Helios Underwriting has reported global insurance rate increases of over 50% since 2017 and a more than 30% increase in Lloyd’s of London (Lloyd’s) premiums, which it says have set the stage for a sustained improvement in underwriting results.
A FY21 results update by the Lloyd’s of London investment and underwriting vehicle also suggests the negative impact of higher interest rates on fixed interest portfolios is likely to be temporary and should be followed by higher returns on insurance assets and regulatory capital.
During 2021, Helios saw an improvement in the combined ratio to 93.9%, a healthy uplift in return on capacity (RoC) for its most recent closed year of account (YOA) and a pick-up in return.
A substantial increase in capacity, combined with the impact of hardening premium rates on underwriting margins and the improved outlook for interest rates has further supported improved forecasts.
The firm also reported resulted in an 111% increase in Lloyd’s underwriting capacity to £232.7 million before reinsurance and an almost trebling in retained capacity to £171.9 million.
“Capacity is the lifeblood of the Lloyd’s syndicates in which Helios has exposure, which gives it the right to participate in the premiums that syndicates write and the underwriting profits they generate,” Helios commented alongside its FY21 results.
“Lloyd’s syndicates are emerging from an extended period of weak premium rates, which lasted to 2017 and affected underwriting results into 2020, exacerbated by COVID-19. The tide has firmly turned with global insurance rate increases in excess of 50% since 2017 and Lloyd’s gross written premium (GWP) growing by more than 30%.”
Looking at Lloyd’s exposure to the Ukraine conflict, Helios suggests that it appears largely limited to aviation, has not led to solvency concerns for the market and should, together with rising inflation, help to maintain pricing discipline in an already hard underwriting environment.
Looking ahead, Helios expects acquisitive growth to commence from FY23 as it anticipates benefits from enhanced cash flows, although the company says the opportunity for consolidating the sizeable Lloyd’s limited liability vehicle (LLV) market could be seized earlier if it opts to access capital markets.