss for the year
|
|
-
|
-
|
-
|
-
|
(2,101)
|
(2,101)
|
Other comprehensive income, net of
tax
|
|
|
|
|
|
|
|
Total comprehensive income for the
year
|
|
|
|
|
|
|
|
|
Transactions with owners:
|
|
|
|
|
|
|
|
|
Dividends paid
|
12
|
-
|
-
|
-
|
-
|
(2,034)
|
(2,034)
|
|
Company buyback of ordinary shares
|
21, 23
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Share issue, net of transaction cost
|
21
|
843
|
11,938
|
-
|
-
|
-
|
12,781
|
Other comprehensive income, net of
tax
|
|
|
|
|
|
|
|
Total transactions with owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the
year:
|
|
|
|
|
|
|
|
|
Loss for the year
|
|
-
|
-
|
-
|
-
|
16,371
|
16,371
|
Other comprehensive income, net of
tax
|
|
|
|
|
|
|
|
Total comprehensive income for the
year
|
|
|
|
|
|
|
|
|
Transactions with owners:
|
|
|
|
|
|
|
|
|
Dividends paid
|
12
|
-
|
-
|
-
|
-
|
(2,319)
|
(2,319)
|
|
Company buyback of ordinary shares
|
21, 23
|
-
|
-
|
-
|
-
|
(3,209)
|
(3,209)
|
|
Share issue, net of transaction cost
|
21
|
21
|
328
|
-
|
300
|
-
|
649
|
Other comprehensive income, net of
tax
|
|
|
|
|
|
|
|
Total transactions with owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes are an integral part of these
Financial Statements.
Parent Company statement of changes in equity -
Year ended 31 December 2023
|
|
|
|
|
Other reserves
(JSOP)
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the
year:
|
|
|
|
|
|
|
|
Profit/(loss) for the year
|
|
-
|
-
|
-
|
(842)
|
(842)
|
Other comprehensive income, net of
tax
|
|
|
|
|
|
|
Total comprehensive income/(loss) for the
year
|
|
|
|
|
|
|
|
Transactions with owners:
|
|
|
|
|
|
|
|
Dividends paid
|
12
|
-
|
-
|
-
|
(2,034)
|
(2,034)
|
|
Company buyback of ordinary shares
|
21, 23
|
-
|
-
|
-
|
-
|
-
|
Share issue, net of transaction
costs
|
|
|
|
|
|
|
Total transactions with owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the
year:
|
|
|
|
|
|
|
|
Profit for the year
|
|
-
|
-
|
-
|
2,318
|
2,318
|
Other comprehensive income, net of
tax
|
|
|
|
|
|
|
Total comprehensive income for the
year
|
|
|
|
|
|
|
|
Transactions with owners:
|
|
-
|
-
|
-
|
(3,209)
|
(3,209)
|
|
Dividends paid
|
12
|
-
|
-
|
-
|
(2,319)
|
(2,319)
|
|
Company buyback of ordinary shares
|
21, 23
|
-
|
-
|
-
|
-
|
-
|
Share issue, net of transaction
costs
|
|
|
|
|
|
|
Total transactions with owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes are an integral part of these
Financial Statements.
Consolidated statement of cash flows - Year
ended 31 December 2023
|
|
|
Year
ended
31
December
2023
£'000
|
Year ended
31
December
2022
£'000
|
|
Cash flows from operating
activities
|
|
|
|
|
Profit/(loss) before tax
|
|
22,705
|
(3,953)
|
|
Adjustments for:
|
|
|
|
|
- interest received
|
8
|
(2,036)
|
(520)
|
|
- Interest paid on borrowings
|
|
1,622
|
797
|
|
- investment income
|
8
|
(6,026)
|
(2,350)
|
|
- amortisation of goodwill
|
22
|
(619)
|
(1,216)
|
|
- profit on sale of intangible
assets
|
|
30
|
(262)
|
|
Changes in working capital:
|
|
|
|
|
- change in fair value of financial assets held
at fair value through profit or loss
|
8
|
(5,570)
|
4,490
|
|
- increase in financial assets at fair value
through profit or loss
|
|
(54,799)
|
(66,153)
|
|
- decrease in other receivables
|
|
(18,862)
|
(65,566)
|
|
- increase in other payables
|
|
16,730
|
15,600
|
- net increase in technical
provisions
|
|
|
|
|
Cash generated by/(used in) in
operations
|
|
3,505
|
(26,871)
|
|
|
|
|
|
Net cash generated/(used in)
operating activities
|
|
|
|
|
Cash flows from investing
activities
|
|
|
|
|
Interest received
|
8
|
2,036
|
520
|
|
Investment income
|
8
|
6,026
|
2,350
|
|
Purchase of intangible assets
|
13
|
(500)
|
(696)
|
|
Proceeds from disposal of intangible
assets
|
|
34
|
5,373
|
Acquisition of subsidiaries, net of cash
acquired
|
|
|
|
Net cash from investing
activities
|
|
|
|
|
Cash flows from financing
activities
|
|
|
|
|
Net proceeds from issue of ordinary share
capital
|
|
649
|
12,781
|
|
Buyback of ordinary share capital
|
|
(3,209)
|
-
|
|
Proceeds from borrowings
|
19
|
59,055
|
15,000
|
|
Repayment of borrowings
|
19
|
(15,000)
|
-
|
|
Interest paid on borrowings
|
|
(1,622)
|
(797
|
Dividends paid to owners of the
Parent
|
|
|
|
Net cash from financing
activities
|
|
|
|
|
Net increase in cash and cash
equivalents
|
|
41,513
|
676
|
Cash and cash equivalents at beginning of
year
|
|
|
|
Cash and cash equivalents at end of
year
|
|
|
|
Analysis of
changes in net debt
|
|
At 1 January
2023
|
Cash flows
|
Acquired with
Subsidiaries
|
At 31
December
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
25,299
|
40,808
|
705
|
66,812
|
|
Revolving Loan Facility
|
(15,000)
|
15,000
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash held within the syndicates' accounts is
£25,899 (2022: £15,046,000) of the total cash and cash equivalents
held at the year end of £61,078,000 (2022: £25,300,000). The cash
held within the syndicates' accounts is not available to the Group
to meet its day-to-day working capital requirements.
Cash and cash equivalents comprise cash at bank
and in hand.
The notes are an integral part of these
Financial Statements.
Parent Company statement of cash flows - Year
ended 31 December 2023
|
|
|
Year
ended
31
December
2023
£'000
|
Year ended
31
December
2022
£'000
|
|
Cash flows from operating
activities
|
|
|
|
|
Profit/(loss) before tax
|
|
2,318
|
(842)
|
|
Adjustments for:
|
|
|
|
|
- investment income
|
|
65
|
108
|
|
- dividends received
|
|
-
|
-
|
|
- impairment of investment in
subsidiaries
|
14
|
(8,063)
|
7,218
|
|
Changes in working capital:
|
|
|
|
|
- change in fair value of financial assets held
at fair value through profit or loss
|
|
-
|
-
|
|
- increase in financial assets at fair value
through profit or loss
|
|
(167)
|
(446)
|
|
- (decrease) in other receivables
|
|
(5,184)
|
(241)
|
- increase in other payables
|
|
|
|
Net cash (used in)/from operating
activities
|
|
|
|
|
Cash flows from investing
activities
|
|
|
|
|
Investment income
|
|
(65)
|
(108)
|
|
Dividends received
|
|
-
|
-
|
|
Acquisition of subsidiaries
|
14, 22
|
(7,268)
|
(5,352)
|
Amounts owed by subsidiaries
|
|
|
|
Net cash used in investing
activities
|
|
|
|
|
Cash flows from financing
activities
|
|
|
|
|
Net proceeds from the issue of ordinary share
capital
|
|
649
|
12,781
|
|
Payment for Company buyback of
shares
|
24
|
(3,209)
|
-
|
|
Proceeds from borrowings
|
19
|
59,055
|
15,000
|
|
Repayment of borrowings
|
19
|
(15,000)
|
-
|
Dividends paid to owners of the
Parent
|
|
|
|
Net cash from financing
activities
|
|
|
|
|
Net increase/(decrease) in cash and
cash equivalents
|
|
31,248
|
(4,746)
|
Cash and cash equivalents at beginning of
year
|
|
|
|
Cash and cash equivalents at end of
year
|
|
|
|
Analysis of
changes in net debt
|
|
At 1 January
2023
|
Cash flows
|
Acquired with
Subsidiaries
|
At 31
December
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
9,347
|
32,171
|
(923)
|
40,596
|
|
Revolving Loan Facility
|
(15,000)
|
15,000
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents comprise cash at bank
and in hand.
The notes are an integral part of these
Financial Statements.
Notes to the Financial Statements - Year ended
31 December 2023
1. General information
The Company is a public limited company listed
on AIM. The Company was incorporated in England and is domiciled in
the UK and its registered office is 1st Floor, 33 Cornhill, London,
United Kingdom EC3V 3ND. These Financial Statements comprise the
Company and its subsidiaries (together referred to as the "Group").
The Group participates in insurance business as an underwriting
member at Lloyd's through its subsidiary undertakings.
2. Significant accounting policies
The Financial Statements have been prepared
under the historical cost convention as modified by the revaluation
of the financial assets at fair value through the statement of
comprehensive income.
The 31 December 2022 Financial Statements were
prepared in accordance International Financial Reporting Standards
(IFRSs). The 31 December 2023 Financial Statements have been
prepared in accordance with United Kingdom Accounting Standards (UK
GAAP), including FRS 102 "The Financial Reporting Standard
applicable in the UK and Republic of Ireland" and FRS 103
"Insurance Contracts".
The reason for this change in reporting
framework is that it is not possible for the Directors to obtain
financial information in respect of the underlying syndicate
participations that would be required to comply with IFRS 17
"Insurance Contracts" which is effective under IFRS for accounting
periods beginning on or after 1 January 2023 (see note
29).
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 2022
except the following as a result of the conversion from IFRS to UK
GAAP:
• positive goodwill
which is taken to the consolidated statement of financial position
(CSOFP) is now amortised over the its estimated useful life of
three years (see Note 29); and
• goodwill on bargain
purchases which was taken straight to the consolidated statement of
comprehensive income (CSOCI) under IFRS is now capitalised and
taken the CSOFP and amortised over its estimated useful life of
three years (see Note 29).
Basis of preparation
These Financial Statements have been prepared in
accordance with United Kingdom Accounting Standards ("UK GAAP"),
including FRS 102 "The Financial Reporting Standard applicable in
the UK and Republic of Ireland" and FRS 103 "Insurance Contracts"
and the Companies Act 2006 and Schedule 3 of the Large and Medium
sized Companies and Groups (Accounts and Reports) Regulations,
relating to insurance.
The 31 December 2022 and these Financial
Statements were prepared under International Financial Reporting
Standards (IFRSs) and the prior period figures have been amended to
reflect the changes in the reporting framework (see note
29).
No statement of comprehensive income is
presented for Helios Underwriting plc, as a Parent Company, as
permitted by Section 408 of the Companies Act 2006.
The Financial Statements have been prepared
under the historical cost convention as modified by the revaluation
of financial assets at fair value through profit or
loss.
Use of judgements and estimates
The preparation of Financial Statements in
conformity with UK GAAP requires the use of judgements, estimates
and assumptions in the process of applying the Group's accounting
policies that affect the reported amounts of assets and liabilities
at the date of the Financial Statements and the reported amounts of
revenues and expenses during the reporting year. Although these
estimates are based on management's best knowledge of the amounts,
events or actions, actual results may ultimately differ from these
estimates. Further information is disclosed in Note 3.
The Group participates in insurance business
through its Lloyd's member subsidiaries. Accounting information in
respect of syndicate participations is provided by the syndicate
managing agents and is reported upon by the syndicate
auditors.
Going concern
The Group and the Company have net assets at the
end of the reporting period of £140,101,000 and £127,717,000
respectively.
The Company's subsidiaries participate as
underwriting members at Lloyd's on the 2021, 2022 and 2023 years of
account, as well as any prior run-off years, and they have
continued this participation since the year end on the 2024 year of
account. This underwriting is supported by funds at Lloyd's
totalling £173,700,000 (2022: £99,840,000), letters of credit
provided through the Group's reinsurance agreements totalling
£31,576,000 (2022: £27,818,000) and solvency credits issued by
Lloyd's totalling £46,988,000 (2022: £1,331,000).
The Directors have a reasonable expectation that
the Group and the Company have adequate resources to meet their
underwriting and other operational obligations for the foreseeable
future. Accordingly, they continue to adopt the going concern basis
of accounting in preparing the annual Financial
Statements.
Principles of consolidation, business
combinations and goodwill
(a) Consolidation and investments in
subsidiaries
The Group Financial Statements incorporate the
Financial Statements of Helios Underwriting plc, the Parent
Company, and its directly and indirectly held
subsidiaries.
The Financial Statements for all of the above
subsidiaries are prepared for the year ended 31 December 2023 under
UK GAAP.
No income statement is presented for Helios
Underwriting plc as permitted by Section 408 of the Companies Act
2006. The profit after tax for the year of the Parent Company was
£2,318,000 (2022: loss of £842,000).
Subsidiaries are entities over which the Group
has the power to govern the financial and operating policies
generally accompanying a shareholding or partnership participation
of more than one half of the voting rights. The existence and
effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Group
controls another entity.
Subsidiaries are fully consolidated from the
date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
Intra-group transactions, balances and
unrealised gains on intra-group transactions are
eliminated.
In the Parent Company's Financial Statements,
investments in subsidiaries are stated at cost and are reviewed for
impairment annually or when events or changes in circumstances
indicate the carrying value to be impaired.
(b) Business combinations and
goodwill
The Group uses the acquisition method of
accounting to account for the acquisition of subsidiaries. The cost
of an acquisition is measured as the fair value of the assets
given, equity instruments issued and liabilities incurred or
assumed at the date of exchange. Acquisition costs are expensed as
incurred.
The excess of the cost of acquisition over the
fair value of the Group's share of the identifiable net assets
acquired is capitalised and recorded as goodwill. Following initial
recognition, goodwill is measured at cost less accumulated
impairment losses. Goodwill is amortised on a straight line basis
over three years. Insurance liabilities are not discounted on
acquisition when calculating their fair value, as these liabilities
will likely all crystallise within three years due to the
accounting framework Lloyd's syndicates operate under. Accordingly,
any discount applied to insurance liabilities will not be
material.
Segmental reporting
Operating segments are reported in a manner
consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision maker, who
is responsible for allocating resources and assessing performance
of the operating segments, has been identified as Martin
Reith.
Foreign currency translation
Items included in the Financial Statements of
each of the Group's entities are measured using the currency of the
primary economic environment in which the entity operates (the
"functional currency"). The Financial Statements are presented in
thousands of pounds sterling, which is the Group's functional and
presentational currency. All amounts have been rounded to the
nearest thousand, unless otherwise indicated.
Foreign currency transactions and non-monetary
assets and liabilities, including deferred acquisition costs and
unearned premiums, are translated into the functional currency
using annual average rates of exchange prevailing at the time of
the transaction as a proxy for the transactional rates. The
translation difference arising on non-monetary asset items is
recognised in the consolidated statement of comprehensive
income.
Certain supported syndicates have non-sterling
functional currencies and any exchange movement that they would
have been reflected in other comprehensive income. As a result,
this has been included within profit before tax at consolidation
level, to be consistent with the Group's policy of using sterling
as the functional currency.
Monetary items are translated at period-end
rates; any exchange differences arising from the change in rates of
exchange are recognised in the consolidated income statement of the
year.
Underwriting
Premiums
Gross premium written comprises the total
premiums receivable in respect of business incepted during the
year, together with any differences between booked premiums for
prior years and those previously accrued, and includes estimates of
premiums due but not yet receivable or notified to the syndicates
on which the Group participates, less an allowance for
cancellations. All premiums are shown gross of commission payable
to intermediaries and exclude taxes and duties levied on
them.
Unearned premiums
Gross premium written is earned according to the
risk profile of the policy. Unearned premiums represent the
proportion of gross premium written in the year that relates to
unexpired terms of policies in force at the end of the reporting
period calculated on a time apportionment basis having regard,
where appropriate, to the incidence of risk. The specific basis
adopted by each syndicate is determined by the relevant managing
agent.
Deferred acquisition costs
Acquisition costs, which represent commission
and other related expenses, are deferred over the period in which
the related premiums are earned.
Reinsurance premiums
Reinsurance premium costs are allocated by the
managing agent of each syndicate to reflect the protection arranged
in respect of the business written and earned.
Reinsurance premium costs in respect of
reinsurance purchased directly by the Group are charged or credited
based on the annual accounting result for each year of account
protected by the reinsurance.
Claims incurred and reinsurers'
share
Claims incurred comprise claims and settlement
expenses (both internal and external) occurring in the year and
changes in the provisions for outstanding claims, including
provisions for claims incurred but not reported ("IBNR") and
settlement expenses, together with any other adjustments to claims
from previous years. Where applicable, deductions are made for
salvage and other recoveries.
The provision for claims outstanding comprises
amounts set aside for claims notified and IBNR. The amount included
in respect of IBNR is based on statistical techniques of estimation
applied by each syndicate's in-house reserving team and reviewed,
in certain cases, by external consulting actuaries. These
techniques generally involve projecting from past experience the
development of claims over time to form a view of the likely
ultimate claims to be experienced for more recent underwriting,
having regard to variations in the business accepted and the
underlying terms and conditions. The provision for claims also
includes amounts in respect of internal and external claims
handling costs. For the most recent years, where a high degree of
volatility arises from projections, estimates may be based in part
on output from the rating and other models of the business
accepted, and assessments of underwriting conditions.
The reinsurers' share of provisions for claims
is based on calculated amounts of outstanding claims and
projections for IBNR, net of estimated irrecoverable amounts,
having regard to each syndicate's reinsurance programme in place
for the class of business, the claims experience for the year and
the current security rating of the reinsurance companies involved.
Each syndicate uses a number of statistical techniques to assist in
making these estimates.
Accordingly, the two most critical assumptions
made by each syndicate's managing agent as regards claims
provisions are that the past is a reasonable predictor of the
likely level of claims development and that the rating and other
models used, including pricing models for recent business, are
reasonable indicators of the likely level of ultimate claims to be
incurred.
The level of uncertainty with regard to the
estimations within these provisions generally decreases with time
since the underlying contracts were exposed to new risks. In
addition, the nature of short-tail risks, such as property where
claims are typically notified and settled within a short period of
time, will normally have less uncertainty after a few years than
long-tail risks, such as some liability businesses where it may be
several years before claims are fully advised and settled. In
addition to these factors, if there are disputes regarding coverage
under policies or changes in the relevant law regarding a claim,
this may increase the uncertainty in the estimation of the
outcomes.
The assessment of these provisions is usually
the most subjective aspect of an insurer's accounts and may result
in greater uncertainty within an insurer's accounts than within
those of many other businesses. The provisions for gross claims and
related reinsurance recoveries have been assessed on the basis of
the information currently available to the Directors of each
syndicate's managing agent. However, ultimate liability will vary
as a result of subsequent information and events and this may
result in significant adjustments to the amounts provided.
Adjustments to the amounts of claims provisions established in
prior years are reflected in the Financial Statements for the
period in which the adjustments are made. The provisions are not
discounted for the investment earnings that may be expected to
arise in the future on the funds retained to meet the future
liabilities. The methods used, and the estimates made, are reviewed
regularly.
Quota share reinsurance
Under the Group's quota share reinsurance
agreements, 47% of the 2021 underwriting year, an average of 26% of
the 2022 underwriting year and an average of 23% of the 2023
underwriting year of account insurance exposure is ceded to the
reinsurers. Amounts payable to the reinsurers are included within
"reinsurance premium ceded" in the consolidated statement of
comprehensive income of the year and amounts receivable from the
reinsurers are included within "reinsurers' share of gross claims
paid" in the consolidated statement of comprehensive income of the
year.
Unexpired risks provision
Provision for unexpired risks is made where the
costs of outstanding claims, related expenses and deferred
acquisition costs are expected to exceed the unearned premium
provision carried forward at the end of the reporting period. The
provision for unexpired risks is calculated separately by reference
to classes of business that are managed together, after taking into
account relevant investment return. The provision is made on a
syndicate-by-syndicate basis by the relevant managing
agent.
Closed years of account
At the end of the third year, the underwriting
account is normally closed by reinsurance into the following year
of account. The amount of the reinsurance to close premium payable
is determined by the managing agent, generally by estimating the
cost of claims notified but not settled at 31 December, together
with the estimated cost of claims incurred but not reported
("IBNR") at that date and an estimate of future claims handling
costs. Any subsequent variation in the ultimate liabilities of the
closed year of account is borne by the underwriting year into which
it is reinsured.
The payment of a reinsurance to close premium
does not eliminate the liability of the closed year for outstanding
claims. If the reinsuring syndicate was unable to meet any
obligations, and the other elements of Lloyd's chain of security
were to fail, then the closed underwriting account would have to
settle any outstanding claims.
The Directors consider that the likelihood of
such a failure of the reinsurance to close is extremely remote and
consequently the reinsurance to close has been deemed to settle the
liabilities outstanding at the closure of an underwriting account.
The Group will include its share of the reinsurance to close
premiums payable as technical provisions at the end of the current
period and no further provision is made for any potential variation
in the ultimate liability of that year of account.
Run-off years of account
Where an underwriting year of account is not
closed at the end of the third year (a "run-off" year of account) a
provision is made for the estimated cost of all known and unknown
outstanding liabilities of that year. The provision is determined
initially by the managing agent on a similar basis to the
reinsurance to close. However, any subsequent variation in the
ultimate liabilities for that year remains with the corporate
member participating therein. As a result, any run-off year will
continue to report movements in its results after the third year
until such time as it secures a reinsurance to close.
Net operating expenses (including acquisition
costs)
Expenses incurred in insurance activities
include acquisition costs, profit and loss on exchange and other
amounts incurred by the syndicates on which the Group
participates.
Acquisition costs, comprising commission and
other costs related to the acquisition of new insurance contracts,
are deferred to the extent that they are attributable to premiums
unearned at the end of the reporting period.
Investment income
Interest receivable from cash and short-term
deposits and interest payable are accrued to the end of the
period.
Dividend income from financial assets at fair
value through profit or loss is recognised in the income statement
when the Group's right to receive payments is
established.
Syndicate investments and cash are held on a
pooled basis, the return from which is allocated by the relevant
managing agent to years of account proportionate to the funds
contributed by the year of account.
Other operating expenses
All expenses are accounted for on an accruals
basis.
Intangible assets: syndicate capacity
With effect from 31 December 2020, the Group
changed this policy so that syndicate capacity is revalued on a
regular basis to its fair value which the Directors believe to be
the average weighted value achieved in the Lloyd's auction process.
The increase in value of syndicate capacity between its fair value
and its cost less impairment is taken to the revaluation reserve
through the statement of other comprehensive income net of any tax
effect.
Financial assets
(a) Classification
The Group classifies its financial assets in the
following categories: at fair value through profit or loss, and
loans and receivables. The classification depends on the purpose
for which the financial assets were acquired. Management determines
the classification of its financial assets at initial recognition.
The Group does not make use of the held-to-maturity and
available-for-sale classifications.
(i) Financial assets at fair value through
profit or loss
All financial assets at fair value through
profit or loss are categorised as designated at fair value through
profit or loss upon initial recognition because they are managed
and their performance is evaluated on a fair value basis in
accordance with the Group's documented investment strategy.
Information about these financial assets is provided internally on
a fair value basis to the Group's key management.
The Group's investment strategy is to invest and
evaluate their performance with reference to their fair values.
Assets in this category are classified as current assets if
expected to be settled within 12 months; otherwise, they are
classified as non-current.
(ii) Loans and receivables
Loans and receivables are non-derivative
financial assets with fixed or determinable payments that are not
quoted in an active market. They are classified as current assets,
except for maturities greater than 12 months after the reporting
period. The latter ones are classified as non-current
assets.
The Group's loans and receivables comprise
"other receivables, including insurance and reinsurance
receivables" and "cash and cash equivalents".
The Parent Company's loans and receivables
comprise "other receivables" and "cash and cash
equivalents".
(b) Recognition, derecognition and
measurement
Regular purchases and sales of financial assets
are recognised on the trade date, being the date on which the Group
commits to the purchase or sale of the asset. Financial assets are
derecognised when the right to receive cash flows from the
financial assets has expired or is transferred and the Group has
transferred substantially all its risks and rewards of
ownership.
Financial assets at fair value through profit or
loss are initially recognised at fair value and transaction costs
incurred expensed in the income statement.
Loans and receivables are initially recognised
at fair value plus transaction costs and are subsequently carried
at amortised cost less any impairment losses.
Fair value estimation
The fair value of financial assets at fair value
through profit or loss which are traded in active markets is based
on quoted market prices at the end of the reporting period. A
market is regarded as active if quoted prices are readily and
regularly available from an exchange, dealer, broker, industry
group, pricing service or regulatory agency and those prices
represent actual and regular occurring market transactions on an
arm's length basis. The quoted market price used for financial
assets at fair value through profit or loss held by the Group is
the current bid price.
The fair value of financial assets at fair value
through profit or loss that are not traded in an active market is
determined by using valuation techniques. These valuation
techniques maximise the use of observable market data where it is
available and rely as little as possible on entity-specific
estimates.
Unrealised gains and losses arising from changes
in the fair value of the financial assets at fair value through
profit or loss are presented in the income statement within "net
investment income".
The fair values of short-term deposits are
assumed to approximate to their book values. The fair values of the
Group's debt securities have been based on quoted market prices for
these instruments.
(c) Impairment
The Group assesses at the end of each reporting
period whether there is objective evidence that a financial asset
or group of financial assets is impaired. A financial asset or a
group of financial assets is impaired and impairment losses are
incurred only if there is objective evidence of impairment as a
result of one or more events that occurred after the initial
recognition of the asset (a "loss event") and that loss event (or
events) has an impact on the estimated future cash flows of the
financial asset or group of financial assets that can be reliably
estimated.
Asset carried at amortised cost
For loans and receivables, the amount of the
loss is measured as the difference between the asset's carrying
amount and the present value of the estimated future cash flows
(excluding future credit losses that have not been incurred)
discounted at the financial asset's original effective interest
rate. The carrying amount of the asset is reduced and the amount of
the loss is recognised in profit or loss. If a loan has a variable
interest rate, the discount rate for measuring any impairment loss
is the current effective interest rate determined under the
contract. As a practical expedient, the Group may measure
impairment on the basis of an instrument's fair value using an
observable market price.
If, in a subsequent period, the amount of the
impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was
recognised (such as an improvement in the debtor's credit rating),
the reversal of the previously recognised impairment loss is
recognised in profit or loss.
Cash and cash equivalents
For the purposes of the statements of cash
flows, cash and cash equivalents comprise cash and short-term
deposits at bank.
Borrowings
Borrowings are recognised initially at fair
value, net of transaction costs incurred. Borrowings are
subsequently carried at amortised cost; any difference between the
proceeds (net of transaction costs) and the redemption value is
recognised in the income statement over the period of the
borrowings, using the effective interest method.
Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the
extent that it is probable that some or all of the facility will be
drawn down. To the extent that there is no evidence that it is
probable that some or all of the facility will be drawn down, the
fee is capitalised as a prepayment for liquidity services, and
amortised over the period of the facility to which it
relates.
Borrowings are classified as current liabilities
unless the Group has an unconditional right to defer settlement of
the liability for at least 12 months after the end of the reporting
period.
Borrowing costs
Borrowing costs are recognised in the income
statement in the period in which they are incurred.
Joint Share Ownership Plan ("JSOP")
On 16 August 2021, the Company issued and
allotted 600,000 new ordinary shares of £0.10 each ("ordinary
shares"). The new ordinary shares have been issued at a
subscription price of 155p per ordinary share, being the closing
price of an ordinary share on 16 August 2021, pursuant to the
Helios Underwriting plc employees' Joint Share Ownership Plan (the
"Plan").
The new ordinary shares have been issued into
the respective joint beneficial ownership of (i) each of the
participating Executive Directors as shown in Note 23 and (ii) the
Trustee of JTC Employee Solutions Limited (the "Trust") and are
subject to the terms of joint ownership agreements ("JOAs")
respectively entered into between the Director, the Company and the
Trustee. The nominal value of the new ordinary shares has been paid
by the Trust out of funds advanced to it by the Company with the
additional consideration of 145p left outstanding until such time
as new ordinary shares are sold. The Company has waived its lien on
the shares such that there are no restrictions on their
transfer.
The terms of the JOAs provide, inter alia, that
if jointly owned shares become vested and are sold, the proceeds of
sale will be divided between the joint owners so that the
participating Director receives an amount equal to the amount
initially provided by the participating Director plus any growth in
the market value of the jointly owned ordinary shares above a
target share price of 174.8p (so that the participating Director
will only ever receive value if the share sale price exceeds
this).
The vesting of the award will be subject to
performance conditions relating to growth in net tangible asset
value per share measured over the three calendar years from the net
tangible asset per share disclosed as at 31 December 2021 of
151p.
The percentage of jointly owned shares that vest
shall be dependent on the average growth in net tangible asset
value per share during the three financial years ending 31 December
2023. The vesting percentage shall be determined on the average
growth in net tangible asset value per share. If the average growth
in net tangible asset value does not exceed 5%, then no awards
vest, and if the average growth in net tangible asset value exceeds
20% or above, then 100% of the awards vest.
The Plan was established and approved by
resolution of the Remuneration Committee of the Company on 13
December 2017 and provides for the acquisition by employees,
including Executive Directors, of beneficial interests as joint
owners (with the Trust) of ordinary shares in the Company upon the
terms of a JOA. The terms of the JOA provide that if the jointly
owned shares become vested and are sold, the proceeds of sale will
be divided between the joint owners on the terms set out
above.
Long Term Incentive Plan ("LTIP")
In 2022, the Company operated the Helios
Underwriting plc Long Term Incentive Plan ("LTIP"). On 16 December
2022, the Company granted 571,427 (see note 23) awards under the
LTIP in the form of a nil-cost options. Under the same plan, the
company granted a further 491,227 on 30 May 2023.
The awards' performance conditions set threshold
(30%) to stretch (60%) targets in respect of the Company's total
shareholder return ("TSR") over the three year period following the
grant of the awards. No portion of the awards shall vest unless the
Company's TSR at the end of the performance period reaches the
threshold target, for which one quarter of the awards would vest,
rising on a straight line basis to full vesting of the awards for
the Company's TSR over the performance period being equal to the
stretch target or better. In the case of Executive Directors, any
vested shares will be subject to a two-year holding
period.
On 5 April 2023 a further 875,000 awards were
made under the company's LTIP, with the terms set out
below.
The awards' performance conditions set threshold
(50%) to stretch (100%) targets in respect of the Company's total
shareholder return ("TSR") over the five year period following the
grant of the awards. No portion of the awards shall vest unless the
Company's TSR at the end of the performance period reaches the
threshold target, for which one quarter of the awards would vest,
rising on a straight line basis to full vesting of the awards for
the Company's TSR over the performance period being equal to the
stretch target or better. In the case of Executive Directors, any
vested shares will be subject to a two-year holding
period.
The awards for the Executive Directors totalled
1,937,656. The vesting period for the awards is three or five years
subject to continued service and the achievement of specific
performance conditions. If the options remain unexercised after a
period of ten years from the date of grant, the options
expire.
The fair value of the LTIP awards is calculated
using a Monte Carlo (Stochastic) model taking into account the
terms and conditions of the awards granted.
No options were exercised during the
year.
Current and deferred tax
The tax expense for the period comprises current
and deferred tax. Tax is recognised in the income statement, except
to the extent that it relates to items recognised in other
comprehensive income or directly in equity, in which case tax is
also recognised in other comprehensive income or directly in
equity, respectively.
Current tax
The current income tax charge is calculated on
the basis of the tax laws enacted at the balance sheet date in the
countries where the Company and its subsidiaries operate and
generate taxable income. Management establishes provisions when
appropriate, on the basis of amounts expected to be paid to the tax
authorities.
Deferred tax
Deferred tax is provided in full on temporary
differences arising between the tax bases of assets and liabilities
and their carrying amounts in the Financial Statements.
However, if the deferred tax arises from initial
recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects
neither accounting nor taxable profit or loss, it is not accounted
for.
Deferred tax is determined using tax rates (and
laws) that have been enacted or substantively enacted by the end of
the reporting period and are expected to apply when the related
deferred income tax asset is realised or the deferred income tax
liability is settled.
Deferred tax assets are recognised to the extent
that it is probable that future taxable profits will be available
against which the temporary differences can be utilised.
Other payables
These present liabilities for services provided
to the Group prior to end of the financial year which are unpaid.
These are classified as current liabilities, unless payment is not
due within 12 months after the reporting date. They are recognised
initially at their fair value and subsequently measured at
amortised cost using the effective interest method.
Share capital and share premium
Ordinary shares are classified as
equity.
The difference between the fair value of the
consideration received and the nominal value of the share capital
issued is taken to the share premium account. Incremental costs
directly attributable to the issue of shares or options are shown
in equity as a deduction, net of tax, from proceeds.
Where the Company buys back its own ordinary
shares on the market, and these are held in treasury, the purchase
is made out of distributable profits and hence shown as a deduction
from the Company's retained earnings.
Dividend distribution policy
Dividend distribution to the Company's
shareholders is recognised in the Group's and the Parent Company's
Financial Statements in the period in which the dividends are
approved by the Company's shareholders.
3. Key accounting judgements and estimation
uncertainties
In applying the Company's accounting policies,
the Directors are required to make judgements, estimates and
assumptions in determining the carrying amounts of assets and
liabilities. These judgements, estimates and assumptions are based
on the best and most reliable evidence available at the time when
the decisions are made, and are based on historical experience and
other factors that are considered to be applicable. Due to the
inherent subjectivity involved in making such judgements, estimates
and assumptions, the actual results and outcomes may differ. The
estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised, if the revision affects
only that period, or in the period of the revision and future
periods, if the revision affects both current and future
periods.
The measurement of the provision for claims
outstanding is the most significant judgement involving estimation
uncertainty regarding amounts recognised in these Financial
Statements in relation to underwriting by the syndicates and this
is disclosed further in Notes 4 and 7.
The management and control of each syndicate is
carried out by the managing agent of that syndicate, and the Group
looks to the managing agent to implement appropriate policies,
procedures and internal controls to manage each
syndicate.
The key accounting judgements and sources of
estimation uncertainty set out below therefore relate to those made
in respect of the Group only, and do not include estimates and
judgements made in respect of the syndicates.
4. Risk management
The majority of the risks to the Group's future
cash flows arise from each subsidiary's participation in the
results of Lloyd's syndicates. As detailed below, these risks are
mostly managed by the managing agents of the syndicates. The
Group's role in managing these risks, in conjunction with its
subsidiaries and members' agent, is limited to a selection of
syndicate participations, monitoring the performance of the
syndicates and the purchase of appropriate member level
reinsurance.
Risk background
The syndicate's activities expose them to a
variety of financial and non-financial risks. The managing agent is
responsible for managing the syndicate's exposure to these risks
and, where possible, introducing controls and procedures that
mitigate the effects of the exposure to risk. For the purposes of
setting capital requirements for the 2020 and subsequent years of
account, each managing agent will have prepared a Lloyd's Capital
Return ("LCR") for the syndicate to agree capital requirements with
Lloyd's based on an agreed assessment of the risks impacting the
syndicate's business and the measures in place to manage and
mitigate those risks from a quantitative and qualitative
perspective. The risks described below are typically reflected in
the LCR and typically the majority of the total assessed value of
the risks concerned is attributable to insurance risk.
The insurance risks faced by a syndicate include
the occurrence of catastrophic events, downward pressure on pricing
of risks, reductions in business volumes and the risk of inadequate
reserving. Reinsurance risk arises from the risk that a reinsurer
fails to meet its share of a claim. The management of the
syndicate's funds is exposed to investment risk, liquidity risk,
credit risk, currency risk and interest rate risk (as detailed
below), leading to financial loss. The syndicate is also exposed to
regulatory and operational risks including its ability to continue
to trade. However, supervision by Lloyd's and the Prudential
Regulation Authority provides additional controls over the
syndicate's management of risks.
The Group manages the risks faced by the
syndicates on which its subsidiaries participate by monitoring the
performance of the syndicates it supports. This commences in
advance of committing to support a syndicate for the following
year, with a review of the business plan prepared for each
syndicate by its managing agent. In addition, quarterly reports and
annual accounts, together with any other information made available
by the managing agent, are monitored and if necessary enquired
into. If the Group considers that the risks being run by the
syndicate are excessive, it will seek confirmation from the
managing agent that adequate management of the risk is in place
and, if considered appropriate, will withdraw support from the next
year of account. The Group also manages its exposure to insurance
risk by purchasing appropriate member level reinsurance.
(a) Syndicate risks
(i) Liquidity risk
The syndicates are exposed to daily calls on
their available cash resources, principally from claims arising
from its insurance business. Liquidity risk arises where cash may
not be available to pay obligations when due, or to ensure
compliance with the syndicate's obligations under the various trust
deeds to which it is party.
The syndicates aim to manage their liquidity
position so that they can fund claims arising from significant
catastrophic events, as modelled in their Lloyd's realistic
disaster scenarios ("RDS").
Although there are usually no stated maturities
for claims outstanding, syndicates have provided their expected
maturity of future claims settlements as follows:
(ii) Credit risk
Credit ratings to syndicate assets (Note 28)
emerging directly from insurance activities which are neither past
due nor impaired are as follows:
|
|
|
|
|
|
|
|
|
Financial investments
|
54,386
|
56,026
|
71,762
|
25,079
|
9,885
|
217,138
|
|
Deposits with ceding undertakings
|
-
|
-
|
261
|
-
|
45
|
306
|
|
Reinsurers' share of claims
outstanding
|
1,933
|
32,553
|
44,102
|
53
|
4,314
|
82,955
|
|
Reinsurance debtors
|
363
|
1,245
|
3,084
|
2
|
341
|
5,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial investments
|
38,125
|
42,837
|
45,204
|
17,617
|
8,126
|
151,909
|
|
Deposits with ceding undertakings
|
-
|
-
|
300
|
-
|
33
|
333
|
|
Reinsurers' share of claims
outstanding
|
3,478
|
25,787
|
47,259
|
171
|
3,989
|
80,684
|
|
Reinsurance debtors
|
756
|
674
|
1,957
|
19
|
226
|
3,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Syndicate assets (Note 28) emerging directly
from insurance activities, with reference to their due date or
impaired, are as follows:
|
|
Past due
but not impaired
|
|
|
Neither
past
due
nor
impaired
£'000
|
|
Between
6
months
and 1
year
£'000
|
Greater
than 1
year
£'000
|
|
|
|
Financial investments
|
217,138
|
-
|
-
|
-
|
-
|
217,138
|
|
Deposits with ceding undertakings
|
306
|
-
|
-
|
-
|
-
|
306
|
|
Reinsurers' share of claims
outstanding
|
82,954
|
12
|
-
|
-
|
(18)
|
82,948
|
|
Reinsurance debtors
|
5,036
|
4,275
|
212
|
136
|
(1)
|
9,658
|
|
Cash at bank and in hand
|
25,899
|
-
|
-
|
-
|
-
|
25,899
|
Insurance and other debtors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past due but not
impaired
|
|
|
Neither
past due
nor
impaired
£'000
|
|
Between
6 months
and 1 year
£'000
|
Greater
than 1
year
£'000
|
|
|
|
Financial investments
|
151,909
|
-
|
-
|
-
|
-
|
151,909
|
|
Deposits with ceding undertakings
|
333
|
-
|
-
|
-
|
-
|
333
|
|
Reinsurers' share of claims
outstanding
|
80,684
|
-
|
-
|
-
|
(18)
|
80,666
|
|
Reinsurance debtors
|
3,632
|
4,162
|
56
|
23
|
-
|
7,873
|
|
Cash at bank and in hand
|
15,046
|
-
|
-
|
-
|
-
|
15,046
|
Insurance and other debtors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(iii) Interest rate equity price
risk
Interest rate risk and equity price risk are the
risks that the fair value of future cash flows of financial
instruments will fluctuate because of changes in market interest
rates and market prices, respectively.
(iv) Currency risk
The syndicates' main exposure to foreign
currency risk arises from insurance business originating overseas,
primarily denominated in US dollars. Transactions denominated in US
dollars form a significant part of the syndicates' operations. This
risk is, in part, mitigated by the syndicates maintaining financial
assets denominated in US dollars against its major exposures in
that currency.
The table below provides details of syndicate
assets and liabilities (Note 28) by currency:
|
|
|
|
|
|
|
|
|
Total assets
|
77,449
|
402,699
|
19,131
|
46,009
|
12,653
|
557,941
|
|
|
|
|
|
|
|
|
(Deficiency)/surplus of assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
60,777
|
317,487
|
13,921
|
35,008
|
12,988
|
440,181
|
|
|
|
|
|
|
|
|
(Deficiency)/surplus of assets
|
|
|
|
|
|
|
The impact of a 5% change in exchange rates
between GBP and other currencies would be £2,090,000 on
shareholders' funds (2022: £114,000).
(v) Reinsurance risk
Reinsurance risk to the Group arises where
reinsurance contracts put in place to reduce gross insurance risk
do not perform as anticipated, result in coverage disputes or prove
inadequate in terms of the vertical or horizontal limits purchased.
Failure of a reinsurer to pay a valid claim is considered a credit
risk, which is detailed separately below.
The Group currently has reinsurance programmes
on the 2021, 2022 and 2023 years of account.
The Group has strategic collateralised quota
share arrangements in place in respect of its underwriting business
with XL Re Limited, Bermudan reinsurer Everest Reinsurance Bermuda
Limited (part of global NYSE-quoted insurer Everest Re Group
Limited), Guernsey reinsurer Polygon Insurance Co Limited and other
private shareholders through HIPCC Limited.
(b) Group risks - corporate level
(i) Investment, credit, liquidity and currency
risks
The other significant risks faced by the Group
are with regard to the investment of funds within its own custody.
The elements of these risks are investment risk, liquidity risk,
credit risk, interest rate risk and currency risk. To mitigate
this, the surplus Group funds are deposited with highly rated banks
and fund managers. The main liquidity risk would arise if a
syndicate had inadequate liquid resources for a large claim and
sought funds from the Group to meet the claim. In order to minimise
investment risk, credit risk and liquidity risk, the Group's funds
are invested in readily realisable short-term deposits. The Group's
maximum exposure to credit risk at 31 December 2023 is £116.5m
(2022: £90.9m), being the aggregate of the Group's insurance
receivables, prepayments and accrued income, financial assets at
fair value, and cash and cash equivalents, excluding any amounts
held in the syndicates. The syndicates can distribute their results
in sterling, US dollars or a combination of the two. The Group is
exposed to movements in the US dollar between the balance sheet
date and the distribution of the underwriting profits and losses,
which is usually in the May following the closure of a year of
account. The Group does not use derivative instruments to manage
risk and, as such, no hedge accounting is applied.
As a result of the specific nature and structure
of the Group's collateralised quota share reinsurance arrangements
through Cell 6 (Guernsey based protected cell managed by HIPCC),
the Group's funds at Lloyd's calculation benefits from an aggregate
£31.6m (2022: £27.8m) letter of credit ("LOC") acceptable to
Lloyd's, on behalf of XL Re Limited, Everest Reinsurance Bermuda
Limited, and other private shareholders. The LOC is pledged in
aggregate to the relevant syndicates through Lloyd's and thus
Helios Underwriting plc is not specifically exposed to counterparty
credit risk in this matter. Should the bank's LOC become
unacceptable to Lloyd's for any reason, the reinsurer is
responsible under the terms of the contract for making alternative
arrangements. The contract is annually renewable and the Group has
a contingency plan in place in the event of non-renewal under both
normal and adverse market conditions.
(ii) Market risk
The Group is exposed to market and liquidity
risk in respect of its holdings of syndicate participations.
Lloyd's syndicate participations are traded in the Lloyd's auctions
held in September and October each year. The Group is exposed to
changes in market prices and a lack of liquidity in the trading of
a particular syndicate's capacity could result in the Group making
a loss compared to the carrying value when the Group disposes of
particular syndicate participations.
(iii) Regulatory risks
The Company's subsidiaries are subject to
continuing approval by Lloyd's to be a member of a Lloyd's
syndicate. The risk of this approval being removed is mitigated by
monitoring and fully complying with all requirements in relation to
membership of Lloyd's. The capital requirements to support the
proposed amount of syndicate capacity for future years are subject
to the requirements of Lloyd's. A variety of factors are taken into
account by Lloyd's in setting these requirements including market
conditions and syndicate performance and, although the process is
intended to be fair and reasonable, the requirements can fluctuate
from one year to the next, which may constrain the volume of
underwriting a subsidiary of the Company is able to
support.
The Company is subject to the AIM Rules.
Compliance with the AIM Rules is monitored by the Board.
Operational risks
As there are relatively few transactions
actually undertaken by the Group, there are only limited systems
and operational requirements of the Group and therefore operational
risks are not considered to be significant. Close involvement of
all Directors in the Group's key decision making and the fact that
the majority of the Group's operations are conducted by syndicates
provide control over any remaining operational risks.
Capital management objectives, policies and
approach
The Group has established the following capital
management objectives, policies and approach to managing the risks
that affect its capital position:
• to maintain the
required level of stability of the Group, thereby providing a
degree of security to shareholders;
• to allocate capital
efficiently and support the development of the business by ensuring
that returns on capital employed meet the requirements of the
shareholders; and
• to maintain the
financial strength to support increases in the Group's underwriting
through acquisition of capacity in the Lloyd's auctions or through
the acquisition of new subsidiaries.
The Group's capital management policy is to hold
a sufficient level of capital to allow the Group to take advantage
of market conditions, particularly when insurance rates are
improving, and to meet the funds at Lloyd's ("FAL") requirements
that support the corporate member subsidiaries' current and future
levels of underwriting.
Approach to capital management
The capital structure of the Group consists
entirely of equity attributable to equity holders of the Company,
comprising issued share capital, share premium and retained
earnings as disclosed in the statements of changes in equity on
pages 34 and 35
At 31 December 2023, the corporate member
subsidiaries had an agreed Economic Capital Assessment ("ECA")
requirement of £172.0m (2022: £125.7m) to support their
underwriting on the 2023 year of account. The funds to support this
requirement are held in short-term investment funds and deposits or
provided by the quota share reinsurance capital providers by way of
an LOC. The FAL requirements are formally assessed and funded twice
yearly and must be met by the corporate member subsidiaries to
continue underwriting. At 31 December 2023, the agreed ECA
requirements for the Group were 35% (2022: 43%) of the capacity for
the following year of account
5. Segmental information
Martin Reith is the Group's chief operating
decision maker. He has determined its operating segments based on
the way the Group is managed, for the purpose of allocating
resources and assessing performance.
The Group has three segments that represent the
primary way in which the Group is managed, as follows:
• syndicate
participation;
• investment management;
and
• other corporate
activities.
The tables below contain the aggregated
technical and non-technical accounts.
Year ended 31 December
2023
|
Syndicate
participation
£'000
|
Investment
management
£'000
|
Other
corporate
activities
£'000
|
|
|
Net earned premium
|
212,120
|
-
|
(11,141)
|
200,980
|
|
Net investment income
|
11,204
|
1,855
|
-
|
13,059
|
|
Other (loss)/income
|
(532)
|
-
|
1,357
|
825
|
|
Net insurance claims and loss adjustment
expenses
|
(106,404)
|
-
|
-
|
(106,404)
|
|
Expenses incurred in insurance
activities
|
(76,985)
|
-
|
(2,251)
|
(79,236)
|
|
Other operating expenses
|
(97)
|
-
|
(7,041)
|
(7,138)
|
|
Amortisation of goodwill
|
-
|
-
|
619
|
619
|
Impairment of syndicate capacity (see Note
13)
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 December 2022
|
Syndicate
participation
£'000
|
Investment
management
£'000
|
Other
corporate
activities
£'000
|
|
|
Net earned premium
|
150,393
|
-
|
-
|
150,393
|
|
Net investment income
|
(3,928)
|
1,152
|
-
|
(2,776)
|
|
Other income
|
533
|
-
|
195
|
728
|
|
Net insurance claims and loss adjustment
expenses
|
(93,876)
|
-
|
(1,963)
|
(95,839)
|
|
Expenses incurred in insurance
activities
|
(52,507)
|
-
|
(1,321)
|
(53,828)
|
|
Other operating expenses
|
(126)
|
-
|
(3,721)
|
(3,847)
|
|
Amortisation of goodwill
|
-
|
-
|
1,216
|
1,216
|
Impairment of syndicate capacity (see Note
13)
|
|
|
|
|
|
|
|
|
|
|
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.
Below is an analysis of the Group underwriting
by class of business:
|
|
Gross
written
premiums
£'000
|
Gross
premiums
earned
£'000
|
Gross
claims
incurred
£'000
|
Net
operating
expenses
£'000
|
Reinsurance
balance
£'000
|
|
|
Accident and health
|
4,247
|
3,801
|
(1,646)
|
(1,589)
|
(304)
|
262
|
|
Motor - third party liability
|
5,066
|
4,620
|
(3,205)
|
(847)
|
(404)
|
164
|
|
Motor - other classes
|
18,248
|
13,795
|
(8,658)
|
(4,300)
|
(1,461)
|
(624)
|
|
Marine, aviation and transport
|
19,210
|
17,870
|
(13,764)
|
(5,806)
|
697
|
(1,003)
|
|
Fire and other damage to property
|
87,169
|
77,541
|
(29,143)
|
(21,620)
|
(15,069)
|
11,709
|
|
Third party liability
|
78,291
|
65,628
|
(33,477)
|
(20,751)
|
(5,926)
|
5,474
|
|
Credit and suretyship
|
8,300
|
7,136
|
(2,732)
|
(2,326)
|
(1,130)
|
948
|
|
Legal expenses
|
138
|
124
|
(62)
|
(54)
|
(1)
|
7
|
|
Assistance
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
Total direct
|
220,859
|
190,646
|
(92,795)
|
(57,377)
|
(23,599)
|
16,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
written
premiums
£'000
|
Gross
premiums
earned
£'000
|
Gross
claims
incurred
£'000
|
Net
operating
expenses
£'000
|
Reinsurance
balance
£'000
|
|
|
Accident and health
|
3,552
|
2,871
|
(1,253)
|
(1,250)
|
(166)
|
201
|
|
Motor - third party liability
|
4,564
|
2,222
|
(1,391)
|
(502)
|
(133)
|
196
|
|
Motor - other classes
|
8,941
|
8,097
|
(5,241)
|
(2,615)
|
68
|
309
|
|
Marine, aviation and transport
|
15,677
|
12,668
|
(9,183)
|
(4,406)
|
1,582
|
661
|
|
Fire and other damage to property
|
64,637
|
52,689
|
(29,289)
|
(14,626)
|
(5,373)
|
3,401
|
|
Third party liability
|
55,307
|
43,799
|
(27,586)
|
(13,217)
|
(1,735)
|
1,261
|
|
Credit and suretyship
|
5,326
|
4,214
|
(2,416)
|
(1,255)
|
(148)
|
395
|
|
Legal expenses
|
120
|
82
|
(38)
|
(36)
|
4
|
13
|
|
Assistance
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
Total direct
|
158,263
|
126,759
|
(76,476)
|
(37,990)
|
(5,915)
|
6,379
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6. Operating (loss)/profit before impairments of
goodwill and capacity
The tables below contain the aggregated
technical and non-technical accounts:
|
|
Underwriting year of account*
|
|
Corporate
reinsurance
£'000
|
|
|
Year ended 31 December
2023
|
|
|
|
|
|
Gross premium written
|
2,009
|
33,313
|
276,798
|
312,120
|
(4,350)
|
-
|
-
|
307,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earned premium
|
5,799
|
103,291
|
110,350
|
219,440
|
(3,180)
|
(11,141)
|
(4,138)
|
200,980
|
|
Other income/(loss)
|
5,188
|
3,630
|
1,757
|
10,575
|
(202)
|
1,408
|
2,103
|
13,884
|
|
Net insurance claims incurred and loss
adjustment expenses
|
2,528
|
(49,731)
|
(60,706)
|
(107,908)
|
1,504
|
-
|
-
|
(106,404)
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit/(loss) before
impairments of goodwill and capacity
|
9,780
|
25,252
|
7,669
|
42,701
|
(494)
|
(9,733)
|
(10,388)
|
22,086
|
|
|
|
|
|
|
|
|
|
|
Operating profit/(loss) before
impairments of goodwill and capacity, after quota share
adjustment
|
|
|
|
|
|
|
|
|
* 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' agent's charges.
** Pre-acquisition relates to
the element of results from the new acquisitions before they were
acquired by the Group.
|
|
Underwriting year of
account*
|
|
|
|
|
Year ended 31 December 2022
|
|
|
|
|
|
Corporate
reinsurance
£'000
|
|
|
|
Gross premium written
|
1,138
|
15,099
|
234,712
|
250,949
|
(6,334)
|
-
|
-
|
244,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earned premium
|
5,911
|
56,042
|
94,653
|
156,606
|
(4,952)
|
-
|
(1,261)
|
150,393
|
|
Other (loss)/income
|
(2,496)
|
(1,046)
|
22
|
(3,520)
|
263
|
562
|
647
|
(2,048)
|
|
Net insurance claims incurred and loss
adjustment expenses
|
3,804
|
(30,920)
|
(69,680)
|
(96,796)
|
2,887
|
(1,964)
|
33
|
(95,839)
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit/(loss) before
impairments of goodwill and capacity
|
4,696
|
6,904
|
(9,520)
|
2,080
|
(46)
|
(1,401)
|
(5,802)
|
(5,169)
|
|
|
|
|
|
|
|
|
|
|
Operating profit/(loss) before
impairments of goodwill and capacity, after quota share
adjustment
|
|
|
|
|
|
|
|
|
* 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' agent's charges.
** Pre-acquisition relates to
the element of results from the new acquisitions before they were
acquired by the Group.
7. Insurance liabilities and reinsurance
balances
Movement in claims outstanding
|
|
|
|
|
|
At 1 January 2022
|
186,653
|
53,433
|
133,220
|
|
Increase in reserves arising from acquisition
of subsidiary undertakings
|
10,888
|
3,177
|
7,711
|
|
Movement of reserves
|
63,339
|
18,320
|
45,019
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2023
|
272,015
|
80,726
|
191,289
|
|
Increase in reserves arising from acquisition
of subsidiary undertakings
|
10,249
|
2,961
|
7,288
|
|
Movement of reserves
|
33,429
|
(2,000)
|
35,429
|
|
|
|
|
|
|
|
|
|
|
Included within other movements are the 2020 and
prior years' claims reserves reinsured into the 2021 year of
account on which the Group does not participate and currency
exchange differences.
Movement in unearned premium
|
|
|
|
|
|
At 1 January 2022
|
59,611
|
10,538
|
49,073
|
|
Increase in reserves arising from acquisition
of subsidiary undertakings
|
2,846
|
493
|
2,352
|
|
Movement of reserves
|
45,723
|
8,478
|
37,245
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2023
|
114,663
|
21,333
|
93,330
|
|
Increase in reserves arising from acquisition
of subsidiary undertakings
|
4,349
|
758
|
3,591
|
|
Movement of reserves
|
30,420
|
3,161
|
27,259
|
|
|
|
|
|
|
|
|
|
|
Included within other movements are the 2019 and
prior years' claims reserves reinsured into the 2020 year of
account on which the Group does not participate and currency
exchange differences.
Assumptions, changes in assumptions and
sensitivity
As described in Note 4, the majority of the
risks to the Group's future cash flows arise from its subsidiaries'
participation in the results of Lloyd's syndicates and are mostly
managed by the managing agents of the syndicates. The Group's role
in managing these risks, in conjunction with the Group's members'
agent, is limited to a selection of syndicate participations and
monitoring the performance of the syndicates and their managing
agents.
The amounts carried by the Group arising from
insurance contracts are calculated by the managing agents of the
syndicates, derived from accounting information provided by the
managing agents and reported upon by the syndicate
auditors.
The key assumptions underlying the amounts
carried by the Group arising from insurance contracts
are:
• the claims reserves
calculated by the managing agents are accurate; and
• the potential
deterioration of run-off year results has been fully provided for
by the managing agents.
There have been no changes in assumptions in
2023.
The amounts carried by the Group arising from
insurance contracts are sensitive to various factors as
follows:
• a 10%
increase/decrease in the managing agents' calculation of gross
claims reserves will decrease/increase the Group's pre-tax profits
by £30,919,000 (2022: £27,202,000);
• a 10%
increase/decrease in the managing agents' calculation of net claims
reserves will decrease/increase the Group's pre-tax profits by
£22,618,000 (2022: £19,129,000); and
• a 10%
increase/decrease in the run-off year net claims reserves will
decrease/increase the Group's pre-tax profits by £65,000 (2022:
£22,000).
The 10% movement has been selected to give an
indication of the possible variations in the assumptions
used.
Analysis of gross and net claims
development
The tables below provide information about
historical gross and net claims development:
Claims development - gross
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
25
|
42
|
43
|
41
|
41
|
41
|
40
|
40
|
40
|
40
|
7
|
|
2015
|
23
|
43
|
44
|
42
|
42
|
42
|
41
|
41
|
41
|
|
6
|
|
2016
|
28
|
55
|
56
|
55
|
54
|
54
|
54
|
54
|
|
|
4
|
|
2017
|
59
|
89
|
92
|
91
|
91
|
90
|
90
|
|
|
|
4
|
|
2018
|
49
|
82
|
85
|
83
|
82
|
83
|
|
|
|
|
4
|
|
2019
|
42
|
84
|
82
|
78
|
76
|
|
|
|
|
|
4
|
|
2020
|
53
|
91
|
93
|
90
|
|
|
|
|
|
|
3
|
|
2021
|
60
|
102
|
104
|
|
|
|
|
|
|
|
|
|
2022
|
96
|
152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claims development - net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
21
|
37
|
37
|
36
|
35
|
35
|
34
|
34
|
34
|
34
|
5
|
|
2015
|
20
|
37
|
37
|
37
|
36
|
35
|
35
|
35
|
35
|
|
4
|
|
2016
|
22
|
43
|
44
|
43
|
42
|
42
|
42
|
42
|
|
|
5
|
|
2017
|
38
|
58
|
61
|
59
|
59
|
58
|
58
|
|
|
|
3
|
|
2018
|
34
|
57
|
59
|
58
|
56
|
56
|
|
|
|
|
3
|
|
2019
|
30
|
60
|
59
|
57
|
56
|
|
|
|
|
|
5
|
|
2020
|
37
|
64
|
66
|
65
|
|
|
|
|
|
|
1
|
|
2021
|
42
|
74
|
75
|
|
|
|
|
|
|
|
|
|
2022
|
69
|
119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Including the new
acquisitions during 2023.
At the end of the three years, syndicates are
normally reinsured to close. Participations on subsequent years on
syndicates may therefore change. The above table shows nine years
of development and how the reinsurance to close received
performed.
8. Net investment income
|
|
Year
ended
31
December
2023
£'000
|
Year ended
31
December
2022
£'000
|
|
Investment income
|
6,026
|
2,350
|
|
Realised losses on financial assets at fair
value through profit or loss
|
(407)
|
(1,021)
|
|
Unrealised profits/(losses) on financial assets
at fair value through profit or loss
|
5,570
|
(4,490)
|
|
Investment management expenses
|
(166)
|
(134)
|
|
|
|
|
Net investment
income/(loss)
|
|
|
Net investment income/(loss) shown above
includes both Technical and Non-Technical investment
income/(loss).
9. Operating expenses (excluding goodwill and
capacity impairment)
|
|
Year
ended
31
December
2023
£'000
|
Year ended
31
December
2022
£'000
|
|
Expenses incurred in insurance
activities:
|
|
|
|
Acquisition costs
|
61,964
|
47,897
|
|
Change in deferred acquisition costs
|
(7,038)
|
(10,163)
|
|
Administrative expenses
|
22,903
|
15,287
|
|
|
|
|
|
|
|
|
|
Other operating expenses:
|
|
|
|
- exchange differences
|
181
|
(644)
|
|
- Directors' remuneration
|
1,938
|
718
|
|
- staff costs
|
852
|
196
|
|
- acquisition costs in connection with the new
subsidiaries acquired in the year
|
276
|
422
|
|
- bank charges
|
40
|
292
|
|
- loan interest and
charges
|
1,721
|
891
|
|
- professional fees
|
1,611
|
1,662
|
|
- administration and other expenses
|
357
|
144
|
|
Auditors' remuneration:
|
|
|
|
- audit of the Parent Company and Group
Financial Statements
|
62
|
56
|
|
- audit of subsidiary company Financial
Statements
|
76
|
63
|
- audit related assurance services
|
|
|
|
|
|
|
|
|
|
|
The Group has eleven employees other than the
Directors of the Company.
Details of the Directors' remuneration are
disclosed below:
|
|
Year
ended
31
December
2023
£
|
Year ended
31
December
2022
£
|
|
Arthur Manners
|
490,000
|
182,000
|
|
Edward William Fitzalan-Howard (resigned 19
April 2024)
|
30,000
|
30,000
|
|
Michael Cunningham (resigned 29 June
2023)
|
20,000
|
40,000
|
|
Andrew Christie
|
33,000
|
33,000
|
|
Nigel Hanbury
|
450,000
|
208,000
|
|
Martin Reith
|
840,000
|
200,000
|
|
Tom Libassi
|
25,000
|
25,000
|
Michael Wade (appointed 29 June
2023)
|
|
|
|
|
|
|
The Deputy Chairman, Nigel Hanbury, the Chief
Executive Officer, Martin Reith, and the Finance Director, Arthur
Manners, had a bonus incentive scheme during 2023 in addition to
their basic remuneration. The above figures for Nigel Hanbury,
Martin Reith and Arthur Manners include an accrual for the year of
£225,000, 550,000 (of which £100,000 is deferred and 295,000 (of
which £100,000 is deferred) respectively (2022: £48,000 for Nigel
Hanbury and £42,000 Arthur Manners) in respect of this scheme. The
deferred bonus will be used as notional underwriting capital in a
proposed staff underwriting corporate member.
No other Directors derive other benefits,
pension contributions or incentives from the Group. Nigel Hanbury,
Martin Reith and Arthurs Manners have share interests in the Joint
Share Ownership Plan and the Long Term Incentive Plan (see Note
23).
10. Income tax charge
(a) Analysis of tax charge/(credit) in the
year
|
|
Year
ended
31
December
2023
£'000
|
Year ended
31
December
2022
£'000
|
|
Current tax:
|
|
|
|
- current year
|
84
|
(84)
|
|
- prior year
|
427
|
(53)
|
|
|
|
|
|
|
|
|
|
Deferred tax:
|
|
|
|
- current year
|
4,958
|
(1,564)
|
|
|
|
|
|
|
|
|
Income charge/(credit)
credit
|
|
|
(b) Factors affecting the tax credit for the
year
Tax for the year is 25% (2022: 19%), the same as
the standard rate of corporation tax in the UK of 25% (2022:
19%).
The differences are explained below:
|
|
Year
ended
31
December
2023
£'000
|
Year ended
31
December
2022
£'000
|
|
|
|
|
|
Tax calculated as loss before tax multiplied by
the standard rate of corporation tax in the UK of 25% (2022:
19%)
|
5,676
|
(982)
|
|
Tax effects of:
|
|
|
|
- prior year adjustments
|
(1,038)
|
(209)
|
|
- rate change and other adjustments
|
2,405
|
(502)
|
|
- permanent disallowances
|
(857)
|
(164)
|
|
- foreign taxes
|
153
|
5
|
|
|
|
|
Tax charge/(credit) for the
year
|
|
|
The results of the Group's participation on the
2021, 2022 and 2023 years of account and the calendar year movement
on 2020 and prior run-offs will not be assessed for tax until the
years ended 2024, 2025 and 2026 respectively, being the year after
the calendar year result of each run-off year or the normal date of
closure of each year of account. Full provision is made as part of
the deferred tax provisions for underwriting profits/(losses) not
yet subject to corporation tax.
11. Earnings per share
Basic earnings per share is calculated by
dividing the net profit attributable to ordinary equity holders of
the Company after tax by the weighted average number of ordinary
shares outstanding during the period.
Diluted earnings per share is calculated by
dividing the net profit attributable to ordinary equity holders of
the Company by the weighted average number of ordinary shares
outstanding during the year, plus the weighted average number of
ordinary shares that would be issued on the conversion of all the
dilutive potential ordinary shares into ordinary shares.
The earnings per share and weighted average
number of shares used in the calculation are set out
below:
|
|
Year
ended
31
December
2023
|
Year ended
31
December
2022
|
Profit/(loss) for the year after tax
attributable to ordinary equity holders of the Parent
|
|
|
Basic - weighted average number of ordinary
shares*
|
|
|
Diluted - weighted average number of ordinary
shares* (includes LTIP and JSOP - see Note
23)
|
|
|
Basic profit/(loss) per share
|
|
|
Diluted profit/(loss) per share**
|
|
|
* Used as the
denominator in calculating the basic earnings per share, and
diluted earnings per share, respectively.
** Diluted loss per share is
not permitted to be reduced from the basic loss per
share.
12. Dividends paid or proposed
A dividend of £2,319,000 was paid during the
year (2022: £2,034,000).
A final dividend of 6p is being proposed in
respect of the financial year ended 31 December 2023.
13. Intangible assets
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
At 1 January 2023
|
553
|
(3,267)
|
59,966
|
57,252
|
|
Additions
|
57
|
(405)
|
500
|
152
|
|
Disposals
|
-
|
-
|
(5)
|
(5)
|
|
Acquired with subsidiary
undertakings
|
-
|
-
|
3,988
|
3,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation
|
|
|
|
|
|
At 1 January 2023
|
71
|
(2,194)
|
-
|
(2,123)
|
|
Charge for the period
|
191
|
(811)
|
-
|
(620)
|
|
Disposals
|
-
|
-
|
-
|
-
|
|
Acquired with subsidiary
undertakings
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 22 sets out the details of the entities
acquired by the Group during the year, the fair value adjustments
and the goodwill arising.
The cost value of the Syndicate Capacity before
revaluation is £47,986,000 (2022: £43,503,000).
14. Investments in subsidiaries
During 2023 a reverse impairment charge of
£8,063,000 was recognised on the cost of investments in
subsidiaries and included in the Parent income
statement.
In addition, the company acquired four new
subsidiaries for a total cash consideration of £7,244,000 and the
issue of 123,457 Ordinary 10p shares for a total value of £200,000.
The company also sold four existing dormant subsidiaries for a
total proceeds of £Nil.
At 31 December 2023 the Company owned 100% of
the following companies and limited liability partnerships, either
directly or indirectly. All subsidiaries are incorporated in
England and Wales and their registered office address is at 40
Gracechurch Street, London EC3V 0BT, apart from RBC CEES Trustee
Limited, which is incorporated in Jersey and its registered office
address is Gaspé House, 66-72 Esplanade, Jersey JE2 3QT and Gould
Scottish Partnership, which is incorporated in Scotland and its
registered office is 9 Haymarket Square, Edinburgh, EH3
8RY.
|
|
|
|
|
|
|
Nameco (No. 917) Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Nameco (No. 346) Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Charmac Underwriting Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
RBC CEES Trustee Limited(ii)
|
Direct
|
100%
|
100%
|
Joint Share Ownership
Plan
|
|
Chapman Underwriting Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Advantage DCP Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Romsey Underwriting Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Helios UTG Partner Limited(i)
|
Direct
|
100%
|
100%
|
Corporate
partner
|
|
Salviscount LLP
|
Indirect
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Inversanda LLP
|
Indirect
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Fyshe Underwriting LLP
|
Indirect
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Nomina No 505 LLP
|
Indirect
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Nomina No 321 LLP
|
Indirect
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Nameco (No. 409) Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Nameco (No. 1113) Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Catbang 926 Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Whittle Martin Underwriting
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Nameco (No. 408) Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Nomina No 084 LLP
|
Indirect
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Nameco (No. 510) Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Nameco (No. 544) Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
N J Hanbury Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Nameco (No. 1011) Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Nameco (No. 1111) Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Nomina No 533 LLP
|
Indirect
|
100%
|
100%
|
Corporate
partner
|
|
North Breache Underwriting Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
G T C Underwriting Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Hillnameco Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Nameco (No. 2012) Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Nameco (No. 1095) Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
New Filcom Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Kemah Lime Street Capital
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Nameco (No. 1130) Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Nomina No 070 LLP
|
Indirect
|
100%
|
100%
|
Corporate
partner
|
|
Nameco (No. 389) Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Nomina No. 469 LLP
|
Indirect
|
100%
|
100%
|
Corporate
partner
|
|
Nomina No. 536 LLP
|
Indirect
|
100%
|
100%
|
Corporate
partner
|
|
Nameco (No. 301) Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Nameco (No. 1232) Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Shaw Lodge Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Queensberry Underwriting
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Nomina No 472 LLP
|
Indirect
|
100%
|
100%
|
Corporate
partner
|
|
Nomina No 110 LLP
|
Indirect
|
100%
|
100%
|
Corporate
partner
|
|
Chanterelle Underwriting Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Kunduz LLP
|
Indirect
|
100%
|
100%
|
Corporate
partner
|
|
Exalt Underwriting Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Nameco (No. 1110) Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Clifton 2011 Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Nomina No 378 LLP
|
Indirect
|
100%
|
100%
|
Corporate
partner
|
|
Gould Scottish Limited Partnership
|
Indirect
|
100%
|
100%
|
Corporate
partner
|
|
Harris Family UTG Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Whitehouse Underwriting Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Risk Capital UTG Limited
|
Direct
|
100%
|
100%
|
Lloyd's of London
corporate vehicle
|
|
Nameco (No. 606) Limited
|
Direct
|
100%
|
-
|
Lloyd's of London
corporate vehicle
|
|
Nameco (No. 1208) Limited
|
Direct
|
100%
|
-
|
Lloyd's of London
corporate vehicle
|
|
Chorlton Underwriting Limited
|
Direct
|
100%
|
-
|
Lloyd's of London
corporate vehicle
|
|
Park Farm Underwriting Limited
|
Direct
|
100%
|
-
|
Lloyd's of London
corporate vehicle
|
|
Helios LLV One Limited
|
Direct
|
100%
|
-
|
Lloyd's of London
corporate vehicle
|
|
Helios LLV Two Limited
|
Direct
|
100%
|
-
|
Lloyd's of London
corporate vehicle
|
|
Helios LLV Three Limited
|
Direct
|
100%
|
-
|
Lloyd's of London
corporate vehicle
|
|
Helios LLV Four Limited
|
Direct
|
100%
|
-
|
Lloyd's of London
corporate vehicle
|
|
Helios LLV Five Limited
|
Direct
|
100%
|
-
|
Lloyd's of London
corporate vehicle
|
|
Helios LLV Six Limited
|
Direct
|
100%
|
-
|
Lloyd's of London
corporate vehicle
|
|
Helios LLV Seven Limited
|
Direct
|
100%
|
-
|
Lloyd's of London
corporate vehicle
|
|
Helios LLV Eight Limited
|
Direct
|
100%
|
-
|
Lloyd's of London
corporate vehicle
|
|
Helios LLV Nine LLP
|
Indirect
|
100%
|
-
|
Corporate
partner
|
|
|
|
|
|
|
For details of all new acquisitions made during
the year 2023, refer to Note 22(a).
(i) Helios UTG Partner
Limited, a subsidiary of the Company, owns 100% of Salviscount LLP,
Inversanda LLP, Fyshe Underwriting LLP, Nomina No 505 LLP, Nomina
No 321 LLP Nomina No 084 LLP, Nomina No 533 LLP, Nomina No 070 LLP,
Nomina No 469 LLP, Nomina No 536 LLP, Nomina No 472 LLP, Nomina No
110 LLP, Kunduz LLP. Nomina No 348 LLP and Gould Scottish Limited
Partnership. The cost of acquisition of these LLPs is accounted for
in Helios UTG Partner Limited, their immediate parent
company.
(ii) RBC CEES Trustee Limited was
an incorporated entity in year 2017 to satisfy the requirements of
the Joint Share Ownership Plan (see Note 23).
15. Financial assets at fair value through
profit or loss
The Group uses the following hierarchy for
determining and disclosing the fair value of financial instruments
by valuation technique:
Level 1: The fair value of financial instruments
traded in active markets (such as publicly traded securities) is
based on quoted market prices (unadjusted) at the end of the
reporting period. The quoted market price used for financial assets
held by the Group is the current bid price. These instruments are
included in Level 1.
Level 2: The fair value of financial instruments
that are not traded in an active market is determined using
valuation techniques which maximise the use of observable market
data inputs, either directly or indirectly (other than quoted
prices included within Level 1) and rely as little as possible on
entity-specific estimates. If all significant inputs required to
fair value an instrument are observable, the instrument is included
in Level 2.
Level 3: If one or more of the significant
inputs is not based on observable market data, the instrument is
included in Level 3. This is the case for unlisted equity
securities.
The Group held the following financial assets
carried at fair value on the statement of financial
position:
|
|
|
|
|
|
|
Shares and other variable yield securities and
units in unit trusts
|
33,945
|
9,497
|
20,809
|
3,639
|
|
Debt securities and other fixed income
securities
|
180,208
|
48,831
|
131,378
|
-
|
|
Participation in investment pools
|
1,459
|
1,037
|
407
|
15
|
|
Loans and deposits with credit
institutions
|
1,448
|
1,446
|
-
|
3
|
|
Derivatives
|
78
|
31
|
46
|
-
|
|
Other investments
|
1,120
|
1,120
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares and other variable yield securities and
units in unit trusts
|
18,751
|
3,794
|
12,913
|
2,044
|
|
Debt securities and other fixed income
securities
|
132,031
|
39,187
|
92,844
|
-
|
|
Participation in investment pools
|
597
|
112
|
462
|
23
|
|
Loans and deposits with credit
institutions
|
263
|
73
|
-
|
190
|
|
Derivatives
|
267
|
146
|
121
|
-
|
|
Other investments
|
1,064
|
1,064
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds at Lloyd's represent assets deposited with
the corporation of Lloyd's to support the Group's underwriting
activities as described in the accounting policies. The Group
entered into a Lloyd's Deposit Trust Deed which gives Lloyd's the
right to apply these monies in settlement of any claims arising
from the participation on the syndicates. These monies can only be
released from the provision of this Deed with Lloyd's express
permission and only in circumstances where the amounts are either
replaced by an equivalent asset, or after the expiration of the
Group's liabilities in respect of its underwriting.
The Directors consider any credit risk or
liquidity risk not to be material.
Company
Financial assets at fair value through profit or
loss are shown below:
|
|
|
|
Holdings in collective investment schemes -
Level 2
|
|
|
|
|
|
|
16. Other receivables
|
|
|
|
|
Arising out of direct insurance
operations
|
85,360
|
64,852
|
|
Arising out of reinsurance
operations
|
63,563
|
59,714
|
|
|
|
|
|
|
|
|
The Group has no analysis of other receivables
held directly by the syndicates on the Group's behalf (see Note
27). None of the Group's other receivables are past their due date
and all are classified as fully performing.
Included within the above receivables are
amounts totalling £nil (2022: £nil) which are not expected to be
wholly recovered within one year.
|
|
|
|
|
Receivables from subsidiaries (Note
25)
|
70,062
|
73,505
|
|
Other debtors
|
2,463
|
1,278
|
|
|
|
|
|
|
|
|
Included within receivables are amounts
totalling £nil (2022: £100,000), which are not expected to be
recoverable within one year.
17. Deferred acquisition costs
|
|
|
|
|
At 1 January
|
24,991
|
13,615
|
|
Increase arising from acquisition of subsidiary
undertakings (Note 22)
|
781
|
664
|
|
Movement in deferred acquisition
costs
|
7,038
|
10,163
|
|
|
|
|
|
|
|
|
18. Deferred tax
Group
Deferred tax is calculated in full on temporary
differences using a tax rate of 25% on deferred tax assets and
deferred tax liabilities (2022: 25% on deferred tax assets and
deferred tax liabilities). The movement on the deferred tax
liability account is shown below:
|
|
Valuation
of
capacity
£'000
|
Timing
differences
on
underwriting
results
£'000
|
|
|
At 1 January 2022
|
13,341
|
(1,375)
|
11,965
|
|
On acquisition of subsidiary
undertakings
|
686
|
(287)
|
399
|
|
Revaluation of capacity
|
668
|
-
|
668
|
|
Prior period adjustment
|
(156)
|
-
|
(156)
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2023
|
14,139
|
(2,828)
|
11,311
|
|
On acquisition of subsidiary
undertakings
|
856
|
-
|
856
|
|
Revaluation of capacity
|
4,497
|
-
|
4,497
|
|
Prior period adjustment
|
712
|
-
|
712
|
Charge/(credit) for the year
|
|
|
|
|
|
|
|
|
Company
The Company had no deferred tax assets or
liabilities (2022: £nil), as disclosed in Note 10.
19. Borrowings
|
|
|
|
|
Secured - at amortised cost
|
59,055
|
-
|
Bank revolving credit facility
|
|
|
|
|
|
|
|
Current
|
-
|
15,000
|
|
|
|
|
|
|
|
|
Bank loan
(a) Revolving credit/loan facility
On 21 December 2021, a new sterling revolving
loan facility ("RLF") was agreed with Barclays Bank Plc to the
value of £15m. The interest is 4.2% per annum. On 21 March 2022,
the full £15m was drawn down and on the 18 December 2023 the loan
was repaid in full.
On 15 December 2023 the Company secured an A - /
stable rating from Kroll Bond Rating Agency LLC, (KBRA) for up to
US$100m
seven-year unsecured debt at a fixed coupon of 9.5%. An
initial tranche of US75m of the debt was drawn down on 15 December
2023. The loan is repaid as one payment in full at the end of the
seven year term.
Reconciliation of movements of liabilities to
cash flows arising from financing activities:
The facility is secured over the assets of the
Company.
|
|
|
|
|
|
|
|
Other
loans and
borrowings
£'000
|
|
Share
capital/
premium
£'000
|
|
|
|
Balance at 1 January 2022
|
|
|
|
|
|
|
|
Changes from financing cash
flows
|
|
|
|
|
|
|
|
Proceeds from issue of share capital (Note
21)
|
-
|
|
12,781
|
-
|
-
|
12,781
|
|
Proceeds from loans and borrowings
|
-
|
|
-
|
-
|
-
|
-
|
|
Payments for Company buyback of ordinary shares
(Note 24)
|
15,000
|
|
-
|
-
|
-
|
15,000
|
|
Repayment of borrowings
|
-
|
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
Total changes from financing cash
flows
|
|
|
|
|
|
|
Effect of changes in foreign exchange
rates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other changes:
|
|
|
|
|
|
|
|
Liability related
|
-
|
|
-
|
-
|
-
|
-
|
|
Other expense
|
-
|
|
-
|
-
|
-
|
-
|
|
Interest expense
|
-
|
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
Total liability related other
changes
|
|
|
|
|
|
|
Total equity related other
changes
|
|
|
|
|
|
|
Balance at 31 December
2022
|
|
|
|
|
|
|
* The equity related
other changes relate to the consolidated profit for the year
2022.
|
|
|
|
|
|
|
|
Other
loans and
borrowings
£'000
|
|
Share
capital/
premium
£'000
|
|
|
|
Balance at 1 January 2023
|
|
|
|
|
|
|
|
Changes from financing cash
flows
|
|
|
|
|
|
|
|
Proceeds from issue of share capital (Note
21)
|
-
|
|
349
|
300
|
-
|
649
|
|
Proceeds from loans and borrowings
|
59,055
|
|
-
|
-
|
-
|
59,055
|
|
Payments for Company buyback of ordinary shares
(Note 24)
|
-
|
|
-
|
-
|
(3,209)
|
(3,209)
|
|
Repayment of borrowings
|
(15,000)
|
|
-
|
-
|
-
|
(15,000)
|
|
|
|
|
|
|
|
|
Total changes from financing cash
flows
|
|
|
|
|
|
|
Effect of changes in foreign exchange
rates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other changes:
|
|
|
|
|
|
|
|
Liability related
|
-
|
|
-
|
-
|
-
|
-
|
|
Other expense
|
-
|
|
-
|
-
|
-
|
-
|
|
Interest expense
|
-
|
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
Total liability related other
changes
|
|
|
|
|
|
|
Total equity related other
changes*
|
|
|
|
|
|
|
Balance at 31 December
2023
|
|
|
|
|
|
|
* The equity related
other changes relate to the consolidated profit for the year
2023.
|
|
|
|
|
|
|
|
Other
loans and
borrowings
£'000
|
|
Share
capital/
premium
£'000
|
|
|
|
Balance at 1 January 2022
|
|
|
|
|
|
|
|
Changes from financing cash
flows
|
|
|
|
|
|
|
|
Proceeds from issue of share capital (Note
21)
|
-
|
|
12,781
|
-
|
-
|
12,781
|
|
Proceeds from loans and borrowings
|
15,000
|
|
-
|
-
|
-
|
15,000
|
|
Payments for Company buyback of ordinary shares
(Note 24)
|
-
|
|
-
|
-
|
-
|
-
|
|
Repayment of borrowings
|
-
|
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
Total changes from financing cash
flows
|
|
|
|
|
|
|
Effect of changes in foreign exchange
rates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other changes:
|
-
|
|
-
|
-
|
-
|
-
|
|
Liability related
|
-
|
|
-
|
-
|
-
|
-
|
|
Other expense
|
-
|
|
-
|
-
|
-
|
-
|
|
Interest expense
|
-
|
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
Total liability related other
changes
|
|
|
|
|
|
|
Total equity related other
changes*
|
|
|
|
|
|
|
Balance at 31 December
2022
|
|
|
|
|
|
|
* The equity related
other changes relate to the Company's profit for the year
2022.
|
|
|
|
|
|
|
|
Other
loans and
borrowings
£'000
|
|
Share
capital/
premium
£'000
|
|
|
|
Balance at 1 January 2023
|
|
|
|
|
|
|
|
Changes from financing cash
flows
|
|
|
|
|
|
|
|
Proceeds from issue of share capital (Note
21)
|
-
|
|
349
|
300
|
-
|
649
|
|
Proceeds from loans and borrowings
|
59,055
|
|
-
|
-
|
-
|
59,055
|
|
Payments for Company buyback of ordinary shares
(Note 24)
|
-
|
|
-
|
-
|
(3,209)
|
(3,209)
|
|
Repayment of borrowings
|
(15,000)
|
|
-
|
-
|
-
|
(15,000)
|
|
|
|
|
|
|
|
|
Total changes from financing cash
flows
|
|
|
|
|
|
|
Effect of changes in foreign exchange
rates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other changes:
|
-
|
|
-
|
-
|
-
|
-
|
|
Liability related
|
-
|
|
-
|
-
|
-
|
-
|
|
Other expense
|
-
|
|
-
|
-
|
-
|
-
|
|
Interest expense
|
-
|
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
Total liability related other
changes
|
|
|
|
|
|
|
Total equity related other
changes*
|
|
|
|
|
|
|
Balance at 31 December
2023
|
|
|
|
|
|
|
* The equity related
other changes relate to the Company's profit for the year
2023.
20. Other payables
|
|
|
|
|
Arising out of direct insurance
operations
|
3,925
|
3,509
|
|
Arising out of reinsurance
operations
|
52,770
|
42,700
|
|
Corporation tax payable
|
-
|
-
|
|
|
|
|
|
|
|
|
The Group has no analysis of other payables held
directly by the syndicates on the Group's behalf (see Note
27).
|
|
|
|
|
Payable to subsidiaries
|
5,532
|
3,128
|
|
Other creditors
|
93
|
-
|
Accruals and deferred income
|
|
|
|
|
|
|
All payables above are due within one
year.
21. Share capital and share premium
|
|
|
Ordinary
share
capital
£'000
|
Partly
paid
ordinary
share
capital
£'000
|
|
|
Ordinary shares of 10p each and
share premium
at 31 December 2022
|
|
|
|
|
|
Ordinary shares of 10p each and
share premium
at 31 December 2023
|
|
|
|
|
|
During the year, the Company issued a further
208,461 ordinary shares of 10p each. Of the shares issued, 85,004
were in relation to a script dividend and 123,457 were issued in
relation to the acquisition of Chorlton Underwriting Limited. Nil
proceeds were received by the company for the issue all these
shares.
(i) Number of shares
|
|
|
|
|
Allotted, called up and fully paid
ordinary shares:
|
|
|
|
- on the market
|
74,186,068
|
76,218,203
|
- Company buyback of ordinary shares held in
treasury (Note 24)
|
|
|
|
|
76,845,833
|
76,637,372
|
Uncalled and partly paid ordinary
shares under the JSOP scheme (ii) (Note 23)
|
|
|
|
|
|
|
(ii) The partly paid ordinary shares are not
entitled to dividend distribution rights during the
year.
22. Acquisition of Limited Liability
Vehicles
Acquisitions of Limited Liability Vehicles are
accounted for using the acquisition method of
accounting.
Where the comparison of the consideration paid
to the fair value of net assets acquired gives rise to goodwill,
this is taken to the consolidated statement of financial position
and amortised on a straight line basis over three years. The below
table shows the summary of the gain on bargain purchase and the
impairment of goodwill as follows:
(a) 2023 acquisitions
During the year, the Company has acquired the
following Lloyd's Limited Liability Vehicles either directly, or
indirectly:
|
|
Nameco
(No. 606)
Limited
£'000
|
Nameco
(No. 1208)
Limited
£'000
|
Chorlton
UW Limited
£'000
|
Park Farm
UW Limited
£'000
|
|
|
|
|
|
|
|
|
|
Intangible assets
|
97
|
4
|
-
|
124
|
225
|
|
Uplift to fair value
|
761
|
717
|
1,227
|
1,100
|
3,805
|
Deferred tax on uplift to fair value
|
|
|
|
|
|
|
|
668
|
542
|
912
|
1,045
|
3,167
|
|
Financial investments
|
1,910
|
882
|
2,234
|
2,360
|
7,386
|
|
Deferred income tax asset
|
-
|
-
|
-
|
-
|
-
|
|
Reinsurers' share of insurance
liabilities:
|
-
|
-
|
-
|
-
|
-
|
|
- reinsurers' share of outstanding
claims
|
421
|
512
|
1,050
|
979
|
2,962
|
|
- reinsurers' share of unearned
premium
|
313
|
96
|
172
|
176
|
757
|
|
Other receivables, including insurance
receivables
|
1,983
|
832
|
2,382
|
3,293
|
8,490
|
|
Deferred acquisition costs
|
243
|
98
|
217
|
224
|
782
|
|
Prepayments and accrued income
|
14
|
8
|
15
|
16
|
53
|
|
Cash and cash equivalents
|
108
|
84
|
201
|
311
|
704
|
|
Insurance liabilities:
|
-
|
-
|
-
|
-
|
-
|
|
- claims outstanding
|
(1,683)
|
(1,722)
|
(3,402)
|
(3,443)
|
(10,250)
|
|
- unearned premiums
|
(1,882)
|
(563)
|
(915)
|
(989)
|
(4,349)
|
|
Deferred income tax liabilities
|
-
|
-
|
-
|
-
|
-
|
|
Other payables, including insurance
payables
|
(923)
|
(655)
|
(611)
|
(545)
|
(2,734)
|
Accruals and deferred income
|
|
|
|
|
|
Total fair value acquired
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Positive goodwill on
acquisition
|
57
|
-
|
-
|
-
|
57
|
Negative goodwill on
acquisition
|
|
|
|
|
|
|
Since date of acquisition
|
|
|
|
|
|
|
Net earned premium
|
917
|
839
|
738
|
811
|
3,305
|
|
Profit/(loss)
|
79
|
132
|
77
|
112
|
400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) 2022 acquisitions
In 2022 the Company acquired three Limited
Liability Vehicles, all of which are incorporated in England and
Wales and are corporate members of Lloyd's.
|
|
Harris
Family
UTG
Limited
£'000
|
Whitehouse
Underwriting
Limited
£'000
|
Risk
Capital
UTG
Limited
£'000
|
|
|
|
|
|
|
|
|
Intangible assets
|
23
|
1
|
46
|
70
|
|
Uplift to fair value
|
216
|
503
|
2,025
|
2,744
|
Deferred tax on uplift to fair value
|
|
|
|
|
|
|
|
|
|
|
|
Financial investments
|
501
|
1,212
|
4,303
|
6,016
|
|
Deferred income tax asset
|
-
|
-
|
-
|
-
|
|
Reinsurers' share of insurance
liabilities:
|
|
|
|
|
|
- reinsurers' share of outstanding
claims
|
367
|
617
|
2,192
|
3,176
|
|
- reinsurers' share of unearned
premium
|
50
|
103
|
340
|
493
|
|
Other receivables, including insurance
receivables
|
992
|
845
|
7,349
|
9,186
|
|
Deferred acquisition costs
|
70
|
125
|
470
|
665
|
|
Prepayments and accrued income
|
6
|
6
|
41
|
53
|
|
Cash and cash equivalents
|
66
|
57
|
445
|
568
|
|
Insurance liabilities:
|
|
|
|
|
|
- claims outstanding
|
(1,020)
|
(1,938)
|
(7,929)
|
(10,887)
|
|
- unearned premiums
|
(281)
|
(528)
|
(2,037)
|
(2,846)
|
|
Deferred income tax liabilities
|
-
|
-
|
-
|
-
|
|
Other payables, including insurance
payables
|
(993)
|
(505)
|
(5,817)
|
(7,315)
|
Accruals and deferred income
|
|
|
|
|
Total fair value acquired
|
|
|
|
|
|
|
|
|
|
|
|
Positive goodwill on
acquisition
|
89
|
109
|
176
|
374
|
Negative goodwill on
acquisition
|
|
|
|
|
|
Since date of acquisition
|
|
|
|
|
|
Net earned premium
|
30
|
5
|
-
|
35
|
|
Profit/(loss)
|
(5)
|
-
|
-
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Had the Limited Liability Vehicles been
consolidated from 1 January 2023, the consolidated statement of
comprehensive income would show a net earned premium of
£204,195,000 and a profit after tax of £17,981,000.
Costs incurred in connection with the three
acquisitions totalling £40,000 (2022: £38,000) have been recognised
in the consolidated statement of comprehensive income.
23. Share option plans
(i) Joint Share Ownership Plan
("JSOP")
500,000 shares have been vested as at 31
December 2021.
On 16 August 2021, a further 600,000 shares were
issued.
Effect of the transactions
The beneficial interests of the Executives are
as follows:
|
|
|
|
|
|
|
Interests
in
jointly
owned
ordinary
shares
issued
under
JSOP
|
Other
interests
in
ordinary
shares
|
|
|
Interests
in jointly
owned
ordinary
shares
issued
under JSOP
|
Other
interests
in
ordinary
shares
|
|
|
Arthur Manners
|
477,500
|
720,009
|
1,197,509
|
|
477,500
|
720,009
|
1,197,509
|
|
|
|
|
|
|
|
|
|
The JSOP is to be accounted for as if it were a
premium priced option, and, therefore, Black Scholes mathematics
have been applied to determine the fair value. As the performance
condition will eventually be trued up, a calculation of the fair
value based on an algebraic Black Scholes calculation of the value
of the "as if" option discounted for the risk of forfeiture or
non-vesting is reasonable. The discount factors are for the risk
that an employee leaves and forfeits the award or the failure to
meet the performance condition with the result the JSOP awards do
not vest in full or at all.
This gave rise to a total fair value amount of
£23,148 to be charged as an expense in the statement of
comprehensive income and spread over three years, being £7,716 in
2018, £7,716 in 2019 and £7,716 in 2020.
(ii) Share-based payments
In 2022, the Company operated the Helios
Underwriting plc Long Term Incentive Plan ("LTIP"). On 16 December
2022, the Company granted 571,427 awards under the LTIP in the form
of a nil-cost options. Under the same plan, the company
granted 491,227 on 30 May 2023.
The awards' performance conditions set threshold
(30%) to stretch (60%) targets in respect of the Company's total
shareholder return ("TSR") over the three-year period following
the grant of the awards. No portion of the awards shall vest
unless the Company's TSR at the end of the performance period
reaches the threshold target, for which one quarter of the awards
would vest, rising on a straight line basis to full vesting of the
awards for the Company's TSR over the performance period being
equal to the stretch target or better. In the case of Executive
Directors, any vested shares will be subject to a two-year holding
period.
On 5 April 2023 a further 875,000 awards were
made under the company's LTIP, with the terms set out
below.
The awards' performance conditions set threshold
(50%) to stretch (100%) targets in respect of the Company's total
shareholder return ("TSR") over the five year period following the
grant of the awards. No portion of the awards shall vest unless the
Company's TSR at the end of the performance period reaches the
threshold target, for which one quarter of the awards would vest,
rising on a straight line basis to full vesting of the awards for
the Company's TSR over the performance period being equal to the
stretch target or better. In the case of Executive Directors, any
vested shares will be subject to a two-year holding
period.
The awards for the Executive Directors are as
follows:
|
|
|
Awards
granted
during
2023
|
|
|
Outstanding
at
31
December
2023
|
Exercisable
at
31
December
2023
|
|
Arthur Manners
|
266,666
|
228,070
|
-
|
-
|
494,736
|
-
|
|
Nigel Hanbury
|
304,761
|
263,157
|
-
|
-
|
567,918
|
-
|
|
|
|
|
|
|
|
|
The fair value of the LTIP awards is calculated
using a Monte Carlo (Stochastic) model taking into account the
terms and conditions of the awards granted. Each award gives rise
to a fair value amount to be charged as an expense in the statement
of comprehensive income and spread over a period as detailed
below:
|
|
|
|
|
|
|
Number of awards granted
|
571,427
|
875,000
|
491,227
|
1,937,656
|
|
The weighted average remaining life of the
options
|
8.86
|
9.26
|
9.41
|
|
|
Period of expense
|
|
|
|
|
|
2022
|
5,123
|
-
|
-
|
5,123
|
|
2023
|
124,667
|
78,170
|
71,464
|
274,301
|
|
2024
|
125,008
|
105,573
|
122,223
|
352,804
|
|
2025
|
119,202
|
105,285
|
121,889
|
346,376
|
|
2026
|
-
|
105,285
|
50,424
|
155,709
|
|
2027
|
-
|
105,285
|
-
|
105,285
|
|
2028
|
-
|
27,402
|
-
|
27,402
|
|
|
|
|
|
|
24. Treasury shares: purchase of own
shares
The Company has in previous years bought back
some of its own ordinary shares on the market and these are held in
treasury. During 2023, the Company has bought back a further
2,240,596 shares for a total consideration of
£3,209,000.
The retained earnings have been reduced by a
further £3,736,000, being the consideration paid on the market for
these shares, as shown in the consolidated and Parent Company
statements of changes in equity.
The Company cannot exercise any rights over
these bought back and held in treasury shares, and has no voting
rights. No dividend or other distribution of the Company's assets
can be paid to the Company in respect of the treasury shares that
it holds.
As at 31 December 2023, the 2,659,765 own shares
bought back represent 3.46% of the total allotted, called up and
fully paid ordinary shares of the Company of 76,845,833 (Note
21).
25. Related party transactions
Helios Underwriting plc has inter-company loans
with its subsidiaries which are repayable on three months' notice
provided it does not jeopardise each company's ability to meet its
liabilities as they fall due. All inter-company loans are,
therefore, classed as falling due within one year. The amounts
from/(to) subsidiaries exceeding £1m as at 31 December are set out
below:
|
|
|
|
|
Nameco (No. 917) Limited
|
9,355
|
12,116
|
|
Helios UTG Partner Limited
|
13,618
|
8,276
|
|
Chapman Underwriting Limited
|
9,663
|
13,458
|
|
Romsey Underwriting Limited
|
7,001
|
8,790
|
|
Advantage DCP Limited
|
(1,699)
|
(1,659)
|
|
Catbang 926 Limited
|
6,378
|
7,466
|
|
N J Hanbury Limited
|
2,759
|
2,789
|
|
Queensberry Underwriting Limited
|
3,164
|
2,870
|
|
Chanterelle Underwriting Limited
|
1,892
|
1,838
|
|
Clifton 2011 Limited
|
2,089
|
1,175
|
|
Exalt Underwriting Limited
|
2,132
|
1,268
|
|
Northbreache Underwriting Limited
|
-
|
1,119
|
|
Harris Family UTG Limited
|
1,479
|
583
|
|
Risk Capital UTG Limited
|
2,282
|
3,624
|
|
Nameco (No. 1208) Limited
|
1,261
|
-
|
|
Park Farm Underwriting Limited
|
(1,578)
|
-
|
Subsidiaries below £1,000,000
|
|
|
|
|
|
|
|
Receivable from subsidiaries
|
70,062
|
73,505
|
Payable from subsidiaries
|
|
|
|
|
|
|
The Group has entered into quota share
reinsurance contracts for the 2021, 2022, 2023 and 2024 years of
account with HIPCC Limited. The Limited Liability Vehicles'
underwriting year of account quota share participations are set out
below:
|
|
|
|
|
|
|
Nameco (No. 917) Limited
|
59%
|
44%
|
36%
|
33%
|
|
Nameco (No. 346) Limited
|
60%
|
65%
|
38%
|
31%
|
|
Chapman Underwriting Limited
|
68%
|
11%
|
20%
|
17%
|
|
Advantage DCP Limited
|
54%
|
-
|
-
|
-
|
|
Romsey Underwriting Limited
|
48%
|
37%
|
29%
|
25%
|
|
Nomina No 321 LLP
|
35%
|
-
|
-
|
-
|
|
Nameco (No. 409) Limited
|
44%
|
-
|
-
|
-
|
|
Nameco (No. 1113) Limited
|
46%
|
-
|
-
|
-
|
|
Catbang 926 Limited
|
60%
|
21%
|
16%
|
13%
|
|
Whittle Martin Underwriting
|
48%
|
-
|
-
|
-
|
|
|
|
|
|
|
Nigel Hanbury, a Director of Helios Underwriting
plc and its subsidiary companies, was also a director and majority
shareholder in HIPCC Limited until 29 November 2023 when he sold
his majority shareholding in full, and resigned as a director on
the same date. Under the agreement, the Group accrued a net
reinsurance premium payable of £6,574,000 (2022: £1,921,000 net
reinsurance premium recovery) during the year.
In addition, HIPCC provides stop loss, portfolio
stop loss and HASP reinsurance policies for the Company.
HIPCC Limited acts as an intermediary for the
reinsurance products purchased by Helios. An arrangement has been
put in place so that 51% of the profits generated by HIPCC in
respect of the business relating to Helios will be repaid to Helios
for the business transacted for the 2020 and subsequent
underwriting years. The consideration paid to Nigel Hanbury of
£100,000 reflects the HIPCC income that he is expected to forgo.
This arrangement was terminated when Nigel Hanbury sold his
shareholding and resigned as a director in HIPCC.
During 2023, the following Directors received
dividends, in line with their shareholdings held:
|
|
Shareholding
at date
dividend
declared
29 June
2023
|
Dividend
received
19 July
2023
£
|
|
Nigel Hanbury (either personally or has an
interest in)
|
9,562,358
|
286,870
|
|
Andrew Christie
|
34,551
|
1,036
|
|
Arthur Manners (either personally or has an
interest in)
|
1,197,509
|
35,925
|
|
Michael Cunningham (resigned 29 June
2024)
|
286,848
|
8,605
|
|
Tom Libassi (has an interest in)
|
13,407,000
|
402,210
|
|
Martin Reith
|
257,727
|
7,731
|
Edward Fitzalan Howard, Duke of Norfolk
(resigned 19 April 2024)
|
|
|
26. Ultimate controlling party
The Directors consider that the Group has no
ultimate controlling party.
27. Syndicate participations
The syndicates in which the Company's
subsidiaries participate as corporate members of Lloyd's either
directly or through MAPA's are as follows:
|
|
|
Allocated capacity
per year of account
|
|
|
Managing or members'
agent
|
|
|
|
|
|
33
|
Hiscox Syndicates
Limited
|
15,358
|
15,358
|
15,357
|
15,271
|
|
218
|
IQUW Syndicate
Management Limited
|
17,711
|
17,711
|
7,519
|
7,500
|
|
318
|
Cincinnati Global
Underwriting Agency Limited
|
1,082
|
862
|
993
|
993
|
|
386
|
QBE Underwriting
Limited
|
3,139
|
3,139
|
3,067
|
2,781
|
|
510
|
Tokio Marine Kiln
Syndicates Limited
|
30,294
|
28,183
|
34,097
|
24,257
|
|
557
|
Tokio Marine Kiln
Syndicates Limited
|
-
|
-
|
3,509
|
3,509
|
|
609
|
Atrium Underwriters
Limited
|
19,528
|
18,421
|
13,714
|
13,168
|
|
623
|
Beazley Furlonge
Limited
|
32,687
|
28,909
|
23,293
|
20,253
|
|
727
|
S A Meacock &
Company Limited
|
2,956
|
2,956
|
2,423
|
2,352
|
|
1176
|
Chaucer Syndicates
Limited
|
2,875
|
2,875
|
2,875
|
2,875
|
|
1200
|
Argo Managing Agency
Limited
|
-
|
55
|
10,050
|
-
|
|
1699
|
Asta Managing Agency
Limited
|
5,000
|
-
|
-
|
-
|
|
1729
|
Dale Managing Agency
Limited
|
25,118
|
20,094
|
10,220
|
247
|
|
1796
|
Asta Managing Agency
Limited
|
7,000
|
-
|
-
|
-
|
|
1902
|
Asta Managing Agency
Limited
|
12,636
|
10,688
|
10,000
|
-
|
|
1925
|
Apollo Syndicate
Management Limited
|
12,500
|
-
|
-
|
-
|
|
1955
|
Arch Managing Agency
Limited
|
20,000
|
12,500
|
-
|
-
|
|
1966
|
Asta Managing Agency
Limited
|
15,000
|
-
|
-
|
-
|
|
1969
|
Apollo Syndicate
Management Limited
|
25,499
|
12,171
|
5,675
|
459
|
|
1971
|
Apollo Syndicate
Management Limited
|
25,000
|
10,000
|
6,467
|
-
|
|
1985
|
Asta Managing Agency
Limited
|
20,000
|
16,874
|
-
|
-
|
|
1988
|
Asta Managing Agency
Limited
|
15,125
|
15,000
|
-
|
-
|
|
1996
|
Polo Managing Agency
Limited
|
9,527
|
5,988
|
-
|
-
|
|
2010
|
Lancashire Syndicates
Limited
|
7,338
|
7,338
|
10,642
|
9,999
|
|
2024
|
Probitas Managing
Agency Limited
|
8,522
|
-
|
-
|
-
|
|
2121
|
Argenta Syndicate
Management Limited
|
5,206
|
272
|
10,267
|
5,697
|
|
2358
|
Nephila Syndicate
Managing Agency Limited
|
20,000
|
-
|
-
|
-
|
|
2427
|
Asta Managing Agency
Limited
|
15,024
|
-
|
-
|
-
|
|
2454
|
Apollo Syndicate
Management Limited
|
5,800
|
-
|
-
|
-
|
|
2525
|
Asta Managing Agency
Limited
|
2,612
|
2,311
|
1,856
|
1,727
|
|
2689
|
Asta Managing Agency
Limited
|
5,477
|
2,699
|
10,111
|
610
|
|
2791
|
Managing Agency
Partners Limited
|
16,422
|
12,001
|
10,123
|
10,112
|
|
3939
|
Apollo Syndicate
Management Limited
|
12,000
|
-
|
-
|
-
|
|
4242
|
Asta Managing Agency
Limited
|
15,000
|
10,807
|
12,987
|
9,018
|
|
4444
|
Canopius Managing
Agents Limited
|
24
|
21
|
20
|
182
|
|
5183
|
Asta Managing Agency
Limited
|
1,727
|
5,000
|
-
|
-
|
|
5623
|
Beazley Furlonge
Limited
|
27,001
|
17,672
|
6,894
|
4,770
|
|
5886
|
Blenheim Underwriting
Limited
|
30,833
|
27,131
|
23,165
|
12,586
|
|
6103
|
Managing Agency
Partners Limited
|
4,150
|
3,301
|
3,480
|
3,149
|
|
6104
|
Hiscox Syndicates
Limited
|
10,000
|
32
|
1,774
|
1,839
|
|
6107
|
Beazley Furlonge
Limited
|
1,550
|
164
|
1,682
|
1,732
|
|
|
Ariel Re Managing
Agency Limited
|
|
|
|
|
|
|
|
|
|
|
|
* Including the new
acquisitions in 2023.
28. Group-owned net assets
The Group statement of financial position
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
statement of financial position between Group and syndicate assets
and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Intangible assets:
|
|
|
|
|
|
|
|
|
- Capacity
|
82,436
|
-
|
82,436
|
|
59,966
|
-
|
59,966
|
|
- Positive goodwill
|
348
|
-
|
348
|
|
482
|
-
|
482
|
|
- Negative goodwill
|
(667)
|
-
|
(667)
|
|
(1,073)
|
-
|
(1,073)
|
|
Financial assets at fair value through profit
or loss
|
70,754
|
217,444
|
288,198
|
|
73,771
|
152,242
|
226,013
|
|
Deferred income tax asset
|
-
|
-
|
-
|
|
-
|
-
|
-
|
|
Reinsurance assets:
|
|
|
|
|
|
|
|
|
- reinsurers' share of claims
outstanding
|
60
|
82,948
|
83,008
|
|
60
|
80,666
|
80,726
|
|
- reinsurers' share of unearned
premium
|
-
|
23,962
|
23,962
|
|
-
|
21,333
|
21,333
|
|
Other receivables, including insurance and
reinsurance receivables
|
357
|
172,575
|
172,932
|
|
3,103
|
144,573
|
147,676
|
|
Cash and cash equivalents
|
40,913
|
25,899
|
66,812
|
|
10,254
|
15,046
|
25,300
|
|
Prepayments and accrued income
|
4,459
|
2,822
|
7,281
|
|
3,746
|
1,330
|
5,076
|
Deferred acquisition costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Equity attributable to owners of the
Parent:
|
|
|
|
|
|
|
|
|
Share capital
|
7,795
|
-
|
7,795
|
|
7,774
|
-
|
7,774
|
|
Share premium
|
98,596
|
-
|
98,596
|
|
98,268
|
-
|
98,268
|
|
Revaluation reserve
|
24,840
|
-
|
24,840
|
|
11,350
|
-
|
11,350
|
|
Other reserves - treasury shares (JSOP and
LTIP)
|
190
|
-
|
190
|
|
(110)
|
-
|
(110)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance liabilities:
|
|
|
|
|
|
|
|
|
- claims outstanding
|
-
|
309,188
|
309,188
|
|
-
|
272,015
|
272,015
|
|
- unearned premium
|
-
|
143,610
|
143,610
|
|
-
|
114,663
|
114,663
|
|
Deferred income tax liabilities
|
22,277
|
58
|
22,335
|
|
11,228
|
84
|
11,312
|
|
Borrowings
|
59,055
|
-
|
59,055
|
|
15,000
|
-
|
15,000
|
|
Other payables, including insurance and
reinsurance payables
|
6,984
|
63,610
|
70,594
|
|
157
|
54,736
|
54,893
|
Accruals and deferred income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
equity
|
|
|
|
|
|
|
|
Below is an analysis of the free working capital
available to the Group:
|
|
|
|
|
Funds at Lloyd's supplied by:
|
|
|
|
Reinsurers
|
31,576
|
27,818
|
|
Other third party
|
26,995
|
26,421
|
|
|
|
|
Total funds at Lloyd's supplied (excluding
solvency credits)
|
|
|
|
Group funds available:
|
|
|
|
Financial assets
|
70,754
|
73,771
|
|
|
|
|
|
|
|
|
Less Group funds at Lloyd's
|
|
|
|
|
|
|
29. Changes arising from the conversion from
IFRS to UK GAAP
The 31 December 2022 Financial Statements were
prepared in accordance with International Financial Reporting
Standards ("IFRSs"). The 31 December 2023 Financial Statements have
been prepared in accordance with United Kingdom Accounting
Standards ("UK GAAP"), including FRS 102 "The Financial Reporting
Standard applicable in the UK and Republic of Ireland" and FRS 103
"Insurance Contracts".
The reason for this change in reporting
framework is that it is not possible for the Directors to obtain
financial information in respect of the underlying syndicate
participations that would be required to comply with IFRS 17
"Insurance Contracts" which is effective under IFRS for accounting
periods beginning on or after 1 January 2023.
Under IFRS any goodwill on bargain purchases is
credited immediately to the consolidated statement of comprehensive
income ("CSOCI"). Any positive goodwill is taken to the
consolidated statement of financial position ("CSOFP") and subject
to an annual impairment review. Under UK GAAP, both goodwill on
bargain purchases and positive goodwill are taken to the CSOFP and
amortised over their estimated useful life.
The Directors have concluded an estimated useful
life of three years for both elements of goodwill to be amortised
over, which is in line with the usual life of a Lloyd's
underwriting year of account.
The prior period figures have been adjusted to
reflect the changes in the accounting framework as per
below:
Total other comprehensive loss
|
|
|
Total other comprehensive loss for
the period - as originally reported at 31 December
2022 under IFRS
|
(1,315)
|
|
Impact of IFRS to UK GAAP conversion - bargain
purchase goodwill amortisation
|
1,278
|
Impact of IFRS to UK GAAP conversion - positive
goodwill amortisation
|
|
Total other comprehensive loss for
the period - at 31 December 2022 under UK
GAAP
|
|
|
|
|
|
Total equity - as
originally reported at 31 December 2022 under IFRS
|
117,178
|
|
Impact of IFRS conversion to UK GAAP - total
bargain purchases goodwill booked to 31 December 2022
|
(4,182)
|
|
Impact of IFRS conversion to UK GAAP -
cumulative bargain purchase goodwill amortisation to 31 December
2022
|
3,108
|
Impact of IFRS conversion to UK GAAP -
cumulative positive goodwill amortisation to 31 December
2022
|
|
Total equity - at 31
December 2022 under UK GAAP
|
|
Goodwill intangible assets
|
|
|
Positive goodwill - as originally reported at
31 December 2022 under IFRS
|
1,468
|
Impact of IFRS conversion to UK GAAP - positive
goodwill amortisation to 31 December 2022
|
|
Positive goodwill - as reported at 31 December
2022 under UK GAAP
|
|
|
Impact of IFRS conversion to UK GAAP - negative
goodwill booked to 31 December 2022
|
(4,182)
|
Impact of IFRS conversion to UK GAAP - negative
goodwill amortisation to 31 December 2022
|
|
|
Negative goodwill - as reported at 31 December
2022 under UK GAAP
|
(1,073)
|
Goodwill intangible asset
- at 31 December 2022 under UK GAAP
|
|
|
|
|
|
Net assets less intangible assets - as
originally reported at 31 December 2022 under IFRS
|
57,211
|
|
Impact of IFRS conversion to UK GAAP - total
bargain purchases goodwill booked to 31 December 2022
|
(4,182)
|
|
Impact of IFRS conversion to UK GAAP -
cumulative bargain purchase goodwill amortisation to 31 December
2022
|
3,108
|
Impact of IFRS conversion to UK GAAP -
cumulative positive goodwill amortisation to 31 December
2022
|
|
|
Net assets less intangible
assets - at 31 December 2022 under UK GAAP
|
55,152
|
Fair value of capacity (WAV)
|
|
|
|
|
|
Shares in issue - on the market (Note
21)
|
76,218
|
|
Shares in issue - total of on the market and
JSOP shares (Note 21)
|
77,318
|
|
Net tangible asset value per share £ - on the
market
|
1.51
|
Net tangible asset value per share £ - on the
market and JSOP shares
|
|
30. Events after the financial reporting
period
Dividend
In respect of the year ended 31 December 2023, a
final dividend of 6p per fully paid ordinary share (see Note 21)
amounting to a total dividend of £4,451,000, is to be proposed at
the Annual General Meeting on 28 June 2024 and paid in July 2024.
These Financial Statements do not reflect this dividend
payable.
Sale of subsidiaries
During the year, Helios Underwriting plc set up
ten new Limited Liability Vehicles (see Note 14) of which the
following have been sold post-31 December 2023:
|
|
|
|
|
Helios LLV Nine LLP
|
13 March
2024
|
25,000
|
|
|
|
|
|
|
|
|
Share buy backs
The Company bought back a further 540,924 shares
for a total consideration of £811,000 post-31 December
2023.
Key future dates
|
|
|
|
Date of Announcements of 2023 Final
Results
|
30 May
2024
|
|
Ex-dividend date
|
6 June
2024
|
|
Record date
|
7 June
2024
|
|
Payment date for the recommended
dividend
|
12 July
2024
|
|
Annual General Meeting
|
28 June
2024
|
Announcement of Interim Results
|
|