Half-year Report

RNS Number : 0628A
Helios Underwriting Plc
25 September 2020
 

25 September 2020 

 

Helios Underwriting plc

( ' Helios ' or ' the Company ' )

 

Interim Results for the Six Months Ended 30 June 2020

 

Helios Underwriting plc, the unique investment vehicle which acquires and consolidates underwriting capacity at Lloyd's, announces its unaudited results for the six months ended 30 June 2020.

 

Nigel Hanbury, Chief Executive, provides the following overview:

 

"These interim results reflect syndicate Covid losses recognised during the period, but our exposure on the 2020 open underwriting year has been greatly reduced through quota share reinsurance.

 

"Our pro-forma Adjusted NAV per share remains robust, reflecting the quality of our portfolio and has increased to £2.07 per share.

 

"Current market conditions have opened up an exciting window of opportunity for Helios: the opportunity to increase our retained exposure by reducing the quota share cession and through targeted acquisitions of LLV's. We have an attractive pipeline of these, which we are actively evaluating. We also continue to explore options to finance the additional capital required, including a potential fundraising."

 

 

 

SUMMARY FINANCIAL INFORMATION

 

6 months  to 30th June

Year to 31 st  December

 

2020

£000's

2019

£000's

2019

£000's

 

 

 

 

Underwriting profits

154

1,610

3,261

Other income

850

469

2,557

Costs

(1,112)

(1,326)

(3,391)

Operating profit  for the period before impairment

(108)

753

2,427

Profit after tax

(96)

648

4,054

 

 

 

 

Earnings per share

-0.55p

4.51p

25.64p

Adjusted Net Asset Value per Share

£2.07

£1.91

£2.06

 

 

· Operating loss before impairment is 108,000 (30 June 2019 - a profit of £753,000)

· Reduction in underwriting profits from the syndicate participations reflects the losses recognised from the Covid-19 pandemic in this period

· The cumulative premium rate increase achieved by underwriters since 1 st January 2018 is 28%, which together with greater discipline encouraged by the Franchise Board at Lloyd's, has improved the prospects for  profitable underwriting

· The Adjusted Net Asset Value per share is £2.07 per share (31 st  December 2019 - £2.06 per share)

 

 

The underwriting result has been impacted by the losses arising from the Covid-19 coronavirus pandemic.  Losses of £5m (7% of capacity) have been reserved for Covid-19 by the supported syndicates as at 30th June 2020, of which 85% attaches to the 2019 year.  The quota share reinsurers share £3.5m of this loss so the impact on the underwriting profits was £1.5m.  The disputes over business interruption coverage are largely outside Lloyds and are not expected to impact the portfolio.  The mid point forecast for the 2019 year of account as at 30 th June 2020 is a loss of 1.6%, having reserved the Covid 19 losses that have been incurred.  We have a stop loss reinsurance protection for the 2019 year on which we do not expect to have to make a claim.

The current turmoil is taking place against the backdrop of the greatest positive momentum the Directors have seen in both insurance and reinsurance pricing for many years. The improvement in underwriting conditions is now accelerating on top of an aggregate rate increase during 2019 of 5.4% (2018: 3.5%) following catastrophe losses in 2017, 2018 and 2019.  Cumulative rate increases since 1 st January 2018 are 28%. We have been advised of further pre-emptions of approximately £9.5m from our supported syndicates to take advantage of improved market conditions.

Underwriting Profits and Window of Market Opportunity

The underwriting profits generated from the proportion of the capacity portfolio retained by Helios reflects the results of the underlying syndicates. The profitability of the syndicates has been affected by the following:

· The losses from Covid-19 have been recognised during the period.

· The premium rate increases that have been achieved are being reflected in the underlying results as reported in the Lloyds market results.

 

A window of opportunity has been opened which is exciting for Helios:

· Our strategy of building a portfolio of syndicate capacity continues to rely on the flow of LLVs for sale at reasonable prices. 

· The pre-emptions, if fully taken up will increase the portfolio by approximately 13%.

· There is an opportunity to increase the capacity retained by Helios shareholders by reducing the quota share cession.

 

The exposure on the 2020 open underwriting year has been reduced by 70% through quota share reinsurance.  The quota  share reinsurers fund their share of the capital requirements and pay Helios a fee and a profit commission.  Stop loss reinsurance is bought for the remaining 30% to limit the Group's exposure in the event of large underwriting losses.  Our costs should not increase at the same pace.

The Pro-forma Adjusted Net Asset Value per share is £2.07p per share (Dec 2019 - £2.06p per share).   It is expected that there will continue to be demand for the top syndicates that make up a significant proportion of the Helios Capacity Fund at the Lloyds Capacity Auctions that take place later this year.

 

For further information, please contact:

 

Helios Underwriting plc

Nigel Hanbury - Chief Executive                                                       07787 530 404 / nigel.hanbury@huwplc.com

Arthur Manners - Chief Financial Officer                                           07754 965 917

 

Shore Capital

Robert Finlay 020 7408 4080

David Coaten 

 

Buchanan

Helen Tarbet / Henry Wilson / George Beale                                     07872 604 453

 020 7466 5111

 

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 £70m of capacity for the 2020 account. The portfolio provides a good spread of business being concentrated in property insurance and reinsurance. For further information please visit www.huwplc.com.

 

 

Six months ended 30 June 2020

 

6 months to 30 June 2020

6 months to 30 June 2019

Year to 31 December 2019

 

 

 

 

Underwriting profits

154

1,610

3,261

Other Income

 

 

 

Fees from reinsurers

400

249

235

Corporate reinsurance recoveries

202

(205)

(358)

Goodwill on bargain purchase

172

285

1,707

Investment  income

76

140

972

Total Other Income

850

469

2,557

Costs

 

 

 

Pre - acquisition

(9)

(2)

(859)

Stop loss costs

(181)

(182)

(200)

Operating costs

(922)

(1,142)

(2,332)

Total Costs

(1,112)

(1,326)

(3,391)

 Operating profit before impairments of goodwill and capacity

(108)

753

2,427

  Impairment charge for capacity

-

-

1,860

Tax

12

(105)

(233)

Profit for the period/year

(96)

648

4,054

 

Period to 30 th June 2020

Underwriting Year

Helios retained

 capacity at

30 June 2020

£m

Portfolio mid

point forecasts

Total profit/(loss)

currently

estimated

£'000

Helios

Profits

£'000

2018

27.6

-3.1%

(856)

439

2019

23.3

-1.6%

(373)

101

2020

21.1

-

-

(386)

 

 

 

 

154

Period to 30 th June 2019

Underwriting Year

Helios retained

 capacity at

30 June 2018

£m

Portfolio mid

point forecasts

Total profit/(loss)

currently

estimated

£'000

Helios

Profits

£'000

2017

28.9

-7.4%

(2,139)

1,048

2018

18.7

-3.6%

(673)

681

2019

16.1

-

-

(119)

 

 

 

 

1,610

Year to 31 December 2019

Underwriting Year

Helios retained

 capacity at

 31 December

2018

£m

Portfolio mid

point forecasts

Total profit/(loss)

currently

estimated

£'000

Helios

Profits

£'000

2017

36.2

-4.8%

(1,748)

2,725

2018

21

-3.6%

(758)

1,349

2019

18.3

-

-

(814)

 

 

 

 

3,261

 

Summary Balance Sheet

The summary Group balance sheet excludes items relating to syndicate participations. See Note 15 for further information.

 

6 Months to June 2020

£'000

 

6 Months to June 2019

£'000

Year to 31 December 2019

£'000

Intangible assets

21,655

16,490

21,178

Funds at Lloyd's

8,989

10,850

13,520

Other cash

1,156

2,018

3,013

Other assets

8,179

8,391

10,120

Total assets

39,979

37,749

47,831

Deferred tax

3,686

2,134

3,292

Borrowings-

2,000

1,034

2,001

Other liabilities

1,118

4,865

6,144

Total liabilities

6,804

8,033

11,437

Syndicate equity

(5,123)

(8,648)

(8,244)

Total equity

28,052

21,068

28,150

Summary Group Cash Flow

The summary group cash flow sheet excludes items relating to syndicate participations. See Note 15 for further information.

 

 

6 months to 30 June 2020

£'000

6 months to 30 June 2019

£'000

Year to 31 December 2019

£'000

 

 

 

 

Opening Balance (free cash)

3,028

9,717

9,717

 

 

 

 

Income

 

 

 

Acquired on acquisition

280

119

2,045

Distribution of profits (net of tax retentions)

54

1,165

1,724

Transfers from Funds at Lloyds'

4,252

1,512

4,178

Investment income

28

43

178

Other income

-

-

911

Sale of investments

-

-

2,014

Borrowings

2,000

(8,162)

2,000

 

 

 

 

Expenditure

 

 

 

Operating costs (inc Hampden / Nomina fees)

(406)

(469)

(2,392)

Reinsurance Cost

(353)

(531)

-

Payable funds for acquisitions

-

-

-

Payments to QS  reinsurers

-

-

(465)

Acquisition of LLV's

(4,875)

(428)

(4,897)

Transfers to Funds at Lloyds'

(750)

(778)

(1,137)

Tax

(102)

(36)

(833)

Dividends paid

-

-

(529)

Revolving credit facility repayment

(2,000)

-

(9,214)

Share buy backs

-

(133)

(287)

Closing balance

1,156

2,019

3,013

 

 

Adjusted NAV

 

6 months to 30 June 2020

£'000

6 months to 30 June 2019

£'000

Year to 31 December 2019

£'000

Net tangible assets

6,397

4,578

6,970

Group letters of credit

2,916

1,762

2,850

Value of capacity (WAV)

26,827

21,077

26,350

 

36,140

27,417

36,170

Share in issue -  on the market

17,478

14,348

17,489

Shares in issue - total of on the market and JSOP shares

17,978

14,848

17,989

Adjusted net asset value per share £ - on the market

2.07

1.91

2.07

Adjusted net asset value per share £ - on the market and JSOP shares

2.01

1.85

2.01

 

Six months ended 30 June 2020

 

 

 

Note

6 months ended 30 June 2020

Unaudited

£'000

6 months

 ended 30 June 2019 Unaudited £'000

12 months ended 31 December 2019 Audited £'000

Gross premium written

4

36,950

29,552

55,470

Reinsurance premium ceded

 

(11,575)

(9,380)

(13,210)

Net premium written

4

25,375

20,172

42,260

Change in unearned gross premium provision

5

(7,700)

(4,625)

(60)

Change in unearned reinsurance premium provision

5

3,837

2,767

488

 

5

(3,863)

(1,858)

428

Net earned premium

3,4

21,512

18,314

42,688

Net investment income

6

1,174

1,491

2,335

Other underwriting income

 

400

252

417

Gain on bargain purchase

12

172

285

1,707

Other income

 

-

13

432

Revenue

 

23,258

20,355

47,579

Gross claims paid

 

(16,380)

(17,242)

(34,107)

Reinsurers' share of gross claims paid

 

3,784

3,890

8,237

Claims paid, net of reinsurance

 

(12,596)

(13,352)

(25,870)

Change in provision for gross claims

5

(5,927)

1,337

(3,758)

Reinsurers' share of change in provision for gross claims

5

2,162

(1,036)

2,004

Net change in provision for claims

5

(3,765)

301

(1,754)

Net insurance claims and loss adjustment expenses

4

(16,361)

(13,051)

(27,624)

Expenses incurred in insurance activities

 

(6,166)

(5,786)

(15,764)

Other operating expenses

 

(839)

(765)

(1,764)

Operating expenses

 

(7,005)

(6,551)

(17,528)

Operating profit before impairments of goodwill and capacity

4

(108)

753

2,427

Impairment of goodwill

 

-

-

-

Impairment of syndicate capacity

 

-

-

-

Profit before tax

 

(108)

753

4,287

Income tax charge

7

12

(105)

(233)

Profit for the period

 

(96)

648

4,054

Other comprehensive income

 

 

 

 

Foreign currency translation differences

 

-

-

-

Income tax relating to the components of other comprehensive income

 

-

-

-

Other comprehensive income for the period, net of tax

 

-

-

-

Total other comprehensive income for the period

 

(96)

648

4,054

 

 

 

 

 

 

 

 

 

 

Profit for the period attributable to owners of the Parent

 

(96)

648

4,054

Total comprehensive income for the period attributable to owners of the Parent

 

(96)

648

4,054

Earnings per share attributable to owners of the Parent

 

 

 

 

Basic

8

-0.55p

4.51p

25.64p

Diluted

8

-0.52p

4.36p

24.86p

 

The profit attributable to owners of the Parent and earnings per share set out above are in respect of continuing operations.

Interim condensed consolidated statement of financial position

Six months ended 30 June 2020

 

 

 

Note

6 months ended 30 June 2020

Unaudited

£'000

6 months ended 30 June 2019 Unaudited £'000

12 months ended 31 December 2019 Audited £'000

Assets

 

 

-

 

Intangible assets

 

21,655

16,490

21,178

Financial assets at fair value through profit or loss

 

64,143

56,507

67,141

Reinsurance assets:

 

 

 

 

- reinsurers' share of claims outstanding

5

28,141

21,233

25,760

- reinsurers' share of unearned premium

5

9,195

7,163

5,023

Other receivables, including insurance and reinsurance receivables

 

52,799

50,717

47,726

Deferred acquisition costs

 

6,853

6,228

6,641

Prepayments and accrued income

 

882

701

432

Cash and cash equivalents

 

8,501

6,997

6,037

Total assets

 

192,169

166,036

179,938

Liabilities

 

 

 

 

Insurance liabilities:

 

 

 

 

- claims outstanding

5

99,758

80,204

95,616

- unearned premium

5

35,961

30,631

26,522

Deferred income tax liabilities

 

3,686

2,134

3,292

Borrowings

 

2,000

1,034

2,000

Other payables, including insurance and reinsurance payables

 

20,841

27,468

18,040

Accruals and deferred income

 

1,871

3,497

6,320

Total liabilities

 

164,117

144,968

151,790

Equity

 

 

 

 

Equity attributable to owners of the Parent:

 

 

 

 

Share capital

11

1,839

1,510

1,839

Share premium

11

18,938

15,387

18,938

Other reserves - treasury shares

11

(50)

(50)

(50)

Retained earnings

 

7,325

4,221

7,421

Total equity

 

28,052

21,068

28,148

Total liabilities and equity

 

192,169

166,036

179,938

 

The Financial Statements were approved and authorised for issue by the Board of Directors on 24 September 2020, and were signed on its behalf by:

Nigel Hanbury

Chief Executive

 

The notes are an integral part of these Financial Statements.

 

Six months ended 30 June 2020

 

 

 

 

Attributable to owners of the Parent

Consolidated

 

 

Note

Share

 capital

£'000

 Share

 premium

£'000

 Other reserves

£'000

Retained

earnings

£'000

Total

£'000

At 1 January 2020

 

1,839

18,938

(50)

7,421

28,148

Total comprehensive income for the year:

 

-

-

-

-

-

Profit for the year

 

-

-

-

(96)

(96)

Other comprehensive income, net of tax

 

-

-

-

-

-

Total comprehensive income for the year

 

-

-

-

(96)

(96)

Transactions with owners:

 

-

-

-

-

-

Dividends paid

9

-

-

-

-

-

Company buy back of shares

11

-

-

-

-

-

Total transactions with owners

 

-

-

-

-

-

At 30 June 2020

 

1,839

18,938

(50)

7,325

28,052

At 1 January 2019

 

1,510

15,387

(50)

4,198

21,045

Total comprehensive income for the year:

 

 

 

 

 

 

Profit for the year

 

-

-

-

648

648

Other comprehensive income, net of tax

 

-

-

-

39

39

Total comprehensive income for the year

 

-

-

-

687

687

Transactions with owners:

 

 

 

 

 

 

Dividends paid

 

-

-

-

(530)

(530)

Share issue

 

-

-

-

(134)

(134)

Total transactions with owners

 

-

-

-

(664)

(664)

At 30 June 2019

 

1,510

15,387

(50)

4,221

21,068

At 1 January 2019

 

1,510

15,387

(50)

4,198

21,045

Total comprehensive income for the year:

 

 

 

 

 

 

Profit for the year

 

-

-

-

4,054

4,054

Other comprehensive income, net of tax

 

-

-

-

-

-

Total comprehensive income for the year

 

-

-

-

4,054

4,054

Transactions with owners:

 

 

 

 

 

 

Dividends paid

 

-

-

-

(529)

(529)

Company buy back of shares

11

-

-

-

(302)

(302)

Share issue

11

329

3,551

-

-

3,880

Total transactions with owners

 

329

3,551

-

(831)

3,049

At 31 December 2019

 

1,839

18,938

(50)

7,421

28,148

               

 

Six months ended 30 June 2020

 

 

 

 

 

Note

6 months ended 30 June 2020 Unaudited

£'000

6 months ended 30 June 2019 Unaudited £'000

12 months ended 31 December 2019 Audited

£'000

Cash flows from operating activities

 

 

 

 

Profit before tax

 

(108)

753

4,287

Adjustments for:

 

 

 

 

- Other comprehensive income, gross of tax

 

-

-

-

- Interest received

 

(45)

(39)

(235)

- Investment income

6

(1,136)

(1,416)

(1,248)

- Recognition of negative goodwill

 

(172)

(285)

(1,707)

- Goodwill on bargain purchase

 

-

-

-

- Impairment of goodwill

 

-

-

-

- (Profit)/loss on sale of intangible assets

 

-

-

(898)

- Impairment of intangible assets

 

-

-

(1,860)

- Goodwill on acquisition

 

-

-

-

Changes in working capital:

 

-

 

 

change in fair value of financial assets held at fair value through profit or loss

 

(79)

17

(659)

decrease/(increase) in financial assets at fair value through profit or loss

 

4,171

2,928

(3,010)

- (increase)/decrease in other receivables

 

(3,863)

5,278

18,823

- (increase)/decrease in other payables

-

(1,193)

1,240

(6,783)

- net decrease/(increase) in technical provisions

 

5,059

(5,504)

(6,473)

Cash generated/(utilised) from operations

 

2,634

2,972

237

Income tax paid

 

-

-

(1,119)

Net cash inflow from operating activities

 

2,634

2,972

(882)

Cash flows from investing activities

 

 

 

 

Interest received

 

45

39

235

Investment income

 

1,136

1,416

1,248

Purchase of intangible assets

 

-

-

(22)

Proceeds from disposal of intangible assets

 

-

-

932

Acquisition of subsidiaries, net of cash acquired

 

(1,218)

(806)

(1,493)

Net cash (outflow)/inflow from investing activities

 

(37)

649

900

Cash flows from financing activities

 

 

 

 

Net proceeds from issue of ordinary share capital

 

-

-

1,844

Buy back of ordinary share capital

 

(133)

(134)

(302)

Payment for company buy back of shares

 

-

-

2,000

Proceeds from borrowings

 

-

(8,162)

(9,196)

Repayment of borrowings

 

-

-

-

Dividends paid to owners of the Parent

 

-

(530)

(529)

Net cash outflow from financing activities

 

(133)

(8,826)

(6,183)

Net (decrease)/increase in cash and cash equivalents

 

2,464

(5,205)

(6,165)

Cash and cash equivalents at beginning of period

 

6,037

12,202

12,202

Cash and cash equivalents at end of period

 

8,501

6,997

6,037

 

Cash held within the syndicates' accounts is £7,345,000 (2019: £4,979,000) of the total cash and cash equivalents held at the end of the period £8,501,000 (2019: £6,997,000). The cash held within the syndicates' accounts is not available to the Group to meet its day-to-day working capital requirements.

Cash and cash equivalents comprise cash at bank and in hand.

The notes are an integral part of these Financial Statements.

 

Six months ended 30 June 2020

1. General information

The Company is a public limited company quoted on AIM. The Company was incorporated in England, is domiciled in the UK and its registered office is 40 Gracechurch Street, London EC3V 0BT. The Company participates in insurance business as an underwriting member at Lloyd's through its subsidiary undertakings.

2. Accounting policies

Basis of preparation

The Condensed Consolidated Interim Financial Statements have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRSs) and in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting, as adopted by the European Union.

 

The Condensed Consolidated Interim Financial Statements are prepared for the six months ended 30 June 2020.

 

The Condensed Consolidated Interim Financial Statements for the six months ended 30 June 2020 and 2019 are unaudited, but have been subject to review by the Group's auditors. The Condensed Consolidated Interim Financial Statements have been prepared in accordance with the accounting policies adopted for the year ended 31 December 2019, and the adoption of new and amended standards as set out further below.

 

The Condensed Consolidated Interim incorporate the Financial Statements of Helios Underwriting plc,   the Parent Company, and its directly and indirectly held subsidiaries being Hampden Corporate Member Limited, Nameco (No. 917) Limited, Nameco (No. 229) Limited, Nameco (No. 518) Limited, Nameco (No. 804) Limited, Halperin Underwriting Limited, Bernul Limited, Nameco (No. 311) Limited, Nameco (No. 402) Limited, Updown Underwriting Limited, Nameco (No. 507) Limited, Nameco (No. 76) Limited, Kempton Underwriting Limited, Devon Underwriting Limited, Nameco (No. 346) Limited, Pooks Limited, Charmac Underwriting Limited, Nottus (No 51) Limited, Chapman Underwriting Limited, Llewellyn House Underwriting Limited, Advantage DCP Limited, Romsey Underwriting Limited, Nameco (No 409) Limited, Nameco (No 1113) Limited, Catbang 926 Limited, Whittle Martin Underwriting, Nameco (No 408) Limited, RBC CEES Trustee Limited, Helios UTG Partner Limited, Nomina No 035 LLP, Nomina No 342 LLP, Nomina No 372 LLP, Salviscount LLP, Inversanda LLP, Fyshe Underwriting LLP, Nomina No 505 LLP and Nomina No 321 LLP.   (Note 10).

 

The underwriting data on which these Condensed Consolidated Interim Financial Statements are based upon has been supplied by the managing agents of those syndicates which the Group supports. The data supplied is the 100% figures for each syndicate. The Group has applied its share of the syndicate participations to the gross figures to derive its share of the syndicates transactions, assets and liabilities.

 

Significant accounting policies

 

The Condensed Consolidated Interim Financial Statements have been prepared under the historical cost convention as modified by the revaluation of the financial assets at fair value through the profit and loss. The same accounting policies, presentation and methods of computation are followed in these Condensed Consolidated Interim Financial Statements as were applied in the preparation of the Group Financial Statements for the year ended 31 December 2020.

 

During the current year, the Group and the Company adopted all the new and revised IFRS, amendments and interpretations that are relevant to its operations and are effective for accounting periods beginning on 1 January 2019. Except for IFRS 9 "Financial Instruments" effective from 1 January 2018, for which a temporary exemption has been applied by the Group, as explained further below. These are set out below and did not have a material impact on the accounting policies of the Group and the Company:

 

• IFRS 16 "Leases", issued on 13 January 2016 (effective 1 January 2019).

• Amendments to IFRS 9: Prepayment Features with Negative Compensation, issued on 12 October 2017, (effective date 1 January 2019).

• Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures, issued on 12 December 2017, (effective date 1 January 2019).

• IFRS 23 "Uncertainty over Income Tax Treatments", issued on 7 June 2017, (effective date 1 January 2019).

• Annual improvements to IFRS 2015-2017 Cycle, issued on 12 December 2017, (effective date 1 January 2019).

• Amendments to IAS 19: Plan Amendment, Curtailment or Settlement, issued on 7 February 2017, (effective date 1 January 2019).

 

Temporary exemptions from IFRS 9 "Financial Instruments", (effective 1 January 2018)

 

The effective date of IFRS 9 Financial Instruments is January 2018. An insurer that has not previously adopted any version of IFRS 9, including the requirements for the presentation of gains and losses on financial liabilities designated as at fair value through profit or loss and whose activities are predominantly connected with insurance as its annual reporting date that immediately precedes 1 April 2016 (or a later date as specified in paragraph 20G of IFRS 4), may apply IAS 39 - Financial Instruments: Recognition and Measurement, rather than IFRS 17 - Insurance Contracts.

 

The Group has applied the temporary exemption from IFRS 9 as its activities are predominately connected with insurance and it has not previously adopted any version of IFRS 9, including the requirements for the presentation of gains and losses on financial liabilities designated at fair value through profit or loss, for annual period beginning before 1 January 2023. Consequently, the Group has a single date of initial application for IFRS 9 in it's entirely, being 1 January 2023.

 

New standards, amendments and interpretations not yet adopted.

 

At the date of authorisation of these Financial Statements, the following standards, amendments and interpretations were in issue but not yet effective:

 

(i) Adopted by the EU

Amendments:

• Amendments to IAS 1 and IAS 8: Definition of Material, issued on 31 October 2018, (effective 1 January 2020).

• Amendments to References to the Conceptual Framework in IFRS, issued on 29 March 2017, (effective date 1 January 2020).

 (ii) Not adopted by the EU

Standards:

• IFRS 17 "Insurance Contracts", issued on 18 May 2017, (effective date 1 January 2023).

 

Amendments:

• Amendment to IFRS 3 Business Combinations, issued on 22 October 2018, (effective 1 January 2020).

• Amendment to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non- Current, issued on 23 January 2020, (effective date 1 January 2022)

3. Segmental information

Nigel Hanbury is the Group's chief operating decision-maker. He has determined its operating segments based on the way the Group is managed, for the purpose of allocating resources and assessing performance.

The Group has three segments that represent the primary way in which the Group is managed, as follows:

syndicate participation;

investment management; and

other corporate activities.

6 months ended 30 June 2020 Unaudited

Syndicate

participation

£'000

Investment

management

£'000

Other

corporate

activities

£'000

Total

£'000

Net earned premium

22,133

-

(621)

21,512

Net investment income

1,171

3

-

1,174

Other income

-

-

400

400

Net insurance claims and loss adjustment expenses

(16,361)

-

-

(16,361)

Expenses incurred in insurance activities

(5,842)

-

(324)

(6,166)

Other operating expenses

-

-

(839)

(839)

Goodwill on bargain purchase

-

-

172

172

Impairment of goodwill

-

-

-

-

Impairment of syndicate capacity

-

-

-

-

Profit before tax

1,101

3

(1,212)

(108)

 

6 months ended 30 June 2019 Unaudited

Syndicate

participation

£'000

Investment

management

£'000

Other

corporate

activities

£'000

Total

£'000

Net earned premium

19,754

-

(1,440)

18,314

Net investment income

1,491

-

-

1,491

Other income

-

-

265

265

Net insurance claims and loss adjustment expenses

(13,051)

-

-

(13,051)

Expenses incurred in insurance activities

(5,472)

-

(314)

(5,786)

Other operating expenses

-

-

(765)

(765)

Goodwill on bargain purchase

-

-

285

285

Impairment of goodwill

-

-

-

-

Impairment of syndicate capacity

-

-

-

-

Profit before tax

2,722

-

(1,969)

753

 

12 months ended 31 December 2019 Audited

Syndicate

participation

£'000

Investment

management

£'000

Other

corporate

activities

£'000

Total

£'000

Net earned premium

42,688

-

-

42,688

Net investment income

2,387

(52)

-

2,335

Other income

254

-

595

849

Net insurance claims and loss adjustment expenses

(26,265)

-

(1,359)

(27,624)

Expenses incurred in insurance activities

(15,367)

-

(397)

(15,764)

Other operating expenses

(114)

-

(1,650)

(1,764)

Gain on bargain purchase

-

-

1,707

1,707

Impairment of goodwill

-

-

-

-

Impairment of syndicate capacity

-

-

1,860

1,860

Profit before tax

3,583

(52)

756

4,287

 

The Group does not have any geographical segments as it considers all of its activities to arise from trading within the UK.

No major customers exceed 10% of revenue.

Net earned premium within 2020 other corporate activities totalling £621,000 (2019: 1,440,000 - 2017, 2018 and 2019 years of account) represents the 2018, 2019 and 2020 years of account net Group quota share reinsurance premium payable to Hampden Insurance Guernsey PCC Limited - Cell 6. This net quota share reinsurance premium payable is included within "reinsurance premium ceded" in the Consolidated Statement of Comprehensive Income of the period.

 

4. Operating profit before impairments of goodwill and capacity

 

Underwriting year of account*

 

 

 

 

6 months ended 30 June 2020

2018 and prior

£'000

 

2019

£'000

 

2020

£'000

 

Sub-total

£'000

Pre-

acquisition

£'000

Corporate

 reinsurance

£'000

Other

 corporate

£'000

Total

£'000

Gross premium written

115

4,439

32,491

37,045

(95)

-

-

36,950

Reinsurance ceded

(131)

(1,089)

(9,578)

(10,798)

24

(621)

(181)

(11,575)

Net premium written

(16)

3,350

22,913

26,247

(70)

(621)

(181)

25,375

Net earned premium

1,519

15,105

5,756

22,380

(66)

(621)

(181)

Other income

702

301

102

1,105

(7)

400

248

1,746

Net insurance claims and loss adjustment expenses

(401)

(10,523)

(5,686)

(16,610)

47

-

202

(16,361)

Operating expenses

(581)

(4,092)

(1,427)

(6,100)

17

-

(922)

(7,005)

Operating profit before impairments of goodwill and capacity

1,239

791

(1,255)

775

(9)

(221)

(653)

(108)

Quota share adjustment

(800)

(690)

869

(621)

-

621

-

-

Operating profit before impairments of goodwill and capacity after quota share adjustment

439

101

(386)

154

(9)

400

(653)

(108)

 

 

Underwriting year of account*

 

 

 

 

6 months ended 30 June 2019

2017 and prior

£'000

 

2018

£'000

 

2019

£'000

 

Sub-total

£'000

Pre-

acquisition

£'000

Corporate

 reinsurance

£'000

Other

 corporate

£'000

Total

£'000

Gross premium written

669

4,017

24,993

29,679

(127)

-

 

29,552

Reinsurance ceded

(132)

(930)

(6,731)

(7,793)

36

(1,440)

(182)

(9,380)

Net premium written

536

3,088

18,262

21,886

(91)

(1,440)

(182)

20,172

Net earned premium

2,103

12,936

4,987

20,026

(90)

 

(1,440)

(182)

18,314

Other income

934

319

130

1,383

(16)

249

425

2,042

Net insurance claims and loss adjustment expenses

(656)

(7,879)

(4,369)

(12,904)

58

-

(205)

(13,051)

Operating expenses

(717)

(3,605)

(1,133)

(5,455)

46

-

(1,142)

(6,551)

Operating profit before impairments of goodwill and capacity

1,664

1,771

(385)

3,050

(2)

(1,191)

(1,104)

753

Quota share adjustment

(616)

(1,090)

266

(1,440)

-

1,440

-

-

Operating profit before impairments of goodwill and capacity after quota share adjustment

1,048

681

(119)

1,610

(2)

249

(1,104)

753

 

Underwriting year of account*

 

 

 

 

12 months ended 31 December 2019

2017

and prior

£'000

 

2018

£'000

 

2019

£'000

 

Sub-total

£'000

Pre-

acquisition

£'000

Corporate

 reinsurance

£'000

Other

 corporate

£'000

Total

£'000

Gross premium written

1,031

5,891

54,656

61,578

(6,108)

-

-

55,470

Reinsurance ceded

(116)

(1,443)

(13,003)

(14,563)

1,553

-

(200)

(13,210)

Net premium written

914

4,447

41,653

47,015

(4,555)

-

(200)

42,260

Net earned premium

3,526

21,772

22,157

47,545

(4,566)

-

(200)

42,688

Other income

1,574

615

339

2,527

(551)

235

2,679

4,891

Net insurance claims and loss adjustment expenses

893

(12,854)

(16,276)

(28,237)

2,329

(1,359)

(358)

(27,624)

Operating expenses

(1,535)

(6,823)

(8,768)

(17,125)

1,929

-

(2,332)

(17,528)

Operating profit before impairments of goodwill and capacity

4,458

2,710

(2,548)

4,620

(859)

(1,124)

(221)

2,426

Quota share adjustment

(1,733)

(1,361)

1,734

(1,359)

-

1,359

-

-

Operating profit before impairments of goodwill and capacity after quota share adjustment

2,725

1,349

(814)

3,261

(859)

235

(211)

2,426

 

Pre-acquisition relates to the element of results from the new acquisitions before they were acquired by the Group.

*   The underwriting year of account results represent the Group's share of the syndicates' results by underwriting year of account before corporate member level reinsurance and members' agents charges.

5. Insurance liabilities and reinsurance balances

Movement in claims outstanding

 

Gross

£'000

Reinsurance

£'000

Net

£'000

At 1 January 2020

95,616

25,760

69,856

Increase in reserves arising from acquisition of subsidiary undertakings

2,036

505

1,531

Movement of reserves

5,927

2,162

3,765

Other movements

(3,821)

(286)

(3,535)

At 30 June 2020

99,758

28,141

71,617

Movement in unearned premium 

 

Gross

£'000

Reinsurance

£'000

Net

£'000

At 1 January 2020

26,522

5,023

21,499

Increase in reserves arising from acquisition of subsidiary undertakings

530

92

438

Movement of reserves

7,700

3,837

3,863

Other movements

1,209

243

966

At 30 June 2020

35,961

9,195

26,766

Included within other movements are the 2017 and prior years' claims reserves reinsured into the 2018 year of account on which the Group does not participate and currency exchange differences.

Movement in claims outstanding

 

Gross

£'000

Reinsurance

£'000

Net

£'000

At 1 January 2019

88,032

22,698

65,334

Increase in reserves arising from acquisition of subsidiary undertakings

1,974

552

1,422

Movement of reserves

(1,337)

(1,036)

(301)

Other movements

(8,465)

(981)

(7,484)

At 30 June 2019

80,204

21,233

58,971

Movement in unearned premium 

 

Gross

£'000

Reinsurance

£'000

Net

£'000

At 1 January 2019

24,772

4,057

20,715

Increase in reserves arising from acquisition of subsidiary undertakings

-

-

-

Movement of reserves

4,625

2,767

1,858

Other movements

1,234

339

895

At 30 June 2019

30,631

7,163

23,468

Included within other movements are the 2016 and prior years' claims reserves reinsured into the 2017 year of account on which the Group does not participate and currency exchange differences.

Movement in claims outstanding

 

Gross

£'000

Reinsurance

£'000

Net

£'000

At 1 January 2019

88,032

22,698

65,334

Increase in reserves arising from acquisition of subsidiary undertakings

11,792

2,730

9,062

Movement of reserves

3,758

2,004

1,754

Other movements

(7,966)

(1,672)

(6,294)

At 31 December 2019

95,616

25,760

69,856

Movement in unearned premium 

 

Gross

£'000

Reinsurance

£'000

Net

£'000

At 1 January 2019

24,772

4,057

20,715

Increase in reserves arising from acquisition of subsidiary undertakings

3,379

1,182

2,197

Movement of reserves

60

488

(428)

Other movements

(1,689)

(704)

(985)

At 31 December 2019

26,522

5,023

21,499

Included within other movements are the 2016 and prior years' claims reserves reinsured into the 2017 year of account on which the Group does not participate and currency exchange differences.

6. Net investment income

 

6 months ended 30 June 2020 Unaudited

£'0 00

 

6  months ended 30 June 2019 Unaudited £'000

12 months ended 31 December

2019 Audited

£'000

Investment income

1,136

1,416

1,248

Realised (losses)/gains on financial assets at fair value through profit or loss

126

17

262

Unrealised (losses)/gains on financial assets at fair value through profit or loss

(133)

18

657

Investment management expenses

-

1

(67)

Bank interest

45

39

235

Net investment income

1,174

1,491

2,335

7. Income tax charge

 Analysis of tax charge/(credit) in the period

 

6 months ended 30 June 2020 Unaudited

£'000

 

 

6 months ended 30 June 2019 Unaudited  £'000

12 months ended 31 December 2019 Audited

£'000

Income tax credit

(12)

105

233

 

The income tax expense is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used is 19.00% (2019: 19.00%). Material disallowed terms have been adjusted for in the income tax calculation.

8. Earnings per share

Basic earnings per share is calculated by dividing the profit attributable to ordinary shareholders after tax by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share is calculated by dividing the net profit attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the period, plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

Earnings per share has been calculated in accordance with IAS 33 "Earnings per share".

The earnings per share and weighted average number of shares used in the calculation are set out below:

 

6 months ended 30 June 2020 Unaudited

 

 

6 months ended 30 June 2019 Unaudited

 

12 months ended 31 December 2019 Audited

 

Profit for the year after tax attributable to ordinary equity holders of the parent

(96,000)

648,000

4,054,000

Basic - weighted average number of ordinary shares*

17,978,841

14,356,224

15,809,376

Adjustments for calculating the diluted earnings per share: Treasury shares (JSOP scheme)

500,000

500,000

500,000

Diluted - weighted average number of shares*

17,478,841

14,856,224

15,044,433

Basic earnings per share

(0.55p)

4.51p

3.14p

Diluted earnings per share

(0.52p)

4.36p

3.03p

* Used as the denominator in calculating the basic earnings per share, and diluted earnings per share, respectively.

9. Dividends paid or proposed

It was proposed and agreed at the AGM on 25 June 2020 that no dividend will be payable in 2020 (2019: 3p).

10. Investments in subsidiaries

 

30 June

2020

£'000

30 June

2019

£'000

31 December

2019

£'000

Total

45,335

25,905

32,901

 

Company or partnership

Direct/indirect

interest

30 June 2020

ownership

 

 

30 June 2019

 ownership

 

31 December 2019

 ownership

Principal activity

 

Hampden Corporate Member Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Nameco (No. 365) Limited

Direct

-

100%

100%

Lloyd's of London corporate vehicle

 

Nameco (No. 605) Limited

Direct

-

100%

100%

Lloyd's of London corporate vehicle

 

Nameco (No. 321) Limited

Direct

-

100%

100%

Lloyd's of London corporate vehicle

 

Nameco (No. 917) Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Nameco (No. 229) Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Nameco (No. 518) Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Nameco (No. 804) Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Halperin Underwriting Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Bernul Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Nameco (No. 311) Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Nameco (No. 402) Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Updown Underwriting Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Nameco (No. 507) Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Nameco (No. 76) Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Kempton Underwriting Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Devon Underwriting Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Nameco (No. 346) Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Pooks Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Charmac Underwriting Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

RBC CEES Trustee Limited

Direct

100%

100%

100%

Joint Share Ownership Plan

 

Nottus (No 51) Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Chapman Underwriting Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Helios UTG Partner Limited

Direct

100%

100%

100%

Corporate partner

 

Nomina No 035 LLP

Indirect

100%

100%

100%

Lloyd's of London corporate vehicle

 

Nomina No 342 LLP

Indirect

100%

100%

100%

Lloyd's of London corporate vehicle

 

Nomina No 372 LLP

Indirect

100%

100%

100%

Lloyd's of London corporate vehicle

 

Salviscount LLP

Indirect

100%

100%

100%

Lloyd's of London corporate vehicle

 

Inversanda LLP

Indirect

100%

100%

100%

Lloyd's of London corporate vehicle

 

Fyshe Underwriting LLP

Indirect

100%

100%

100%

Lloyd's of London corporate vehicle

 

Nomina No 505 LLP

Indirect

100%

100%

100%

Lloyd's of London corporate vehicle

 

Nomina No 321 LLP

Direct

100%

100%

-

Lloyd's of London corporate vehicle

 

Llewellyn House Underwriting Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Advantage DCP Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Romsey Underwriting Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Nameco (No 409) Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Nameco (No 1113 Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Catbang 926 Limited

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Whittle Martin Underwriting

Direct

100%

100%

100%

Lloyd's of London corporate vehicle

 

Nameco (No 408) Limited

Direct

100%

-

-

Lloyd's of London corporate vehicle

                   

 

Helios UTG Partner Limited, a subsidiary of the Company, owns 100% of Nomina No 035 LLP, Nomina No 342 LLP, Nomina No 372 LLP, Salviscount LLP, Inversanda LLP, Fyshe Underwriting LLP, Nomina No 505 LLP and Nomina No 321 LLP. The cost of acquisition of these LLPs is accounted for in Helios UTG Partner Limited, their immediate Parent Company.

RBC CEES Trustee Limited is a newly incorporated entity in year 2017 to satisfy the requirements of the Joint Share Ownership Plan.

For details of all new acquisitions in the 6 months to 30 June 2020, refer to note 12.

11. Share capital and share premium

 

Number of

shares (i)

Ordinary share

capital

£'000

Partly

paid ordinary

share capital

£'000

Share

premium

£'000

Total

£'000

Ordinary shares of 10p each and share premium at 1 January 2019

15,104,240

1,460

50

15,387

16,897

Ordinary shares of 10p each and share premium at 31 December 2019

18,390,906

1,789

50

15,387

16,897

Ordinary shares of 10p each and share premium at 1 January 2020

18,390,906

1,789

50

15,387

16,897

Ordinary shares of 10p each and share premium at 30 June 2020

18,390,906

1,789

50

15,387

16,897

 

 (i) Number of shares

 

30 June 2020

31 December 2019

Allotted, called up and fully paid ordinary shares:

 

 

On the market

17,478,028

17,488,628

Company buy back of ordinary shares held in treasury

412,878

402,278

 

17,890,906

17,890,906

Uncalled and partly paid ordinary share under the JSOP scheme (ii)

500,000

500,000

 

18,390,906

18,390,906

 

(ii)  The partly paid ordinary shares are not entitled to dividend distribution rights during the year.

12. Acquisition of Limited Liability Vehicles

 

Nameco (No. 408) Limited

On 28 January 2020, Helios Underwriting plc acquired 100% of the issued share capital of Nameco (No. 408) Limited for a total consideration of £1,008,000. Nameco (No. 408) Limited is incorporated in England and Wales and is a corporate member of Lloyd's.

The acquisition has been accounted for using the acquisition method of accounting. After the alignment of accounting policies and other adjustments to the valuation of assets and liabilities to reflect their fair value at acquisition, the fair value of the net assets was £1,180,000. Negative goodwill of £172,000 arose on acquisition which has been recognised as goodwill on bargain purchase in the income statement. The following table explains the fair value adjustments made to the carrying values of the major categories of assets and liabilities at the date of acquisition:

 

Carrying value

£'000

Adjustments

£'000

Fair value

£'000

Intangible assets

-

477

477

Financial assets at fair value through profit or loss

1,174

-

1,174

Reinsurance assets:

 

 

 

- reinsurers' share of claims outstanding

505

-

505

- reinsurers' share of unearned premium

92

-

92

Other receivables, including insurance and reinsurance receivables

1,418

-

1,418

Deferred acquisition cost

138

-

138

Prepayments and accrued income

10

-

10

Cash and cash equivalents

390

-

390

Insurance liabilities:

 

 

 

- claims outstanding

(2,035)

-

(2,035)

- unearned premium

(532)

-

(532)

Deferred income tax liabilities

(1)

(91)

(92)

Other payables, including insurance and reinsurance payables

(326)

-

(326)

Accruals and deferred income

(39)

-

(39)

Net assets acquired

794

386

1,180

Satisfied by:

 

 

 

Cash and cash equivalents

1,008

-

1,008

Loan paid on acquisition

-

-

-

Total consideration

1,008

-

1,008

Negative goodwill

214

386

(172)

 

 

2018 year

of account

2019 year

of account

2020 year

of account

Capacity acquired

1,304,321

1,142,830

1,086,270

 

The net earned premium and profit of Nameco (No. 408) Limited for the period since the acquisition date to 30 June 2020 are £356,000 and £33,000 respectively.

Negative goodwill has arisen on the acquisition of Nameco (No. 408) Limited as a result of the purchase consideration being at a discount to the fair value of net assets acquired.

13. Related party transactions

 

Helios Underwriting plc and its subsidiaries have entered into a management agreement with Nomina plc. Jeremy Evans, a Director of Helios Underwriting plc and its subsidiary companies, is also a Director of Nomina plc. Under the agreement, Nomina plc provides management and administration, financial, tax and accounting services to the Group for an annual fee of £152,000 (2019: £180,000).

The Limited Liability Vehicles have entered into a members' agent agreement with Hampden Agencies Limited. Jeremy Evans, a Director of Helios Underwriting plc and its subsidiary companies, is also a director of Hampden Capital plc, which controls Hampden Agencies Limited. Under the agreement, the Limited Liability Vehicles will pay Hampden Agencies Limited a fee based on a fixed amount, which will vary depending upon the number of syndicates the Limited Liability Vehicles underwrite on a bespoke basis, and a variable amount depending on the level of underwriting through the members' agent pooling arrangements. The total fees payable for 2020 are £135,000 (2019: £225,000).

A number of subsidiary companies have entered into quota share reinsurance contracts for the 2018, 2019 and 2020 years of account with protected cell companies of Hampden Insurance PCC (Guernsey) Limited. The quota share percentages for the above years was 70%

Nigel Hanbury, a Director of Helios Underwriting plc and its subsidiary companies, is also a director and majority shareholder in Hampden Insurance Guernsey PCC Limited. Hampden Capital plc, a substantial shareholder in Helios Underwriting plc, is also a substantial shareholder in Hampden Insurance Guernsey PCC Limited - Cell 6.  Under quota share agreements between Cell 6 and certain Helios subsidiaries, the Group accrued a net reinsurance premium recovery of £4,453,000 (2019: £3,968,000) during the period.

In addition, HIPCC provide stop loss, portfolio stop loss and HASP reinforce policies for the company.

HIPCC Limited acts as an intermediary for the reinsurance products purchased by Helios. An arrangement has been put in place so that 51% of the profits generated by HIPCC (being Nigel Hanburys share) in respect of the business relating to Helios will be repaid to Helios for the business transacted for the 2020 and subsequent underwriting years.

14. Ultimate controlling party

The Directors consider that the Group has no ultimate controlling party.

 

15. Syndicate participations

The syndicates and members' agent pooling arrangements ("MAPA") in which the Company's subsidiaries participate as corporate members of Lloyd's are as follows:

Syndicate or MAPA number

Managing or members' agent

Allocated capacity per year of account

2017

£

2018 ]

£

2019

£

2020

£

33

Hiscox Syndicates Limited

5,764,233

8,019,797

7,031,021

8,339,667

218

ERS Syndicate Management Limited

3,620,739

5,104,083

5,108,619

5,108,619

308

Tokio Marine Kiln Syndicates Limited

132,000

-

-

-

318

Beaufort Underwriting Agency Limited

866,250

866,250

836,250

-

386

QBE Underwriting Limited

1,322,097

1,291,391

1,295,773

1,295,772

510

Tokio Marine Kiln Syndicates Limited

11,843,732

11,850,400

11,865,468

13,051,289

557

Tokio Marine Kiln Syndicates Limited

1,844,203

1,526,776

1,512,922

2,269,384

609

Atrium Underwriters Limited

4,722,562

5,058,275

5,069,124

5,700,796

623

Beazley Furlonge Limited

6,951,965

8,057,318

8,428,557

9,544,350

727

S A Meacock & Company Limited

1,586,583

1,586,582

1,586,582

1,436,179

1176

Chaucer Syndicates Limited

1,168,400

1,448,810

1,449,906

1,419,908

1200

Argo Managing Agency Limited

136,305

57,857

57,143

-

1729

Asta Managing Agency Limited

329,996

324,634

55,810

2,867

1884

Charles Taylor Managing Agency Limited

217,500

-

-

-

1969

Apollo Syndicate Management Limited

616,462

131,082

-

-

1991

R&O Managing Agency Limited

222,228

-

-

-

2010

Cathedral Underwriting Limited

2,127,335

2,127,332

2,130,071

2,129,005

2014

Pembroke Managing Agency Limited

2,279,023

547,449

92,192

-

2121

Argenta Syndicate Management Limited

885,082

1,003,093

1,003,093

1,253,868

2525

Asta Managing Agency Limited

332,794

432,632

467,270

535,460

2689

Asta Managing Agency Limited

1,537,499

398,045

32,192

2,377

2791

Managing Agency Partners Limited

6,468,698

6,468,694

6,480,967

6,282,966

2988

Brit Syndicates Limited

225,687

227,127

2,740

-

4242

Asta Managing Agency Limited

288,521

348,378

253,299

3,299

4444

Canopius Managing Agents Limited

757,008

1,177,416

-

-

5623

Beazley Furlonge Limited

2,250,000

-

-

2,250,000

5820

ANV Syndicates Limited

-

-

-

-

5886

Asta Managing Agency Limited

5,623,852

453,254

536,512

5,623,852

6103

Managing Agency Partners Limited

1,349,391

1,287,333

1,292,210

1,349,391

6104

Hiscox Syndicates Limited

1,047,395

1,112,543

1,137,541

1,047,395

6107

Beazley Furlonge Limited

1,026,295

1,014,510

1,263,800

1,026,295

6111

Catlin Underwriting Agencies Limited

278,279

249,065

-

-

6117

Argo Managing Agency Limited

3,302,839

3,472,410

3,095,553

397,574

6123

Asta Managing Agency Limited

8,440

8,708

-

 

7211

Members' agent pooling arrangement

11,553

121,828

120,610

130,401

7217

Members' agent pooling arrangement

18,107

19,917

29,875

-

7227

Members' agent pooling arrangement

2,746

3,661

6,406

-

Total

 

62,710,376

65,796,650

62,241,506

70,200,714

 

16. Group-owned net assets

The Group statement of financial position includes the following assets and liabilities held by the syndicates on which the Group participates. These assets are subject to trust deeds for the benefit of the relevant syndicates' insurance creditors. The table below shows the split of the statement of financial position between Group and syndicate assets and liabilities:

 

 

30 June 2020

30 June 2019

31 December 2019

Group

£'000

Syndicate

£'000

Total

£'000

Group

£'000

Syndicate

£'000

Total

£'000

Group

£'000

Syndicate

£'000

Total

£'000

Assets

 

 

 

 

 

 

 

 

 

Intangible assets

21,655

-

21,655

16,490

-

16,490

21,178

-

21,178

Financial assets at fair value through profit or loss

8,989

55,154

64,143

10,850

45,657

56,507

13,520

53,621

67,141

Reinsurance assets:

-

-

-

 

-

-

-

-

-

- reinsurers' share of claims outstanding

61

28,080

28,141

61

21,172

21,233

61

25,699

25,760

- reinsurers' share of unearned premium

-

9,195

9,195

-

7,163

7,163

-

5,023

5,023

Other receivables, including insurance and reinsurance receivables

7,837

44,962

52,799

8,151

42,566

50,717

10,044

37,682

47,726

Deferred acquisition costs

-

6,853

6,853

-

6,228

6,228

-

6,641

6,641

Prepayments and accrued income

281

601

882

179

522

701

-

432

432

Cash and cash equivalents

1,156

7,345

8,501

2,018

4,979

6,997

3,028

3,009

6,037

Total assets

39,979

152,190

192,169

37,749

128,287

166,036

47,831

132,107

179,938

Liabilities

 

 

 

 

 

 

 

 

 

Insurance liabilities:

 

 

 

 

 

 

 

 

 

- claims outstanding

-

99,758

99,758

-

80,204

80,204

-

95,616

95,616

- unearned premium

-

35,961

35,961

-

30,631

30,631

-

26,522

26,522

Deferred income tax liabilities

3,686

-

3,686

2,134

-

2,134

3,292

-

3,292

Borrowings

2,000

-

2,000

1,034

-

1,034

2,000

-

2,001

Other payables, including insurance and reinsurance payables

10

20,831

20,841

1,694

25,774

27,468

1,051

16,989

18,040

Accruals and deferred income

1,108

763

1,871

3,171

326

3,497

5,094

1,226

6,320

Total liabilities

6,804

157,313

164,117

8,033

136,935

144,968

11,437

140,353

151,790

Equity attributable to owners of the Parent

 

 

 

 

 

 

 

 

 

Share capital

1,839

-

1,839

1,510

-

1,510

1,839

-

1,839

Share premium

18,938

-

18,938

15,387

-

15,387

18,938

-

18,938

Other reserves

(50)

-

(50)

(50)

-

(50)

(50)

-

(50)

Retained earnings

12,448

(5,123)

7,325

12,869

(8,648)

4,221

15,667

(8,246)

7,421

Total equity

33,175

(5,123)

28,052

29,716

(8,648)

21,068

36,394

(8,246)

28,148

Total liabilities and equity

39,979

152,190

192,169

37,749

128,287

166,036

47,831

132,108

179,938

 

 

17. COVID-19

 

The COVID-19 pandemic has created turbulence in financial markets and economic uncertainty which will impact individuals and businesses. The full impact of this on the insurance industry, including the Lloyd's market, is uncertain. The initial assessment by supported syndicates has identified those lines of business most likely to be impacted, however the full extent of the losses and the impact upon pricing will become clearer as the year progresses. We will regularly monitor developments in this area and take appropriate actions as needed.

The COVID-19 coronavirus pandemic will be a manageable loss for the property and casualty insurance and reinsurance industry, unless there is some kind of structural change to drive the cost to the sector much higher.

It should not be forgotten that the current turmoil is happening against the backdrop of the greatest momentum we have seen in (re)insurance pricing for many years. Recent events are accelerating the premium rate rises.

The importance of having sufficient diversification within the portfolio to absorb shock losses is critical to the success of the portfolio. We do this by being partnered with the highest quality underwriting businesses at Lloyd's

It is expected that that a significant proportion of the losses arising from COVID-19 will attach to the 2019 underwriting year and therefore there remains considerable uncertainty regarding the eventual outcome for this underwriting year.

The Directors are confident that the business continues to be a going concern as in addition to the current funds lodged at Lloyd's, Helios has available the following facilities to provide additional resources to fund the necessary capital requirements:

A bank revolving credit bank facility of £4m of which £2.0m has been utilised, and

The stop loss reinsurance contracts for the 2019 and 2020 years of account could provide additional underwriting capital of approximately £5m.

 

The Board considers that the dividend policy should reflect the requirement to maintain its available cash resources given the uncertainty for the potential funding of the COVID-19 and other losses in the immediate future and therefore no dividend will be payable.

 

 

The Interim Report will be made available in electronic format on the Company's website, www.huwplc.com .  

 

 

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