Helios’ CEO bullish on growth trajectory as Lloyd’s enjoys “its time in the sun”

The “exceptional” market opportunities at Lloyd’s are driving positive growth momentum for Helios Underwriting, with its newly appointed CEO Martin Reith saying the unique investment vehicle will continue to outperform in 2023 and beyond as it looks to support its syndicate portfolio and explore other options.

Having set out a “growth-oriented” strategy, Reith is confident of growing Helios’ overall portfolio, which currently stands at £297mn after expanding by more than 27 percent since 1 January 2022.

Speaking to The Insurer TV in his first interview as CEO of Helios Underwriting, having joined the investment vehicle in 2021 as non-executive director, Reith outlined how the Lloyd’s market has been through “tremendous remediation and resetting of the dial” with the “very exciting” market now seeing a “healthy flow of business” that is “in line and ahead of inflation”.

“Lloyd's is having its time in the sun,” he said, “and quite correctly.”

Discussing how Helios’ model is “perfectly positioned” to make the most of this culmination of tailwinds, Reith said: “Part of the beauty of getting access to syndicates, particularly where we have freehold tenancy access, is the pre-emption values.

“In a market that's growing, our syndicates are leading and shaping that market and are looking to maximise the opportunities,” he said.

One critical aspect of this is Helios’ “curation” of each syndicate’s portfolio. Reith suggested this process was a key element of the “outperformance of the market” that allowed its dramatic portfolio growth.

However, capacity reinsured slipped 5 percent year on year to £58.3mn. Commenting on this, Reith said buying reinsurance is a “very important” part of Helios’ strategy.

“There are three levels of risk management for Helios,” he explained. “Clearly, we back and rate the management teams who run the syndicates that we support, and there's a layer of risk management at that level. We then have Lloyd's oversight and the business planning process and approvals that go through there.

“And then we have Helios' curation and positioning of that portfolio. And we use a number of different mechanisms to ensure that our volatility is controlled and managed to an acceptable standard and level within our capital and risk appetite,” he explained.

Turning the conversation to how Reith’s leadership may differ from that of his predecessor Nigel Hanbury, the CEO asserted there would be no significant changes to Helios’ business model, which is one of acquiring syndicate investments – primarily Lloyd’s Names.

He said this would continue, but with an emphasis on syndicates at “the right terms and at fair value”.

This would subsequently allow the investment vehicle to take advantage of the “healthy flow of opportunities to buy LLVs”, which is “very much part of” Helios’ intended future approach.

The interview also touched on how Helios’ recent £12.5mn raise has mainly been used for “buying some LLVs”, although it had become slightly more “cautious” towards LLVs due to the Russia-Ukraine conflict.

Whilst this cautiousness did not remove Reith’s “love” of “entrepreneurial” syndicates, he underlined that LLVs must produce “robust business plans” to address systemic risks.

Reith said the “market has responded well” to systemic risks such as cyber, but its need to “be alive” to issues within its portfolio underlined this necessity.

Hybrid model “absolutely perfect”

The CEO summarised that its approach was fundamentally “growth-orientated”.

Whilst the insurance market and premiums are “growing”, Helios intends to continue to support its syndicate portfolio. But Reith indicated a preference for a “hybrid model” that allowed it to access business that is not typically found at Lloyd’s.

“In this changing and challenging world, people are buying more and more insurance, he said.

“Our opportunity is to continue to support the syndicates that we have within our portfolio. But beyond that, it's to find new opportunities.

“And, I think, that's quite key. I’m very pleased to say that we’ve become, in the world of private capital, quite a credentialiser for new syndicate start-ups or MGAs switching into syndicates, looking to have seed capital to boost them, to kickstart them into the Lloyd's marketplace,” he added.

Reith suggested this “absolutely perfect” model would allow it to shift the quality of earnings from one part as “underwriting concerns” and another part through an “Ebita-style model” of fees and commissions.

But given Reith’s roots in establishing Lloyd’s businesses – having launched Ascot in 2001 – it begs the question: would Helios consider launching a syndicate?

“For me, I think the key thing for Helios is that we're non-competitive,” he said.

“So, if I was to start a syndicate to compete with my portfolio, I think they may have something to say about it, and may have views about whether we can support them.”

However, Reith did not rule it out completely.

“There's a possibility that in a follow capacity, Helios may take a different view, but we're not there yet. Our focus, at the moment, is building as best as we can in this fabulous market the syndicates that we have access to now,” he concluded.

In the second part of The Insurer TV interview with Helios Underwriting’s Martin Reith, we reflect on his career – the highs and the lows – how he views the current market conditions and why the focus on mental health needs to be more prominent.