Helios in 2024 sidecar talks to double capacity size to £600mn

Listed Lloyd’s investment vehicle Helios Underwriting is in talks with investors about launching a sidecar that could double its 2024 capacity, The Insurer can reveal.

Helios’ new CEO Martin Reith is at the Monte Carlo Rendez-Vous promoting the initiative less than a week after Lloyd’s unveiled its best H1 aggregate combined ratio – at 85.2 percent – since 2007.

Helios currently underwrites a portfolio of £310mn across a basket of different syndicates and has traditionally been close to or better than the Lloyd’s market average. Helios is also increasingly used by some managing agents to credentialise new third-party capital raises as a perceived knowledgeable, long-term capital investor, The Insurer understands.

According to sources familiar with the proposal, Helios anticipates its portfolio will grow to around £360mn next year by taking advantage of planned pre-emptions.

The proposed sidecar – project name Tarpon – would sit alongside its portfolio, providing the fund manager with the ability to negotiate individually with syndicates looking to expand further.

A sidecar would also have the advantage of providing management fee income to support the annual underwriting returns Helios receives from its portfolio.

Helios’ diverse portfolio – combined with a reinsurance leverage mechanism – also means it currently benefits from a capital-capacity ratio of approximately 50 percent, suggesting it would need to raise a maximum of £120mn to take its 2024 capacity up to £600mn.

It is unclear whether the proposed sidecar would operate through Helios’ existing Guernsey-based cell companies or the increasingly popular London Bridge Risk PCC platform, first launched by Lloyd’s in 2021.

After the success of the first $200mn pilot – backed by Ontario Teachers’ and Nephila – London Bridge 2 is designed to attract billions of dollars of fresh capital into the Lloyd’s market. One structural difficulty, however, is that it operates with a single corporate member while Helios currently operates with multiple members.