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Helios Underwriting - Active Lloyd’s risk management and promotion

Helios Underwriting delivered a strong capacity increase in FY22 as well as improved portfolio diversification, enhanced by selective risk taking in existing Lloyd’s of London (Lloyd’s) syndicates and as a promoter of new initiatives. Its new CEO’s strategy aims to enhance risk selection and management, capital management and growth initiatives (organically and as a promoter and acquirer). The strategy includes increased investment in future growth through reinsurance, financing and capacity building strategies. The FY22 EPS loss was slightly higher than expected due to investment losses and a delay in underwriting turnaround. After allowing for Helios’s new strategic investment and adding conservatism for current global uncertainty, we have cut our FY23 and FY24 EPS forecasts by 31% to 15.1p and 15% to 26.6p respectively. This still represents meaningful near-term growth, while our confidence around long-term growth has been enhanced by impressive capacity accumulation prospects and strategic investment. As a result, we maintain our valuation of 252p/share, at a 47% premium to our FY23 forecast net asset value (NAV).