Helios Underwriting was established in 2007 primarily to provide investors with a limited liability direct investment into the Lloyd’s insurance market. It is an AIM-quoted holding company, providing underwriting exposure across a diversified portfolio of selected Lloyd’s syndicates.
Lloyd’s released record results with FY23 earnings of £10.7bn (equal to the sum of the preceding decade), on the back of historically high premium increases. Near-term combined ratios may recede from the 17-year FY23 low in a benign large claims (natural catastrophe) environment but should remain attractive, with higher interest rates continuing to boost investment income.
Financials |
Update
Financials |
Flash note
Financials |
Update
Financials |
Update
Arthur Manners
FD
Michael Wade
Chairman
Forecast net debt (£m)
10
Forecast gearing ratio (%)
6
% | 1M | 3M | 12M |
---|---|---|---|
Actual | 5.1 | 12.9 | 11.1 |
Relative | 6.2 | 10.5 | 4.1 |
52 week high/low | 186.0p/115.0p |
Helios Underwriting (Helios) delivered strong EPS of 21.6p in FY23, from a loss of 3.1p in FY22, ahead of our 14.7p forecast. On 7 June, the company announced that CEO Martin Reith had stepped down, with Michael Wade taking over as executive chair. Mr Reith had driven a strategy of investment in internal capabilities and Lloyd’s of London (Lloyd’s) capacity expansion via tenancy capacity and promotor activities. While Helios will still pursue select capacity acquisition, indications are that future strategy will increasingly be focused on extracting value from the existing portfolio, with greater shareholder distributions through dividends and share buybacks. We have updated our forecasts based on the FY23 performance and underwriting outlook, paring back our near-term capacity growth forecasts but allowing for a more liberal distribution policy. We have cut our EPS forecasts by 5.5% in FY24 and 1.9% in FY25, and introduce FY26 forecasts. Our valuation is unchanged at 280p/share, supported by higher distributions.
Y/E Dec | Revenue (£m) | EBITDA (£m) | PBT (£m) | EPS (fd) (p) | P/E (x) | P/CF (x) |
---|---|---|---|---|---|---|
2022A | 148.3 | (5.2) | (5.2) | (3.1) | N/A | N/A |
2023A | 212.9 | 22.1 | 22.1 | 20.8 | 8.4 | 21.1 |
2024E | 341.3 | 24.5 | 24.5 | 23.8 | 7.4 | 6.0 |
2025E | 428.2 | 36.4 | 36.4 | 35.3 | 5.0 | 6.3 |