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Somers Syndicate 3705
Annual Report and Accounts
for the year ended 31 December 2025
Registered Office
Office 891
Lloyd’s
One Lime Street
London
EC3M 7HA
Registered Number: 13806081
Lime Syndicate Management Limited
Directors and Administration
Somers Syndicate 3705
Report and financial statements for the year ended 31 December 2025
1
Directors
S J Britt
H N A Colthurst
A J F Craggs
resigned 27 November 2025
E Cunningham
appointed 1 May 2025
N G Hardman
appointed 25 November 2025
J W Heap
A Lauder
appointed 24 June 2025
D E Reeves
resigned 21 July 2025
C D Short
S S Sihota
Company Secretary
B J Murphy
resigned 4 December 2025
T Adewemimo
appointed 10 December 2025
Active Underwriter
D Harrell
appointed 1 January 2025
resigned 16 April 2025
D Booth
appointed 16 April 2025
Registered Office
To 28 February 2025
From 1 March 2025
40 Lime Street
Office 891, One Lime Street
London
London
EC3M 7AW
EC3M 7HA
Independent Auditors
PricewaterhouseCoopers LLP
7 More London Riverside
London
SE1 2RT
Registered Number
13806081
Financial register firm reference number
FRN1016212
Lloyd’s Managing Agent Code
2108V
Managing Agent’s report
For the year ended 31 December 2025
Somers Syndicate 3705
Report and financial statements for the year ended 31 December 2025
2
The Directors of Lime Syndicate Management Limited ("LSML" or "Managing Agent") a Company registered in England and
Wales, present their annual report and financial statements of managed Syndicate 3705 (the "Syndicate") for the year
ended 31 December 2025.
Principal Activities
The principal activity of the syndicate is the transaction of general insurance business, on a delegated basis, in the Lloyd’s
market. The Syndicate currently underwrites property, energy and casualty lines.
Ownership
As of 31 December 2025, the Syndicate was managed by LSML, the immediate parent of LSML is Lime Syndicate
Management Holdings Limited, incorporated in the United Kingdom and registered in England and Wales. Their ultimate
parent company is Greysbridge Holdings Ltd., incorporated in Bermuda. The registered address of Lime Syndicate
Management Holdings Limited is Office 891, Lloyd’s, One Lime Street, London, EC3M 7HA, and the registered address of
Greysbridge Holdings Ltd. is Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.
The address of the Managing Agent's registered office is Office 891, Lloyd’s, One Lime Street, London, EC3M 7HA.
The Syndicate is a wholly aligned Syndicate, with underwriting capacity and capital being provided via sole participant Arch
Corporate Member No. 17 Limited ("ACML17").
Review of the Business
2025 is the first year of trading for the Syndicate; therefore, no prior year comparative disclosures are shown in this report.
Our insurance underwriting strategy is to operate in lines of business where our underwriting expertise can make a
meaningful difference to operating results. We seek to operate profitably across all the product lines. We underwrite
predominantly in the London wholesale insurance markets, on a selective delegated underwriting authority basis. To achieve
our objectives, our insurance operating principles are to:
x
capitalise on profitable underwriting opportunities;
x
centralise responsibility for underwriting;
x
maintain a disciplined underwriting philosophy using our experience and strategic analytics to drive decisions;
x
provide appropriate claims management services; and
x
promote and utilise an efficient distribution system;
Our underwriting philosophy is to generate an underwriting profit through prudent risk selection and adequate pricing across
the underwriting cycle. To achieve this, we adhere to uniform underwriting standards across each product line focusing on
1) risk selection, 2) desired attachment point, 3) limits and retention management, 4) due diligence, including financial
condition, claims history, management and exposure, 5) underwriting authority and approval limits, and 6) collaborative
decision-making.
The focus in 2025 has been the implementation of the operational framework of Syndicate 3705 and establishing a robust
platform to support sustainable growth and portfolio development in future years. The Board of Directors of the Managing
Agency will continue to support disciplined growth and development of business.
The Syndicate commenced underwriting in January 2025. The Syndicate was presented with a steady stream of business
opportunities which aligned to the Syndicate’s risk appetite. The Active Underwriter is confident the Syndicate will achieve
2025 planned Gross Written Premium and SBF Underwriting Result as written business matures over the next 12-24 months.
The Syndicate reported an underwriting loss of £5,186k for the year ended 31 December 2025, with a combined ratio of
124.3%.
Managing Agent’s report
For the year ended 31 December 2025
Somers Syndicate 3705
Report and financial statements for the year ended 31 December 2025
3
Key financial information
For the year ended 31 December
2025
£’000
Gross premium written
71,063
Net premium written
56,847
Net earned premium
21,387
Claims incurred, net of reinsurance
(13,170)
Acquisition costs
(5,962)
Administrative expenses
(7,441)
Underwriting result
(5,186)
Investment return
111
Foreign exchange
(16)
Loss for the year
(5,091)
Key financial information
For the
year ended
2025
%
Claims incurred, net of reinsurance ratio
61.6
Acquisition costs ratio
27.9
Administrative expense ratio
34.8
Combined ratio
124.3
Premiums written
In 2025 the Syndicate wrote a mixture of casualty, property and specialty business. All written on a binder or lineslip basis.
Claims Incurred
Due to the relative immaturity of loss emergence to date, the incurred losses are in line with the Syndicate Business Forecast
(SBF) and pricing loss ratios.
Acquisition costs
Acquisition costs represent commission paid to brokers and coverholders and earned in line with the premium attached to
them.
Administrative expenses
Administrative expenses consist of underwriting staff salaries, Lloyd’s charges, and other standard personal expenses. The
majority of expenses are charged based on a proportion of underwriting capacity and recognised in year one of the
underwriting year.
Risk management strategy and risk appetite
LSML has incorporated and embedded risk management frameworks for the identification, assessment, measurement and
reporting of all material risks, across all key categories and encompassing both financial and non-financial risks. Such
frameworks have been established both in relation to the Syndicate under management and the Managing Agent itself. In
the former case, the framework includes the following key elements:
x
Risk management strategy document and risk function strategy and plan
x
Risk appetite groupings and statements
x
Risk reporting, which is facilitated by the usage of key risk indicators to reflect set tolerances
x
Risk assessment via risk and control registers with clearly defined owners of said risks and controls
x
Monitoring and reporting of emerging risks and risk events.
The Syndicate sets risk appetite annually, in conjunction with LSML, and is approved by LSML’s Board under the framework
of the Syndicate Business Forecast (SBF) and Solvency Capital Requirement (SCR) process. Oversight of various risk
management matters is delegated to LSML’s Risk and Capital Committee, which meets at least quarterly to review the risk
management framework. This includes monitoring the risk profile as reflected in the risk register and measuring performance
against risk tolerances as expressed through key risk indicators.
Managing Agent’s report
For the year ended 31 December 2025
Somers Syndicate 3705
Report and financial statements for the year ended 31 December 2025
4
The Syndicate commenced operations on 1 January 2025 and operates a delegated authority business model. Its key focus
as expected in its first year of operation is to achieve plan. Given the infancy of the Syndicate, the risk profile is driven by
several key risks outlined below. The key exposures are property driven with immaterial reserve, credit or investment risk
which is expected to increase as the business matures. The Syndicate is exposed to the following principal categories of
risk:
x
Insurance risk
x
Credit risk
x
Financial risk
x
Operational risk
x
Strategic risk
Insurance Risk
Insurance risk includes the risks that a policy will be written for insufficient premium to cover exposure (including
catastrophic accumulation) or provide inappropriate cover (underwriting risk), that the frequency or severity of insured
events will be higher than expected (claims risk), or that estimates of claims subsequently prove to be insufficient (reserving
risk). LSML’s Board manages insurance risk through challenge and oversight of the approved business plan in the format of
the SBF. This establishes thresholds for volumes, pricing, line sizes and retention by class of business. The Board and
relevant committees monitor performance against the business plan through risk reporting and track the aggregation of risk
through exposure management reporting over the year. Included within this, the Board considers any impacts from
underwriting related to the agreed Environmental, Societal and Governance (ESG) approach. Reserve adequacy is monitored
through quarterly review by LSML’s Actuarial team under the governance of the Reserving Committee.
Credit risk
Credit risk is largely derived from reinsurance counterparty risk. This is defined as the inability (owing to default or financial
constraint) or unwillingness of any reinsurers to pay recoveries due from outwards reinsurance as they become due. Such
reinsurers would have been approved by the Syndicate and the Managing Agent. This risk can be mitigated by
collateralisation or other similar arrangements, as may be put in place and approved. LSML’s Reinsurance and Security
Committee sets approval and usage criteria, monitors reinsurer ratings and oversees the application of the reinsurer
approval policy. The Syndicate may also be exposed to premium and broker credit risk, where risk transfer arrangements
are in place. This is mitigated by ensuring that there is no over-reliance on any one broker and that proper financial and
operational due diligence is performed, prior to transacting with a counterparty. In addition, regular reviews of
counterparties payment performance and aged debt to reduce any bad debt exposure are performed.
Financial Risk
Financial risk covers Market risk and Liquidity risk where market risk exposure impacting the Syndicate relates to fluctuations
in interest rates or exchange rates, and inflation. The Syndicate is exposed to foreign exchange movements because of
mismatches between the currencies in which assets and liabilities are denominated and the currencies in which they were
received or paid. Any surplus or deficit in a core currency would be subject to review by LSML’s Board and Investment
Committee.
Liquidity risk expresses the risk that the Syndicate will not be able to meet its liabilities as they fall due, owing to a shortfall
in cash, or that it can only meet such obligations at excessive cost. To mitigate this risk, LSML’s Board reviews cash flow
projections regularly and ensures that, where needed, the Syndicate has adequate liquidity facilities in place or has a cash
call option from its capital providers.
Operational Risk
This is the risk that errors caused by people, processes and systems lead to unforeseen losses within the Syndicate. Classes
of risk included in this category are human resources, systems (including technology) and data, delegated authorities,
regulatory and legal risk, conduct and reputational risk. The Managing Agent seeks to manage this risk through its
operational risk and control framework, including procedure manuals, training and peer review. In addition, business
continuity and disaster recovery plans are in place and are regularly updated and tested.
Managing Agent’s report
For the year ended 31 December 2025
Somers Syndicate 3705
Report and financial statements for the year ended 31 December 2025
5
Regulatory risk is the risk of loss, in either financial or reputational terms, owing to a breach of regulatory requirements or
failure to respond to regulatory change and development. LSML’s Compliance function provides oversight and guidance to
the Syndicate regarding their commitments to regulatory and legal risks, incorporating conduct risk and having regard to
sanctions.
Strategic risk
Risks in this category emanate from business planning and objectives, capital risk and group risk. It also incorporates ESG
in its broader form.
Group risk may be defined as the risk of contagion, disagreement or potential obtrusion that arises
from being associated with key stakeholders and third parties within a broader group of companies. Business planning risk
relates to changes in the underlying strategy as espoused in the SBF or other such documentation, including strategic
conflicts of interest.
Approved and signed by:
N G Hardman
Lime Syndicate Management Limited
Director
19 February 2026
Statement of managing agent’s responsibilities
For the year ended 31 December 2025
Somers Syndicate 3705
Report and financial statements for the year ended 31 December 2025
6
Statement of managing agent’s responsibilities in respect of the financial statements
The directors of the Managing Agent are responsible for preparing the Syndicate’s Annual Report and Accounts in accordance
with applicable law and regulation, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic
of Ireland”, and Financial Reporting Standard 103 “Insurance Contracts” (“FRS 103”).
In accordance with The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008,
managing agents are required to prepare Syndicate annual accounts for each financial year which give a true and fair view
of the state of affairs of the Syndicate and of its profit or loss for that year.
In preparing the Syndicate annual accounts, the Managing Agent is required to:
x
select suitable accounting policies and then apply them consistently;
x
state whether applicable United Kingdom Accounting Standards, comprising FRS 102 and FRS 103 have been
followed, subject to any material departures disclosed and explained in the financial statements;
x
make judgements and accounting estimates that are reasonable and prudent; and
x
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company
will continue in business.
The Managing Agent is responsible for:
x
safeguarding the assets of the Syndicate and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities;
x
keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the
Syndicate and enable it to ensure that the Syndicate annual accounts comply with the 2008 Regulations;
x
the preparation and review of the iXBRL tagging that has been applied to the Syndicate Accounts in accordance
with the instructions issued by Lloyd’s, including designing, implementing and maintaining systems, processes and
internal controls to result in tagging that is free from material non-compliance with the instructions issued by
Lloyd’s, whether due to fraud or error; and
x
the maintenance and integrity of the Syndicate’s annual accounts published on the Lloyd’s website.
Statement of disclosure of Information to Auditors
Each of the persons who are Directors of the Managing Agent at the date of approval of this report confirms that:
x
so far as the director is aware, there is no information relevant to the audit of the Syndicate’s annual accounts for
the year ended 31 December 2025 of which the auditors are unaware; and
x
each director has taken all the steps that they ought to have taken in their duty as a director of the Managing Agent
in order to make themselves aware of any relevant audit information and to establish that the Syndicate’s auditors
are aware of that information.
Approved and signed by:
S S Sihota
Lime Syndicate Management Limited
Director
19 February 2026
Independent auditors’ report to the member of Syndicate
3705
7
Report on the audit of the syndicate annual accounts
Opinion
In our opinion, Syndicate 3705’s syndicate annual accounts:
x
give a true and fair view of the state of the syndicate’s affairs as at 31 December 2025 and of its loss and cash
flows for the year then ended;
x
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and
Republic of Ireland”, and applicable law); and
x
have been prepared in accordance with the requirements of The Insurance Accounts Directive (Lloyd’s Syndicate
and Aggregate Accounts) Regulations 2008 and the requirements within the Lloyd’s Syndicate Accounts Instructions
version 3.1 as modified by the Frequently Asked Questions issued by Lloyd’s version 1.1 (“the Lloyd’s Syndicate
Instructions”).
We have audited the syndicate annual accounts included within the Annual Report and Accounts
(the “Annual Report”),
which comprise: the balance sheet as at 31 December 2025; the statement of profit or loss and other comprehensive
income, the statement of cash flows, and
the statement of changes in members’ balances for the year then ended; and the
notes to the financial statements, which include a description of the significant accounting policies..
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”), The Insurance Accounts
Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, the Lloyd’s Syndicate Instructions and
applicable law. Our responsibilities under ISAs (UK) are further described in the
Auditors’ responsibilities for the audit of the
syndicate annual accounts
section of our report. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We remained independent of the syndicate in accordance with the ethical requirements that are relevant to our audit of the
syndicate annual accounts in the UK, which includes the FRC’s Ethical Standard, as applicable to other entities of public
interest, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were
not provided.
Other than those disclosed in note 6, we have provided no non-audit services to the syndicate in the period under audit.
Conclusions relating to going concern
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the syndicate’s ability to continue as a going concern for a
period of at least twelve months from when the syndicate annual accounts are authorised for issue.
In auditing the syndicate annual accounts, we have concluded that the Managing Agent’s use of the going concern basis of
accounting in the preparation of the syndicate annual accounts is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the syndicate's
ability to continue as a going concern.
Our responsibilities and the responsibilities of the Managing Agent with respect to going concern are described in the relevant
sections of this report.
8
Reporting on other information
The other information comprises all of the information in the Annual Report other than the syndicate annual accounts and
our auditors’ report thereon. The Managing Agent is responsible for the other information. Our opinion on the syndicate
annual accounts does not cover the other information and, accordingly, we do not express an audit opinion or, except to
the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the syndicate annual accounts, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the syndicate annual accounts or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material
inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material
misstatement of the syndicate annual accounts or a material misstatement of the other information. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information, we are required to report
that fact. We have nothing to report based on these responsibilities.
With respect to the
Managing Agent’s Report
(the “Managing Agent’s Report”), we also considered whether the disclosures
required by The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 have been
included.
Based on our work undertaken in the course of the audit, The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate
Accounts) Regulations 2008 requires us also to report certain opinions and matters as described below.
Managing Agent’s Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Managing Agent’s
Report for the year ended 31 December 2025 is consistent with the syndicate annual accounts and has been prepared in
accordance with applicable legal requirements.
In light of the knowledge and understanding of the syndicate and its environment obtained in the course of the audit, we
did not identify any material misstatements in the Managing Agent’s Report.
Responsibilities for the syndicate annual accounts and the audit
Responsibilities of the Managing Agent for the syndicate annual accounts
As explained more fully in the Statement of managing agent’s responsibilities, the Managing Agent is responsible for the
preparation of the syndicate annual accounts in accordance with the applicable framework and for being satisfied that they
give a true and fair view. The Managing Agent is also responsible for such internal control as they determine is necessary
to enable the preparation of syndicate annual accounts that are free from material misstatement, whether due to fraud or
error.
In preparing the syndicate annual accounts, the Managing Agent is responsible for assessing the syndicate’s ability to
continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis
of accounting unless it is intended for the syndicate to cease operations, or it has no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the syndicate annual accounts
Our objectives are to obtain reasonable assurance about whether the syndicate annual accounts as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these syndicate annual accounts.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent
to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
9
Based on our understanding of the syndicate and industry, we identified that the principal risks of non-compliance with laws
and regulations related to breaches of regulatory principles, such as those governed by the Prudential Regulation Authority
and the Financial Conduct Authority, and those regulations set by the Council of Lloyd’s, and we considered the extent to
which non-compliance might have a material effect on the syndicate annual accounts. We also considered those laws and
regulations that have a direct impact on the syndicate annual accounts such as The Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 and the Lloyd’s Syndicate Instructions.
We evaluated management’s incentives and opportunities for fraudulent manipulation of the syndicate annual accounts
(including the risk of override of controls), and determined that the principal risks were related to posting of inappropriate
journals and management bias in accounting estimates. Audit procedures performed by the engagement team included:
x
Conducting fraud inquiries with management, the compliance team, underwriting and reserving teams;
Testing
journal entries identified as exhibiting unusual characteristics (i.e. unusual account combinations (including those
made to revenue) with consideration of whether the identified journals are indicative of fraud. Assessing significant
estimates and judgements relevant to the syndicate accounts for bias, including, the estimated premium income
and the valuation of outstanding claims reserves (gross and net IBNR). Refer to page 6 and 9 for further details of
work performed to date.
x
Maintaining a high level of professional scepticism during our audit; including challenging management on key
judgement areas and following up when initial audit evidence provided is not adequate. We are also including
elements of unpredictability in our testing.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of
non-compliance with laws and regulations that are not closely related to events and transactions reflected in the syndicate
annual accounts. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting
one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
A further description of our responsibilities for the audit of the syndicate annual accounts is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the syndicate’s member in accordance with part 2 of
The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and for no other purpose.
We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Other required reporting
Under The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 we are required to
report to you if, in our opinion:
x
we have not obtained all the information and explanations we require for our audit; or
x
adequate accounting records have not been kept by the Managing Agent in respect of the syndicate; or
x
certain disclosures of Managing Agent remuneration specified by law are not made; or
x
the syndicate annual accounts are not in agreement with the accounting records.
We have no exceptions to report arising from this responsibility.
Other matter
We draw attention to the fact that this report may be included within a document to which iXBRL tagging has been applied.
This auditors’ report provides no assurance over whether the iXBRL tagging has been applied in accordance with section 2
of the Lloyd’s Syndicate Instructions 3.1.
Lucy Stock
(Senior statutory auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
20
February 2026
Statement of profit or loss and other comprehensive
income
Technical account – General business
for the year ended 31 December 2025
Somers Syndicate 3705
Annual report and financial statements 2025
10
10
Note
2025
£’000
Gross premiums written
5
Outwards reinsurance premiums
(14,216 )
Premiums written, net of reinsurance
Changes in unearned premium
Change in the gross provision for unearned premiums
(45,377 )
Change in the provision for unearned premiums reinsurers’ share
Net change in provisions for unearned premiums
(35,460 )
Earned premiums, net of reinsurance
Allocated investment return transferred from the non-technical account
Change in the provision for claims
Gross amount
15
(15,682 )
Reinsurers’ share
15
Net change in provisions for claims
(13,170 )
Claims incurred, net of reinsurance
(13,170 )
Net operating expenses
6
(13,403 )
Balance on the technical account – general business
(5,075 )
2025 is the first year of trading for the Syndicate; therefore, no prior year comparatives are shown in this report.
The accompanying notes from pages 16 to 30 form an integral part of these financial statements.
Statement of profit or loss and other comprehensive
income
Non-technical account
for the year ended 31 December 2025
Somers Syndicate 3705
Annual report and financial statements 2025
11
11
Note
2025
£’000
Balance on the technical account – general business
(5,075 )
Investment income
9
Total investment return
Allocated investment return transferred to the technical account
(111 )
Loss on foreign exchange
(16 )
Loss for the financial year
(5,091 )
Total comprehensive loss for the financial year
(5,091 )
2025 is the first year of trading for the Syndicate; therefore, no prior year comparatives are shown in this report.
There are no gains and losses other than those included in the profit and loss account for the financial year.
The accompanying notes from pages 16 to 30 form an integral part of these financial statements.
Balance sheet
Assets
as at 31 December 2025
Somers Syndicate 3705
Annual report and financial statements 2025
12
Note
2025
£’000
Provision for unearned premiums
15
Claims outstanding
15
Reinsurers’ share of technical provisions
Debtors arising out of direct insurance operations
10
Other debtors
11
Debtors
Cash at bank and in hand
12
Other assets
Deferred acquisition costs
13
Prepayments and accrued income
Total assets
2025 is the first year of trading for the Syndicate; therefore, no prior year comparatives are shown in this report.
The accompanying notes from pages 16 to 30 form an integral part of these financial statements.
Balance sheet
Liabilities
as at 31 December 2025
Somers Syndicate 3705
Annual report and financial statements 2025
13
Note
2025
£’000
Members’ balances
Total capital and reserves
Provision for unearned premiums
15
Claims outstanding
15
Technical provisions
Creditors arising out of direct insurance operations
Creditors arising out of reinsurance operations
16
Other creditors including taxation and social security
17
Creditors
Accruals and deferred income
18
Total liabilities
Total liabilities, capital and reserves
2025 is the first year of trading for the Syndicate; therefore, no prior year comparatives are shown in this report.
The accompanying notes from pages 16 to 30 form an integral part of these financial statements.
The Syndicate financial statements were approved by the board of Lime Syndicate Management Limited on 18 February
2026 and were signed on its behalf by:
S S Sihota
Lime Syndicate Management Limited
Director
19 February 2026
Statement of changes in members’ balances
for the year ended 31 December 2025
Somers Syndicate 3705
Annual report and financial statements 2025
14
2025
£’000
Members’ balances brought forward at 1 January
Total comprehensive loss for the financial year
(5,091 )
Cash calls on open underwriting year
Members’ balances carried forward at 31 December
2025 is the first year of trading for the Syndicate; therefore, no prior year comparatives are shown in this report.
Statement of cash flows
for the year ended 31 December 2025
Somers Syndicate 3705
Annual report and financial statements 2025
15
Note
2025
£’000
Cash flows from operating activities
Loss for the financial year
(5,091 )
Adjustments:
Increase in gross technical provisions
Increase in reinsurers’ share of gross technical provisions
(12,337 )
Increase in debtors
(32,277 )
Increase in creditors
Movement in other assets/liabilities
(9,686 )
Investment return
(111 )
Net cash flows from operating activities
Cash flows from investing activities
Investment income received
9
Net cash flows from investing activities
Cash flows from financing activities
Open-year cash calls made
Net cash flows from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
12
2025 is the first year of trading for the Syndicate; therefore, no prior year comparatives are shown in this report.
The accompanying notes from pages 16 to 30 form an integral part of these financial statements.
Notes to the financial statements
Somers Syndicate 3705
Annual report and financial statements 2025
16
1.
Basis of preparation
Somers Syndicate 3705 (‘The Syndicate’) comprises a single member of the Society of Lloyd's that underwrites insurance
business in the London Market. The address of the Syndicate’s managing agent is Office 891, Lloyd’s, One Lime Street,
London, EC3M 7HA.
The financial statements have been prepared in accordance with the Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008 and applicable Accounting Standards in the United Kingdom and the Republic of
Ireland, including Financial Reporting Standard 102 (FRS 102), Financial Reporting Standard 103 (FRS 103) in relation to
insurance contracts, and the Lloyd’s Syndicate Accounts Instructions Version 3.0 as modified by the Frequently Asked
Questions issued by Lloyd’s version 1.1.
The financial statements have been prepared on the historical cost basis, except for financial assets at fair value through
profit or loss and available for sale that are measured at fair value. The financial statements are presented in GB Pounds
(GBP), which is also the Syndicate’s functional currency. All amounts have been rounded to the nearest thousand, unless
otherwise indicated.
Going concern
The Directors of the Managing Agent have assessed the Syndicate’s ability to continue as a going concern by considering,
amongst other things, the Syndicate’s reserve strength, available capital, future business plan and any expected material
changes to its operations. Based on the assessment, they continue to adopt the going concern basis in preparing the financial
statements
2.
Use of judgements and estimates
In preparing these financial statements, the directors of the Managing Agent have made judgements, estimates and
assumptions that affect the application of the Syndicate’s accounting policies and the reported amounts of assets, liabilities,
income and expenses.
The following critical judgements have been made in applying the Syndicate’s accounting policies:
The Syndicate makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.
Incurred but not reported (IBNR)
The estimation of claims IBNR is generally subject to a greater degree of uncertainty than the estimation of the cost of
settling claims already notified to the Syndicate, where more information about the claim event is generally available. In
calculating the estimated cost of unpaid claims, the Syndicate would typically consider a variety of estimation techniques.
Many of the generally accepted actuarial (reserving) models are based upon statistical analyses of historical experience,
which assumes that the development pattern of the current claims will be consistent with experience. Where it is possible
to rely on such methods, these also give insight into the trends inherent in the data being projected. Since the Syndicate
only started writing business in 2025, the level of historical experience available remains low and greater credibility has
been placed on exposure-based models and application of benchmarks in the latest review.
Large claims affecting each relevant business class are generally assessed separately, either measured on a case-by-case
basis or projected separately, to allow for the possible distorting effect of the development and incidence of these large
claims. Consideration is given to changes or uncertainties which may create distortions in the underlying statistics or which
might cause the cost of unsettled claims to increase or reduce when compared with the cost of previously settled claims.
This may include factors such as changes in the legal environment and the effects of inflation.
Provisions are calculated gross of any reinsurance recoveries. A separate estimate is made of the amounts that will be
recoverable from reinsurers based upon the gross provisions and having due regard to collectability. An estimate of the
future cost of indirect claims handling is calculated as a percentage of the claim's reserves held at the balance sheet date.
Throughout the estimation process, an assessment is undertaken of the range of possible outcomes. This is based on the
assumed variability of outcomes for the portfolio and used to inform the management margin recommendation.
Notes to the financial statements
Somers Syndicate 3705
Annual report and financial statements 2025
17
Written and pipeline premium
Written premium is reported according to management's estimation of when the premium will be written. For delegated
authority business, the underwriters estimate how much business will attach to the facility based on historic experience and
the current trading conditions of the market. This estimate is updated on a regular basis. It is assumed that risks attaching
to the master facility incept evenly across the year of the facility and therefore only the proportion of risks which have
incepted to the master facility by the reporting date are reported within the written premium in these reports and accounts.
Regular reporting is required under the terms of the delegated authority, including provision of risk bordereaux, which gives
an updated estimate of the written business at each point in time. An adjustment may be made to the even inception profile
if the actual written business is materially different from that initially assumed.
Earned premium
The earning of premiums is based primarily on time apportionment, with an adjustment for the risk profile of certain classes
of business, particularly those exposed to seasonal weather-related events.
Reinsurance recoverable
Reinsurance is deemed to be fully recoverable unless there is reason to doubt its recoverability. In these circumstances,
specific provisions are made based on the expected proportional recovery and the credit risk profile of the counterparties.
3.
Significant accounting policies
The following significant accounting policies have been applied consistently in dealing with items which are considered
material in relation to the Syndicate’s financial statements.
a.
Premiums written
Gross premiums written reflect direct and inwards reinsurance business written during the year, gross of commission payable
to intermediaries, and exclude any taxes or duties based on premiums. Premiums written include estimates for ‘pipeline’
premiums representing amounts due to the Syndicate not yet notified and adjustments to estimates of premiums written in
previous years.
Estimated premium income in respect of facility contracts, for example, binding authorities and lines slips, is deemed to be
written in a manner that reflects the expected profile of the underlying business which has been written. Outwards
reinsurance premiums are accounted for in the same accounting year as the premiums for the related direct or inwards
business being reinsured. The earned proportion of premiums is recognised as income. Premiums are earned from the date
of attachment of risk over the indemnity period based on the pattern of the risks underwritten.
b.
Unearned premiums
The provision for unearned premiums comprises the proportion of gross premiums written which is estimated to be earned
in the following or subsequent financial years, computed separately for each insurance contract using the daily pro rata
method, adjusted if necessary to reflect any variation in the incidence of risk during the period covered by the contract.
c.
Acquisition costs
Costs incurred in acquiring general insurance contracts are deferred. Acquisition costs include direct costs such as brokerage
and commission, and indirect costs such as administrative expenses connected with the processing of proposals and the
issuing of policies. The deferred acquisition cost asset represents the proportion of acquisition costs which corresponds to
the proportion of gross premiums written that is unearned at the balance sheet date.
d.
Reinsurance
The Syndicate assumes and cedes reinsurance in the normal course of business. Premiums and claims on reinsurance
assumed are recognised in the technical account along the same basis as direct business, considering the product
classification. Reinsurance premiums ceded and reinsurance recoveries on claims incurred are included in the respective
expense and income accounts. Premiums ceded and claims reimbursed are presented on a gross basis in the technical
account and statement of financial position as appropriate.
Reinsurance outwards premiums are earned according to the nature of the cover. ‘Losses occurring during’ policies are
earned evenly over the policy period. ‘Risks attaching’ policies are expensed on the same basis as the inwards business
being protected.
Notes to the financial statements
Somers Syndicate 3705
Annual report and financial statements 2025
18
Reinstatement premiums on both inwards and outwards business are accreted to the technical account on a pro rata basis
over the term of the original policy to which they relate.
e.
Claims provisions and related reinsurance recoveries
Claims incurred comprise claims and claims handling expenses (both internal and external) paid in the year, and the
movement in provision for outstanding claims and settlement expenses. The Syndicate does not discount its liability for
outstanding claims nor the reinsurance share of outstanding claims.
Outstanding claims include an allowance for the cost of claims incurred by the balance sheet date but not reported until
after the reporting date (IBNR). Salvage and subrogation, and other recoveries are deducted from the provision for
outstanding claims. The liability for outstanding claims is estimated using the input of assessments for individual cases
reported to the Syndicate and widely accepted actuarial techniques for the claims incurred but not reported (IBNR). Where
possible, the techniques will use projections, based on experience of the development of claims over time, to form a view
on the likely ultimate claims to be experienced.
Since the Syndicate only started writing business in 2025, the level of historical experience available remains low and greater
credibility has been placed on exposure-based models and application of benchmarks. Specific provisions may be included
for the ultimate cost of more complex claims, or factors which may give rise to changes in the estimate of the ultimate
claims cost, for example, court decisions or inflation.
The reinsurers’ share of provisions for claims is based on calculated amounts of outstanding claims and projections for IBNR
having regard to the reinsurance programme in place for the class of business, the claims experience for the year and the
current security rating of the reinsurers involved. A few statistical techniques are used to assist in making these estimates.
Reinsurance assets are assessed for impairment at each balance sheet date. A reinsurance asset is deemed impaired if there
is objective evidence, because of an event that occurred after its initial recognition, that the Syndicate may not recover all
amounts due, and that event has a reliably measurable impact on the amount that the Syndicate will receive from the
reinsurer. Impairment losses are recognised in profit or loss in the year in which the impairment loss is recognised.
f.
Foreign currencies
Transactions in foreign currencies are translated to the functional currency using the exchange rates at the date of the
transactions. The Syndicate’s monetary assets and liabilities denominated in foreign currencies are translated into the
functional currency at the rates of exchange at the balance sheet date. Non-monetary assets and liabilities denominated in
foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the
date that the fair value was determined. Non-monetary items denominated in foreign currencies that are measured at
historical cost are translated to the functional currency using the exchange rate at the date of the transaction. For the
purposes of foreign currency translation, unearned premiums and deferred acquisition costs are treated as if they were
monetary items.
g.
Off setting
Financial assets and financial liabilities are offset, and the net amount presented in the balance sheet when, and only when,
the Syndicate currently has a legal right to set off the amounts and intends either to settle on a net basis or to realise the
asset and settle the liability simultaneously.
h.
Investment return
Investment income comprises interest income on cash held in premium trust fund accounts.
Investment return is initially recorded in the non-technical account. The return is transferred in full to the general business
technical account to reflect the investment return on funds supporting the underwriting business.
i.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances. Cash and cash equivalents are carried at amortised cost in the statement
of financial position.
Notes to the financial statements
Somers Syndicate 3705
Annual report and financial statements 2025
19
j.
Taxation
Under Schedule 19 of the Finance Act 1993, managing agents are not required to deduct basic rate income tax from trading
income. Capital appreciation falls within trading income and is also distributed gross of tax.
No provision has been made for any United States Federal Income Tax payable on underwriting results or investment
earnings. Any income tax payments on account made by the Syndicate during the year have been included in the balance
sheet under the heading ‘other debtors’ and will be collected from members.
No provision has been made for any other overseas tax payable by members on underwriting results.
k.
Pension costs
Lime Syndicate Services Limited operates a defined contribution scheme. Pension contributions relating to Managing Agent
staff who act on behalf of the Syndicate are charged to the Syndicate as incurred and are included within net operating
expenses.
l.
Profit commission
Profit commission is charged by the Managing Agent at a rate of 2.5% of the profit on a year of account basis, subject to
the operation of a 2-year deficit clause. This is charged to the Syndicate as incurred but does not become payable until after
the appropriate year of account closes, normally at 36 months.
m.
Other prepayment and accrued income
Prepayments are payments made in advance for goods or services to be received in future years. At the end of the reporting
year, any portion of expenses paid in advance that relates to future years is recognised as a current asset in the balance
sheet. The corresponding expense is reduced in the statement of profit or loss – non-technical account for the year to reflect
only the expense incurred during the reporting year.
Accrued income represents income that has been earned during the reporting year but has not yet been received by the
end of that year. Such amounts are recognised under other receivables in the balance sheet. The related income is
recognised in the profit or loss – non-technical account for the year in which it is earned, regardless of whether cash has
been received.
n.
Operating expenses
Where expenses are incurred by the Managing Agent for the administration of the Syndicate, these expenses are apportioned
appropriately based on the type of expense. Expenses that are incurred jointly are apportioned between the Managing Agent
and the Syndicate on a basis depending on the amount of work performed, resources used, and the volume of business
transacted.
o.
Debtors and creditors
Insurance debtors and creditors include amounts due to and from agents, brokers and insurance contract holders. These
are classified as debt instruments as they are non-derivative financial assets with fixed or determinable payments that are
not quoted on an active market. Insurance debtors are measured at amortised cost less any provision for impairments.
Insurance creditors are stated at amortised cost. The Syndicate does not have any debtors directly with policyholders; all
transactions occur via an intermediary.
Reinsurance debtors and creditors include amounts due to and from reinsurers. These are classified as debt instruments as
they are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market.
Reinsurance debtors are measured at amortised cost less any provision for impairments. Reinsurance creditors are stated
at amortised cost. Reinsurance debtor principally relates to claims recoveries where the underlying claim has been settled,
and the recovery is due. Reinsurance creditors are primarily premiums payable for reinsurance contracts and are recognised
as an expense when due.
Other debtors principally consist of amounts due from members and sundry debtors and are carried at amortised cost less
any impairment losses. All other debtors are due within one year, unless otherwise stated.
Other creditors principally consist of amounts due to the Managing Agent and other related entities, profit commissions
payable and other sundry payables. These are stated at amortised cost determined using the effective interest rate method.
All other creditors are due within one year, unless otherwise stated.
Notes to the financial statements
Somers Syndicate 3705
Annual report and financial statements 2025
20
p.
Classification of insurance and reinsurance contracts
Insurance and reinsurance contracts are classified as insurance contracts where they transfer significant insurance risk. If
a contract does not transfer significant insurance risk, it is classified as a financial instrument. All of the Syndicates' written
contracts and purchased reinsurance contracts transfer significant insurance risk and therefore are recognised as insurance
contracts.
4.
Risk and capital management
Introduction and overview
This note presents information about the nature and extent of insurance and financial risks to which the Syndicate is exposed,
the Managing Agent’s objectives, policies and processes for measuring and managing insurance and financial risks, and for
managing the Syndicate’s capital.
Risk management framework
LSML has incorporated and embedded risk management frameworks for the identification, assessment, measurement and
reporting of all material risks, across all key categories and encompassing both financial and non-financial risks. Such
frameworks have been established both in relation to the Syndicate under management and the Managing Agent itself. In
the former case, the framework includes the following key elements:
x
Risk management strategy document and risk function strategy and plan
x
Risk appetite groupings and statements
x
Risk reporting, which is facilitated by the usage of key risk indicators to reflect set tolerances
x
Risk assessment via risk and control registers with clearly defined owners of said risks and controls
x
Monitoring and reporting of emerging risks and risk events.
The Managing Agent has identified the following principal categories of risk facing the Syndicate:
x
Insurance risk
x
Credit risk
x
Financial risk
x
Operational risk
x
Strategic risk
The Syndicate sets risk appetite annually, in conjunction with LSML, and is approved by LSML’s Board under the auspices
of the Syndicate Business Forecast (SBF) and Solvency Capital Requirement (SCR) process. Oversight of various risk
management matters is delegated to LSML’s Risk and Capital Committee, which meets at least quarterly to review the risk
management framework. This includes monitoring the risk profile as reflected in the risk register and measuring performance
against risk tolerances as expressed through key risk indicators.
a.
Insurance Risk
Insurance risk includes the risks that a policy will be written for insufficient premium to cover exposure (including
catastrophic accumulation) or provide inappropriate cover (underwriting risk), that the frequency or severity of insured
events will be higher than expected (claims risk), or that estimates of claims subsequently prove to be insufficient (reserving
risk).
i.
Management of insurance risk
LSML’s Board manages insurance risk through challenge and oversight of the approved business plan in the format of the
SBF. This establishes thresholds for volumes, pricing, line sizes and retention by class of business. The Board and relevant
committees monitor performance against the business plan through risk reporting and track the aggregation of risk through
exposure management reporting over the period. Included within this, the Board considers any impacts from underwriting
related to the agreed ESG approach. Reserve adequacy is monitored through quarterly review by LSML’s Actuarial team
under the governance of the Reserving Committee.
ii.
Sensitivity to insurance risk
The liabilities established could be significantly lower or higher than the ultimate cost of settling the claims arising. This level
of uncertainty varies between the classes of business and the nature of the risk being underwritten and can arise from
developments in case reserving for large losses and catastrophes, or from changes in estimates of claims IBNR.
Notes to the financial statements
Somers Syndicate 3705
Annual report and financial statements 2025
21
The following table presents the profit and loss impact of the sensitivity of the value of insurance liabilities disclosed in the
accounts to potential movements in the assumptions applied within the technical provisions. Given the nature of the business
underwritten by the Syndicate, the approach to calculating the technical provisions can vary and as a result the sensitivity
performed is to apply a beneficial and adverse risk margin to the total insurance liability. The amount disclosed in the table
represents the profit or loss impact of an increase or decrease in the insurance liability as a result of applying the sensitivity.
The amount disclosed for the impact on claims outstanding – net of reinsurance represents the impact on both the profit
and loss for the year and member balance.
2025
+5%
£’000
-5%
£’000
General insurance business sensitivities as at 31 December
Claims outstanding – gross of reinsurance
(784 )
Claims outstanding – net of reinsurance
(659 )
b.
Credit risk
Credit risk is largely derived from reinsurance counterparty risk. This is defined as the inability (owing to default or financial
constraint) or unwillingness of any reinsurers to pay recoveries due from outwards reinsurance as they become due. Such
reinsurers would have been approved by the Syndicate and the Managing Agent.
i.
Management of credit risk
This risk can be mitigated by collateralisation or other similar arrangements, as may be put in place and approved. LSML’s
Reinsurance and Security Committee sets approval and usage criteria, monitors reinsurer ratings and oversees the
application of the reinsurer approval policy. The Syndicate may also be exposed to premium and broker credit risk, where
risk transfer arrangements are in place.
ii.
Exposure to credit risk
The carrying amount of financial assets and reinsurance assets represents the maximum credit risk exposure. The Syndicate
does not hold any collateral as security or purchase any credit enhancements (such as guarantees, credit derivatives and
netting arrangements that do not qualify for offset).
The following table analyses the credit rating by investment grade of reinsurers’ share of claims outstanding, amount due
from intermediaries, amounts due from reinsurers in respect of settled claims, cash at bank and in hand, and other debtors
and accrued interest.
2025
AAA
£’000
AA
£’000
A
£’000
BBB
£’000
Other
£’000
Not
Rated
£’000
Total
£’000
Reinsurers’ share of claims outstanding
Debtors
arising
out
of
direct
insurance
operations
Cash at bank and in hand
Other debtors and accrued interest
Total
iii.
Financial assets that are past due or impaired
The Syndicate has debtors arising from direct insurance operations that are past due but not impaired at the reporting date.
These debtors have been individually assessed for impairment by considering information such as the occurrence of
significant changes in the counterparty’s financial position, patterns of historical payment information and disputes with
counterparties.
For assets to be classified as past-due the contractual payments are in arrears by more than 30 days. An impairment
adjustment is recorded in the profit and loss: non-technical account for assets impaired. The Syndicate operates mainly on
a ‘neither past-due nor impaired basis’ and when evidence is available, sufficient collateral will be obtained for ‘past-due
and impaired’ assets. An impairment assessment will also be performed if applicable.
Notes to the financial statements
Somers Syndicate 3705
Annual report and financial statements 2025
22
An analysis of the carrying amounts of past due or impaired debtors is presented in the table below:
2025
Neither past
due nor
impaired
£’000
Past due but
not impaired
£’000
Gross value
of impaired
assets
£’000
Impairment
allowance
£’000
Total
£’000
Reinsurers’ share of claims outstanding
Debtors arising out of direct insurance operations
Cash at bank and in hand
Other
debtors
Total
There is no in impairment allowance during the year for each class of financial asset or at the balance sheet date and no
reconciliation of changes in impairment allowance is presented.
The table below sets out the age analysis of financial assets that are past due but not impaired at the balance sheet date:
2025
0-3 Months
Past due
£’000
3-6 months
past due
£’000
6-12
months past
due
£’000
Greater
than 1 year
past due
£’000
Total
£’000
Reinsurers’ share of claims outstanding
Debtors arising out of direct insurance operations
Cash at bank and in hand
Other debtors
Total
c.
Financial risk
Financial risk covers Market risk and Liquidity risk where market risk exposure impacting the Syndicate relates to fluctuations
in interest rates or exchange rates, and inflation. The Syndicate is exposed to foreign exchange movements because of
mismatches between the currencies in which assets and liabilities are denominated and the currencies in which they were
received or paid. Any surplus or deficit in a core currency would be subject to review by LSML’s Board and Investment
Committee.
Liquidity risk expresses the risk that the Syndicate will not be able to meet its liabilities as they fall due, owing to a shortfall
in cash, or that it can only meet such obligations at excessive cost.
i.
Management of financial risk
To mitigate this risk, LSML’s Board reviews cash flow projections regularly and ensures that, where needed, the Syndicate
has adequate liquidity facilities in place or has a cash call option from its capital providers and any surplus or deficit in a
core currency would be subject to review by LSML’s Board and Investment Committee.
Notes to the financial statements
Somers Syndicate 3705
Annual report and financial statements 2025
23
ii.
Maturity analysis of syndicate liabilities
The maturity analysis presented in the table below shows the remaining contractual maturities for the Syndicate’s insurance
contracts and financial instruments. For insurance and reinsurance contracts, the contractual maturity is the estimated date
when the gross undiscounted contractually required cash flows will occur. For financial liabilities, it is the earliest date on
which the gross undiscounted cash flows (including contractual interest payments) could be paid assuming conditions are
consistent with those at the reporting date.
2025
No
maturity
stated
£’000
0-1 yrs
£’000
1-3 yrs
£’000
3-5 yrs
£’000
>5 yrs
£’000
Total
£’000
Claims outstanding
Creditors
Accruals and deferred income
Total
iii.
Interest rate sensitivity analysis
The Syndicate holds cash and cash equivalents which are not subject to interest rate price risk.
The analysis below is performed for reasonably possible movements in market indices on financial instruments with all other
variables held constant, showing the impact on the result before tax due to changes in fair value of financial assets and
liabilities (whose fair values are recorded in the profit and loss account) and members’ balances.
2025
Impact on
loss for the
year
£’000
Impact on
member
balances
£’000
+ 50 basis points shift in yield curves
- 50 basis points shift in yield curves
iv.
Currency risk
The Syndicate writes business primarily in Sterling, US dollar, Euro, Canadian dollar and Australian dollar and is therefore
exposed to currency risk arising from fluctuations in these exchange rates.
The objective is to maintain assets in the currency in which the cash flows from liabilities are to be settled in order to hedge
the currency risk inherent in these contracts.
The table below summarises the carrying value of the Syndicate’s assets and liabilities, at the reporting date:
2025
Sterling
£’000
US dollar
£’000
Euro
£’000
Canadian
dollar
£’000
Australian
dollar
£’000
Total
£’000
Reinsurers' share of technical provisions
Debtors
Cash at bank and in hand
Prepayments and accrued income
Total assets
Technical provisions
(3,247 )
(53,679 )
(3,597 )
(125 )
(60,648 )
Creditors
(910 )
(8,908 )
(254 )
(10,072 )
Accruals and deferred income
(1,109 )
(2,988 )
(4,097 )
Total liabilities
(5,266 )
(65,575 )
(3,851 )
(125 )
(74,817 )
Total member balances
(2,125 )
(32 )
(5 )
(909 )
Notes to the financial statements
Somers Syndicate 3705
Annual report and financial statements 2025
24
v.
Exchange rate sensitivity analysis
The analysis below is performed for possible movements in key variables, with all other variables held constant, showing
the impact on the result and net assets. The correlation of variables will have a significant effect in determining the ultimate
impact. However, to isolate and demonstrate the effect due to changes in variables, each variable has been changed on an
individual basis.
The following table gives an indication of the impact on the result and net assets or liabilities of a ten percent change in the
relative strength of the pound sterling against the value of the US dollar, Euro, Canadian dollar and Australian dollar.
2025
Impact on
loss for the
year
£’000
Impact on
member
balances
£’000
10 percent increase in
Sterling/US dollar exchange rate
213
213
10 percent increase in
Sterling/Euro exchange rate
3
3
10 percent increase in
Sterling/Canadian dollar exchange rate
-
-
10 percent increase in
Sterling/Australian dollar exchange rate
1
1
Total
217
217
Operational Risk
This is the risk that errors caused by people, processes and systems lead to unforeseen losses within the Syndicate. Classes
of risk included in this category are human resources, systems (including technology) and data, delegated authorities,
regulatory and legal risk, conduct and reputational risk. The Managing Agent seeks to manage this risk through its
operational risk and control framework, including procedure manuals, training programme and peer review. In addition,
business continuity and disaster recovery plans are in place and are regularly updated and tested.
Regulatory risk is the risk of loss, in either financial or reputational terms, owing to a breach of regulatory requirements or
failure to respond to regulatory change and development. LSML’s Compliance function provides oversight and guidance to
the Syndicate regarding their commitments to regulatory and legal risks, incorporating conduct risk and having regard to
sanctions.
Strategic risk
Risks in this category emanate from business planning and objectives, capital risk and group risk. It also incorporates ESG
in its broader form.
Group risk may be defined as the risk of contagion, disagreement or potential obtrusion that arises
from being associated with key stakeholders and third parties within a broader group of companies. Business planning risk
relates to changes in the underlying strategy as espoused in the SBF or other such documentation, including strategic
conflicts of interest.
Notes to the financial statements
Somers Syndicate 3705
Annual report and financial statements 2025
25
5.
Analysis of underwriting result
An analysis of the underwriting result before investment return is presented in the table below:
For the year ended
31 December 2025
£’000
Gross
premiums
written
Gross
premium
earned
Gross
c
laims
incurred
Gross
o
perating
expenses
Reinsurance
balance
Underwriting
result
Third party liability
(12,984 )
(9,181 )
(82 )
(2,660 )
Fire and other damage of property
(1,604 )
(3,072 )
(278 )
(899 )
Credit and suretyship
(472 )
(2,015 )
(70 )
(1,462 )
Legal Expenses
(605 )
(445 )
(1 )
(140 )
Marine, aviation and transport
(17 )
(45 )
(1 )
(25 )
Total
direct insurance
(15,682 )
(14,758 )
(432 )
(5,186 )
Total
(15,682 )
(14,758 )
(432 )
(5,186 )
Additional analysis
The below is an additional disclosure for Lloyd’s reporting purposes and is included to facilitate the classification of the above
segments into the Lloyd’s aggregate classes of business:
For the year ended
31 December
2025
£’000
Gross
premiums
written
Gross
premium
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
result
Fire and other damage to
property, which is
Energy
(258 )
(237 )
(12 )
(24 )
No gains or losses were recognised in profit or loss during the year on buying reinsurance.
Total commissions for direct insurance business for the year amounted to:
2025
£’000
Total commission for direct insurance business
The gross premiums written for direct insurance by location (where the contracts were concluded) is presented in the table
below:
2025
£’000
United States of America
United Kingdom
European Union member states
Rest of the world
Total
6.
Net operating expenses
2025
£’000
Acquisition costs
Change in deferred acquisition costs
(13,876 )
Reinsurance commissions and profit participation
(1,355 )
Administrative expenses
Members’ standard personal expenses
Total
Notes to the financial statements
Somers Syndicate 3705
Annual report and financial statements 2025
26
Administrative expenses include:
2025
£’000
Auditors’ remuneration: fees payable to the Syndicate’s auditors for the audit of these financial
statements
Auditors’ remuneration: fees payable to the Syndicate’s auditors and its associates in respect of
other services pursuant to legislation
Total
289
7.
Key management personnel compensation
The directors of LSML received the following aggregate remuneration:
2025
£’000
Directors’ emoluments
1,498
Of the above amount, £nil was charged to the Syndicate, as the emoluments were borne by LSML and Lime Syndicate
Services Limited (LSSL).
The active underwriter was allocated the following remuneration fee charge to the syndicate and included within net
operating expenses.
2025
£’000
Emoluments
Total
298
8
Staff numbers and costs
The Syndicate and managing agent have no employees. Staff are employed by Lime Syndicate Services Limited. The average
number of persons employed by the service company, but working for the Syndicate during the year, analysed by category,
was as follows:
2025
£’000
Administration and finance
Underwriting
Claims
Total
The following amounts were recharged by the service company to the Syndicate in respect of payroll costs:
2025
£’000
Wages and salaries
Social security costs
Other pension costs
9.
Investment income
2025
£’000
Interest on cash at the bank
Total
Notes to the financial statements
Somers Syndicate 3705
Annual report and financial statements 2025
27
10.
Debtors arising out of direct insurance operations
2025
£’000
Premium receivable
32,081
Loss funds held by cover holders
186
Total
32,267
Due within one year
Due after one year
Total
11.
Other debtors
2025
£’000
Other
Total
12.
Cash at bank and in hand
2025
£’000
Cash at bank and in hand
Total
Included within cash and cash equivalents are the following amounts which are not available for use by the Syndicate
because it is held in the regulated US Situs trust fund
2025
£’000
Cash at bank and in hand
Total
13.
Deferred acquisition costs
2025
Gross
£’000
Reinsurance
£’000
Net
£’000
Balance at 1 January
Incurred deferred acquisition costs
(4,366 )
Amortised deferred acquisition costs
(7,317 )
(5,962 )
Foreign exchange movements
(92 )
(69 )
Balance at 31 December
(2,988 )
14.
Claims development
The following tables illustrate the development of the estimates of earned ultimate cumulative claims incurred, including
claims notified and IBNR, for each successive underwriting year, illustrating how amounts estimated have changed from the
first estimates made.
As these tables are on an underwriting year basis, there is an apparent large increase from amounts reported for the end
of the underwriting year to one year later as a large proportion of premiums are earned in the year of account’s second year
of development.
Notes to the financial statements
Somers Syndicate 3705
Annual report and financial statements 2025
28
Balances have been translated at exchange rates prevailing at 31 December in all cases.
2025
£’000
Total
£’000
Estimate of gross claims at end of underwriting year
Estimate of gross claims
Less gross claims paid
Gross claims reserve
2025
£’000
Total
£’000
Estimate of net claims at end of underwriting year
Estimate of net claims
Less net claims paid
Net claims reserve
15.
Technical provisions
The table below shows changes in the insurance contract liabilities and assets from the beginning of the period to the end
of the period.
2025
Gross
provisions
£’000
Reinsurance
asset
£’000
Net
£’000
Claims outstanding
Balance at 1 January
Claims paid during the year
Expected cost of current year claims
(2,512 )
Foreign exchange movements
(110 )
(92 )
Balance at 31 December
(2,494 )
2025
Gross
provision
£’000
Reinsurance
asset
£’000
Net
£’000
Unearned premiums
Balance at 1 January
Premiums written during the year
(14,216 )
Premiums earned during the year
(25,686 )
(21,387 )
Foreign exchange movements
(301 )
(227 )
Balance at 31 December
(9,843 )
Refer to Note 4 for the sensitivity analysis performed over the value of insurance liabilities, disclosed in the accounts, to
potential movements in the assumptions applied within the technical provisions.
16.
Creditors arising out of reinsurance operations
2025
£’000
Premium payable
8,961
Total
8,961
Due within one year
Due after one year
Total
Notes to the financial statements
Somers Syndicate 3705
Annual report and financial statements 2025
29
17.
Other creditors, including taxation and social security
2025
£’000
Balances due to Arch Underwriters Europe Limited
Balances due to the Managing Agent
Total
Due within one year
900
Due after one year
-
Total
900
18.
Accruals and deferred income
2025
£’000
Reinsurers’ share of technical provisions - Deferred acquisition costs
2,988
Accrued expenses
1,109
Total
4,097
19.
Related Parties
2025
£’000
Outwards reinsurance premiums (Syndicate 1955)
1,488
Outwards reinsurance premiums (Arch Reinsurance Ltd.)
12,727
Administrative expenses (LSML)
859
Acquisition costs (Arch Underwriting Limited)
710
Members’ standard personal expenses (LSML)
2,841
Syndicate 1955
The Syndicate placed outwards reinsurance business with Syndicate 1955, which is deemed to be a related party.
Arch Reinsurance Ltd.
The Syndicate placed outwards reinsurance business with Arch Reinsurance Ltd., which is deemed to be a related party.
Arch Underwriting Limited
The Syndicate incurred fees payable to Arch Underwriting Limited for actuarial services, which are deemed to be a related
party.
Lime Syndicate Management Limited
A managing agent fee was payable from the Syndicate to the Managing Agent along with underwriting staff salaries and
expenses directly attributable to the Syndicate.
20.
Off-balance sheet items
There are no off-balance sheet items to report.
21.
Post balance sheet events
There are no other post-balance sheet events to report.
22.
Contingencies and commitments
There are no contingencies and commitments to report.
Notes to the financial statements
Somers Syndicate 3705
Annual report and financial statements 2025
30
23.
Foreign exchange rates
The following currency exchange rates have been used for principal foreign currency transactions (reported to two decimal
places):
Opening rate as at
1 January 2025
Closing rate as at
31 December
2025
Average rate for the
year ended
31 December 2025
Sterling
Euro
US dollar
Australian dollar
24.
Funds at Lloyd’s
Every member is required to hold capital at Lloyd’s which is held in trust and known as Funds at Lloyd’s (‘FAL’). These funds
are intended primarily to cover circumstances where Syndicate assets prove insufficient to meet participating members’
underwriting liabilities. The level of FAL that Lloyd’s requires a member to maintain is determined by Lloyd’s based on
Prudential Regulatory Authority requirements and resource criteria. The determination of FAL has regard to a number of
factors including the nature and amount of risk to be underwritten by the member and the assessment of the reserving risk
in respect of business that has been underwritten. Since FAL is not under the management of the Managing Agent, no
amount has been shown in these Financial Statements by way of such capital resources. However, the Managing Agent is
able to make a call on the Member’s FAL to meet liquidity requirements or to settle losses.