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Helios Underwriting reports loss after tax of £3.9m in H1 2022 results

29th September 2022 - Author: Pete Carvill

Lloyd’s focused investment vehicle, Helios Underwriting, has released its unaudited results for H1 2022, saying that it saw gross written premiums (GWP) rise by 133% to £124m over the period.

Elsewhere, the firm reported a loss after tax of £3.9m, a much-worse result than in H1 2021 when it reported a loss of £2.6m, on the back of investment losses.

The firm also reported an increase of 112% in its net insurance claims and operating expenses. Combined ratio between H1 2021 and H1 2022 went from 93.5% to 94.5%.

It wrote: “The increase in the gross written premiums reflect the growth of the capacity portfolio to £233m for the 2022 underwriting year. The combined portfolio ratio of 94.5% has been impacted by the early-stage contribution of the 2022 underwriting year.”

Around operating costs, Helios wrote in its results: “Operating costs have increased to £2.4m as a potential significant acquisition was contemplated in the period where costs of due diligence were incurred of £0.7m and as £20m (2021-£7.6m) of additional underwriting capital has been sourced through a bank facility adding a further £0.2m to the costs. The stop loss for Helios retained capacity continues to be bought which has a 10% indemnity to protect the Group from a loss excess of 7.5% loss for the 2022 underwriting year. The increase in the retained capacity of 84% to £172m contributed to the increase in the stop loss costs incurred.”

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The company also said that it had seen a 76% improvement in the underwriting result to £3.3m with a 94.5% combined ratio. Meanwhile, it said that investment losses of £3.5m have been booked in the first six months driven by mark to market investment losses as interest rates have increased, which has masked the improvement in the underwriting margins, although higher yields on both syndicate and group funds will benefit future returns.

Nigel Hanbury, chief executive of Helios, said: “The steady improvement in current market conditions continues to open up exciting windows of opportunity for Helios. The progress in underwriting conditions over five years is being reflected in the improved underwriting margins. The results are skewed as a consequence of the recent 133% growth in our retained capacity and a cautious approach to reserving, as we would expect, by our portfolio. With the passage of time, 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.”

He added: “Mark to market losses within syndicates’ investment bond portfolios have also impacted results. Rising interest rates will help negate that with improved returns from fixed income in future periods. We have increased our retained capacity to £172m for the 2022 underwriting year to take advantage of the current market conditions. We are confident that we can continue to demonstrate our ability to achieve attractive shareholder returns over the next few years.”

It was only last month that Helios recorded an increased capacity position of £232.7m of account as at as August 18th, 2022. This is comparable to the £145m and £115.6m reported in 2021 and 2020 respectively.

This updated figure consists of £172m retained capacity, compared to the £93.5m reported in 2021; as well as a reinsured capacity of £60.8m, which compares to the £51.5m reported last year.

Ominously, the firm said around the invasion of Ukraine by Russia: “The potential losses from Ukraine have been recognised to the extent that they are known. The events in Ukraine continue to unfold and the full extent of the insured losses have yet to be fully recognised.”

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