Helios Underwriting, the Lloyd’s of London investment and underwriting vehicle, has announced an update on its capacity portfolio and its growth plans.
The company is looking to build a fund of capacity on the better quality syndicates at Lloyd’s by acquiring existing limited liability vehicles (LLVs) and by taking up pre-emption capacity offered by its supported syndicates.
Due to rising costs and requirements to fund losses on the Lloyd’s market, the number of potential LLV acquisitions available in the market has increased recently, causing concern for an aging base of investors considering plans for 2021 underwriting.
Helios notes how it has successfully seized these opportunities in the past and points to its track record of acquiring LLVs at a discount to their fair market value, growing its capacity portfolio over time.
Since 1 January 2018, the premium rates charged by those supported syndicates have increased by approximately 28%, improving underwriting margins and the prospects of profitable underwriting.
Helios sees the increase in premium rates and hardening market serving as an opportunity for its shareholders.
In addition, the Company currently cedes 70% of its current portfolio to reinsurers in 2020, equating to approximately £49 million.
Due to the improving market conditions, the Helios’ board is considering the possibility of retaining a larger proportion of any additional capacity underwritten, so that average capacity reinsured will remain at approximately £50 million going forward.
Nigel Hanbury, Chief Executive, commented, “I am delighted that the improving market will likely present opportunities to underwrite additional capacity next year, acquire further LLV’s and increasing retained exposure. In the current environment we see significant opportunities to grow Helios and to significantly enhance value for shareholders.”