REG - Helios Underwriting - Notice of Results and Change in Accounting

Helios UnderwritingAnnouncement

20/05/2025 07:00

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RNS Number : 3032J  Helios Underwriting Plc  20 May 2025

 

20th May 2025
 

Helios Underwriting plc

('Helios' or 'the Company')

 

Notice of Results and

Change in Accounting Framework

 

 

 

Helios, the only publicly traded company offering instant access to a diverse
portfolio of syndicates at Lloyd's of London, announces that it will be
releasing its preliminary results for the year ended 31(st) December 2024 on
29(th) May 2025.

The board, in collaboration with its professional advisor, has reviewed its
accounting framework and concluded that it is more appropriate for Helios to
report as an investment entity under IFRS rather than as an insurance group
under UK GAAP. This approach more accurately reflects the Company's business
activities, complies with the AIM Rule reporting requirements, and will also
support investment in Helios from international investors.

For the financial year ended 31st December 2023 the Company reported under UK
GAAP, including FRS 102 and FRS 103. For the financial year ended 31st
December 2024 Helios will report as an investment entity under IFRS 10, with
retrospective application.  This determination by the Directors of reporting
its financial statements as an investment entity required significant
judgement to be exercised.

IFRS 10 describes an investment entity as an entity that:

·      Obtains funds from one or more investors for the purpose of
providing those investors with investment management services.

·      Commits to its investors that its business purpose is to invest
funds solely for returns from capital appreciation, investment income or both;
and

·      Measures and evaluates the performance of substantially all its
investments on a fair value basis.

 

The Board believes Helios should be classified as an investment entity for
accounting under IFRS because it obtains funds from one or more investors for
the purpose of providing them with investment management services, such as
syndicate research, advice on syndicate selections and portfolio curations.

The funds are invested solely for capital appreciation and investment income,
and the Company measures and evaluates the performance of substantially all
its investments at fair value.

Consequently, the financial statements for the year to 31(st) December 2024
together with the comparative year 2023 have been prepared presenting Helios
as an investment entity rather than an insurance group. The business model of
the Company itself has not changed.

The financial information presented in the Financial Analysis section of the
Annual Report will be prepared in a similar way to previous years and further
disclosure will be made in the Summary Financial Information section to allow
shareholders to understand the transition to the revised presentation of the
Company's IFRS results.

The approach taken using the new accounting treatment of investment entity
accounting will be to value the underwriting subsidiaries of Helios whose
assets / liabilities mainly comprise capacity value, funds at Lloyd's,
recognised but undistributed underwriting profits less expenses of those
companies.  The value of the subsidiaries will be disclosed as an aggregate
value as "Equity Investments at Fair Value"

The revised Net Assets (unaudited) as at 31 December 2023 reflecting the
proposed change of accounting together with Fair Value adjustments are
expected to be as follows:

 

                                                             £m     Pence per share
 Net Assets reported as at 31/12/ 2023 under UK GAAP         140.1  1.89
 Fair Value adjustments
 Capacity Value                                       (8.2)
 Pipeline Underwriting profits                        7.6
 Deferred tax on capacity value                       20.1
 Other movements                                      3.1
                                                             22.6   0.30
 Revised Net Assets - Fair Value 31/12/2023                  162.7  2.19

 

The Fair Value adjustments comprise the following:

Capacity Value - The Directors' approach to the valuation of capacity
continues to rely on the "market approach" whereby the average prices from the
previous capacity auctions are the primary basis for establishing the
appropriate value. In addition, a provision has been made to reflect the
potential future reductions in overall capacity values considering the
capacity available on new freehold syndicates which could reduce demand for
the longer established syndicates.

Pipeline Underwriting profits - the Board considers that the potential
syndicate profits that the syndicate managers are forecasting in addition to
that recognised under GAAP should be reflected in the fair value estimates as
a market participant would.  The incremental profits the syndicate managers
estimate using the midpoint forecasts / YOA forecasts included in the
quarterly returns submitted to Lloyd's together with Helios's Management View
of the likely outturn of each year of account will be the basis for reviewing
the additional profits to be reflected in the fair value estimates.

Deferred tax on capacity value - under Fair Value accounting there is no
requirement to provide for deferred tax on the capacity owned by Helios'
trading LLV's.  The Directors have taken a view Helios is eligible for
Substantial Shareholding Exemption on its investments, hence no deferred tax
provision on the uplift fair value of investments is required.

Other movements include adjustments to revaluations on subsidiaries not held
at fair value at prior year ends.

The cumulative effect of these adjustments will result in a re-stated net
assets per share of £2.19p as at 31 December 2023. These adjustments are
unaudited as of the date of this announcement.

It is expected that this uplift in net asset value per share to £2.19 p per
share as at 31 December 2023 will be largely reflected in the net asset value
as at 31 December 2024.

The Directors have been advised that this change will not change the trading
business of underwriting at Lloyd's nor will it change the legal structure of
the business.

The Directors have also been advised that the ordinary shares of Helios will
remain eligible for Business Relief for Inheritance Tax.

 

For further information, please contact:

Helios Underwriting plc

John Chambers - Interim Executive Chairman
 
44 (0)203 965 6441

Arthur Manners - Chief Financial
Officer

 

Deutsche Numis (Nomad and Broker)
 

Giles Rolls / Charles
Farquhar
                                +44 (0)20 7260
1000

 

FTI Consulting

Ed Berry / Nathan Hambrook-Skinner              +44 (0)7703 330
199 / +44 (0)7977 817 092

 

 About Helios

Helios provides a limited liability direct investment into the Lloyd's
insurance market and is quoted on the London Stock Exchange's AIM market
(ticker: HUW). Helios trades within the Lloyd's insurance market writing
approximately £491m of capacity for the 2025 account. The portfolio provides
a good spread of business being concentrated in property & casualty
insurance and reinsurance. For further information please visit
www.huwplc.com.

 

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