Helios Underwriting, the Lloyd’s of London focused investment and underwriting vehicle that counts some insurance-linked securities (ILS) market sources among its capital backers, is aiming to expand its business through the rest of this year, with more third-party capital targeted to support the build out of its portfolio.
The Lloyd’s investment vehicle is expecting to increase its capacity volume, with the help of third-party investors, to take advantage of what is seen as an attractive opportunity in the hard reinsurance market environment.
The more attractive environment has also led Helios to retain more risk, seeking to extract as much profit out of the business at this stage of the market cycle.
Helios’ Chairman Michael Cunningham recently stated, “We are now at the stage in the cycle where the market has become more profitable and so the underwriting risk retained by Helios has been increased and the amount ceded to reinsurers has reduced to 26% of the overall portfolio.
“Helios actively manages capital. We have a number of dials we can turn to increase or decrease our exposure. Fee income remains a core and attractive earnings stream that complements our underwriting returns. As the market cycle evolves, we evaluate opportunities to retain underwriting exposure or cede risk for fees.”
With capital deployed across a portfolio of Lloyd’s syndicates, Helios aims to provide uncorrelated returns to investors, while being an efficient third-party capital access point to Lloyd’s.
On growth prospects for Helios, Chairman Cunningham said, “We envisage further growth over 2023 and into 2024 and will position the portfolio accordingly. We expect the majority of the syndicates we support to pre-empt in order to benefit from the attractive rating environment and market discipline. In addition, we are in discussions with a number of new opportunities for Helios that will give us further diversification.
“It is likely we shall seek support from third party capital to allow us to maximise these opportunities for appropriate fees and commissions. We believe this will help us to continue to deliver superior returns and generate repeatable income while managing volatility.”
Third-party capital is expected to fund growth of Helios’ capacity fund for the 2024 year at Lloyd’s.
Currently, Helios has around $300 million of capacity deployed into Lloyd’s, with participations across most of the market’s managing agents.
Expanding this with the help of third-party capital providers can help it gain more scale, maximising the current market opportunity to the benefit of its shareholders and other backers as well.