ILS backed Helios outperforms Lloyd’s every year since 2013

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Helios Underwriting, the Lloyd’s of London focused investment and underwriting vehicle that has a significant amount of backing from insurance-linked securities (ILS) market sources, has reported that its track-record shows it continues to outperform the wider Lloyd’s market.

helios-underwriting-logoHelios raised £53.5 million of new capital through a share issuance earlier this year, the majority of which came from insurance-linked securities (ILS) market sources.

The company counts specialist insurance-linked securities (ILS) and reinsurance investment firms ILS Capital Management and Hudson Structured Capital Management among its backers, with the pair having taken a significant proportion of Helios’ recent capital raises.

As a result, Helios proceeds with its plan of further building-out its portfolio of Lloyd’s insurance and reinsurance business, with the backing of investors who fully-understand the intricacies of generating insurance and reinsurance linked returns.

Based on its first-quarter estimates, Helios currently expects a -1.59% loss against the 2019 underwriting year of account at Lloyd’s and a 0.6% profit for 2020.

The 2019 account position has improved over the last quarter, from a negative -2.15% loss at the end of last year.

While far from stunning, in terms of returns, it’s important to remember that the Lloyd’s market has largely been in the red, in terms of underwriting performance, through these years.

In fact, the Lloyd’s market average for the 2019 year of account is -4.8%, meaning that Helios has outperformed it by 3.21% for that year at this stage.

The Lloyd’s market average for the 2020 year of account is also worse across the market, at 0.35%, meaning Helios’s book for that year is outperforming by 0.25% so far.

For the 2021 year of account, Helios has grown its retained capacity position to £58.6 million, which is almost double the 2019 and 2020 underwriting years.

While its reinsured position on the 2021 year of account is lower, with a greater proportion of business retained this year, compared to a greater proportion having been turned over to reinsurance in 2019 and 2020.

That’s positive for investors backing the vehicle, if Helios can keep up its outperformance.

Nigel Hanbury, Chief Executive of Helios, said, “As the only listed consolidator of private capital at Lloyd’s, Helios has built a diversified and unique portfolio of insurance risk with top performing syndicates. We provide sustainable returns for shareholders through exposure to targeted acquisitions of the capacity of these high quality syndicates, and our strategy is bringing results, with returns on average 4.7% better than the Lloyd’s market itself over recent years, having outperformed the Lloyd’s market every year since 2013 without exception.

“Following our recent successful fundraising, we are pursuing opportunities to further build our core portfolio of capacity, to increase the capacity retained by Helios and continue to achieve outperformance against the Lloyd’s market as whole.”

The improvement in the 2019 year of account reflects greater clarity over the losses from the COVID-19 pandemic, Helios said, while the 2020 year performance so far reflects a high incidence of natural catastrophe claims.

The selective approach, to backing underwriters rather than the entire Lloyd’s market seems to be working for Helios and shows that while the market’s underwriting performance has perhaps been lacking, Lloyd’s includes plenty of underwriters capable of delivering returns for investors.

Helios’ CEO explained to us previously that the company has been targeting ILS fund managers and other sophisticated and experienced insurance sector investors.

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