Helios Underwriting — Huge capacity increase follows capital restructure

Helios Underwriting (AIM: HUW)

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Research: Financials

Helios Underwriting — Huge capacity increase follows capital restructure

Helios Underwriting reported FY24 expected underwriting capacity of £501.8m on 15 December 2023, a huge 69% increase over the past year. Capacity growth of £28m reported at H123 is followed by a further expected £177m of tenancy capacity, some only becoming active during H124. The large addition was made possible by a significant capital restructure where Helios raised US$75m in seven-year unsecured debt at a coupon of 9.5%. The syndicate underwriting operating result outlook has meaningfully improved on the back of this increased exposure, driving a strong upgrade in our FY25 earnings forecast, although FY24 was downgraded to allow for a sharp uptick in financing costs. After allowing for the additive impact of the company’s ongoing share buybacks, our FY24 EPS forecast has been cut by 5%, while our FY25 forecast has been lifted by 10% to 37.6p. This upgrade, combined with a sharp reversal in gilt yields, has resulted in an 11% increase in our valuation to 280p/share.

Marius Strydom

Written by

Marius Strydom

Analyst

Lloyd’s Building

Financials

Helios Underwriting

Huge capacity increase follows capital restructure

FY24 capacity update

Insurance

16 January 2024

Price

148p

Market cap

£111m

Net cash (£m) at 30 June 2022

13.2

Shares in issue

75.0m

Free float

46.4%

Code

HUW

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(3.9)

6.9

(9.2)

Rel (local)

(4.1)

5.4

(6.2)

52-week high/low

175p

115p

Business description

Helios Underwriting was established in 2007 (as Hampden Underwriting) 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.

Next events

FY23 earnings release

May 2024

Analyst

Marius Strydom

+44 (0)20 3077 5700

Helios Underwriting is a research client of Edison Investment Research Limited

Helios Underwriting reported FY24 expected underwriting capacity of £501.8m on 15 December 2023, a huge 69% increase over the past year. Capacity growth of £28m reported at H123 is followed by a further expected £177m of tenancy capacity, some only becoming active during H124. The large addition was made possible by a significant capital restructure where Helios raised US$75m in seven-year unsecured debt at a coupon of 9.5%. The syndicate underwriting operating result outlook has meaningfully improved on the back of this increased exposure, driving a strong upgrade in our FY25 earnings forecast, although FY24 was downgraded to allow for a sharp uptick in financing costs. After allowing for the additive impact of the company’s ongoing share buybacks, our FY24 EPS forecast has been cut by 5%, while our FY25 forecast has been lifted by 10% to 37.6p. This upgrade, combined with a sharp reversal in gilt yields, has resulted in an 11% increase in our valuation to 280p/share.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/22

148.6

(5.2)

(4.9)

3.0

N/A

2.3

12/23e

213.0

14.9

14.7

6.0

10.1

4.1

12/24e

332.1

25.8

26.2

12.8

5.6

8.6

12/25e

441.9

37.0

37.6

18.4

3.9

12.4

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Capacity and net asset value uplift

Helios expects gross capacity of £501.8m for 2024 deployment, of which c £52m relates to new syndicate support during H124. Retained capacity is expected at £387m (62% up for the year). Although quota share (QS) reinsurance arrangements are largely unchanged, the company is implementing a new ‘Rental Capacity’ initiative with Argenta Private Capital, which will result in c £55m of tenancy capacity being ‘rented out’, reducing capital needs and resulting in fee income (higher percentage than by using QS). On 11 December 2023, Helios announced a strong 17% increase in NAV/share as at 30 September 2023 to 176p, supported by an 18p capacity revaluation following strong Lloyd’s of London (Lloyd’s) auction activity. We have lifted our FY23 NAV forecast to 187p/share.

Buybacks and more liberal dividend policy

In October 2023, Helios announced an increase in its annual base dividend from 3p to 6p to be paid in 2024. In addition, it bought 2.3m of its own shares at an average price of 143p/share during 2023, which is set to reduce average shares in issue by c 2.3% in FY24. This has a positive impact on EPS, NAV/share and valuation.

Valuation: 11% increase to 280p/share

The huge increase in Helios’s capacity, combined with the additive impact of share buybacks, has resulted in a 10% uplift in our FY25 EPS forecast. This, combined with a reduction in discount rate, has lifted our valuation of the company by 11% to 280p/share, which is at a 50% premium to our forecast FY23 NAV of 187p/share and supported by our forecast return on NAV (RONAV) of 13.6% in FY24 and 16.7% in FY25. Our valuation is 89% ahead of the current share price.

Capacity and NAV uplifts support forecast upgrades

Helios Underwriting reported FY24 expected underwriting capacity of £501.8m on 15 December 2023, a huge 61% increase on the 30 June 2023 capacity update and 69% on the update at the start of the year (see Exhibit 1 below). Of this gross capacity, £387m is expected to be retained, which represents a 62% increase over the year and 58% on the level disclosed as at H123 of £244.5m. This is a marked increase in capacity compared to its 8 November 2023 capacity update and was achieved in conjunction with a significant capital restructure and the introduction of ‘rental capacity’. Capacity of £114.9m is expected to be ceded to third parties for FY24.

While the ceded amount has historically almost fully represented QS reinsurance, Helios is expected to ‘rent’ up to £55m of its £501.8m FY24 capacity to other third parties under a new ‘rental capacity’ initiative with Argenta Private Capital Limited (Argenta). The ‘rental capacity’ initiative is aimed at third parties active at Lloyd’s via the member agent pooling arrangement (MAPA). £22m will be ‘rented out’ using Helios’s existing limited liability vehicles (LLVs) with a further 10 new LLVs created and already capitalised by Helios, offering up to a further £33m of capacity to the open market in H124. The ‘rented’ capacity will be in the form of tenancy capacity in the hands of the third parties, allowing for ownership over a 12-month period, which is likely to be extended on an annual basis. The third parties will pay a fee of 1.25% of the amount of capacity ‘rented’, which is almost twice as much as the fee paid by QS reinsurers, enhancing returns for Helios. If successful, the annual amount of rented out capacity is expected to grow, in conjunction with both Argenta and other members’ agents currently being pursued.

Over FY23 to 8 November 2023 (as per the company announcement on the date), Helios added capacity from the following sources, affecting its capacity value (WAV), which makes up the bulk of FY23 balance sheet intangible assets (see Exhibit 1 below):

£8.2m from LLV acquisitions, adding £3.5m to WAV;

£14.7m of capacity from pre-emptions, adding £7m; and

£6.5m from participation in the Lloyd’s auctions, adding £0.4m.

In addition, due to strong pricing in the Lloyd’s auctions, resulting in a c 6.5bp higher weighted average price for the Helios syndicate portfolio, the company’s WAV was revalued upwards to the tune of £11.5m. This resulted in a 37% uplift in WAV for the year and an increase in NAV/share from 151p as at 31 December 2023 to 176p as at 30 September 2023. We have lifted our forecast for FY23 NAV from 170.5p/share to 187.1p/share on the back of this.

Exhibit 1: Capacity build-up in FY24

£m

Total

Tenancy

Freehold

Third party

Retained

Capacity value

Start 2023

296.6

149.3

147.3

58.3

238.3

60.0

LLV acquisitions

8.2

0.8

7.4

8.2

3.5

Wildfire Defense Syndicate

6.0

6.0

6.0

0.0

QS capacity ceded

6.0

(6.0)

0.0

2023 year of account

310.8

156.1

154.7

66.3

244.5

63.5

Pre-emptions^

14.7

14.7

14.7

7.0

Net auction

6.5

6.5

6.5

0.4

Increase in portfolio value

11.5

Tenancy capacity added*

169.8*

169.8

169.8

0.0

Rental capacity ceded**

0.0

48.6

(48.6)

0.0

2024 year of account

501.8*

325.9

175.9

114.9

386.9

82.4

Source: Helios, Edison Investment Research. Note: *We assume that £52m of tenancy capacity will only become active in H124 and will not fully contribute to FY24 underwriting results and capital requirements. The amount includes pre-emptions as well, which have not yet been split out in Helios disclosure. **We have calculated the £48.6m of rental capacity ceded (assuming no QS changes), resulting in a value below the targeted £55m. The shortfall could be due to QS or other changes not yet disclosed. We have further assumed no impact on capacity value.

The 15 December 2023 announcement highlighted a further increase in capacity of £169.8m (all in the form of tenancy capacity), which was added as part of the company’s capital restructure. The level of capacity that can be carried by Helios’s balance sheet is dependent on the company’s ability to supply the Funds at Lloyd’s (FAL) to back the business to be written on said capacity. The £169.8m capacity addition was made possible by a significant capital restructure where Helios raised US$75m in seven-year unsecured debt at a coupon of 9.5%. The company obtained an A- / stable rating from Kroll Bond Rating Agency LLC (KBRA) for up to US$100m, which leaves a further US$25m undrawn. In conjunction with issuing the new debt, Helios repaid its Barclays facility of £15m, resulting in a c £40m increase in gearing as at 31 December 2023.

Helios management has indicated that the full increase in gearing would be reflected in its cash balance (free working capital) at 31 December 2023, with no additional transfer to FAL, despite the large increase in capacity. This is due to the deferral of required funding as well as a high level of syndicate solvency credits that will only unwind during the course of the year. Our FAL forecast for FY23 therefore remains largely unchanged at £64m and increases strongly to £90.5m in FY24. We expect to see a commensurate reduction in free working capital from £52m to £36.6m over the course of FY24.

As a result of the increased gearing being housed in cash for FY24, we expect a large increase in group investment income. This will, however, be more than offset by the finance charges on the unsecured debt, with a net finance cost impact of -5.5% on the c £60m of debt.

Share buybacks and updated dividend policy

In a 10 October 2023 press release, Helios announced an increase in its annual base dividend from 3p to 6p to be paid in 2024. This doubling of the base dividend could be further supplemented by special dividends. Our model allows for such special dividends to be paid from 2025 onwards.

In addition, Helios bought 2.3m of its own shares at an average price of 143p/share during 2023, which is set to reduce average shares in issue by c 2.3% in FY24. This has a positive impact on EPS, NAV/share and valuation. The buyback programme was renewed in December 2023, with the company starting 2024 active in the market.

During the course of 2023, a forced partial sell-off by Odey Asset Management (a reduction in stake from 7.7m at 31 December 2022 to 6.6m shares currently) was concluded. This overhang allowed Helios to take advantage of share price weakness through its buyback programme. We note that share price weakness has continued despite the Odey overhang having been removed and this appears to be related to a drawdown in the stake of key investor Hudson Structured Capital Management (HSCM) (reduction in stake from 12.5m at 31 December 2022 to 11.6m shares). This sell-off is more likely related to the failure of Southern Fidelity Insurance Company (a Florida-based insurer in which HSCM Bermuda Fund had a 75% stake) than to concerns related to its much smaller investment in Helios.

While we warn that a continuing overhang from HSCM could put further pressure on the Helios share price, we see this as an opportunity for Helios and shareholders to add to or build positions at attractive levels.

Financials

Exhibit 2: Helios’s segmental forecasts and key metrics

£m

FY21

FY22

FY23e

FY24e

FY25e

Capacity (for deployment in the next year)

232.8

296.6

449.8#

557.8

624.7

Capacity added through acquisitions

34.9

5.7

7.4

9.0

11.2

Capacity added through pre-emptions

6.1

36.0

14.7

27.0

33.5

Tenancy capacity added

58.0

38.9

124.6#

72.0

22.3

Retained capacity

171.2

238.3

328.3#

379.2

406.0

Key parent company assets

FAL (required capital)

43.6

73.8

64.2##

90.5

118.2

WAV (intangible assets)

59.8

60.0

82.4

95.4

111.6

Free working capital

16.2

10.5

52.3

36.6

20.4

Key syndicate assets

Insurance assets

110.3

152.2

294.3

444.0

574.0

Equity (members' balances at Lloyd's)

(3.5)

(5.1)

6.7

12.3

19.9

Group NAV (syndicate plus parent equity)

46.6

55.7

56.0

65.0

75.9

Syndicate level results*

GWP

134.6

250.9

327.6

477.0

605.9

Net earned premiums

92.7

156.6

216.6

335.4

448.9

Claims

(54.1)

(96.8)

(119.1)

(185.8)

(249.8)

Expenses

(32.9)

(54.2)

(75.8)

(115.8)

(151.6)

Underwriting result

5.7

5.6

21.7

33.8

47.5

Investment income on financial assets

0.0

(3.5)

8.9

13.4

17.9

Quota share reinsurance

(2.3)

(2.0)

(8.3)

(9.7)

(14.9)

Underwriting Operating result

3.4

0.1

22.4

37.5

50.5

Parent level results

Reinsurance income**

0.2

0.6

1.2

2.5

3.4

Investment income on FAL

1.2

0.6

1.8

5.1

5.7

Stop loss costs

(1.9)

(1.3)

(4.2)

(7.4)

(10.3)

Operating costs***

(3.6)

(5.2)

(5.9)

(10.6)

(10.8)

Pre-acquisition impact

(0.1)

(0.0)

(0.5)

(1.3)

(1.6)

Combined pre-tax profit

(0.6)

(5.2)

14.9

25.8

37.0

Tax

0.2

1.9

(3.7)

(6.5)

(9.2)

Profit after tax

(0.4)

(3.3)

11.2

19.4

27.7

WAV revaluation after tax

5.4

2.0

13.9

7.1

8.8

Total comprehensive income

4.9

(1.3)

25.0

26.4

36.5

NAV/share (p)

157.0

151.8

187.1

217.4

254.0

WAV/share (p)

88.2

78.7

111.4

129.3

151.2

EPS (p)

(0.8)

(4.9)

14.7

26.2

37.6

DPS (p)

3.0

3.0

6.0

12.8

18.4

Capacity growth

110.9%

27.4%

51.7%

24.0%

12.0%

EPS growth

(147.3%)

546.7%

(403.0%)

77.7%

43.3%

RONAV/share

(0.5%)

(3.1%)

9.4%

13.6%

16.7%

RONAV/share plus WAV revaluations

5.5%

(1.2%)

25.0%

19.2%

22.6%

Group insurance ratios****

Claims ratio

64.5%

63.7%

58.4%

58.5%

59.1%

Expense ratio

43.3%

40.9%

42.1%

42.2%

40.2%

Combined ratio

107.8%

104.6%

100.5%

100.7%

99.3%

Underwriting portfolio insurance ratios*****

Claims ratio

58.4%

61.8%

55.0%

55.4%

55.6%

Expense ratio

35.5%

34.6%

35.0%

34.5%

33.8%

Combined ratio

93.9%

96.4%

90.0%

89.9%

89.4%

RoC (closed YOA)

3.3%

3.6%

6.3%

14.3%

16.0%

Year 3 (accounting year)

6.1%

3.9%

5.8%

9.2%

7.5%

Year 2 (previous year)

1.3%

4.4%

4.6%

9.1%

8.8%

Year 1 (underwriting year)

(4.2%)

(4.6%)

(4.0%)

(4.0%)

(0.3%)

Source: Helios Underwriting accounts, Edison Investment Research. Notes: *Syndicate results before pre-acquisition/other parent items and after QS. **QS and ‘rental capacity’ fees and profit commission. ***Including finance costs. ****Using consolidated premiums (after pre-acquisition impact) and including parent items. *****Using syndicate excluding pre-acquisitions and parent impacts. Syndicate revenue higher than consolidated revenue, but so are claims and expenses (pre acquisition impact). #Assumes £52m of tenancy capacity only active in H124 (reduced contribution to FY24 UW results and capital requirements). ##Allows for FAL deferral and elevated syndicate solvency credits.

The key changes to our FY23 forecasts for Helios are related to the capital restructure and the capacity revaluation (discussed above). As discussed, we expect the FAL impact for FY23 to be limited due to the deferral of required funding as well as a high level of syndicate solvency credits. In Exhibit 2 above we have increased our forecast capacity for FY23, but delayed £52m of this increase to FY24 to allow for some tenancy capacity only becoming active in H124 and not fully contributing to FY24 underwriting results and capital requirements. Our free working capital forecast has been increased meaningfully to £52.3m, allowing for the net proceeds of the new unsecured debt funding. Our NAV forecast has been increased on the back of the disclosed capacity value revaluation, resulting in an FY23 NAV/share forecast of 187.1p versus 170.5p in our previous research. As a result, our forecast for FY23 total comprehensive income has increased from £15.1m to £25.0m, despite an unchanged EPS forecast.

Our FY24 forecasts have been affected in a number of key areas, resulting in a reduction of EPS from 27.7p/share to 26.2p/share:

Retained capacity has been lifted from £288.9m to £379.2m, allowing for the disclosed uplift on the back of the capital restructuring.

The increase in capacity had a limited impact on our Syndicate underwriting operating result (up from £35.9m to £37.5m) due to assumed losses in the first year of account (YOA).

FAL has been increased from £75.9m to £90.5m to allow for our increased capacity forecast (with the FY23 delayed impact realised in FY24).

Working capital is forecast to decline from £52.3m in FY23 to £36.6m, but still ending well ahead of our previous forecast of £11.6m due to the capital restructuring.

WAV has been increased from £78.0m to £95.4m to allow for the FY24 revaluation, rolled forward at a similar growth rate to before.

The increased WAV has resulted in an increase in our NAV forecast from 199.4p/share to 217.4p/share (with a commensurate reduction in forecast RONAV from 15.9% to 13.6% due to a higher FY23 base and lower EPS forecast).

Our group reinsurance income forecast has increased from £1.9m to £2.5m, taking account of the growing fees on the new ‘rental capacity’ initiative.

Group investment income has been lifted sharply from £3.5m to £5.1m, allowing for the higher working capital following the capital restructure (debt issuance).

This positive impact has been more than offset by an increase in forecast operating costs from £6.1m to £10.6m, with a net negative impact equating to -5.5% of the debt facility.

Our stop loss reinsurance cost forecast has increased from £6.0m to £7.4m to allow for the increased capacity and premiums written.

Our combined pre-tax profit forecast is down from £28.3m to £25.8m due to the positive Syndicate underwriting operating result and reinsurance income impact being more than offset by the net negative finance cost and stop loss reinsurance cost. We expect this impact to be a one-off due to the delay in underwriting profit uplift following a capacity increase (we expect strong profits to emerge in the second YOA).

Our EPS forecast is down 5.4% from 27.7p/share to 26.2p/share, with additive benefits of the share buy-back moderating the capital restructuring impact above.

Our FY25 forecasts represent a clearer picture of the impact of the capital restructure, the ‘rental capacity’ initiative and the share buyback. The impact is strongly positive:

Our retained capacity forecast is up from £319.7m to £406.0m, driving our forecast Syndicate underwriting operating result up from £42.1m to £50.5m (despite an increase in combined ratio from 86.8% to 89.4% due to the increased first YOA impact).

FAL has been increased from £87.3m to £118.2m to allow for our increased capacity forecast, resulting in a decline in working capital from £36.6m in FY24 to £20.4m (still ahead of our previous forecast of £11.3m).

WAV has been increased from £87.3m to £111.6m, with a commensurate increase in our NAV forecast from 228p/share to 254p/share (supported by strong earnings and the share buyback). RONAV of 16.7% is unchanged from our previous forecast.

Group reinsurance income and investment income are forecast higher than previously, with these increases more than offset by the increase in forecast operating costs (including financing costs) as well as stop loss reinsurance costs. The strong growth in the latter will likely result in Helios reassessing its stop loss protection in search of a more appropriate and efficient arrangement.

However, in FY25 the increase in the Syndicate underwriting operating result healthily exceeds this net impact, resulting in our combined pre-tax profit forecast being up from £34.9m to £37.0m.

With the help of the additive benefits of the share buyback, we have increased our EPS forecast by 10% from 34.1p/share to 37.6p/share.

Our forecasts are conservative in their allowance for capacity growth through non-traditional avenues, the roll-out of the new ‘rental capacity’ initiative and the potential benefits from the portfolio evaluation and monitoring (PEM) initiative and allowance for growth in new and growing risk classes not typically available through traditional syndicates. It is also conservative insofar as the high forecast growth in stop loss costs, with alternative structures potentially being pursued to deliver cost efficiencies on this line item.

The risks to our forecasts are largely linked to Helios’s ability to maintain a healthy combined ratio beyond our FY25 forecast. The current strong underwriting environment is likely to face pressure over the medium term as the very healthy margins attract new competitors and pricing pressure. This is an industry-wide risk, which we have dealt with via conservative forecasts (as discussed above) and by applying an over-the-cycle RONAV in determining our valuation.

We forecast a RONAV of 13.6% for FY24 and 16.7% for FY25, with RONAV including revaluation (largely driven by the impact of pre-emptions on the capacity value) averaging just over 20%. For the purposes of our valuation, we have employed a return of 14.6%, which we use in our RONAV versus P/NAV valuation.


Valuation: An over-the-cycle return approach

Our base case valuation of 280p/share uses a 14.6% over-the-cycle RONAV, which has been reduced from the 16.3% used in our previous research, Interim results deliver a long-awaited upswing, as a result of the higher-than-expected FY23 NAV base used in determining the valuation. As discussed above, due to the published capacity fund revaluations and uplift in 30 September 2023 NAV, we have lifted our year-end NAV forecast from 170.5p/share to 187p/share, also positively affected by the 2.3% reduction in shares in issue used for the calculation.

We have reduced our cost of equity from 11.1% to 10.3% based on a risk-free rate of 3.8% (down from 4.6%), a risk premium of 6.5% and a beta of 1x.

Exhibit 3: Current valuation

FY22

FY23e

FY24e

FY25e

Over the cycle valuation (p)

280 

 

 

 

EPS (p)

(4.9)

14.7

26.2

37.6

DPS (p)

3.0

6.0

12.8

18.4

NAV/share (p)

151.8

187.1

217.4

254.0

Valuation-implied P/E (x)

N/A

19.0

10.7

7.5

Valuation-implied dividend yield (%)

1.1

2.1

4.6

6.5

NAV multiple (x)

1.82

1.48

1.28

1.10

Source: Helios, Edison Investment Research

Our fair value for Helios is at a 1.48x multiple of its FY23 forecast NAV of 187p/share and at an 89% premium to the current share price. While the valuation is reasonably supported by expected FY23 EPS (P/E of 19x) and modestly so by dividends (2.1% dividend yield), it quickly moves into very attractive territory on a forward basis with the P/E multiple falling to 7.5x in FY25 and the dividend yield rising to 6.5%.

Exhibit 4: Financial summary

2022

2023e

2024e

2025e

Accounts: IFRS, year-end 31 December, £’000s

PROFIT & LOSS

Revenue*

148,345

212,958

332,089

441,885

Net insurance claims and loss adjustment expenses

(149,667)

(193,975)

(298,865)

(397,328)

Gross Profit

(1,322)

18,984

33,223

44,557

EBITDA

(5,169)

14,872

25,816

36,996

Operating profit (before amort. and excepts.)

(5,169)

14,872

25,816

36,996

Intangible Amortisation

0

0

0

0

Exceptionals

0

0

0

0

Other

(3,847)

(4,111)

(7,407)

(7,561)

Operating Profit

(5,169)

14,872

25,816

36,996

Net Interest

0

0

0

0

Profit Before Tax (norm)

(5,169)

14,872

25,816

36,996

Profit Before Tax (FRS 3)

(5,169)

14,872

25,816

36,996

Tax

1,852

(3,718)

(6,454)

(9,249)

Profit After Tax (norm)

(3,317)

11,154

19,362

27,747

Profit After Tax (FRS 3)

(3,317)

11,154

19,362

27,747

Average Number of Shares Outstanding (m)

72.0

75.1

73.9

73.8

EPS - normalised (p)

(4.9)

14.7

26.2

37.6

EPS - normalised fully diluted (p)

(4.9)

14.5

25.7

36.7

EPS - (IFRS) (p)

(4.9)

14.5

25.7

36.7

Dividend per share (p)

3.0

6.0

12.8

18.4

Gross Margin (%)

(0.9%)

8.9%

10.0%

10.1%

EBITDA Margin (%)

(3.5%)

7.0%

7.8%

8.4%

Operating Margin (before GW and except.) (%)

(3.5%)

7.0%

7.8%

8.4%

BALANCE SHEET

Fixed Assets

567,249

767,015

1,115,996

1,445,049

Intangible Assets

61,434

83,852

96,900

113,079

Tangible Assets

279,803

324,684

484,597

639,777

Investments

226,012

358,479

534,498

692,193

Current Assets

25,300

77,910

71,300

59,714

Stocks

0

0

0

0

Debtors

0

0

0

0

Cash

25,300

77,910

71,300

59,714

Other

0

0

0

0

Current Liabilities

22,488

8,237

9,060

9,967

Creditors

7,488

8,237

9,060

9,967

Short term borrowings

15,000

0

0

0

Long Term Liabilities

452,883

696,793

1,016,330

1,305,834

Long term borrowings

0

60,000

60,000

60,000

Other long-term liabilities

452,883

636,793

956,330

1,245,834

Net Assets

117,178

139,896

161,905

188,963

CASH FLOW

Operating Cash Flow

(24,798)

13,088

11,661

16,289

Net Interest

(2,870)

(6,119)

(12,202)

(16,870)

Tax

(166)

(3,718)

(6,454)

(9,249)

Capex

(696)

(392)

0

0

Acquisitions/disposals

3,459

7,038

4,823

7,721

Financing

27,781

45,000

0

0

Dividends

(2,034)

(2,287)

(4,439)

(9,476)

Net Cash Flow

676

52,610

(6,611)

(11,586)

Opening net debt/(cash)

24,624

10,300

17,910

11,300

HP finance leases initiated

0

0

0

0

Change in borrowings

(15,000)

(45,000)

0

0

Closing net debt/(cash)

10,300

17,910

11,300

(286)

Source: Helios Underwriting accounts, Edison Investment Research. Note: *Shown after pre-acquisition impact and parent reinsurance result, investment income, costs and other items (see Exhibit 2 for a segmental view of Syndicate result and Parent result).


General disclaimer and copyright

This report has been commissioned by Helios Underwriting and prepared and issued by Edison, in consideration of a fee payable by Helios Underwriting. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Helios Underwriting and prepared and issued by Edison, in consideration of a fee payable by Helios Underwriting. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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