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28 September 2023
Helios Underwriting plc
("Helios" or the "Company")
Interim Results for the Six Months Ended 30 June 2023
Helios Underwriting plc is an investment vehicle which provides shareholders with participation in the Lloyd's insurance market through an actively managed spread portfolio of syndicate capacity, announces its unaudited results for the six months ended 30 June 2023.
· Gross written premiums increased by 28% to £160 (HY 2022 - £124m) reflecting the increase in the capacity portfolio
· Further rate increase achieved by the Lloyd's market of 9.1% (HY 2022 7.7%) over the six month period continuing the excellent market conditions at Lloyd's.
· 252% improvement in the underwriting result to £11.6m (HY 2022- £3.3m) with an 88% combined ratio
· The increase of 33% in the underwriting exposure in 2023 Year of Account to £244m of retained capacity will contribute to the underwriting result in the future.
· Investment returns of £3.1m (HY 2022 - losses £3.5m) have been booked in the first six months benefiting from the increased interest rates
· Operating profit is £6.0m (30 June 2022 - a loss of £3.4m)
· The net tangible asset value per share is £1.54 per share (FY 2022 - £1.52 per share)
Martin Reith, Chief Executive, provides the following overview:
"The continued improvement in market conditions presents exciting opportunities for Helios. The portfolio is positioned to benefit from pricing and market discipline and underwriting profits are now being recognised from five years of improved underwriting margins. We are confident that given market discipline, we should continue to see favorable returns across our portfolio. The resilience of these conditions seem to be more sustainable and we fully expect our portfolio to thrive.
"The results are a little skewed as a consequence of the recent rapid 33% growth in our retained capacity in 2023 and a cautious approach to reserving adopted within our portfolio. With the passage of time and as the better loss ratio premium earns through, we are confident that our portfolio will demonstrate outperformance against a prudent reserving strategy. The impact of the increased yields on the Group investments will make a contribution in the future."
Helios Underwriting plc
Martin Reith - Chief Executive
Arthur Manners - Chief Financial Officer +44 203 965 6441
Numis
Giles Rolfe +44 (0)20 260 1000
Charles Farquhar
Buchanan
Helen Tarbet / George Beale +44 (0)7872 604 453
+44 (0)20 7466 5111
Chairman's statement
Six months ended 30 June 2023
Helios Underwriting plc is the only listed vehicle where investors can own a share in a company with a broad spread of Lloyd's syndicate participations and where the Funds at Lloyd's (FAL) ratio is less than 50% meaning that for every £1 of capital at work it underwrites £2 or more in capacity.
Under the direction of our new Chief Executive, Helios has plans to continue its growth and broaden still further into insurance underwriting activities at a time when market conditions are attractive.
These conditions give us confidence to return capital to shareholders, initially through a share buyback programme and the Board will be reviewing the dividend policy in the future.
SUMMARY FINANCIAL INFORMATION | ||
| 6 months to 30 June | |
| 2023 | 2022 |
£000's | £000's | |
Gross written premium | 158,509 | 124,067 |
Underwriting result | 11,658 | 3,291 |
Investment Income - syndicates | 3,160 | (3,560) |
Net quota share | (4,378) | (383) |
Net profits from portfolio | 10,441 | (652) |
Other income | 739 | 833 |
Costs | (5,146) | (3,612) |
Operating profit / loss for the period | 6,034 | (3,431) |
Profit/(loss) after tax | 4,351 | (3,264) |
Earnings per share | 5.71p | (4.44)p |
Net Tangible Asset Value per Share | £1.54p | £1.52p |
The combined underwriting result has improved substantially as the underlying profitability of the portfolio starts to be recognised. Given the improved terms on property and property catastrophe business achieved at the beginning of the year, the impact of worldwide natural catastrophes in the period has been muted.
| 2023 | 2022 | % Increase | |
£000's | £000's | |||
Gross premium written | 160,493 | 124,067 | 28% | |
Net earned premium | 97,316 | 59,990 | 62% | |
Net insurance claims & operating expenses | (85,658) | (56,699) | 51% | |
Underwriting result | 11,658 | 3,291 | 254% | |
Investment Income | 3,160 | (3,560) | | |
Operating profit/loss | 14,819 | (269) | | |
Combined ratio | 88% | 95% | | |
The figures in the above table are gross of pre-acquition
The increase in the gross written premiums reflect the growth of the capacity portfolio to £310m for the 2023 underwriting year. The combined portfolio ratio of 88% is in line with the combined ratio for the Lloyds market of 85% and has improved substantially given the contribution of the profitability from the 2022 year.
6 months to 30th June
| 2021 and prior | 2022 | 2023 | Total |
£000's | £000's | £000's | £000's | |
Net Earned Premium | 4,113 | 68,516 | 24,687 | 97,316 |
Underwriting result | 1,973 | 13,215 | (3,531) | 11,658 |
Investment Income | 1,801 | 1,165 | 195 | 3,160 |
Operating (loss) / profit | 3,774 | 14,380 | (3,336) | 14,818 |
Quota Share Reinsurers | (1,429) | (3,679) | 730 | (4,378) |
Total Group Underwriting Profit/(loss) | 2,345 | 10,701 | (2,606) | 10,440 |
The underwriting contribution from the 2022 underwriting years reflects the expected development of those years after recognising underwriting losses at an early stage. 2023 to date represents an initial loss due to the higher proportion of expenses and reinsurance costs allocated to the first six months of the underwriting year. The future recognition of the Net Earned Premiums from 2023 year, given the increased underwriting exposure, will benefit the underwriting result in the future.
| 6 months to 30th June | |
| 2023 | 2022 |
| £000's | £000's |
Stop loss costs | (1,083) | (783) |
Excess of Loss costs | (1,778) | (812) |
Operating costs | (2,285) | (2,017) |
Total Costs | (5,146) | (3,612) |
The excess of loss costs has increased in line with the additional funds provided by reinsurers and by banks. Operating costs have been impacted by the additional resources taken on to manage the larger portfolio
Financial Investments | £000's | Investment Return - £000's | Yield |
Syndicate investment assets | 182,253 | 3,160 | 1.71% |
Group investment assets | 77,297 | (19) | 0.03% |
| 259,550 | 3,141 | 1.21% |
Helios's share of the syndicate investments has increased by 43% since 30 June 2022 and has generated a positive return of 1.71% in the first 6 months of the year in comparison to a negative yield of 2.8% in the comparative period last year. The Group funds will continue to earn interest for the balance of the year. The Group's share of the syndicate investments is expected to continue to increase to reflect the growth of the capacity portfolio.
Helios Retained Capacity
The positive momentum in both insurance and reinsurance pricing has continued into 2023 as the property and property reinsurance rates increased significantly at the beginning of the year. The improvement in underwriting conditions over the last five years will provide a platform for better prospects for underwriting returns over the next few years.
Helios has increased its retained capacity to £244.5m for the 2023 underwriting year, an increase of 42% to take advantage of the current market conditions. The proportion of the capacity reinsured has been reduced while the capital provided by the reinsurers has remained steady. The quota share reinsurers fund their share of the capital requirements and pay Helios a fee and a profit commission. The strategy of building a portfolio of underwriting capacity that can be accessed by alternative sources of capital is expected to be developed in the future as we regard this as an attractive opportunity to increase the fee income generated from the portfolio.
£m | 2023 Capacity | Capacity Value |
2023 YOA | 310.8 | 62.6 |
Expected Pre-emptions | 14.5 | 6.3 |
Increase in NTAV per share | 6.2p |
Helios has received preliminary indications of pre-emptions for the 2023 year of account from the syndicates supported of £14.5m which are subject to approval by Lloyd's. The value of the capacity portfolio, using the 2022 weighted average prices, including the value of the expected pre-emptions for 2023 (using the 2022 weighted average capacity prices) could increase to £69m - an increase of 10%.
Wild-fire Defense Syndicate
Helios became the cornerstone FAL provider in a new SIAB 1996 which commenced underwriting from July this year underwriting £6m of capacity for 2023 year of account. WDS provides insurance cover to commercial businesses located in California for the risks of wildfire. Their intervention techniques have saved may properties from destruction and provide much needed cover in this challenging environment.
Acquisitions in 2023 to date
Four acquisitions have been completed to date increasing the portfolio by £8m of capacity.
£m | 2023 Capacity | Humphrey's Valuation | Total Consideration** | Discount |
Nameco 606 | 2.0 | 1.6 | 1.5 | 5.8% |
Nameco 1208 | 1.8 | 1.0 | 0.7 | 25.0% |
Park Farm UW* | 2.3 | 3.4 | 3.2 | 6.3% |
Chorlton UW* | 2.1 | 2.1 | 2.0 | 10.0% |
Total | 8.2 | 8.1 | 7.4 | 11.1% |
*Completed after 30th June 2023
** includes the cash consideration plus the proprietors loans assumed by the group
Our strategy of building a portfolio of syndicate capacity continues to rely on the flow of LLVs for sale at reasonable prices. The discounts achieved to the Humphrey Valuations have decreased as both Vendor expectations of future value have increased and as other purchasers have realised the value of the potential future profitability of these capacity portfolios.
Capital Position as at 30th June 2023
Underwriting capital | 30 June 2023 | 31 December 2022 |
£m | £m | |
Quota share reinsurance panel | 22.3 | 27.8 |
Excess of loss funds at Lloyd's | 46.4 | 41.2 |
Helios own funds | 62.4 | 58.3 |
Solvency credits | 21.2 | 0.7 |
Total | 152.3 | 128.0 |
| | |
Total Capacity | 310.8 | 296.7 |
Economic capital requirement | 128.6 | 126.4 |
Capital Ratio | 41% | 42% |
Surplus Capital | 23.7 | 1.6 |
The improvement in the Solvency position of the capacity portfolio, increasing the solvency credits to £21m as profits have been recognized within the supported syndicates. Surplus solvency credits of £10m have recently been released to improve the free cash position of the Company.
Return of Capital to Shareholders
Helios is committed to returning capital to shareholders. The Board has already announced a share repurchase program and is actively considering other mechanisms to achieve this goal. This will also potentially include the review and increase of our dividend policy.
The Company has allocated £1million recently for the buyback of its shares as the share price is below tangible book value. The Board believes that while the share price remains at these levels it is in shareholders' interests to continue to buy back shares in the market.
The net tangible asset value per share is £1.54p per share (Dec 2022 - £1.52p per share). The net assets include a deferred tax provision of £14m on the value of the capacity portfolio.
Financial results summary
Six months ended 30 June 2023
| 6 months to 30 June 2023 £'000 | 6 months to 30 June 2022 £'000 |
| |
|
Underwriting profits | 10,441 | (652) |
Other Income | | |
Fees from reinsurers | 720 | 442 |
Corporate reinsurance recoveries | - | 307 |
Goodwill on bargain purchase | - | - |
Investment income | 19 | 84 |
Total Other Income | 739 | 833 |
Costs | | |
Pre-acquisition | (184) | - |
Stop loss costs | (1,931) | (1,224) |
Operating costs | (3,031) | (2,388) |
Total Costs | (5,146) | (3,612) |
Operating profit before impairments of goodwill and capacity | 6,034 | (3,431) |
Amortisation of goodwill | 302 | 638 |
Tax | (1,985) | (214) |
Revaluation of syndicate capacity | - | - |
Income tax relating to the components of other Comprehensive income | - | (257) |
Profit/(loss) for the period/year | 4,351 | (3,264) |
Period to 30 June 2023 |
| | | | | |||
Underwriting Year | Helios retained capacity at | Portfolio mid point forecasts | Portfolio Expected Profits | Helios Earned before tax | Helios Profits | Helios Profits to be earned in the future | ||
30 June 2023 | at 30 June 2023 |
| to 31 Dec 2022 | to 30th June 2023 |
| |||
£m |
| £'000 | £'000 | £'000 | £'000 | |||
| | | | | | |||
2021 | 102.3 | 4.90% | 5,016 | 711 | 2,346 | 1,959 | ||
2022 | 180.9 | 5.68% | 10,272 | (7,088) | 10,701 | 6,659 | ||
2023 | 234.2 | N/A | | | (2,606) | | ||
| | | | | 10,441 | 8,618 | ||
| | | Impact on NTAV |
| 12.8p | 8.5p | ||
Financial results summary continued
Six months ended 30 June 2023
Summary Balance Sheet
The summary Group balance sheet excludes items relating to syndicate participations. See Note 16 for further information.
| 30 June 2023 £'000
| 31 December 2022 £'000
|
Intangible assets | 61,236 | 59,375 |
Funds at Lloyd's | 77,297 | 73,771 |
Other cash | 2,020 | 10,254 |
Other assets | 6,958 | 6,909 |
Total assets | 147,511 | 150,309 |
Deferred tax | 13,921 | 11,228 |
Borrowings | 15,000 | 15,000 |
Other liabilities | 7,732 | 3,839 |
Total liabilities | 36,653 | 30,067 |
Syndicate equity | 6,292 | (5,123) |
Total equity | 117,150 | 115,119 |
Summary Group Cash Flow
The summary group cash flow sheet excludes items relating to syndicate participations. See Note 16 for further information.
| 6 months to 30 June 2023 £'000 | 6 months to 30 June 2022 £'000 |
| | |
Opening Balance (free cash) | 10,254 | 16,178 |
| | |
Income |
|
|
Acquired on acquisition | 9 | - |
Distribution of profits (net of tax retentions) | 3,091 | 2,422 |
Transfers from Funds at Lloyds' | 2,499 | 5,277 |
Investment income | 375 | 55 |
Borrowings | - | 15,000 |
| | |
Expenditure |
|
|
Operating costs (inc Hampden / Nomina fees) | (2,988) | (1,409) |
Reinsurance Cost | (3,408) | (857) |
Acquisition of LLV's | (1,569) | - |
Transfers to Funds at Lloyds' | (6,067) | (21,886) |
Tax | (236) | 293 |
Dividends paid | - | (2,034) |
Closing balance | 1,960 | 13,039 |
Financial results summary continued
Six months ended 30 June 2023
Net tangible asset per share
| 6 months to 30 June 2023 £'000 | Year to 31 December 2022 £'000 |
|
|
|
Net tangible assets | 55,915 | 55,743 |
Value of capacity (WAV) | 61,548 | 59,967 |
| 117,463 | 115,710 |
Shares in issue - on the market | 76,218 | 76,218 |
Shares in issue - total of on the market and JSOP shares | 77,318 | 77,318 |
Net tangible asset value per share £ - on the market | £1.54p | £1.52p |
Net tangible asset value per share £ - on the market and JSOP shares | £1.52p | £1.50p |
Interim condensed consolidated statement of comprehensive income
Six months ended 30 June 2023
|
Note | 6 months ended 30 June 2023 Unaudited £'000
| 6 months ended 30 June 2022 Unaudited £'000
|
Gross premium written | 4 | 158,509 | 124,067 |
Reinsurance premium ceded | | (49,587) | (35,291) |
Net premium written | 4 | 108,922 | 88,776 |
Change in unearned gross premium provision | 5 | (34,899) | (46,338) |
Change in unearned reinsurance premium provision | 5 | 15,782 | 15,945 |
| | (19,117) | (30,393) |
Net earned premium | 3,4 | 89,805 | 58,383 |
Net investment income | 6 | 3,141 | (3,476) |
Other underwriting income | | 720 | 442 |
Revenue | | 93,666 | 55,349 |
Gross claims paid | | (42,895) | (28,627) |
Reinsurers' share of gross claims paid | | 10,437 | 7,153 |
Claims paid, net of reinsurance | | (32,458) | 21,474 |
Change in provision for gross claims | 5 | (15,696) | (17,146) |
Reinsurers' share of change in provision for gross claims | 5 | (1,953) | 3,879 |
Net change in provision for claims | 5 | (17,649) | (13,267) |
Net insurance claims and loss adjustment expenses | 4 | (50,107) | (34,741) |
Expenses incurred in insurance activities | | (34,969) | (22,310) |
Other operating expenses | | (2,556) | (1,729) |
Operating expenses | | (37,525) | (24,039) |
Operating profit/(loss) before impairments of goodwill and capacity | 4 | 6,034 | (3,431) |
Amortisation of goodwill | | 302 | 638 |
Profit/(loss) before tax | | 6,336 | (2,793) |
Income tax charge | 7 | (1,985) | (214) |
Income and deferred tax charge as a result of change in tax rates | 7 | - | - |
Profit/(loss) for the period | | 4,351 | (3,007) |
Other comprehensive income | | | |
Deferred tax relating to change in tax rates on revaluation of capacity | | - | (257) |
Other comprehensive income/(loss) for the period, net of tax | | - | (257) |
Total other comprehensive income/(loss) for the period | | - | (3,264) |
| | | |
| | | |
Profit/(loss) for the period attributable to owners of the Parent | | 4,351 | (3,264) |
Total comprehensive income/(loss) for the period attributable to owners of the Parent |
| 4,351 | (3,264) |
Earnings/(loss) per share attributable to owners of the Parent | | | |
Basic | 8 | 5.71p | (4.44)p |
Diluted | 8 | 5.55p | (4.44)p |
The profit attributable to owners of the Parent and earnings per share set out above are in respect of continuing operations.
The notes are an integral part of these Financial Statements.
Interim condensed consolidated statement of financial position
Six months ended 30 June 2023
|
Note | At 30 June 2023 Unaudited £'000
| At 31 December 2022 Unaudited £'000
|
Assets | | | |
Intangible assets | | 61,236 | 59,375 |
Financial assets at fair value through profit or loss | | 259,550 | 226,013 |
Reinsurance assets: | | | |
- reinsurers' share of claims outstanding | 5 | 89,625 | 80,726 |
- reinsurers' share of unearned premium | 5 | 33,308 | 21,333 |
Other receivables, including insurance and reinsurance receivables | | 165,315 | 147,676 |
Deferred acquisition costs | | 26,696 | 24,991 |
Prepayments and accrued income | | 8,088 | 5,076 |
Cash and cash equivalents | | 28,200 | 25,300 |
Total assets | | 672,018 | 590,490 |
Liabilities | | | |
Insurance liabilities: | | | |
- claims outstanding | 5 | 305,382 | 272,015 |
- unearned premium | 5 | 135,286 | 114,663 |
Deferred income tax liabilities | | 13,921 | 11,312 |
Borrowings | | 15,000 | 15,000 |
Other payables, including insurance and reinsurance payables | | 76,475 | 54,893 |
Accruals and deferred income | | 8,804 | 7,488 |
Total liabilities | | 554,868 | 475,371 |
Equity | | | |
Equity attributable to owners of the Parent: | | | |
Share capital | 11 | 7,774 | 7,774 |
Share premium | 11 | 98,268 | 98,268 |
Revaluation reserve | 11 | 11,350 | 11,350 |
Other reserves - treasury shares | 11 | (110) | (110) |
Retained earnings | | (132) | (2,163) |
Total equity | | 117,150 | 115,119 |
Total liabilities and equity | | 672,018 | 590,490 |
The Financial Statements were approved and authorised for issue by the Board of Directors on 27 September 2023, and were signed on its behalf by:
Martin Reith
Chief Executive
The notes are an integral part of these Financial Statements.
Interim condensed consolidated statement of changes in equity
Six months ended 30 June 2023
| | | | Attributable to owners of the Parent | ||||
Consolidated |
Note | Share capital £'000 | Share premium £'000 | Revaluation reserve | Other reserves £'000 | Retained earnings £'000 | Total £'000 | |
At 1 January 2023 | | 7,774 | 98,268 | 11,350 | (110) | (2,163) | 115,119 | |
Total comprehensive income for the year: | | - | - | - | - | - | - | |
Profit for the year | | - | - | - | - | 4,351 | 4,351 | |
Other comprehensive income, net of tax | | - | - | - | - | - | - | |
Total comprehensive income for the year | | - | - | - | - | 4,351 | 4,351 | |
Transactions with owners: | | - | - | - | - | - | - | |
Dividends paid | 9 | - | - | - | - | (2,320) | (2,320) | |
Company buy back of shares | 11 | - | - | - | - | - | - | |
Share issue | | - | - | - | - | - | - | |
Total transactions with owners | | - | - | - | - | (2,320) | (2,320) | |
At 30 June 2023 | | 7,774 | 98,268 | 11,350 | (110) | (132) | 117,150 | |
At 1 January 2022 | | 6,931 | 86,330 | 9,348 | (110) | 3,188 | 105,687 | |
Total comprehensive income for the year: | | | | | | | | |
Loss for the year | | - | - | - | - | (3,007) | (3,3007) | |
Other comprehensive income, net of tax | | - | - | (257) | - | - | (257) | |
Total comprehensive income for the year | | - | - | (257) | - | (3,007) | (3,264) | |
Transactions with owners: | | - | - | - | - | - | - | |
Dividends paid | 9 | - | - | - | - | (2,034) | (2,034) | |
Company buy back of shares | 11 | - | - | - | - | - | - | |
Share issue | | - | - | - | - | - | - | |
Total transactions with owners | | - | - | - | - | (2,034) | (2,034) | |
At 30 June 2022 | | 6,931 | 86,330 | 9,091 | (110) | (1,853) | 100,389 | |
The notes are an integral part of these Financial Statements.
Interim condensed consolidated statement of cash flows
Six months ended 30 June 2023
|
Note | At 30 June 2023 Unaudited £'000
| At 30 June 2022 Unaudited £'000
|
Cash flows from operating activities | | | |
Profit/(loss) before tax |
| 6,336 | (2,793) |
Adjustments for: |
| | |
- Interest received |
| (227) | (78) |
- Investment income | | (3,502) | 3,503 |
- Amortisation of goodwill | | (302) | 638 |
Changes in working capital: | | | |
- change in fair value of financial assets held at fair value through profit or loss | | 512 | (617) |
- Increase in financial assets at fair value through profit or loss | | (30,214) | (32,609) |
- Increase in other receivables |
| (18,147) | (47,556) |
- Increase in other payables |
| 18,926 | 23,005 |
- net increase in technical provisions |
| 27,941 | 59,933 |
Cash generated from operations |
| 1,323 | 2,150 |
Income tax paid/(received) |
| (237) | (252) |
Net cash inflow from operating activities |
| 1,086 | 1,898 |
Cash flows from investing activities | | | |
Interest received |
| 227 | 78 |
Investment income |
| 3,502 | (3,503) |
Acquisition of subsidiaries, net of cash acquired |
| (1,239) | - |
Net cash inflow/(outflow) from investing activities |
| 2,490 | (3,425) |
Cash flows from financing activities | | | |
Net proceeds from issue of ordinary share capital | | - | - |
Proceeds from borrowings | | - | 15,000 |
Repayment of borrowings | | - | - |
Dividends paid to owners of the Parent | | - | (2,034) |
Net cash inflow from financing activities |
| - | 12,966 |
Net increase in cash and cash equivalents |
| 3,576 | 11,439 |
Cash and cash equivalents at beginning of period | | 24,624 | 24,625 |
Cash and cash equivalents at end of period |
| 28,200 | 36,064 |
Cash held within the syndicates' accounts is £26,240,000 (30 June 2022: £23,085,000) of the total cash and cash equivalents held at the end of the period £28,200,000 (30 June 2022: £36,064,000). 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.
Notes to the financial statements
Six months ended 30 June 2023
1. General information
The Company is a public limited company quoted on AIM. The Company was incorporated in England, is domiciled in the UK and its registered office is 40 Gracechurch Street, London EC3V 0BT. The Company participates in insurance business as an underwriting member at Lloyd's through its subsidiary undertakings.
These condensed consolidated financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2022 were approved by the board of directors on 25 May 2023 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.
2. Accounting policies
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", FRS 103 "Insurance Contracts", FRS 104 "Interim Financial Reporting", 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 30 June 2022 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 17).
The Condensed Consolidated Interim Financial Statements are prepared for the six months ended 30 June 2023.
The Condensed Consolidated Interim Financial Statements for the six months ended 30 June 2023 and June 2022 are unaudited, but have been subject to review by the Group's auditors.
The Condensed Consolidated Interim Financial Statements incorporate the Financial Statements of Helios Underwriting plc, the Parent Company, and its directly and indirectly held subsidiaries (see note 10).
The underwriting data on which these Condensed Consolidated Interim Financial Statements are based upon has been supplied by the managing agents of those syndicates which the Group supports. The data supplied is the 100% figures for each syndicate. The Group has applied its share of the syndicate participations to the gross figures to derive its share of the syndicate's transactions, assets and liabilities.
Going concern
The Group has net assets at the end of the reporting period of £117,150,000 (31 December 2022: £115,119,000).
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 intend to continue this participation in the 2024 year of account.
The Directors have a reasonable expectation that the Group 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 Financial Statements.
Significant accounting policies
The Condensed Consolidated Interim 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 and the 30 June 2022 Financial Statements were prepared in accordance International Financial Reporting Standards (IFRSs). The 30 June 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", FRS 103 "Insurance Contracts" and FRS 104 "Interim Financial Reporting".
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 17).
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 17).
- 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 17).
Notes to the financial statements
Six months ended 30 June 2023
3. Segmental information
Martin Reith and Nigel Hanbury are the Group's chief operating decision-makers. They determine 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.
6 months ended 30 June 2023 Unaudited | Syndicate participation £'000 | Investment management £'000 | Other corporate activities £'000 | Total £'000 |
Net earned premium | 94,183 | - | (4,378) | 89,805 |
Net investment income | 3,160 | (19) | - | 3,141 |
Other income | - | - | 720 | 720 |
Net insurance claims and loss adjustment expenses | (50,107) | - | - | (50,107) |
Expenses incurred in insurance activities | (34,925) | - | (44) | (34.969) |
Other operating expenses | - | - | (2,556) | (2,556) |
Amortisation of goodwill | - | - | 302 | 302 |
Profit before tax | 12,311 | (19) | (5,956) | 6,336 |
6 months ended 30 June 2022 Unaudited | Syndicate participation £'000 | Investment management £'000 | Other corporate activities £'000 | Total £'000 |
Net earned premium | 58,767 | - | (383) | 58,384 |
Net investment income | (3,561) | 85 | - | (3,476) |
Other income | - | - | 442 | 442 |
Net insurance claims and loss adjustment expenses | (34,740) | - | (1) | (34,741) |
Expenses incurred in insurance activities | (21,650) | - | (660) | (22,310) |
Other operating expenses | - | - | (1,729) | (1,729) |
Amortisation of goodwill | - | - | 637 | 637 |
Loss before tax | (1,184) | 85 | (1,693) | (2,793) |
The Group does not have any geographical segments as it considers all of its activities to arise from trading within the UK.
No major customers exceed 10% of revenue.
Net earned premium within 2023 other corporate activities totalling £4,378,000 (2022: £383,000 - 2020, 2021 and 2022 years of account) represents the 2021, 2022 and 2023 years of account net Group quota share reinsurance premium payable to HIPCC Limited - Cell 6. This net quota share reinsurance premium payable is included within "reinsurance premium ceded" in the Consolidated Statement of Comprehensive Income of the period.
Notes to the financial statements
Six months ended 30 June 2023
4. Operating profit before impairments of goodwill and capacity
| Underwriting year of account* | | | | | |||
6 months ended 30 June 2022 | 2020 and prior £'000 |
2021 £'000 |
2022 £'000 |
Sub-total £'000 | Pre- acquisition £'000 | Corporate reinsurance £'000 | Other corporate £'000 | Total £'000 |
Gross premium written | 930 | 11,407 | 111,730 | 124,067 | - | - | - | 124,067 |
Reinsurance ceded | (96) | (2,410) | (31,178) | (33,684) | - | (383) | (1,224) | (35,291) |
Net premium written | 834 | 8,997 | 80,552 | 90,383 | - | (383) | (1,224) | 88,776 |
Net earned premium | 3,306 | 35,444 | 21,240 | 59,990 | - | (383) | (1,224) | 58,383 |
Other income | (2,315) | (941) | (304) | (3,560) | - | 442 | 84 | (3,034) |
Net insurance claims and loss adjustment expenses | 578 | (20,389) | (15,237) | (35,048) | - | - | 307 | (34,741) |
Operating expenses | (843) | (9,826) | (10,982) | (21,651) | - | - | (2,388) | (24,039) |
Operating profit before impairments of goodwill and capacity | 726 | 4,288 | (5,283) | (269) | - | 59 | (3,221) | (3,431) |
Quota share adjustment | (150) | (1,621) | 1,388 | (383) | - | 383 | - | - |
Operating profit before impairments of goodwill and capacity after quota share adjustment | 576 | 2,667 | (3,895) | (652) | - | 442 | (3,221) | (3,431) |
| Underwriting year of account* | | | | | |||
6 months ended 30 June 2023 | 2021 and prior £'000 |
2022 £'000 |
2023 £'000 |
Sub-total £'000 | Pre- acquisition £'000 | Corporate reinsurance £'000 | Other corporate £'000 | Total £'000 |
Gross premium written | 1,606 | 25,982 | 132,905 | 160,493 | (1,984) | - | - | 158,509 |
Reinsurance ceded | (1,410) | (4,786) | (37,624) | (43,820) | 542 | (4,378) | (1,931) | (49,587) |
Net premium written | 196 | 21,196 | 95,281 | 116,673 | (1,442) | (4,378) | (1,931) | 108,922 |
Net earned premium | 4,113 | 68,516 | 24,687 | 97,316 | (1,202) | (4,378) | (1,931) | 89,805 |
Other income | 1,801 | 1,165 | 195 | 3,161 | (39) | 720 | 19 | 3,861 |
Net insurance claims and loss adjustment expenses | 629 | (36,119) | (15,244) | (50,734) | 627 | - | - | (50,107) |
Operating expenses | (2,768) | (19,182) | (12,974) | (34,924) | 430 | - | (3,031) | (37,525) |
Operating profit before impairments of goodwill and capacity | 3,775 | 14,380 | (3,336) | 14,819 | (184) | (3,658) | (4,943) | 6,034 |
Quota share adjustment | (1,429) | (3,679) | 730 | (4,378) | - | 4,378 | - | - |
Operating profit before impairments of goodwill and capacity after quota share adjustment | 2,346 | 10,701 | (2,606) | 10,441 | (184) | 720 | (4,943) | 6,034 |
Pre-acquisition relates to the element of results from the new acquisitions before they were acquired by the Group.
* The underwriting year of account results represent the Group's share of the syndicates' results by underwriting year of account before corporate member level reinsurance and members' agents charges.
Notes to the financial statements continued
Six months ended 30 June 2023
5. Insurance liabilities and reinsurance balances
Movement in claims outstanding
| Gross £'000 | Reinsurance £'000 | Net £'000 |
At 1 January 2023 | 272,015 | 80,726 | 191,289 |
Increase in reserves arising from acquisition of subsidiary undertakings | 5,316 | 1,530 | 3,786 |
Movement of reserves | 15,696 | (1,953) | 17,649 |
Other movements | 12,355 | 9,322 | 3,033 |
At 30 June 2023 | 305,382 | 89,625 | 215,757 |
Movement in unearned premium
| Gross £'000 | Reinsurance £'000 | Net £'000 |
At 1 January 2023 | 114,663 | 21,333 | 93,330 |
Increase in reserves arising from acquisition of subsidiary undertakings | 1,690 | 301 | 1,388 |
Movement of reserves | 34,899 | 15,782 | 19,117 |
Other movements | (15,966) | (4,108) | (11,857) |
At 30 June 2023 | 135,286 | 33,308 | 101,978 |
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 claims outstanding
| Gross £'000 | Reinsurance £'000 | Net £'000 |
At 1 January 2022 | 186,653 | 53,433 | 133,220 |
Increase in reserves arising from acquisition of subsidiary undertakings | - | - | - |
Movement of reserves | 17,146 | 3,879 | 13,267 |
Other movements | 37,984 | 15,762 | 22,222 |
At 30 June 2022 | 241,783 | 73,074 | 168,709 |
Movement in unearned premium
| Gross £'000 | Reinsurance £'000 | Net £'000 |
At 1 January 2022 | 59,611 | 10,538 | 49,073 |
Increase in reserves arising from acquisition of subsidiary undertakings | - | - | - |
Movement of reserves | 46,338 | 15,945 | 30,393 |
Other movements | (8,440) | (2,491) | (5,949) |
At 30 June 2022 | 97,509 | 23,992 | 73,517 |
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.
6. Net investment income
| 6 months ended 30 June 2023 Unaudited £'000 | 6 months ended 30 June 2022 Unaudited £'000 |
Investment income | 3,502 | (3,503) |
Realised (losses)/gains on financial assets at fair value through profit or loss | (100) | 12 |
Unrealised (losses)/gains on financial assets at fair value through profit or loss | (512) | (61) |
Investment management expenses | 24 | (2) |
Bank interest | 227 | 78 |
Net investment income | 3,141 | (3,476) |
Included within Investment income are investment gains of £3,160,000 (2022: £3,560,000 investment losses) from Syndicate participations.
Notes to the financial statements continued
Six months ended 30 June 2023
7. Income tax charge
Analysis of tax charge/(credit) in the period
| 6 months ended 30 June 2023 Unaudited £'000 |
6 months ended 30 June 2022 Unaudited £'000 |
Income tax credit | 1,985 | 214 |
The income tax expense is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used is 23.50% (2022: 19.00%).
8. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to ordinary shareholders 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 period, 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.
Earnings per share has been calculated in accordance with IAS 33 "Earnings per share".
The earnings per share and weighted average number of shares used in the calculation are set out below:
| 6 months ended 30 June 2023 Unaudited
|
6 months ended 30 June 2022Unaudited
|
Profit/(loss) for the year after tax attributable to ordinary equity holders of the parent | 4,351,000 | (3,007,000) |
Basic - weighted average number of ordinary shares* | 76,218,203 | 67,786,212 |
Weighted average number of ordinary shares for diluted earnings per share* | 77,889,630 | 68,889,212 |
Basic earnings/(loss) per share | 5,71p | (4.44)p |
Diluted earnings/(loss) per share | 5.55p | (4.44)p |
* Diluted loss per share is not permitted to be reduced from the basic loss per share.
9. Dividends paid or proposed
It was proposed and agreed at the AGM on 29 June 2023 that a dividend of 3p would be payable. The Dividend was paid post period end on 14 July 2023 totalling £2,320,000 and has been accrued in these financial statements.
10. Investments in subsidiaries
| 30 June 2023 £'000 | 31 December 2022 £'000 |
Total | 66,722 | 65,546 |
Notes to the financial statements continued
Six months ended 30 June 2023
10. Investments in subsidiaries (continued)
| Direct/indirect interest | 30 June 2023 ownership | 31 December 2022 ownership | Principal activity |
Nameco (No. 917) Limited | Direct | 100% | 100% | Lloyd's of London corporate vehicle |
Devon Underwriting Limited | Direct | 100% | 100% | Lloyd's of London corporate vehicle |
Nameco (No. 346) Limited | Direct | 100% | 100% | Lloyd's of London corporate vehicle |
Pooks 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 |
Nottus (No 51) Limited | Direct | 100% | 100% | Lloyd's of London corporate vehicle |
Chapman Underwriting Limited | Direct | 100% | 100% | Lloyd's of London corporate vehicle |
Llewellyn House 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% | 100% | Lloyd's of London corporate vehicle |
Nameco (No 1208) Limited | Direct | 100% | 100% | Lloyd's of London corporate vehicle |
(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.
Notes to the financial statements continued
Six months ended 30 June 2023
11. Share capital and share premium
| Number of shares (i) | Ordinary share capital £'000 | Partly paid ordinary share capital £'000 | Share premium £'000 | Total £'000 |
Ordinary shares of 10p each and share premium at 31 December 2022 | 77,737,372 | 7,664 | 110 | 98,268 | 106,042 |
Ordinary shares of 10p each and share premium at 30 June 2023 | 77,737,372 | 7,664 | 110 | 98,268 | 106,042 |
(i) Number of shares
| 30 June 2023 | 31 December 2022 |
Allotted, called up and fully paid ordinary shares: | | |
On the market | 76,218,203 | 76,218,203 |
Company buy back of ordinary shares held in treasury | 419,169 | 419,169 |
| 76,637,372 | 76,637,372 |
Uncalled and partly paid ordinary share under the JSOP scheme (ii) | 1,100,000 | 1,100,000 |
| 77,737,372 | 77,737,372 |
(ii) The partly paid ordinary shares are not entitled to dividend distribution rights during the year.
12. Related party transactions
A number of subsidiary companies have entered into quota share reinsurance contracts for the 2021, 2022 and 2023 years of account with protected cell companies of HIPCC Limited.
Nigel Hanbury, a Director of Helios Underwriting plc and its subsidiary companies, is also a director and majority shareholder in HIPCC Limited. Hampden Capital plc, a substantial shareholder in Helios Underwriting plc, is also a substantial shareholder in HIPCC Limited - Cell 6. Under quota share agreements between Cell 6 and certain Helios subsidiaries, the Group accrued a net reinsurance premium payable of £1,736,000 (31 December 2022: £1,921,000 recoverable) during the period.
In addition, HIPCC provide stop loss, portfolio stop loss and HASP reinforce 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 (being Nigel Hanburys share) in respect of the business relating to Helios will be repaid to Helios for the business transacted for the 2021 and subsequent underwriting years.
13. Ultimate controlling party
The Directors consider that the Group has no ultimate controlling party.
Notes to the financial statements continued
Six months ended 30 June 2023
14. Acquisition of Lloyd's Limited Liability Vehicles
During the period, the company has acquired the following Lloyd's Limited Liability Vehicles either directly, or indirectly:
Helios Acquisitions
| |||||
|
Date of acquisition | 2023 Capacity | Purchase price | Fair value of asset acquired | Goodwill recognised |
|
| | | | |
Nameco (No 606) Limited | 2 June 2023 | 2,024,096 | 1,175,131 | 1,112,121 | 63,010 |
Nameco (No 1208) Limited | 12 June 2023 | 1,776,807 | - | 87,000 | (87,000) |
| | | | | |
Total Acquisitions Completed |
| 3,800,903 | 1,175,131 | 1,112,208 | (23,990) |
| | | | | |
15. Syndicate participations
The syndicates and members' agent pooling arrangements ("MAPA") in which the Company's subsidiaries participate as corporate members of Lloyd's are as follows:
| | Allocated capacity per year of account | ||
Syndicate or | Managing or members' agent | 2023 £ | 2022 £ | 2021 £ |
33 | Hiscox Syndicates Limited | 14,862,935 | 14,862,935 | 14,837,949 |
218 | IQUW Syndicate Management Limited | 17,624,778 | 7,427,997 | 7,428,004 |
318 | Cincinnati Global Underwriting Agency Limited | 862,407 | 992,637 | 992,635 |
386 | QBE Underwriting Limited | 2,966,471 | 2,897,646 | 2,634,241 |
510 | Tokio Marine Kiln Syndicates Limited | 27,562,480 | 33,536,417 | 23,760,440 |
557 | Tokio Marine Kiln Syndicates Limited | - | 3,485,330 | 3,485,330 |
609 | Atrium Underwriters Limited | 17,661,850 | 13,153,869 | 12,653,790 |
623 | Beazley Furlonge Limited | 28,099,719 | 22,713,565 | 19,890,751 |
727 | S A Meacock & Company Limited | 2,834,522 | 2,323,378 | 2,255,711 |
1176 | Chaucer Syndicates Limited | 2,854,340 | 2,854,339 | 2,854,347 |
1200 | Argo Managing Agency Limited | 54,999 | 10,050,000 | - |
1729 | Asta Managing Agency Limited | 20,083,504 | 1,211,467 | 189,401 |
1902 | Asta Managing Agency Limited | 10,688,300 | 10,000,002 | - |
1955 | Arch Managing Agency Limited | 12,500,000 | - | - |
1969 | Apollo Syndicate Management Limited | 12,170,742 | 5,675,170 | 459,001 |
1971 | Apollo Syndicate Management Limited | 10,000,001 | 6,467,147 | - |
1985 | Asta Managing Agency Limited | 16,874,190 | - | - |
1988 | Asta Managing Agency Limited | 15,000,000 | - | - |
2010 | Lancashire Syndicates Limited | 7,713,238 | 10,499,418 | 9,864,905 |
2121 | Argenta Syndicate Management Limited | 140,000 | 10,134,894 | 5,577,177 |
2288 | Astra Managing Agency Limited | - | - | - |
2525 | Asta Managing Agency Limited | 2,141,973 | 1,721,029 | 1,601,833 |
2689 | Asta Managing Agency Limited | 2,686,871 | 10,100,276 | 534,813 |
2791 | Managing Agency Partners Limited | 11,677,739 | 9,850,281 | 9,850,285 |
4242 | Asta Managing Agency Limited | 10,749,622 | 12,937,527 | 8,933,909 |
4444 | Canopius Managing Agents Limited | 21,176 | 20,000 | 182,189 |
5183 | Asta Managing Agency Limited | 5,000,000 | - | - |
5623 | Beazley Furlonge Limited | 17,631,646 | 6,894,032 | 4,769,792 |
5886 | Asta Managing Agency Limited | 26,929,794 | 22,989,002 | 12,432,907 |
6103 | Managing Agency Partners Limited | 3,263,814 | 3,447,515 | 3,072,388 |
6104 | Hiscox Syndicates Limited | - | 1,758,333 | 1,781,360 |
6107 | Beazley Furlonge Limited | 132,363 | 1,649,683 | 1,649,378 |
6117 | Argo Managing Agency Limited | 230,404 | 2,957,188 | 2,104,208 |
6133 | Apollo Syndicate Management Limited | - | - | - |
Total |
| 300,479,878 | 241,611,077 | 153,796,744 |
Notes to the financial statements continued
Six months ended 30 June 2023
16. 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:
| 30 June 2023 | 31 December 2022 | ||||
Group £'000 | Syndicate £'000 | Total £'000 | Group £'000 | Syndicate £'000 | Total £'000 | |
Assets | | | | | |
|
Intangible assets | 61,236 | - | 61,236 | 59,375 | - | 59,375 |
Financial assets at fair value through profit or loss | 77,297 | 182,253 | 259,550 | 73,771 | 152,242 | 226,013 |
Reinsurance assets: | | | | | | |
- reinsurers' share of claims outstanding | 60 | 89,565 | 89,625 | 60 | 80,666 | 80,726 |
- reinsurers' share of unearned premium | - | 33,308 | 33,308 | - | 21,333 | 21,333 |
Other receivables, including insurance and reinsurance receivables | 1,790 | 163,525 | 165,315 | 3,103 | 144,573 | 147,676 |
Deferred acquisition costs | - | 26,696 | 26,696 | - | 24,991 | 24,991 |
Prepayments and accrued income | 5,168 | 2,920 | 8,088 | 3,746 | 1,330 | 5,076 |
Cash and cash equivalents | 1,960 | 26,240 | 28,200 | 10,254 | 15,046 | 25,300 |
Total assets | 147,511 | 524,507 | 672,018 | 150,309 | 440,181 | 590,490 |
Liabilities |
|
|
| | | |
Insurance liabilities: |
|
|
| | | |
- claims outstanding | - | 305,382 | 305,382 | - | 272,015 | 272,015 |
- unearned premium | - | 135,286 | 135,286 | - | 114,663 | 114,663 |
Deferred income tax liabilities | 13,921 | - | 13,921 | 11,228 | 84 | 11,312 |
Borrowings | 15,000 | - | 15,000 | 15,000 | - | 15,000 |
Other payables, including insurance and reinsurance payables | 2,170 | 74,305 | 76,475 | 157 | 54,736 | 54,893 |
Accruals and deferred income | 5,562 | 3,242 | 6,484 | 3,682 | 3,806 | 7,488 |
Total liabilities | 36,653 | 518,215 | 552,548 | 30,067 | 445,304 | 475,371 |
Equity attributable to owners of the Parent |
|
|
| | | |
Share capital | 7,774 | - | 7,774 | 7,774 | - | 7,774 |
Share premium | 98,268 | - | 98,268 | 98,268 | - | 98,268 |
Revaluation reserve | 11,350 | - | 11,350 | 11,350 | - | 11,350 |
Other reserves | (110) | - | (110) | (110) | - | (110) |
Retained earnings | (6,424) | 6,292 | (132) | 2,960 | (5,123) | (2,163) |
Total equity | 110,858 | 6,292 | 117,150 | 120,242 | (5,123) | (115,119) |
Total liabilities and equity | 147,511 | 524,507 | 672,018 | 150,310 | 440,181 | 590,491 |
Notes to the financial statements continued
Six months ended 30 June 2023
17. Changes arising from the conversion from IFRS to UK GAAP
The 31 December 2022 and the 30 June 2022 Financial Statements were prepared in accordance with International Financial Reporting Standards (IFRSs). The 30 June 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", FRS 103 "Insurance Contracts" and FRS 104 "Interim Financial Reporting".
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 | £'000 |
Total other comprehensive (loss)/income for the period - as originally reported at 30 June 2022 under IFRS | (3,902) |
Impact of IFRS to UK GAAP conversion - bargain purchase goodwill amortisation | 670 |
Impact of IFRS to UK GAAP conversion - positive goodwill amortisation | (32) |
Total other comprehensive loss for the period - at 30 June 2022 under UK GAAP | (3,264) |
Total equity | £'000 |
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 | (985) |
Total equity - at 31 December 2022 under UK GAAP | 115,119 |
Goodwill intangible assets | £'000 |
Positive goodwill intangible assets - 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 | (985) |
Positive goodwill intangible assets - as reported at 31 December 2022 under UK GAAP | 483 |
| |
Impact of IFRS conversion to UK GAAP - bargain purchase goodwill booked to 31 December 2022 | (4,182) |
Impact of IFRS conversion to UK GAAP - bargain purchase goodwill amortisation to 31 December 2022 | 3,108 |
Bargain purchase goodwill amortisation to 31 December 2022 under UK GAAP | (1,074) |
| |
Goodwill intangible asset - at 31 December 2022 under UK GAAP | (591) |
Notes to the financial statements continued
Six months ended 30 June 2023
18. Event after the financial reporting period
Acquisitions of LLV's since the period end
Since the Financial reporting period, the company has acquired the following entities either directly, or indirectly:
Helios Acquisitions
| |||||
|
| 2023 Capacity m | Purchase price £m | Humphrey Valuation | Discount to Humphreys (%) |
| | | | | |
Chorlton Underwriting Limited |
| 2.1 | 2.0 | 2.1 | 10.0% |
Park Farm Underwriting Limited |
| 2.3 | 3.2 | 3.4 | 6.3% |
Total |
| 4.4 | 5.2 | 5.5 |
|
| | | | | |
Notes to the financial statements continued
Six months ended 30 June 2023
Directors, Registered office and advisers
Directors
Michael John Wade (Non-Executive Chairman) appointed 29 June 2023
Martin Robert Davidson Reith (Chief Executive Officer)
Nigel John Hanbury (Executive Deputy Chairman)
Andrew Hildred Christie (Non-Executive Director)
Arthur Roger Manners (Finance Director)
Edward Fitzalan-Howard (Non-Executive Director)
Thomas John Libassi (Non-Executive Director)
Company secretary
Martha Bruce
Shakespeare Martineau
No 1 Colmore Square
Birmingham B4 6AA
Company number
05892671
Registered office
40 Gracechurch Street
London EC3V 0BT
Statutory auditors
PKF Littlejohn LLP
15 Westferry Circus
Canary Wharf
London E14 4HD
Nominated adviser and broker
Numis Sercurities Limited
45 Gresham Street
London EC2V 7BF
Lloyd's members' agent
Hampden Agencies Limited
40 Gracechurch Street
London EC3V 0BT
Registrars
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen B62 8HD
INDEPENDENT REVIEW REPORT TO HELIOS UNDERWRITING PLC
Conclusion
We have been engaged by the group to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2023 which comprises the Interim Condensed Consolidated Income Statement, the Interim Condensed Statement of Comprehensive Income, the Interim Condensed Statement of Financial Position, the Interim Condensed Statement of Changes in Equity, the Interim Condensed Statement of Cash Flows, and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2023 is not prepared, in all material respects, in accordance with FRC's Financial Reporting Standard 104 and AIM Rules for Companies.
Basis for conclusion
We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", issued for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the group are prepared in accordance with UK GAAP. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with FRC's Financial Reporting Standard 104, "Interim Financial Reporting".
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that management have inappropriately adopted the going concern basis of accounting or that management has identified material uncertainties relating to going concern that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410, however future events or conditions may cause the group to cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules for companies.
In preparing the half-yearly financial report, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of financial information
In reviewing the half-yearly report, we are responsible for expressing to the group a conclusion on the condensed set of financial statements in the half-yearly financial report. Our conclusion, including our Conclusions relating to going concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion paragraph of this report.
Use of our report
This report is made solely to the company's directors, as a body, in accordance with the terms of our engagement letter dated 29 August 2023. Our review has been undertaken so that we might state to the company's directors those matters we have agreed to state to them in a reviewer's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company's directors as a body, for our work, for this report, or for the conclusions we have formed.
PKF Littlejohn LLP 15 Westferry Circus
Statutory Auditor Canary Wharf
27 September 2023 London E14 4HD
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