20th May 2025 07:00
20th May 2025
Helios Underwriting plc
('Helios' or 'the Company')
Notice of Results and
Change in Accounting Framework
Helios, the only publicly traded company offering instant access to a diverse portfolio of syndicates at Lloyd's of London, announces that it will be releasing its preliminary results for the year ended 31st December 2024 on 29th May 2025.
The board, in collaboration with its professional advisor, has reviewed its accounting framework and concluded that it is more appropriate for Helios to report as an investment entity under IFRS rather than as an insurance group under UK GAAP. This approach more accurately reflects the Company's business activities, complies with the AIM Rule reporting requirements, and will also support investment in Helios from international investors.
For the financial year ended 31st December 2023 the Company reported under UK GAAP, including FRS 102 and FRS 103. For the financial year ended 31st December 2024 Helios will report as an investment entity under IFRS 10, with retrospective application. This determination by the Directors of reporting its financial statements as an investment entity required significant judgement to be exercised.
IFRS 10 describes an investment entity as an entity that:
· Obtains funds from one or more investors for the purpose of providing those investors with investment management services.
· Commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income or both; and
· Measures and evaluates the performance of substantially all its investments on a fair value basis.
The Board believes Helios should be classified as an investment entity for accounting under IFRS because it obtains funds from one or more investors for the purpose of providing them with investment management services, such as syndicate research, advice on syndicate selections and portfolio curations.
The funds are invested solely for capital appreciation and investment income, and the Company measures and evaluates the performance of substantially all its investments at fair value.
Consequently, the financial statements for the year to 31st December 2024 together with the comparative year 2023 have been prepared presenting Helios as an investment entity rather than an insurance group. The business model of the Company itself has not changed.
The financial information presented in the Financial Analysis section of the Annual Report will be prepared in a similar way to previous years and further disclosure will be made in the Summary Financial Information section to allow shareholders to understand the transition to the revised presentation of the Company's IFRS results.
The approach taken using the new accounting treatment of investment entity accounting will be to value the underwriting subsidiaries of Helios whose assets / liabilities mainly comprise capacity value, funds at Lloyd's, recognised but undistributed underwriting profits less expenses of those companies. The value of the subsidiaries will be disclosed as an aggregate value as "Equity Investments at Fair Value"
The revised Net Assets (unaudited) as at 31 December 2023 reflecting the proposed change of accounting together with Fair Value adjustments are expected to be as follows:
£m | Pence per share | ||
Net Assets reported as at 31/12/ 2023 under UK GAAP | 140.1 | 1.89 | |
Fair Value adjustments | |||
Capacity Value | (8.2) | ||
Pipeline Underwriting profits | 7.6 | ||
Deferred tax on capacity value | 20.1 | ||
Other movements | 3.1 | ||
22.6 | 0.30 | ||
Revised Net Assets - Fair Value 31/12/2023 | 162.7 | 2.19 |
The Fair Value adjustments comprise the following:
Capacity Value - The Directors' approach to the valuation of capacity continues to rely on the "market approach" whereby the average prices from the previous capacity auctions are the primary basis for establishing the appropriate value. In addition, a provision has been made to reflect the potential future reductions in overall capacity values considering the capacity available on new freehold syndicates which could reduce demand for the longer established syndicates.
Pipeline Underwriting profits - the Board considers that the potential syndicate profits that the syndicate managers are forecasting in addition to that recognised under GAAP should be reflected in the fair value estimates as a market participant would. The incremental profits the syndicate managers estimate using the midpoint forecasts / YOA forecasts included in the quarterly returns submitted to Lloyd's together with Helios's Management View of the likely outturn of each year of account will be the basis for reviewing the additional profits to be reflected in the fair value estimates.
Deferred tax on capacity value - under Fair Value accounting there is no requirement to provide for deferred tax on the capacity owned by Helios' trading LLV's. The Directors have taken a view Helios is eligible for Substantial Shareholding Exemption on its investments, hence no deferred tax provision on the uplift fair value of investments is required.
Other movements include adjustments to revaluations on subsidiaries not held at fair value at prior year ends.
The cumulative effect of these adjustments will result in a re-stated net assets per share of £2.19p as at 31 December 2023. These adjustments are unaudited as of the date of this announcement.
It is expected that this uplift in net asset value per share to £2.19 p per share as at 31 December 2023 will be largely reflected in the net asset value as at 31 December 2024.
The Directors have been advised that this change will not change the trading business of underwriting at Lloyd's nor will it change the legal structure of the business.
The Directors have also been advised that the ordinary shares of Helios will remain eligible for Business Relief for Inheritance Tax.
For further information, please contact:
Helios Underwriting plc
John Chambers - Interim Executive Chairman 44 (0)203 965 6441
Arthur Manners - Chief Financial Officer
Deutsche Numis (Nomad and Broker)
Giles Rolls / Charles Farquhar +44 (0)20 7260 1000
FTI Consulting
Ed Berry / Nathan Hambrook-Skinner +44 (0)7703 330 199 / +44 (0)7977 817 092
About Helios
Helios provides a limited liability direct investment into the Lloyd's insurance market and is quoted on the London Stock Exchange's AIM market (ticker: HUW). Helios trades within the Lloyd's insurance market writing approximately £491m of capacity for the 2025 account. The portfolio provides a good spread of business being concentrated in property & casualty insurance and reinsurance. For further information please visit www.huwplc.com.
Related Shares:
Helios Underw