26th May 2015 10:13
LONDON (Alliance News) - Helios Underwriting PLC Tuesday said 2014 was its "best year" for net profit but results were lower at the operating level due to higher costs.
In a statement, Helios said it made a GBP1.0 million net profit in 2014, compared with GBP731,000 in the prior year, while operating profit was down 4% at GBP1.2 million. Revenue grew by 41% to GBP13.9 million, driven by premium growth and higher net investment income, while operating expenses were up 49% at GBP6.8 million, and net insurance claims and loss adjustment expenses were up 46% at GBP5.9 million.
"The results were helped by an excellent result from the 2012 underwriting account of 13.01% on our net underwriting capacity of GBP21.1 million compared to the 2011 account, which produced 7.58% on underwriting capacity of GBP15.9 million," Chairman Michael Oliver said in a statement.
"Shareholders will note that the profit after tax is considerably greater than the previous year, but the operating profit was down by some 4%. This is largely due to negative goodwill emanating from our program of acquisitions which had a beneficial effect combined with increased operating costs (reduced for 2015)," Oliver said.
The chairman said the company considers growth to be important, with "various options" being explored by the board.
"To do so does inevitably increase costs, such as professional and advisors fees, which accounts for much of the reduced operating profit," Oliver said.
The chairman said the company's gross premium income limit underwritten for the 2015 year of account is equal to GBP23.0 million, down from GBP25.6 million for 2014, GBP23.9 million for 2013 and GBP23.7 million for 2012.
"The reduction is explained by the continuing programme of 'quality control', compulsory de-emptions and syndicate cessations. We continue with our strategy of reinsuring a significant portion of the youngest, least mature year, such that reinsurance has now risen to 70% from 50%," Oliver said.
"The gross premium figure nets down, after reinsurance, to GBP6.9 million for 2015, GBP10.7 million for 2014, GBP17.5 million for 2013 and GBP23.7 million for 2012. However, we have a significant war chest which can be utilised to purchase more vehicles if they become available at reasonable prices. Should such purchases be achieved, the net underwriting figure will rise considerably on all accounts between now and the time they come to close," the chairman said.
Oliver said the company is taking advantage of "reasonably priced" stop-loss reinsurance to guard against losses that "may arise" on the 2015 account.
"The board considers that the risks attaching to the open accounts of 2014 and prior are sufficiently well developed that no further protection is required," he said.
The company paid a dividend of 5.1 pence per share for 2014, including a special dividend of 3.6p. That was an increase from the 4.5p paid for 2013, which included a 3.0 special dividend.
Helios shares were untraded on Tuesday. The stock last traded at 165 pence.
By Samuel Agini; [email protected]; @samuelagini
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