27th Sep 2019 11:16
(Alliance News) - Helios Underwriting PLC on Friday said its interim underwriting profit saw a sharp increase following a jump in retained capacity.
Helios is a specialist insurer which buys and sells Lloyd's of London insurance syndicates, a group of companies, or underwriters, who join together to insure very high-valued property or high-hazard liability exposures.
In the six months to June 30, Helios' pretax profit more than tripled to GBP753,000 from GBP235,000 the year before.
The company's underwriting profits have more than doubled in the period compared to the year before rising to GBP1.6 million from GBP741,000.
"The increase in underwriting profits from the syndicate participations reflects the improved underwriting conditions and the investment returns at syndicate level generated from the reduction in bond yields," Helios explained.
The insurer's gross premiums written jumped 44% to GBP20.6 million from GBP29.6 million, with net written premiums rising 38% to GBP20.2 million.
Helios noted 2019 has seen a "lower than average" loss activity, contributing to its improved results.
At the end of the half, the company's retained capacity for its 2017 underwriting year stood at GBP28.9 million, 61% higher than at the same point last year. Its 2018 retained capacity at June 30 was 61% higher year on year at GBP18.7 million. The 2019 retained capacity ended the half 31% higher at GBP16.1 million.
Helios said: "A window of opportunity has been opened which is exciting for Helios. Smaller investors are finding their costs increasing which, when combined with an expectation of lower returns which can partially explain the increased flow. There are no accurate statistics as to the age of the 'decision makers' within the community of LLV (limited liability vehicle) owners but the directors feel that many are aged and executor sales are a common feature. The complexity inherent in the business of running an LLV, more onerous regulatory requirements, rising costs and falling profits is a powerful incentive to put a vehicle up for sale."
Helios has acquired two LLVs in 2019, making a total of 8 in the last 12 months, increasing the company's capacity fund to GBP55 million from GBP52.6 million at the end of 2018.
The sharp rise in retained capacity was also a contributing factor to the sharp rise in profit, Helios said.
"The board currently expects that the syndicate results for the 2017 and 2018 underwriting years will exceed current mid-point forecasts published by the managing agents, which should make a meaningful contribution to the Helios full year result," the company added.
2017 currently has a mid-point forecast of negative 7.4% with 2018 sitting at negative 3.6%.
Helios continued: "The premium rate increases achieved by underwriters over the last 18 months together with greater discipline encouraged by the Franchise Board at Lloyd's in underwriting profitable portfolios should improve profitability in the future."
Shares in Helios Underwriting were untraded Friday in London but last closed at 119.55 pence each.
By Paul McGowan; [email protected]
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