22 December 2016
Helios Underwriting plc
("Helios" or the "Company")
Proposed acquisition of Pooks Limited and General Meeting
Proposed acquisition of Pooks Limited
Helios is pleased to announce that, in line with its strategy of increasing underwriting capacity through acquisition, it has conditionally agreed to acquire Pooks Limited ("Pooks"), a limited liability member of Lloyd's ("LLV") which is ultimately beneficially owned by Nigel Hanbury, for a consideration of £870,659 in cash (the "Proposed Transaction").
As a result of Nigel Hanbury's indirect ownership of Upperton Holdings Limited (the shareholder of Pooks), the Proposed Transaction constitutes a substantial property transaction for the purpose of the Companies Act 2006 and, accordingly, is subject to shareholder approval. The Proposed Transaction also constitutes a related party transaction for the purpose of the AIM Rules.
Completion of the Proposed Transaction is conditional upon:
(a) the passing, without amendment, of a resolution to approve the Proposed Transaction; and
(b) Lloyd's approval of the change of control of Pooks as a result of the Proposed Transaction.
Subject to the satisfaction of the conditions, it is expected that completion of the Proposed Transaction will occur on or around 12 January 2017. If the conditions are not satisfied or waived by no later than 30 March 2017, the Acquisition Agreement will automatically terminate and cease to have any further force and effect, save in respect of any antecedent breaches of the parties under the sale and purchase agreement.
Information in respect of Pooks
The 2017 underwriting capacity of Pooks is £784,666 (this compares with Helios's 2017 capacity of £32.6 million for 2017 prior to this acquisition). Pooks participates in a spread of Lloyd's syndicates that broadly matches the existing portfolio of Helios, such that no syndicate participations are expected to be relinquished or sold in the future. Pooks has a significant participation of £118,424 on the Nuclear Syndicate - Syndicate 1176 - managed by Chaucer Syndicates Limited, a high risk syndicate that has produced excellent returns in the past. This Proposed Transaction represents an opportunity for Helios to continue to build its participations on the better syndicates at Lloyd's. The capacity acquired together with the capacity retained by Helios is as follows:
Pooks Ltd |
|
Year of Account |
|
|
|
2014 |
2015 |
2016 |
2017 |
|
£m |
£m |
£m |
£m |
Retained |
0.42 |
0.37 |
0.38 |
0.23 |
Reinsured |
0.42 |
0.37 |
0.38 |
0.55 |
Total Capacity |
0.83 |
0.75 |
0.76 |
0.78 |
Pooks has entered into quota share reinsurance arrangements in respect of 50% of its portfolio for 2014 to 2016 underwriting years. These arrangements will remain in place and Helios will reinsure 70% of 2017 underwriting year in line with its stated strategy of reducing "on-risk" exposures.
Pooks is a limited liability member of Lloyd's. In the year ended 31 December 2015, Pooks made a profit before tax of £28,156 on gross premiums written of £606,141. Its value, as independently assessed, at completion is expected to be approximately £890,600, including underwriting capacity with an auction value of £516,071.
Forecasts in respect of Pooks' 2014 and 2015 open years of account are set out below:
Year of Account |
Pooks syndicate capacity (£'000) |
Forecast of syndicate profit (30 September 2016) |
Mid point (£'000) |
Mid point (%) |
Range (%) |
2014 |
835 |
150 |
17.98% |
21.91% - 14.05% |
2015 |
750 |
92 |
12.23% |
17.17% - 7.28% |
Source: Syndicate data and Helios analysis (before quota share and early release)
Related party transaction
As Nigel Hanbury is a director of, and substantial shareholder in, the Company, the Proposed Transaction constitutes a related party transaction for the purpose of the AIM Rules.
The Independent Directors (being the directors of Helios, other than Nigel Hanbury) consider, having consulted with the Company's nominated adviser, Stockdale Securities Limited, that the terms of the Proposed Transaction are fair and reasonable in so far as the Company's shareholders are concerned.
Posting of circular and General Meeting
The Company is posting a circular to shareholders in connection with the Proposed Transaction, including a notice of the general meeting to be held at 4.00 p.m. on Monday, 9 January 2017 at the offices of Holman Fenwick Willan LLP, Friary Court, 65 Crutched Friars, London EC3N 2AE. A copy of the circular will be made available on the Company's website (www.huwplc.com) shortly.
Commenting upon the acquisition, Sir Michael Oliver- the Chairman, said:
"We are delighted to have made a further acquisition which further increases our underwriting capacity. This is in line with our stated strategy of acquiring corporate members as suitable opportunities arise. The capacity on the Nuclear Syndicate - a high risk syndicate - should, in particular, help provide incremental returns to Helios."
For further information please contact:
Helios Nigel Hanbury - Chief Executive Arthur Manners |
07787 530404 / [email protected] 07754 965 917 |
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Stockdale Robert Finlay |
020 7601 6100 |
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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 £33 million of capacity for the 2017 account. The portfolio provides a good spread of classes of business being concentrated in property insurance and reinsurance. For further information please visit www.huwplc.com.
