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SYNDICATE 2623
ANNUAL REPORT AND ACCOUNTS
YEAR ENDED
31 DECEMBER 2025
CONTENTS
STRATEGIC REPORT OF THE MANAGING AGENT…………………………………………………………… 4
MANAGING AGENT’S REPORT………………………………………………………………………………………… 7
STATEMENT OF MANAGING AGENT’S RESPONSIBILITIES…………………………………………… 14
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SYNDICATE 2623 …………… 15
STATEMENT OF COMPREHENSIVE INCOME ………………………………………………………………… 18
BALANCE SHEET …………………………………………………………………………………………………………… 19
STATEMENT OF CHANGES IN MEMBERS' BALANCES ……………………………………………….… 20
STATEMENT OF CASH FLOWS ……………………………………………………………………………………… 21
NOTES TO THE SYNDICATE ANNUAL ACCOUNTS ………………………………………………….…… 22
MANAGING AGENT'S CORPORATE INFORMATION ……………………………………………………… 50
SYNDICATE 2623
31 DECEMBER 2025
3
STRATEGIC REPORT OF THE MANAGING AGENT
Overview
Syndicate 2623 (the ‘syndicate’) continues to write a range of specialised insurance at Lloyd’s. The
syndicate writes business in parallel with Syndicate 623. For the 2024 underwriting year and beyond,
business written domestically by Beazley’s US-based underwriters in prior years is no longer written
through Syndicate 2623. At the same time, the syndicate’s portfolio was rebalanced to cover a smaller
share of Beazley's existing wholesale business written in London, Europe, and Singapore, with Syndicate
2623 taking a smaller share of risks that are written in parallel with Syndicate 623.
The capacities of the syndicates managed by Beazley Furlonge Limited ('BFL') are as follows:
Syndicate Number Capacities
2025 Year of Account
£ m
2024 Year of Account
£ m
623 861.0 887.2
2623 2,357.1 2,299.6
3622 35.5 37.0
3623 432.0 1,325.6
4321 — —
5623 419.3 396.6
6107 43.9 57.8
Total 4,148.8 5,003.8
The result for Syndicate 2623 for the year ended 31 December 2025 is a profit of $544.2m (2024:
$758.4m).
Year of account results
The 2023 year of account ('YoA') has closed with a return on capacity of 16.2%. This return on capacity is
a result of careful risk selection and a relatively favourable natural catastrophe experience for the year of
account. The 2024 YoA is currently forecasting a positive return on capacity of 10%. This YoA experienced
a more challenging claims environment compared to the 2023 YoA. The 2025 YoA, is currently projected
to close with a positive return on capacity. This YoA is still developing. Catastrophe events throughout
2026 and the development of 2025 calendar year losses may still impact the 2025 YoA.
Rating environment
Rate movements for the syndicate softened in 2025, with an overall decrease of 2.9% in 2025 across the
portfolio (2024: 0.2% increase). Cyber Risks recorded the largest reduction at 5.8% (2024: 4.4%
decrease). Property Risks also saw rate reductions of 4.6% (2024: 1.8% increase), while MAP Risks
experienced decreases of 1.1% (2024: MAP 1.1% increase). Specialty Risks remained comparatively
stable, with a modest rate decrease of 0.5% (2024: 0.3% increase).
The syndicate's gross written premiums for 2025 are $2,790.1m (2024: $2,926.9m). This reflects a 4.7%
decrease, driven primarily by the 2.9% rate reduction mentioned above. Further reductions include the
residual impact of the syndicate no longer writing business underwritten by Beazley’s US-based
underwriters, and the stamp capacity reductions between the 2023 and 2024 YoA. Net earned premiums
for 2025 are $2,385.0m (2024: $3,096.1m). This reduction reflects the premium earnings of the 2023
YoA that were present in 2024, but not in 2025.
Combined ratio
The combined ratio is a measure of operating performance and represents the ratio of the syndicate's total
costs (excluding foreign exchange movements) to total net earned premium. The syndicate’s combined
ratio in 2025 has increased to 88.5% (2024: 85.0%). This has arisen due to a deterioration in both the
claims and expense ratios.
Claims
The claims ratio is a measure of the syndicate's claims experience and represents the ratio of its net
insurance claims to net earned premium. The claims ratio was 48.1% in 2025 (2024: 46.7%). The claims
ratio deterioration is primarily driven by modest prior year reserve strengthening in 2025, compared with
releases in 2024. This was partially offset by lower catastrophe losses during the year, including California
wildfires in early 2025 and Hurricane Melissa in late 2025. Additionally, current accident year attritional
claims experience was more favourable in 2025.
SYNDICATE 2623
31 DECEMBER 2025
4
STRATEGIC REPORT OF THE MANAGING AGENT CONTINUED
Prior year reserve development
During 2025 the syndicate strengthened prior year reserves by $4.9m (2024: $121.9m release). The
syndicate's strengthening was driven by its Specialty book, with largely offsetting releases on the Cyber
and Property Risk divisions, reflective of favourable catastrophe experience. Net strengthening/(releases)
are shown by division in the table below:
2025 2024
$m $m
Cyber Risks
(18.8) (40.0)
Digital
2.5 (26.4)
MAP Risks
9.2 61.8
Property Risks
(71.8) (122.5)
Specialty Risks
83.8 5.2
Total
4.9 (121.9)
Net operating expenses
Net operating expenses, including business acquisition costs and administrative expenses, were $963.2m
(2024: $1,185.7m). The breakdown of these costs is shown below:
2025 2024
$m $m
Brokerage costs
594.1 820.2
Other acquisition costs
89.4 89.2
Total acquisition costs
683.5 909.4
Administrative and other expenses
279.7 276.3
Net operating expenses*
963.2 1,185.7
* A further breakdown of net operating expenses can be found in note 4.
Brokerage costs as a percentage of net earned premium are approximately 24.9% (2024: 26.5%).
Brokerage costs are deferred and expensed over the life of the associated premiums in accordance with
accounting guidelines. Other acquisition costs comprise costs that have been identified as being directly
related to underwriting activity (e.g. underwriters’ salaries and Lloyd’s box rental). These costs are also
deferred in line with premium earning patterns. Administrative expenses comprise primarily IT costs,
facilities costs, Lloyd’s central costs and other support costs.
The expense ratio is a measure of net operating expenses to net earned premium. The expense ratio for
2025 is 40.4% (2024: 38.3%). The managing agent continues to focus on total expense base, allowing for
additional expenses where aligned to underlying business growth or to enhance the syndicates business
model. The higher expense ratio reflects a decreasing net earned premium position and a relative increase
in the underlying expense base.
Investment performance
Syndicate investments generated a return of $269.7m, or 5.2% in 2025 (2024: a return of $291.5m, or
5.1%). Financial assets were $4,785.0m as at 31 December 2025 (2024: $5,549.1m). Returns were
driven by strong performance from credit and equity holdings, and from the decline in treasury yields on
fixed income assets.
The macroeconomic backdrop proved resilient. Despite an uptick in market volatility earlier in the year and
a backdrop of elevated geopolitical risk, the US economy performed well supported by investment and
consumption growth. The Federal Reserve cut rates by 0.75% over the year which created a favourable
backdrop for short dated fixed income, while long dated bond yields saw smaller declines which resulted a
steepening of the overall yield curve. Despite ongoing macro uncertainty, resilient corporate fundamentals
supported investment performance in 2025, with exposure to investment grade corporate bonds benefiting
from from tightening credit spreads. Holdings in collateralized loan obligations also performed well,
offering incremental credit spread in well diversified and high quality structures.
SYNDICATE 2623
31 DECEMBER 2025
5
STRATEGIC REPORT OF THE MANAGING AGENT CONTINUED
The portfolio benefited from its exposures to equity markets. Following a weak start in Q1, equities
recovered well led by corporate earnings growth and supportive monetary policy. We added regional
diversification to our equity holdings early in the year, which are now more closely aligned to global
indices. Exposure to high yield added value as spreads held modest gains through the year. Hedge funds,
which offer an additional diversified source of return, also generated positive excess returns.
The yield of the fixed income portfolio at 31 December 2025 was 4.0% for 2623 with a duration of 1.7
years. This level of yield is a positive starting point for fixed income investment returns. The syndicate’s
investment portfolio remains diversified and well positioned for a range of market outcomes.
The table below details the breakdown of the syndicate’s portfolio, by asset class:
31 Dec 2025 31 Dec 2024
$000 % $000 %
Shares and other variable yield securities
and units in unit trusts
1,219,042 25.5 1,353,066 24.4
Debt securities and other fixed income
securities
3,151,274 65.9 3,774,160 68.0
Participation in investment pools
11,926 0.2 9,191 0.2
Loans and deposits with credit institutions
29,033 0.6 — —
Derivative assets 171 — 10,295 0.2
Syndicate loans to central fund — — 26,714 0.5
Other investments 255,540 5.3 277,000 4.9
Financial investments at fair value 4,666,986 97.5 5,450,426 98.2
Cash at bank and in hand 118,009 2.5 98,677 1.8
Total 4,784,995 100 5,549,103 100
The reduction in financial investments is reflective of the syndicate reducing in size, with business written
domestically by Beazley’s US-based underwriters in prior years, no longer being written through Syndicate
2623.
Reinsurance
In 2025, the amount spent on outward reinsurance was $415.0m (2024: $475.4m). As a percentage of
gross premiums written it reduced to 14.9% (2024: 16.2%). The reduction is driven by the Cyber book,
with 2024 seeing the purchase of multi-year Cyber catastrophe bonds, covering future years of account.
As a percentage of earned premiums, the spend is more consistent with a ratio of 16.0% (2024: 16.1%).
Outlook
The 2024 underwriting year was impacted by losses from the Atlantic hurricanes (Milton & Helene), as well
as the California wildfires in early 2025. This YoA achieved a mix of rate changes across its diverse book.
MAP Risks and Property Risks demonstrated rate increases which were offset by a softening of the rates on
the Cyber Risks book in 2024. The syndicate is expected to produce a 10% return on capacity.
In 2025, the syndicate's written business has increased, in comparison to the 2024 YoA, as a result of
differing stamp capacity splits. Underlying growth across 623 and 2623 has been offset by further rate
reductions to those demonstrated above. The 2025 YoA has experienced some claims events - most
notably the California wildfires event. Despite this, and even though it is in the early stages of
development, this YoA is expected to generate a positive return on capacity. The managing agent will
continue to monitor the YoA's development.
Looking ahead to 2026, the managing agent expects market conditions to become more competitive
against a backdrop of heightened and evolving risks. This will place a larger emphasis on risk selection and
stakeholder relations to drive positive returns. The managing agent continues to search for growth
opportunities while taking heed of the increasingly complex macroeconomic environment. In parallel, the
managing agent's expertise and focus on innovation will allow it to navigate the rate cycle and execute its
underwriting strategy.
…………………………
C C J Wong
Director
19 February 2026
SYNDICATE 2623
31 DECEMBER 2025
6
MANAGING AGENT’S REPORT
The managing agent presents its report for the year ended 31 December 2025.
This annual report is prepared using the annual basis of accounting as required by Statutory Instrument
No 1950 of 2008, the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008 and applicable United Kingdom Accounting Standards, including Financial Reporting
Standard 102: The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland
and Financial Reporting Standard 103: Insurance Contracts.
Principal activity
The principal activity of Syndicate 2623 is the transaction of a range of specialised insurance business at
Lloyd’s, including the underwriting of professional indemnity, cyber liability, property, marine, reinsurance,
accident and health, and political risks and contingency business.
Business review
A review of the syndicate’s activities is included in the strategic report.
Risk governance and reporting
BFL’s Board of Directors (the 'Board') has the responsibility for defining and monitoring the risk appetite
within which BFL and the syndicates operate (collectively, ‘Beazley’), with key individuals and committees
accountable for day-to-day management of risks and controls. Regular reporting from the Risk Function to
Board and Risk Committee meetings and senior management committees ensures that risks are monitored
and managed as they arise. Beazley Group is structured across three platforms, one of which is the
London Wholesale platform governed by BFL on behalf of the syndicates. This platform-focused structure
strengthens leadership accountability, enhances platform-level and legal entity governance, and further
reinforces the effectiveness of the overall risk management framework.
Climate-related risks and opportunities
Climate-related risks, opportunities, and other sustainability related matters were regular agenda items
throughout 2025 led by Beazley plc’s Board and supported by the boards of BFL and the Group’s other
regulated subsidiaries. The Group’s sustainability strategy, sets out the goals and targets across a wider
range of sustainability issues, including climate change. Beazley plc’s consolidated Annual report and
accounts includes the Group’s disclosures for the Task Force on Climate-Related Financial Disclosures
('TCFD') Recommendations. The 2025 Beazley plc Annual report and accounts is expected to be published
on the Group's website in March 2026.
Although not specifically listed in the risk categories detailed further in this report, the Board of BFL deems
climate risk to be inherently embedded within all risks managed across the syndicate.
Risk management
The Board maintains a sound understanding of all drivers of risk and, supported by the Risk Function,
provides effective challenge to management in overseeing risks across Beazley. The Board and the Risk
Committee continue to ensure that the risk management framework remains aligned to Beazley’s evolving
risk profile, supports robust oversight and challenge, and embeds a strong risk culture across the business.
The Board remains attentive to emerging risks and developments in the regulatory and legal landscape.
The Risk Function continues to engage in key strategic projects, providing proportionate and effective
second-line challenge to support the ongoing evolution of the risk management framework.
The effectiveness of risk management across the business is underpinned by continued collaboration
between Beazley's assurance functions, in particular Compliance, Risk Function and, Control and
Compliance Assurance Team, to deliver a coherent second line oversight function.
Throughout the year, Beazley strengthened its risk leadership team and further matured its risk culture
across the Group. Investment in both the first and second lines of defence has progressed through the
phased delivery of modernisation and transformation programmes, to enhance oversight, agility and
overall risk management capability.
SYNDICATE 2623
31 DECEMBER 2025
7
MANAGING AGENT’S REPORT CONTINUED
Risk management oversight and framework
The Board has ultimate responsibility for risk management and delegates direct oversight of the risk
management framework to its Risk Committee. The Board delegates executive oversight of the Risk
Function and framework to the BFL Management Committee, which fulfils this responsibility in conjunction
with the Group Risk and Regulatory Committee.
The risk management framework sets out the approach to identifying, assessing, managing, monitoring,
and reporting principal risks. This framework underpins the delivery of the Group’s strategic priorities and
supports informed decision making at all levels.
Beazley operates a governance structure founded on the ‘three lines of defence’ model, with the Risk
Function forming part of the second line of defence. Ongoing communication and collaboration across the
three lines of defence ensures that Beazley identifies and manages risks effectively.
The Board approves Beazley’s risk appetite statements annually and receives regular updates throughout
the year on performance against these appetites, including impact on the risk profile of the business.
A comprehensive suite of reports from the Risk Function supports senior management and the Board in
fulfilling their oversight responsibilities. These reports include updates on risk culture, risk appetite, risk
profiles, stress and scenario testing (including reverse stress testing) and analysis, emerging and
heightened risks, and the Own Risk and Solvency Assessment. In addition, the Risk Function provides
reporting to the Remuneration Committee to ensure alignment between risk considerations and
remuneration practices.
An annual risk management plan is developed, with reference to Beazley's business strategy, external
market and regulatory developments, as well as Beazley's risk profile. In addition, the Risk Function
integrates insights from internal audit findings and other assurance activities into its risk assessment and
planning processes to ensure a comprehensive and forward-looking approach.
The approach to identifying, managing and mitigating emerging risks includes inputs from across the
business, analysis of lessons learned following incidents and industry thought leadership. The approach
considers the potential materiality and likelihood of impacts, which helps prioritise emerging risks that
Beazley monitors or undertakes focused work on. Key emerging risks in 2025 included: Artificial
Intelligence; Geopolitical and conflict escalation; Supply chain complexity; and Political and social unrest/
instability.
Principal risks
Beazley operates in a dynamic environment where risk exposures evolve in response to changes in market
conditions, regulatory developments, and strategic priorities. Identifying and managing these risks is
fundamental to safeguarding Beazley's financial strength and delivering sustainable value to stakeholders.
Principal risks are subject to regular review through Beazley's risk and control assessment process. The
overall risk profile is continuously monitored with emphasis on operational and regulatory risks, to ensure
that our control environment and risk management capabilities evolve in line with business change and
developments in the external environment.
The table below summarises the principal risks faced by Beazley, together with the governance, oversight
and control measures in place to mitigate these exposures, and the associated outlook.
Legend for principal risks table below
Risk outlook
Increasing Stable Decreasing
SYNDICATE 2623
31 DECEMBER 2025
8
MANAGING AGENT’S REPORT CONTINUED
Insurance
Risk of loss arising from uncertainties and
deviations in the occurrence, frequency,
amount and timing of insurance premium
and claim liabilities relative to the
assumptions at the time of underwriting.
This includes key underwriting risk drivers
such as market cycle, catastrophe,
reinsurance reserves and climate.
• Market cycle: potential
systematic mispricing of medium
or long-tailed business that does
not support revenue to invest
and cover future claims;
• Catastrophe: one or more large
events caused by nature (e.g.
hurricane, windstorm,
earthquake and/or wildfire) or
mankind (e.g. systemic cyber-
event, global pandemic, losses
linked to an economic crisis, an
act of terrorism or an act of war
and/or a political event)
impacting a number of policies,
and therefore giving rise to
multiple losses;
• Reinsurance arrangements:
reinsurance may not be available
or purchases do not support the
business underwritten (e.g.
mismatch);
• Reserving: reserves may not be
sufficiently established to reflect
the ultimate paid losses; and
• Climate risk: impact of climate
change on underwriting and
reserving assumptions, including
the risk arising from the physical
effects of climate change, the
transition to a low-carbon
economy and associated
litigation risks.
Insurance risk, arising in the syndicates, is principally managed by
Beazley through pricing tools, analysis of macro trends and claim
frequency/severity, which ensures exposure is well diversified and
not overly concentrated in any one area, or line of business.
Our strategic approach to exposure management and a
comprehensive internal and external reinsurance programme help to
reduce volatility of profits in addition to managing net exposure
through the transfer of risk.
Our prudent and comprehensive approach to reserving ensures
adequate provisions are made for the payment of all valid claims.
High calibre claims and underwriting professionals deliver expert
service and claims handling to insureds, ensuring good customer
outcomes.
Beazley carries out periodic analysis to identify significant areas of
concentration risk across its business and monitors solvency
regularly to ensure adequate capitalisation.
Beazley continuously monitors key trends and incidents, particularly
for evolving perils such as cyber, to ensure our view of risk is up-to-
date.
Beazley makes extensive use of modelling, including catastrophe
modelling, the use of our Solvency II model and stress and scenario
testing to ensure insurance risk is within approved risk appetite.
Beazley integrates management of climate risk into its business
processes for physical and litigation risk, through climate-adjusted
pricing, capital modelling and climate conditioned views of risk for
its most sensitive perils and supporting underwriting using targeted
tools and dashboards and scenario analysis. The approaches
continue to develop, given the evolving nature of climate risk.
Investment in underwriting, reinsurance, and exposure
management systems and processes continue to strengthen our risk
management capabilities in an increasingly complex landscape
shaped by advances in artificial intelligence, rising geopolitical
tensions, and climate-related natural hazards.
Outlook:
While we continue to assess Beazley's insurance risk outlook as
stable, supported by active management of market cycles across all
lines of business, we recognise that the cycle of rate increases have
likely peaked and in the absence of a market turning event, we
anticipate further soft market pressures in the near term, making
effective risk management increasingly critical.
Credit
Exposure to credit risk largely emanates
from the use of reinsurers, brokers, and
coverholders.
Credit risk is the risk of loss resulting from
default in obligations due or changes in
the credit standing of either issuers of
securities, counterparties or any debtors
which Beazley is exposed to.
Beazley maintains long-term partnerships with strategic reinsurance
partners to support it throughout the insurance cycle and during
potential catastrophic claim events. Beazley uses a range of
traditional and alternative reinsurance mechanisms to diversify
reinsurance credit risk. All reinsurers must meet stringent internal
approval criteria, overseen by the Reinsurance Security Committee.
Beazley operates established broker relationships and mitigates
credit risk via the monitoring of broker concentrations, payment
performance oversight and broker onboarding review criteria.
Coverholder monitoring and onboarding utilises a risk-based
approach, using financial stability information, overseen by the
Delegated Authority Oversight Committee.
Investment credit risks are managed with a well-diversified
portfolio, with investment parameters by type, duration and credit
quality, monitored by the Investment Committee.
Outlook:
The credit risk outlook remains stable, as Beazley manages
reinsurance, broker, coverholder and investment credit risks,
maintaining low levels of aged and/or bad debt.
Principal risks and summary descriptions Mitigation and monitoring
SYNDICATE 2623
31 DECEMBER 2025
9
Market
The risk of loss resulting from fluctuations
in the level and in the volatility of market
prices of assets, liabilities and financial
instruments. Investment assets may be
impacted by adverse movements in
financial markets, interest rates,
exchange rates, or external market
forces.
Beazley operates a conservative investment strategy to ensure
adequate funds available to pay claims. We employ robust policies
and tools to manage market risk, ensuring alignment with
regulatory requirements and industry best practices.
Interest rate and foreign exchange risks are managed using natural
hedges and financial instruments, minimizing potential volatility.
The Investment Committee regularly reviews market risk exposures
to ensure that our risk management capabilities remain agile and
effective in responding to evolving market dynamics.
Beazley continues to develop its understanding of how climate
change impacts our investment portfolio to help inform alignment
with our sustainability goals and create long-term value.
Outlook:
We maintain a stable market risk outlook for 2026, underpinned by
active investment portfolio management and a robust internal
control framework.
Group
The contagion risk that an action or
inaction of one part of the Beazley Group
adversely affect another part or parts of
the syndicate. This also includes a
changes in culture which leads to
inappropriate behaviour, actions and/or
decisions including dilution of culture or
negative impact on the brand.
In 2025, Beazley further developed its Risk Culture Framework, to
align with industry best practice. The framework is underpinned by
six guiding principles: Leadership and Tone from the Top; Risk
Governance and Accountability; Risk Awareness; Communication
and Transparency; Risk and Reward; and Innovation and
Adaptiveness.
A strong risk culture is the cornerstone of a mature Risk Function. It
enables informed and responsible decision-making, fosters
transparency, and promotes vigilance across both existing and
emerging risks, ensuring Beazley remains resilient and forward-
looking in an evolving risk and regulatory landscape. In 2025,
advancing our risk culture maturity was a key management priority.
A series of organisation-wide initiatives were launched to strengthen
communication and engagement, with the aim of cultivating a
consistent and robust risk culture. These efforts focused on building
a shared understanding of risk, encouraging proactive management,
and reinforcing a supportive ‘speak up’ environment.
Beazley operates shared services, systems, processes and controls
across different legal entities and jurisdictions. As such, the impact
of an issue or incident in one area of the business can have
implications across the Group (i.e. contagion risk). To mitigate this
risk we continue focus on group-wide strategic initiatives, which
include continued enhancement of our internal control environment
and optimization of key business and IT processes through
deployment of technology solutions.
The BFL Management Committee and the Board oversee Group risk,
with regular monitoring conducted by the Risk Function and
overseen by the Risk Committee.
Outlook:
Our Group risk outlook remains stable, with the BFL Management
Committee continuously evolving our risk culture through ongoing
monitoring and annual assessments, designed to drive
enhancements.
Principal risks and summary descriptions Mitigation and monitoring
SYNDICATE 2623
31 DECEMBER 2025
10
MANAGING AGENT’S REPORT CONTINUED
Principal risks and summary descriptions Mitigation and monitoring
Liquidity
Investments and/or other assets are
not available or adequate in order to
settle financial obligations when they
fall due.
By actively managing its liquidity needs, Beazley maximizes flexibility
in handling its financial assets and investment strategy. This proactive
approach ensures that clients and creditors are financially protected.
Beazley regularly evaluates the liquidity position of the syndicates
under the oversight of the Risk Committee.
Liquidity stress testing is performed to assess the largest cash flow
demands from the ten most severe Realistic Disaster Scenarios across
a 1-day and 12-month time horizon.
Liquidity is monitored quarterly to ensure an adequate liquidity surplus
is maintained, such that liquidity exceeds internal requirements, even
under stressed scenarios.
Outlook:
The liquidity risk outlook remains stable, with sufficient available
liquidity to meet expected cashflow requirements, including under
stressed scenarios, while maintaining adequate levels of liquidity and
capital buffers.
Regulatory and legal
The risk of non-compliance with
regulatory and legal requirements and
supervisory expectations or failing to
operate in line with the relevant
regulatory framework in the territories
where Beazley operates. This may lead
to financial loss (fines, penalties),
sanctions, reputational damage, loss of
confidence from regulators, regulatory
intervention, inability to underwrite or
pay claims.
Beazley’s compliance framework supports adherence to rules, laws
and regulatory expectations including through horizon scanning,
advice and training. The work of the compliance function is overseen
by the Risk and Regulatory Committee.
In 2025, we implemented a global horizon scanning tool to support the
increasing size and complexity of our multi-jurisdictional business. This
tool aids in identifying, assessing and implementing new and emerging
legal and regulatory policy in a way that is both accessible and
immediate across all areas of our business and locations that we
underwrite. Additionally, it helps to increase awareness of the
regulatory environment for a wider audience, strengthens our
adherence to requirements and provides additional clarity over the
expectations of our regulators.
We enhanced our regulatory engagement protocols by developing a
new framework, establishing oversight and strengthening our
reporting mechanisms for sharing key information with our regulators.
To ensure effective embedding of the new protocols and further
strengthen our culture of transparency and openness, we provided
firm-wide training to ensure that expectations are understood.
Delivering good customer outcomes remains central to our business.
The second line functions contribute to the work of the Conduct
Review Group, which provides oversight of conduct risk throughout the
product lifecycle, ensuring we are able to consistently meet regulatory
expectations for the treatment of our policyholders and retail
customers.
Beazley maintains a very low appetite for regulatory and legal risk. As
we consolidate the positive regulatory engagement achieved in 2025
and navigate an increasingly complex environment, maintaining strong
and open relationships with our regulators remains paramount.
Outlook:
The outlook for this risk has moved from increased to stable as a
result of the positive action taken above. We also continue to enhance
our key systems and internal control frameworks as well as adapting
our compliance framework to adhere to our regulatory and compliance
landscape. We expect the risk outlook to improve as changes become
well embedded.
SYNDICATE 2623
31 DECEMBER 2025
11
MANAGING AGENT’S REPORT CONTINUED
Principal risks and summary descriptions Mitigation and monitoring
Operational
The risk of failure of people,
processes and systems or the
impact of an external event on
Beazley's operations.
Primary risk drivers include
technology, information
management, project and
change transformation, third-
party management and the
process and people related
infrastructure supporting core
business activities; Underwriting
and Claims management
Our risks and controls are formally monitored and reported through a risk
and control self-assessment process and the use of quantifiable Key Risk
Indicators. Our ongoing control enhancement and underwriting
transformation programmes are designed to ensure that Beazley is fully
equipped to meet current and future operational challenges, strengthening
our resilience and supporting sustainable growth.
In 2025, we further advanced our investment in technology and process re-
engineering to strengthen our operational capabilities and add resilience to
internal processes and associated controls. Our business continuity, disaster
recovery and incident response plans ensure the stability of our processes
and systems, enabling our team to consistently deliver optimal outcomes for
our clients.
As the external environment grows more complex, technology and cyber
resilience remain top priorities. We have advanced our cyber maturity
journey, collaborating with external agencies, and maintaining robust
controls over information security, data and operational resilience. Regular
reviews of our incident response plans and ongoing investment in cyber
security training for all employees ensure we remain vigilant and prepared.
While maintaining a low appetite for operational risk, we observed an
increase in reported risk incidents during 2025, albeit of lower materiality,
reflecting both the growing complexity of our operational environment and
our enhanced risk awareness and reporting culture. Our Risk Function works
closely with first line teams to ensure that controls and processes evolve in
line with emerging risks and business change.
Outlook:
This risk has moved from an increased to stable outlook in 2026, reflecting a
reduction in the severity of operational risk incidents. This is supported by
the continued benefits of our investment in modernising controls, systems
and processes. As our transformation programmes and modernisation
initiatives progress, we expect these efforts to further enhance our
operational resilience in the years ahead.
Strategic
The risk of loss resulting from
ineffective strategic direction and
implementation that leads to
inadequate profitability, financial
loss and/or reputational damage.
Pervasive risks impacting
multiple areas of Beazley (e.g.,
reputation, and sustainability)
occurring through real or
perceived action, or inaction, by
a regulatory body, market and/or
third-party provider.
A negative change to Beazley’s
reputation would have a
detrimental impact to BFL and
the syndicates performance and
public perception.
Beazley consistently addresses key strategic opportunities and challenges,
striving to be the highest performing and most sustainable specialist insurer.
We ensure that we recognise, understand, discuss, and develop action plans
for significant strategic priorities in a timely manner, while maintaining
operational effectiveness and brand reputation.
More widely over the past 18 months, Beazley has made enhancements to its
corporate governance arrangements to align to a three-platform model. It
aims to ensure that the legal entities benefit from increased transparency,
and clarity around decision-making powers & autonomy, which aims to de-
risk the organisation. The three platform model has been implemented and
will continue to be embedded throughout 2026.
Beazley creates an environment that attracts, retains and develops high
performing talent with diverse perspectives, encouraging exploration,
creation, and innovation. By investing in understanding the complexities of
the risks our clients face and deploying our expertise where it adds value, we
thrive. The BFL Management Committee and the Board oversee these risks,
in collaboration with the Group Executive Committee.
Our commitment is to create a sustainable business for our people, partners,
and planet through responsible business goals. This focuses on
understanding and reducing our carbon footprint, contributing positively to
our social environment, and upholding strong governance practices.
Sustainability principles are embedded into business planning with a
documented transition plan and reputational risk is mitigated through
transparent climate-related decision-making across underwriting,
investments and operations. While market developments are considered,
each is evaluated individually to balance potential opportunities and risks.
Outlook:
As we build on our past achievements, our outlook for strategic risk in 2026
remains stable, underpinned by our commitment to disciplined growth,
innovation and sustainability.
SYNDICATE 2623
31 DECEMBER 2025
12
MANAGING AGENT’S REPORT CONTINUED
Directors
A list of Directors of the managing agent who held office during the year and to the date of this report can
be found on page 50.
Disclosure of information to the auditor
The Directors of the managing agent who held office at the date of approval of this Managing Agent’s
Report confirm that, so far as they are each aware, there is no relevant audit information of which the
syndicate’s auditor is unaware; and each Director has taken all the steps that they ought to have taken as
a Director to make themselves aware of any relevant audit information and to establish that the
syndicate’s auditor is aware of that information.
Auditor
Pursuant to Section 14(2) of Schedule 1 of the Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008, the auditor will be deemed to be reappointed and Ernst & Young
LLP will therefore continue in office.
On behalf of the Board
…………………………
C C J Wong
Director
19 February 2026
SYNDICATE 2623
31 DECEMBER 2025
13
STATEMENT OF MANAGING AGENT’S RESPONSIBILITIES
The Directors of the managing agent are responsible for preparing the syndicate financial statements in
accordance with applicable law and regulations.
The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 requires
the Directors of the managing agent to prepare their syndicate annual accounts for each financial year.
Under that law they have elected to prepare the annual accounts in accordance with UK Accounting
Standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 102 The
Financial Reporting Standard applicable in the UK and Republic of Ireland.
Under Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 the
Directors of the managing agent must not approve the annual accounts unless they are satisfied that they
give a true and fair view of the state of affairs of the syndicate and of the statement of comprehensive
income of the syndicate for that period. In preparing these financial statements, the Directors of the
managing agent are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable UK Accounting Standards have been followed, subject to any material
departures disclosed and explained in the annual accounts;
• assess the syndicate’s ability to continue as a going concern, disclosing, as applicable, matters related
to going concern; and
• use the going concern basis of accounting unless they either intend to cease trading, or have no
realistic alternative but to do so.
The Directors of the managing agent are responsible for keeping adequate accounting records that are
sufficient to show and explain the syndicate’s transactions and disclose with reasonable accuracy at any
time the financial position of the syndicate and enable them to ensure that the financial statements comply
with the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008. They
are responsible for such internal control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error and have
general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the
company and to prevent and detect fraud and other irregularities.
The Directors of the managing agent are responsible for the maintenance and integrity of the syndicate
and financial information included on the syndicate’s website. Legislation in the UK governing the
preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The Directors of the managing agent are required to comply with the requirements of section 1 of the
Lloyd’s Syndicate Accounts Instructions version 3.1 as modified by the Frequently Asked Questions Version
1.1 issued by Lloyd’s (the 'Syndicate Accounts Instructions').
The Directors of the managing agent are responsible for 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.
We confirm that to the best of our knowledge the syndicate accounts, including the iXBRL tagging applied
to these accounts, comply with the requirements of the Lloyd’s Syndicate Accounts Instructions version 3.1
as modified by the Frequently Asked Questions version 1.1 issued by Lloyd’s.
On behalf of the Board
…………………………
C C J Wong
Director
19 February 2026
SYNDICATE 2623
31 DECEMBER 2025
14
Opinion
We have audited the syndicate annual accounts of syndicate 2623 (‘the syndicate’) for the year ended 31
December 2025 which comprise the Statement of Comprehensive Income, the Balance Sheet, Statement
of Changes In Members’ Balances, the Statement of Cash Flows and the related notes 1 to 24, including a
summary of significant accounting policies. The financial reporting framework that has been applied in
their preparation is applicable law including The Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008, United Kingdom Accounting Standards including FRS 102 ‘The
Financial Reporting Standard applicable in the UK and Republic of Ireland’ and FRS 103 ‘Insurance
Contracts’ (‘United Kingdom Generally Accepted Accounting Practice’), and Section 1 of the Lloyd’s
Syndicate Accounts Instructions V3.1 as modified by the Frequently Asked Questions Version 1.1 issued by
Lloyd’s (‘the Syndicate Accounts Instructions’).
In our opinion, the syndicate annual accounts:
• give a true and fair view of the syndicate’s affairs as at 31 December 2025 and of its profit for the
year then ended;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice; and
• have been prepared in accordance with the requirements of The Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the Syndicate Accounts
Instructions.
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 Syndicate
Accounts Instructions, and other applicable law. Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of the syndicate annual accounts section of our
report. We are independent of the syndicate in accordance with the ethical requirements that are relevant
to our audit of the syndicate annual accounts in the UK, including the FRC’s Ethical Standard as applied to
other entities of public interest, and we have fulfilled our other ethical responsibilities in accordance with
these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Conclusions relating to going concern
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.
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 12 months from when the syndicate annual accounts are
authorised for issue. from when the syndicate annual accounts are authorised for issue.
Our responsibilities and the responsibilities of the directors of the managing agent with respect to going
concern are described in the relevant sections of this report. However, because not all future events or
conditions can be predicted, this statement is not a guarantee as to the syndicate’s ability to continue as a
going concern.
Other information
The other information comprises the information included in the annual report and accounts other than the
syndicate annual accounts and our auditor’s report thereon. The directors of the managing agent are
responsible for the other information contained within the annual report and accounts.
Our opinion on the syndicate annual accounts does not cover the other information and, except to the
extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion
thereon.
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 course of
the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the syndicate annual accounts themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of the other information, we are required to report that
fact.
We have nothing to report in this regard.
SYNDICATE 2623
31 DECEMBER 2025
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SYNDICATE 2623
15
Opinions on other matters prescribed by The Insurance Accounts Directive (Lloyd’s Syndicate
and Aggregate Accounts) Regulations 2008
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 financial year in which the syndicate
annual accounts are prepared is consistent with the syndicate annual accounts; and
• the managing agent’s report has been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the syndicate and its environment obtained in the
course of the audit, we have not identified material misstatements in the managing agent’s report.
We have nothing to report in respect of the following matters where The Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 requires us to report to you, if in our
opinion:
• the managing agent in respect of the syndicate has not kept adequate accounting records; or
• the syndicate annual accounts are not in agreement with the accounting records; or
• certain disclosures of the managing agent’s emoluments specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of the managing agent
As explained more fully in the Statement of Managing Agent’s Responsibilities set out on page 14, the
directors of the managing agent are responsible for the preparation of the syndicate annual accounts and
for being satisfied that they give a true and fair view, and for such internal control as they determine is
necessary to enable the preparation of the syndicate annual accounts that are free from material
misstatement, whether due to fraud or error.
In preparing the syndicate annual accounts, the directors of the managing agent are responsible for
assessing the syndicate’s ability to continue in operation, disclosing, as applicable, matters related to its
ability to continue in operation and using the going concern basis of accounting unless the directors of the
managing agent either intends to cease to operate the syndicate, or has no realistic alternative but to do
so.
Auditor’s 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 auditor’s 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.
Explanation as to what extent the audit was considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed
below. However, the primary responsibility for the prevention and detection of fraud rests with both those
charged with governance of the managing agent and management.
Our approach was as follows:
• We obtained a general understanding of the legal and regulatory frameworks that are applicable to
the syndicate and determined that the most significant are direct laws and regulations related to
elements of Lloyd’s Byelaws and Regulations, and the financial reporting framework (UK United
Kingdom Generally Accepted Accounting Practice), and requirements referred to by Lloyd’s in the
Syndicate Accounts instructions. Our considerations of other laws and regulations that may have a
material effect on the syndicate annual accounts included permissions and supervisory
requirements of Lloyd’s of London, the Prudential Regulation Authority (‘PRA’) and the Financial
Conduct Authority (‘FCA’).
SYNDICATE 2623
31 DECEMBER 2025
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SYNDICATE 2623
16
• We obtained a general understanding of how the syndicate is complying with those frameworks by
making enquiries of management, internal audit, and those responsible for legal and compliance
matters of the syndicate. In assessing the effectiveness of the control environment, we also
reviewed significant correspondence between the syndicate, Lloyd’s of London and other UK
regulatory bodies; reviewed minutes of the Board and Risk Committee of the managing agent; and
gained an understanding of the managing agent’s approach to governance.
• For direct laws and regulations, we considered the extent of compliance with those laws and
regulations as part of our procedures on the related syndicate annual accounts’ items.
• For both direct and other laws and regulations, our procedures involved: making enquiries of the
directors of the managing agent and senior management for their awareness of any non-
compliance of laws or regulations, enquiring about the policies that have been established to
prevent non-compliance with laws and regulations by officers and employees, enquiring about the
managing agent’s methods of enforcing and monitoring compliance with such policies, and
inspecting significant correspondence with Lloyd’s, the PRA and the FCA and involvement of
relevant specialists, including forensics specialists and inquiring about the appointment of external
advisors, including legal counsel, as applicable.
• The syndicate operates in the insurance industry which is a highly regulated environment. As such
the Senior Statutory Auditor considered the experience and expertise of the engagement team to
ensure that the team had the appropriate competence and capabilities, which included the use of
specialists where appropriate.
• We assessed the susceptibility of the syndicate’s annual accounts to material misstatement,
including how fraud might occur by considering the controls that the directors of the managing
agent have established to address risks identified by them, or that otherwise seek to prevent,
deter or detect fraud. We also considered areas of significant judgement, complex transactions,
performance targets, economic or external pressures and the impact these have on the control
environment. Where this risk was considered to be higher, we performed audit procedures to
address each identified fraud risk, including;
â—¦ Reviewing accounting estimates for evidence of management bias. Supported by our
Actuaries, we assessed if there were any indicators of management bias in the valuation of
insurance liabilities and the recognition of estimated premium income.
â—¦ Evaluating the business rationale for significant and/or unusual transactions.
â—¦ Testing the appropriateness of journal entries recorded in the general ledger, particularly
in respect of judgemental areas including valuation of insurance liabilities and estimated
premium income.
A further description of our responsibilities for the audit of the annual accounts is located on the Financial
Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part
of our auditor’s report.
Other matter
Our opinion on the syndicate annual accounts does not cover the iXBRL tagging included within these
syndicate annual accounts, and we do not express any form of assurance conclusion thereon.
Use of our report
This report is made solely to the syndicate’s members, as a body, in accordance with The Insurance
Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008. Our audit work has been
undertaken so that we might state to the syndicate’s members those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the syndicate and the syndicate’s members as a
body, for our audit work, for this report, or for the opinions we have formed.
Niamh Byrne (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
SYNDICATE 2623
31 DECEMBER 2025
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SYNDICATE 2623
17
20 February 2026
| 2025 | 2024 | ||
| Notes | $'000 | $'000 | |
Gross premiums written | 3 | | |
| Outward reinsurance premiums | ( | ( | |
Premiums written, net of reinsurance | | | |
Changes in unearned premium | |||
| Change in the gross provision for unearned premiums | 15 | | |
Change in the provision for unearned premiums, reinsurers’ share | 15 | ( | ( |
| Net change in the provisions for unearned premiums | | | |
| Earned premiums, net of reinsurance | | | |
| Allocated investment return transferred from the non-technical account | | | |
Claims paid | |||
| Gross amount | 15 | ( | ( |
| Reinsurers’ share | 15 | | |
| Net claims paid | ( | ( | |
Change in the provision for claims | |||
| Gross amount | 15 | | ( |
| Reinsurers’ share | 15 | ( | ( |
| Net change in provisions for claims | | ( | |
| Claims incurred, net of reinsurance | ( | ( | |
| Net operating expenses | 4 | ( | ( |
Balance on the technical account - general business | | | |
Investment income | 7 | | |
Realised gains on investments | 7 | | |
| Unrealised (losses)/gains on investments | 7 | ( | |
Investment expenses and charges | ( | ( | |
Total investment return | | | |
Allocated investment return transferred to technical account | ( | ( | |
| (Loss)/gain on foreign exchange | ( | | |
| Other income | | | |
| Profit for the financial year | | | |
| Total comprehensive income for the financial year | | |
There were no other comprehensive gains or losses in the year.
The notes on pages 22 to 49 form part of these financial statements.
SYNDICATE 2623
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2025
18
| 2025 | 2024 | ||
| Assets | Notes | $'000 | $'000 |
Investments | |||
| Financial investments | 9 | | |
Deposits with ceding undertakings | | | |
| | | ||
Reinsurers' share of technical provisions | |||
| Provision for unearned premiums | 15 | | |
| Claims outstanding | 15 | | |
| | | ||
Debtors | |||
Debtors arising out of direct insurance operations | 11 | | |
Debtors arising out of reinsurance operations | 12 | | |
| Other debtors | 13 | | |
| | | ||
Other assets | |||
| Cash at bank and in hand | 19 | | |
| | | ||
Prepayments and accrued income | |||
| Deferred acquisition costs | 14 | | |
| Other prepayments and accrued income | | | |
| | | ||
| Total assets | | | |
Capital and reserves | |||
| Members' balances | | | |
| | | ||
Liabilities | |||
Technical provisions | |||
| Provision for unearned premiums | 15 | | |
| Claims outstanding | 15 | | |
| | | ||
Creditors | |||
Creditors arising out of direct insurance operations | 16 | | |
Creditors arising out of reinsurance operations | 17 | | |
Other creditors | 18 | | |
| | | ||
| Accruals and deferred income | | | |
Total liabilities | | | |
| Total liabilities, capital and reserves | | |
The notes on pages 22 to 49 form part of these financial statements.
The syndicate annual accounts on pages 18 to 49 were approved and authorised for issue by the Board of
Beazley Furlonge Limited on 19 February 2026 and were signed on its behalf by
…………………………
C C J Wong (Director)
SYNDICATE 2623
BALANCE SHEET
AS AT 31 DECEMBER 2025
19
| 2025 | 2024 | |
| $'000 | $'000 | |
Members’ balances brought forward at 1 January | | |
| Total comprehensive income for the financial year | | |
| Payments of profit to members' personal reserve funds | ( | ( |
| Members' balances carried forward at 31 December | | |
Members participate in syndicates by reference to YoA and their ultimate result, assets and liabilities are
assessed with reference to policies incepting in that YoA in respect of their membership of a particular
year.
The notes on pages 22 to 49 form part of these financial statements.
SYNDICATE 2623
STATEMENT OF CHANGES IN MEMBERS’ BALANCES
31 DECEMBER 2025
20
| 2025 | 2024 | ||
Note | $'000 | $'000 | |
Cash flows from operating activities | |||
| Profit for the financial year | | | |
Adjustments for: | |||
Decrease in gross technical provisions | 15 | ( | ( |
Decrease in reinsurers' share of gross technical provisions | 15 | | |
| (Increase)/decrease in debtors | ( | | |
| Decrease in creditors | ( | ( | |
| Movement in other assets/liabilities | ( | | |
Investment return | 7 | ( | ( |
| Foreign exchange | ( | | |
| Net cash flows from operating activities | ( | ( | |
Cash flows from investing activities | |||
| Purchase of equity and debt securities | ( | ( | |
| Sale of equity and debt securities | | | |
| Investment income received | | | |
| Net cash flows from investing activities | | | |
Cash flows from financing activities | |||
Transfer to members in respect of underwriting participations | ( | ( | |
| Net cash flows from financing activities | ( | ( | |
| Net increase in cash and cash equivalents | | | |
| Cash and cash equivalents at the beginning of the year | | | |
| Foreign exchange on cash and cash equivalents | | ( | |
| Cash and cash equivalents at the end of the year | 19 | | |
The notes on pages 22 to 49 form part of these financial statements.
SYNDICATE 2623
STATEMENT OF CASH FLOWS
YEAR ENDED 31 DECEMBER 2025
21
1 Accounting policies
Basis of preparation
Syndicate 2623 (the ‘syndicate’) comprises a member of the Society of Lloyd’s that underwrites insurance
business in the London Market. The managing agent of the syndicate is Beazley Furlonge Limited (‘BFL'),
whose registered address and a principal place of business is 22 Bishopsgate, London, EC2N 4BQ. The
ultimate controlling party of BFL is Beazley plc, a company incorporated in England and Wales.
These syndicate annual accounts have been prepared in accordance with the Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, the 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 3.1 as modified by the Frequently Asked Questions Version 1.1 issued by
Lloyd’s.
The financial statements have been prepared on the historic cost basis, except for financial assets at fair
value through profit or loss ('FVTPL') which are measured at fair value. All amounts presented are stated in
US dollars, being the syndicate’s functional currency, and in thousands, unless noted otherwise.
Going Concern
The financial statements of the syndicate have been prepared on a going concern basis. The syndicate's
business activities, together with the factors likely to affect its future development, performance and
position, are set out in the Strategic report of the managing agent on pages 4 - 7 . In addition, note 2
includes the syndicate's risk management objectives and the managing agent's objectives, policies and
processes for managing its capital. The syndicate has sufficient capital for each year of account in its Funds
at Lloyd’s (FAL). There is no intention to cease underwriting or cease the operations of the syndicate.
In assessing the syndicate's going concern position as at 31 December 2025, the managing agent has
considered a number of factors, including the current statement of financial position and the syndicate's
strategic and financial plan. The assessment concluded that, for the foreseeable future, the syndicate has
sufficient capital and liquidity for the 12 months from the date the financial statements are authorised for
issue.
Use of estimates and judgements
The preparation of financial statements requires the use of estimates and judgements that affect the
reported amounts of assets, liabilities, income and expenses. Actual results may differ from those on which
management’s estimates are based. Estimates and assumptions are continually evaluated and are based
on historical experience and other factors. For example, estimates which are sensitive to economic,
regulatory and geopolitical conditions could be impacted by significant changes in the external
environment such as the volatile macroeconomic environment, climate change, international conflicts, and
significant changes in legislation. Any revisions to accounting estimates are recognised in the period in
which the estimate is revised and in any future periods affected.
Specific to climate change, since responses to it are still developing, it is not possible to consider all
possible future outcomes when determining asset and liability valuations, and timing of future cash flows,
as these are not yet known. Nevertheless, the current management view is that reasonably possible
changes arising from climate risks would not have a material impact on asset and liability valuations at the
year-end date.
(a) Valuation of insurance contract liabilities
The most critical estimate included within the syndicate’s balance sheet is the estimate for insurance
losses incurred but not reported (‘IBNR’), which is included within total technical provisions and reinsurer’s
share of technical provisions in the balance sheet and Note 15. This estimate is critical as it outlines the
current liability for future expenses expected to be incurred in relation to claims. If this estimation was to
prove inadequate then an exposure would arise in future years where a liability has not been provided for.
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2025
22
22
1 Accounting policies continued
The best estimate of the most likely ultimate outcome is used when calculating notified claims. This
estimate is based upon the facts available at the time, in conjunction with the claims manager’s view of
likely future developments. The total estimate of IBNR as at 31 December 2025 included within claims
outstanding in the balance sheet is $4,020,501k (2024: $4,417,704k).
(b) Valuation of unquoted and illiquid financial assets
Determination of fair value of unquoted and illiquid assets involves judgement in model valuations,
through the incorporation of both observable and unobservable market inputs. These inputs include
assumptions that lead to the existence of a range of plausible valuations. Further detail on the
methodologies and inputs used is described in note 9.
(c) Premium estimates
Premium written is initially based on the estimated premium income (‘EPI’) of each contract. Where
premium is sourced through binders, the binder EPI is pro-rated across the binder period. Judgement is
involved in determining the ultimate estimates in order to establish the appropriate premium value and,
ultimately, the cash to be received. EPI estimates are updated to reflect changes in an underwriter's
expectation through consultation with brokers and third-party coverholders, changes in market conditions,
historic experience and to reflect actual cash received for a contract.
Due to the nature of Lloyd’s business and the settlement patterns of the underlying business it is also not
uncommon for some contracts to take a number of years to finalise and settle, and a receivable on the
balance sheet remains. The amount of estimated future premium that remains in insurance receivables
relating to years of account that are more than three years developed at 31 December 2025 is $24,383k
(2024: $24,251k).
Significant accounting policies
The financial statements have been prepared on an annual basis of accounting, whereby the incurred cost
of claims, commissions and related expenses are charged against the earned proportion of premiums, net
of reinsurance as follows:
(a) Premiums written
Gross premiums written comprise premiums on contracts incepted during the financial year together
with adjustments to premiums written in previous accounting periods and estimates for premiums
from contracts entered into during the course of the year. Gross written premiums are stated before
the deduction of brokerage, taxes, duties levied on premiums and other deductions.
(b) Unearned premiums
A provision for unearned premiums represents that part of the gross premiums written that is
estimated will be earned in the following or subsequent financial periods. It is calculated using the
daily pro rata method, under which the premium is apportioned over the period of risk.
(c) Claims provisions and related reinsurance recoveries
Claims represent the cost of claims and claims handling expenses paid during the financial year,
together with the movement in provisions for outstanding claims, claims incurred but not reported
(‘IBNR’) and future claims handling provisions. The provision for claims outstanding comprises
amounts set aside for claims advised and IBNR.
The IBNR amount is based on estimates calculated using widely accepted actuarial techniques (e.g.
chain ladder) which are reviewed quarterly by the group actuary and annually by the independent
syndicate reporting actuary. The techniques generally use projections, based on past experience of
the development of claims over time, to form a view on the likely ultimate claims to be experienced.
For more recent underwriting, regard is given to the variations in the business portfolio accepted and
the underlying terms and conditions. Thus, the critical assumptions used when estimating claims
provisions are that the past experience is a reasonable predictor of likely future claims development
and that the rating and other models used to analyse current business are a fair reflection of the likely
level of ultimate claims to be incurred.
A provision is made at the year-end for the estimated cost of claims incurred but not settled at the
balance sheet date, including the cost of claims incurred but not yet reported to the managing agent.
The managing agent takes all reasonable steps to ensure that it has appropriate information regarding
its claims exposures. However, given the uncertainty in establishing claims provisions, it is likely that
the final outcome will prove to be different from the original liability established.
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
23
1 Accounting policies continued
(d) Liability adequacy testing
At each reporting date, liability adequacy tests are performed to ensure the adequacy of the claims
liabilities net of deferred acquisition costs and unearned premium reserves. In performing these tests,
current best estimates of future contractual cash flows, claims handling and administration expenses
as well as investment income from the assets backing such liabilities are used.
Any deficiency is subsequently charged to the statement of comprehensive income and a liability for
unexpired risk provision is established.
(e) Acquisition costs
Acquisition costs comprise brokerage, premium levies, and staff related costs of the underwriters
acquiring the business. The proportion of acquisition costs in respect of unearned premiums is
deferred at the balance sheet date and recognised in later periods when the related premiums are
earned.
(f) Foreign currencies
Foreign currency transactions are translated into the functional currency using average exchange
rates applicable to the period in which the transactions take place and where the syndicate considers
these to be a reasonable approximation of the transaction rate. Foreign exchange gains and losses
resulting from the settlement of such transactions and from translation at the period end of monetary
assets and liabilities denominated in foreign currencies are recognised in the statement of
comprehensive income.
(g) Investment return
Investment return comprises all investment income, realised investment gains and losses and
movements in unrealised gains and losses, net of investment expenses, charges and interest.
Realised gains and losses on investments carried at market value are calculated as the difference
between sale proceeds and the original cost of the investment. Movements in unrealised gains and
losses on investments represent the difference between the valuation at the balance sheet date, and
the valuation at the previous period end or purchase value during the period.
Investment return is initially recorded in the non-technical account. A transfer is made from the non-
technical account to the general business technical account to reflect the investment return on funds
supporting underwriting business.
(h) Ceded reinsurance
These are contracts entered into by the syndicate with reinsurers under which the syndicate is
compensated for losses on contracts issued by the syndicate and that meet the definition of an
insurance contract. Insurance contracts entered into by the syndicate under which the contract holder
is another insurer (inwards reinsurance) are included with insurance contracts.
Any benefits to which the syndicate is entitled under its reinsurance contracts held are recognised as
reinsurance assets. These consist of balances due from reinsurers relating to claims and also includes
the provision for unearned premiums, reinsurers’ share. Balances due relating to the reinsurers share
of claims are based on calculated amounts of outstanding claims recoveries and projections for IBNR,
net of estimated irrecoverable amounts having regard to the reinsurance programme in place for the
class of business, the claims experience for the period and the current security rating of the reinsurer
involved. Reinsurance liabilities are primarily premiums payable for reinsurance contracts and are
recognised as an expense when due
Reinsurance assets are assessed for impairment at each reporting date. If there is objective evidence
of impairment, then the carrying amount is reduced to its recoverable amount and the impairment
loss is recognised in the statement of comprehensive income.
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
24
1 Accounting policies continued
(i) Financial instruments
Recognition and derecognition
Financial instruments are recognised on the balance sheet at such time that the syndicate becomes a
party to the contractual provisions of the financial instrument. A financial asset is derecognised when:
• the contractual rights to receive cash flows from the financial assets expire;
• the financial assets have been transferred, together with substantially all the risks and
rewards of ownership; or
• despite having retained some, but not substantially all, risks and rewards of ownership,
control of the asset is transferred to another party and the other party has the practical ability
to sell the asset in its entirety to an unrelated third party.
Financial liabilities are derecognised if the syndicate’s obligations specified in the contract expire, are
discharged or cancelled.
Financial assets and liabilities measurement
On acquisition of a financial asset or liability, the asset or liability is measured at the transaction price,
except for those financial assets and liabilities at FVTPL, which are initially measured at fair value. The
exception to this is when the arrangement constitutes a financing transaction however, the syndicate
does not make use of any such arrangements.
Except for derivative financial investments, all financial investments are designated as FVTPL upon
initial recognition because they are managed and their performance is evaluated on a fair value basis.
Information about these financial instruments is provided internally on a fair value basis to key
management. The investment strategy is to invest and evaluate their performance with reference to
their fair values.
Fair value measurement
Fair value is the price at which an orderly transaction to sell an asset or to transfer a liability would
take place between market participants at the measurement date. Fair value is a market-based
measure and in the absence of observable market prices in an active market, it is measured using the
assumptions that market participants would use when pricing the asset or liability.
The best evidence of the fair value of a financial instrument at initial recognition is the transaction
price, i.e., the fair value of the consideration given or received, unless the fair value of that
instrument is evidenced by comparison with other observable current market transactions in the same
instrument (i.e., without modification or repackaging) or based on a valuation technique whose
variables include only data from observable markets.
When transaction price provides the best evidence of fair value at initial recognition, the financial
instrument is initially measured at the transaction price and any difference between this price and the
value initially obtained from a valuation model is subsequently recognised in statement of
comprehensive income depending on the individual facts and circumstances of the transaction but not
later than when the valuation is supported wholly by observable market data or the transaction is
closed out.
Upon initial recognition, attributable transaction costs relating to financial instruments at FVTPL are
recognised in the statement of comprehensive income when incurred. Financial assets at FVTPL are
continuously measured at fair value, and changes therein are recognised in the statement of
comprehensive income. Net changes in the fair value of financial assets at FVTPL exclude interest and
dividend income, as these items are accounted for separately.
Hedge funds, equity funds, collateralised loan obligations and illiquid credit assets
The syndicate participates in a number of hedge funds and related financial instruments for which
there are no readily available quoted market prices. The valuation of these hedge funds is based on
fair value techniques (as described above). The fair value of our hedge fund portfolio is calculated by
reference to the underlying net asset values of each of the individual funds. Consideration is also
given in valuing these funds to any restriction applied to distributions, the existence of side pocket
provisions, and the timing of the latest available valuations. At certain times, the syndicate will have
uncalled unfunded commitments in relation to its illiquid credit assets. These uncalled unfunded
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
25
1 Accounting policies continued
commitments are actively monitored by the syndicate and are disclosed in notes 2 and 9 to the
financial statements. The additional investment into its illiquid credit asset portfolio is recognised on
the date that this funding is provided. These instruments are included within shares and other variable
yield securities and units in unit trusts. The syndicate also invests in a number of collateralised loan
obligations ('CLOs'). The valuation of of these CLOs is based on fair value techniques (as described
above). The CLOs are included within debt securities and other fixed income securities.
(j) Insurance 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.
(k) Other debtors
Other debtors principally consist of intercompany debtor balances and sundry debtors and are carried
at amortised cost less any impairment losses.
(l) Other creditors
Other creditors principally consist of amounts due to Syndicate 3623, 6107 and other related entities,
and bank overdraft. These are stated at amortised cost determined using the effective interest rate
method.
(m) Derivative financial instruments
Derivatives are initially recognised at fair value on the date on which a derivative contract is entered
into and are subsequently remeasured at their fair value. The best evidence of fair value of a
derivative at initial recognition is the transaction price. Fair values are obtained from quoted market
prices in active markets, recent market transactions, and valuation techniques which include
discounted cash flow models. All derivatives are carried as assets when fair value is positive and as
liabilities when fair value is negative.
Derivative assets and liabilities are offset and the net amount reported in the balance sheet when
there is a legally enforceable right to set off the recognised amounts and the parties intend to settle
on a net basis, or realise the assets and settle the liability simultaneously. Derivative assets are
included within Financial investments in the Balance Sheet. Derivative liabilities are included within
Other creditors.
(n) Impairment of financial assets
Assessment is made at each reporting date whether there is objective evidence that a financial asset
or group of financial assets measured at amortised cost is impaired. A financial asset or group of
financial assets is impaired and impairment losses are incurred only if there is objective evidence of
impairment as a result of one or more events that have occurred after the initial recognition of the
assets and that event has an impact on the estimated cash flows of the financial asset or group of
financial assets that can be reliably estimated.
If there is objective evidence that impairment exists, the amount of the loss is measured as the
difference between the assets carrying amount and the value of the estimated future cash flows
discounted at the financial asset’s original effective interest rate. The amount of the loss is recognised
in statement of comprehensive income.
(o) Cash and cash equivalents
Cash and cash equivalents are comprised of cash at bank and in hand, in addition to deposits held at
call with banks and other short-term highly liquid investments with maturities of three months or less
from the acquisition date. Only cash at bank and in hand is presented separately on the face of the
balance sheet, while cash equivalents are included within the 'financial investments' line. Cash and
cash equivalents are shown in aggregate on the cash flow statement and at note 19. These are
carried at amortised cost less impairment losses.
(p) Taxation
Under Schedule 19 of the Finance Act 1993 managing agents are not required to deduct basic rate
income tax from trading income. In addition, all UK basic rate income tax (currently at 20%) deducted
from syndicate investment income is recoverable by managing agents and consequently the
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
26
1 Accounting policies continued
distribution made to members or their members’ agents is gross of tax. Capital appreciation falls
within trading income and is also distributed gross of tax.
No provision has been made for any US federal income tax payable on underwriting results or
investment earnings. Any payments on account made by the syndicate during the year have been
included in the balance sheet under the heading ‘other debtors’.
No provision has been made for any other overseas tax payable by members on underwriting results.
(q) Pension costs
Pension contributions relating to staff who act on behalf of the syndicate are charged to the syndicate
and included within net operating expenses.
(r) Related party transactions
The syndicate has taken advantage of the exemption contained in FRS 102.1 and has therefore not
disclosed transactions with other wholly owned entities forming part of the Beazley Group.
2 Risk management
The managing agent has identified the risks arising from the syndicates activities and has established
policies and procedures to manage these items in accordance with its risk appetite. The sections below
outline the syndicate’s risk appetite and explain how the managing agent defines and manages each
category of risk. The risk management framework is discussed in the managing agent's report.
2.1 Insurance risk
The syndicate’s insurance business assumes the risk of loss from persons or organisations that are directly
exposed to an underlying loss. Insurance risk arises from this risk transfer due to inherent uncertainties
about the occurrence, amount and timing of insurance liabilities. The four key components of insurance
risk are underwriting, reinsurance, claims management and reserving. Each element is considered below.
a) Underwriting risk
Underwriting risk comprises four elements that apply to all insurance products offered by the syndicate:
• cycle risk – the risk that business is written without full knowledge as to the (in)adequacy of rates,
terms and conditions;
• event risk – the risk that individual risk losses or catastrophes lead to claims that are higher than
anticipated in plans and pricing;
• pricing risk – the risk that the level of expected loss is understated in the pricing process; and
• expense risk – the risk that the allowance for expenses and inflation in pricing is inadequate.
The managing agent manages and model these four elements in the following three categories: attritional
claims, large claims and catastrophe events.
The syndicate’s underwriting strategy is to seek a diverse and balanced portfolio of risks in order to limit
the variability of outcomes. This is achieved by accepting a spread of business over time, segmented
between different products, geography and size.
The annual business plans for each underwriting team reflect the syndicate’s underwriting strategy, and
set out the classes of business, the territories and the industry sectors in which business is to be written.
These plans are approved by the Board of BFL and monitored by the underwriting committee.
The managing agents’s underwriters calculate premiums for risks written based on a range of criteria
tailored specifically to each individual risk. These factors include but are not limited to the financial
exposure, loss history, risk characteristics, limits, deductibles, terms and conditions and acquisition
expenses. The managing agent also recognises that insurance events are, by their nature, random, and
the actual number and size of events during any one year may vary from those estimated using
established statistical techniques.
To address this, the managing agent sets out the exposure that it is prepared to accept in certain
territories to a range of events such as natural catastrophes and specific scenarios which may result in
large industry losses. This is monitored through regular calculation of Realistic Disaster Scenarios. The
aggregate position
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
27
2 Risk management continued
is monitored at the time of underwriting a risk, and reports are regularly produced to highlight the key
aggregations to which the syndicate is exposed.
The managing agent uses a number of modelling tools to monitor its exposures against the agreed risk
appetite set and to simulate catastrophe losses in order to measure the effectiveness of its reinsurance
programmes.
Stress and scenario tests are also run using these models. The range of scenarios considered includes
natural catastrophe, cyber, marine, liability, political, terrorism and war events.
One of the largest types of event exposure relates to natural catastrophe events such as windstorm or
earthquake. While the increasing risk from climate change impacting the frequency and severity of natural
catastrophes, the managing agent continues to monitor its exposure. Where possible the managing agent
measures geographic accumulations and uses its knowledge of the business, historical loss behaviour and
commercial catastrophe modelling software to assess the expected range of losses at different return
periods. Upon application of the reinsurance coverage purchased, the key gross and net exposures are
calculated on the basis of extreme events at a range of return periods.
To manage underwriting exposures, the managing agent has developed limits of authority and business
plans which are binding upon all staff authorised to underwrite and are specific to underwriters, classes of
business and industry.
These authority limits are enforced through a comprehensive sign-off process for underwriting transactions
including dual sign-off for all line underwriters and peer review for all risks exceeding individual
underwriters authority limits. Exception reports are also run regularly to monitor compliance.
All underwriters also have a right to refuse renewal or change the terms and conditions of insurance
contracts upon renewal. Rate monitoring details, including limits, deductibles, exposures, terms and
conditions and risk characteristics are also captured and the results are combined to monitor the rating
environment for each class of business.
Binding authority contracts
A proportion of the syndicate’s insurance risks are transacted by third parties under delegated
underwriting authorities. Each third party is thoroughly vetted by the managing agent's coverholder
approval group before it can bind risks, and is subject to rigorous monitoring to maintain underwriting
quality and confirm ongoing compliance with contractual guidelines.
b) Reinsurance risk
Reinsurance risk to the syndicate arises where reinsurance contracts put in place to reduce gross insurance
risk do not perform as anticipated, result in coverage disputes or prove inadequate in terms of the vertical
or horizontal limits purchased. Failure of a reinsurer to pay a valid claim is considered a credit risk which is
detailed separately below.
The syndicate’s reinsurance programmes complement the underwriting team's business plans and seek to
protect syndicate capital from an adverse volume or volatility of claims on both a per risk and per event
basis. In some cases the syndicate deems it more economic to hold capital than purchase reinsurance.
These decisions are regularly reviewed as an integral part of the business planning and performance
monitoring process.
The Reinsurance Security Committee examines and approves all reinsurers to ensure that they possess
suitable security. The syndicate’s ceded reinsurance team ensures that these guidelines are followed,
undertakes the administration of reinsurance contracts, monitors and instigates our responses to any
erosion of the reinsurance programmes.
c) Claims management risk
Claims management risk may arise within the syndicate in the event of inaccurate or incomplete case
reserves and claims settlements, poor service quality or excessive claims handling costs. These risks may
damage the Beazley brand and undermine its ability to win and retain business or incur punitive damages.
These risks can occur at any stage of the claims life-cycle.
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
28
2 Risk management continued
The managing agent's claims teams are focused on delivering quality, reliability and speed of service to
both internal and external clients. Their aim is to adjust and process claims in a fair, efficient and timely
manner, in accordance with the policy’s terms and conditions, the regulatory environment, and the
business’s broader interests. Prompt and accurate case reserves are set for all known claims liabilities,
including provisions for expenses.
d) Reserving and ultimate reserves risk
Reserving and ultimate reserves risk occurs within the syndicate where established insurance liabilities are
insufficient through inaccurate forecasting, or where there is inadequate allowance for expenses and
reinsurance bad debts provisions.
To manage reserving and ultimate reserves risk, the managing agent's actuarial team uses a range of
recognised techniques to project gross premiums written, monitor claims development patterns and stress
test ultimate insurance liability balances. An external independent actuary also performs an annual review
to produce a statement of actuarial opinion for the syndicate.
The objective of the syndicate’s reserving policy is to produce accurate and reliable estimates that are
consistent over time and across classes of business. The estimates of gross premiums written and claims
prepared by the actuarial department are used through a formal quarterly peer review process to
independently test the integrity of the estimates produced by the underwriting teams for each class of
business. These meetings are attended by senior management, senior underwriters, actuarial, claims, and
finance representatives.
An increase or decrease in total claims liabilities would have the following impact on profit and members'
balances':
Sensitivity to insurance risk (claims reserves)
Impact on profit and members'
balances
2025
$'000
2024
$'000
Claims outstanding - gross of reinsurance 5,705,517 5,982,650
Claims outstanding - net of reinsurance 4,155,251 4,381,135
5% increase in gross claims reserve (285,276 ) (299,133 )
5% decrease in gross claims reserve
5% increase in net claims reserve
(207,763 ) (219,057 )
5% decrease in net claims reserve 207,763 219,057
The syndicate monitors its exposure to insurance risk by location. The geographical breakdown of written
premiums is disclosed in note 3.
2.2 Market risk
Market risk arises where the value of assets and liabilities changes as a result of movements in foreign
exchange rates, interest rates and market prices.
Foreign exchange risk
The functional and presentational currency of the syndicate is US dollar. The effect of this on foreign
exchange risk is that the syndicate is exposed to fluctuations in exchange rates for non-dollar denominated
transactions and net assets.
The syndicate deals in four main settlement currencies: US dollars, sterling, Canadian dollars and euro.
Transactions in all currencies are converted to US dollars on initial recognition and revalued at the
reporting date. Remaining foreign exchange risk is still actively managed as described below.
The following table summarises the carrying value of total assets and total liabilities categorised by
currency:
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
29
2 Risk management continued
31 December 2025
UK £
$'000
US $
$'000
EUR €
$'000
CAD $
$'000
AUD $
$'000
Other
$'000
Total
$'000
Investments
Reinsurers' share of
technical provisions
Debtors
Other assets
Prepayments and
accrued income
Total assets
Technical provisions
(959,251 ) (5,653,447 ) (456,299 ) (196,986 ) — — (7,265,983 )
Creditors
(47,616 ) (298,034 ) (16,698 ) (4,002 ) — — (366,350 )
Accruals and deferred
income
(71,985 ) (15,742 ) (1,046 ) (180 ) — — (88,953 )
Total liabilities
(1,078,852 )
(5,967,223 ) (474,043 ) (201,168 ) — — (7,721,286 )
Total Capital and
Reserves
(24,199 ) (843,084 ) (503 ) (165,425 )
(62,319 )
(90,080 )
(1,185,610 )
UK £
$'000
US $
$'000
EUR €
$'000
CAD $
$'000
AUD $
$'000
Other
$'000
Total
$'000
Investments
Reinsurers' share of
technical provisions
Debtors
(19,562 ) 1,547,384 142,802 15,508 — — 1,686,132
Other assets
Prepayments and
accrued income
Total assets 876,711 7,790,313 256,007 439,430 63,399 91,198 9,517,058
Technical provisions
(874,127 ) (6,040,060 ) (409,743 ) (248,264 ) — — (7,572,194 )
Creditors
(49,398 ) (516,547 ) (42,749 ) 13,380 — — (595,314 )
Accruals and deferred
income
(70,643 ) (17,090 ) (789 ) (225 ) — — (88,747 )
Total liabilities (994,168 ) (6,573,697 ) (453,281 ) (235,109 ) — — (8,256,255 )
Total Capital and
Reserves
(63,399 )
(91,198 )
(1,260,803 )
Sensitivity analysis - foreign exchange risk
In 2025, the managing agent managed the syndicate's foreign exchange risk by periodically assessing its
non-dollar exposures and hedging these to a tolerable level while targeting net assets to be predominately
US dollar denominated. As part of this hedging strategy, exchange rate derivatives were used to rebalance
currency exposure across the syndicate. Details of all foreign currency derivative contracts entered into
with external parties are disclosed in note 10. On a forward looking basis an assessment is made of
expected future exposure development and appropriate currency trades put in place to reduce risk.
Fluctuations in the syndicate’s trading currencies against the US dollar would result in a change to profit
and members' balances. The table below gives an indication of the impact on profit and members' balances
of a percentage change in relative strength of US dollar against the value of sterling, Canadian dollar, euro
and Australian dollar, simultaneously.
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
30
2 Risk management continued
Impact on profit and members'
balances'
Change in exchange rate of sterling, Australian dollar, Canadian dollar and
euro relative to US dollar
2025
$'000
2024
$'000
Dollar weakens 10% against other currencies (4,548) (5,263)
Dollar strengthens 10% against other currencies
4,548 5,263
Interest rate risk
Some of the syndicate’s financial instruments, including financial investments and cash and cash
equivalents are exposed to movements in market interest rates.
The managing agent manages interest rate risk by primarily investing in short duration financial
investments and cash and cash equivalents. The Investment Committee monitors the duration of these
assets on a regular basis.
The syndicate also entered into interest rate futures contracts to manage the interest rate risk on fixed
income portfolios.
The following table shows the average duration at the reporting date of the financial instruments that are
exposed to movements in market interest rates. Duration is a commonly used measure of volatility which
gives a better indication than maturity of the likely sensitivity of our portfolio to changes in interest rates.
31 December 2025
<1 yr 1-2 yrs 2-3 yrs 3-4 yrs 4-5 yrs 5-10 yrs >10 yrs Total
Duration
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Debt securities
and other fixed
income securities
1,435,247 827,585 417,093 169,153 104,375 197,821 — 3,151,274
Participation in
investment pools
11,926 — — — — — — 11,926
Shares and other
variable yield
securities and
unit trusts*
— — — 317,100 — — — 317,100
Loans and
deposits with
credit institutions
29,033 — — — — — — 29,033
Overseas
deposits
255,540 — — — — — — 255,540
Cash at bank and
in hand
118,009 — — — — — — 118,009
Derivative
financial
instruments
171 — — — — — — 171
Syndicate loans
to central fund
— — — — — — — —
Total
1,849,926
827,585 417,093 486,253 104,375 197,821 —
3,883,053
*Excluding equity securities.
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
31
2 Risk management continued
31 December 2024
<1 yr 1-2 yrs 2-3 yrs 3-4 yrs 4-5 yrs 5-10 yrs >10 yrs Total
Duration
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Debt securities
and other fixed
income securities
1,245,178 1,180,462 711,995 305,885 130,223 200,417 — 3,774,160
Participation in
investment pools
9,191 — — — — — — 9,191
Shares and other
variable yield
securities and
unit trusts*
— — — 442,038 — — — 442,038
Loans and
deposits with
credit institutions
— — — — — — — —
Overseas
deposits
277,000 — — — — — — 277,000
Cash at bank and
in hand
98,677 — — — — — — 98,677
Derivative
financial
instruments
10,295 — — — — — — 10,295
Syndicate loans
to central fund
26,714 — — — — — —
26,714
Total
1,667,055
1,180,462
711,995 747,923 130,223 200,417 —
4,638,075
*Excluding equity securities.
Sensitivity analysis - interest rate risk
The syndicate holds financial assets and liabilities that are exposed to interest rate risk. Changes in
interest yields, with all other variables constant, would result in changes in the capital value of debt and
derivative financial instruments. This will affect reported profits and members' balances as indicated in the
below table:
Impact on profit for the | ||||
year | Impact on members balances | |||
| Shift in yield (basis points) | 2025 $'000 | 2024 $'000 | 2025 $'000 | 2024 $'000 |
| 50 basis point increase | ( | ( | ( | ( |
50 basis point decrease | | | | |
Price risk
Financial assets and derivatives that are recognised on the balance sheet at their fair value are susceptible
to losses due to adverse changes in prices. This is referred to as price risk.
Financial assets include fixed and floating debt securities, hedge funds, illiquid credit assets, equity funds
and derivative financial assets. The fixed income securities are well diversified across high quality, liquid
securities. The price risk associated with these securities is predominantly interest, foreign exchange and
credit risk related. The sensitivity to price risk that relates to the syndicate’s hedge fund investments,
illiquid credit assets and equity linked funds is presented in the table below. The Investment Committee
has established comprehensive guidelines with investment managers setting out maximum investment
limits, diversification across industries and concentrations in any one industry or company.
Listed investments are recognised on the balance sheet at quoted bid price. If the market for the
investment is not considered to be active, then the syndicate establishes fair value using valuation
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
32
2 Risk management continued
techniques. This includes using recent arm’s length market transactions, reference to current fair value of
other investments that are substantially the same, discounted cash flow models and other valuation
techniques that are commonly used by market participants.
Impact on profit for the year
Impact on members
balances
Change in fair value of hedge
funds, equity linked funds and
illiquid credit assets
2025
$'000
2024
$'000
2025
$'000
2024
$'000
5% increase in fair value
5% decrease in fair value
(45,097 ) (45,551 ) (45,097 ) (45,551 )
2.3 Credit risk
Credit risk arises from the failure of another party to perform its financial or contractual obligations to the
syndicate in a timely manner. The primary sources of credit risk for the syndicate are:
• reinsurers – whereby reinsurers may fail to pay valid claims against a reinsurance contract held by
the syndicate;
• brokers and coverholders – whereby counterparties fail to pass on premiums or claims collected or
paid on behalf of the syndicate;
• investments – whereby issuer default results in the syndicate losing all or part of the value of a
financial instrument and derivative financial instrument; and
• cash at bank and in hand.
The syndicate’s core business is to accept significant insurance risk and the appetite for other risks is low.
This protects the syndicate’s capital from erosion so that it can meet its insurance liabilities.
The managing agent limits exposure to a single counterparty or a group of counterparties and analyses the
geographical locations of exposures when assessing credit risk.
An approval system also exists for all new brokers, and broker performance is carefully monitored. Regular
exception reports highlight trading with non-approved brokers, and the syndicate’s credit control function
frequently assesses the ageing and collectability of debtor balances. Any large, aged items are prioritised
and where collection is outsourced, incentives are in place to support these priorities.
The Investment Committee has established comprehensive guidelines for the syndicate’s investment
managers regarding the type, duration and quality of investments acceptable to the syndicate. The
performance of investment managers is regularly reviewed to confirm adherence to these guidelines.
The managing agent has developed processes to formally examine all reinsurers before entering into new
business arrangements. New reinsurers are approved by the Reinsurance Security Committee, which also
reviews arrangements with all existing reinsurers at least annually. Vulnerable or slow-paying reinsurers
are examined more frequently.
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
33
2 Risk management continued
The following tables summarise the syndicate’s concentrations of credit risk. It shows amounts that neither
past due nor impaired.
31 December 2025
AAA
$'000
AA
$'000
A
$'000
BBB
$'000
Other
$'000
Not
rated
$'000
Total
$'000
Investments
Shares and other variable
yield securities and units in
unit trusts
Debt securities and other
fixed income securities
Participation in investment
pools
Loans secured by
mortgages
Loans and deposits with
credit institutions
Derivative assets
Syndicate loans to central
fund
Other investments
Deposits with ceding
undertakings
Total investments
1,219,829
683,405
1,370,940
176,579 317,100 902,113
4,669,966
Reinsurers’ share of claims
outstanding
Debtors arising out of direct
insurance operations
Debtors arising out of
reinsurance operations
Cash at bank and in hand
Other debtors and accrued
interest
Total
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
34
2 Risk management continued
31 December 2024
AAA
$'000
AA
$'000
A
$'000
BBB
$'000
Other
$'000
Not
rated
Total
$'000
Investments
Shares and other variable
yield securities and units
in unit trusts
Debt securities and other
fixed income securities
Participation in
investment pools
Loans secured by
mortgages
Loans and deposits with
credit institutions
Derivative assets
Syndicate loans to central
fund
Other investments
Deposits with ceding
undertakings
Total investments
665,621
1,458,727
1,527,974
320,356 442,038
1,038,993
5,453,709
Reinsurers’ share of claims
outstanding
Debtors arising out of
direct insurance operations
Debtors arising out of
reinsurance operations
Cash at bank and in hand
Other debtors and accrued
interest
Total
Some amounts above were stated differently at year end 2024. The above table now only shows amounts
that were neither past due nor impaired.
Based on all evidence available, debtors arising out of insurance operations and other debtors have not
been impaired and no impairment provision has been recognised in respect of these assets. An analysis of
the overall credit risk exposure indicates that the syndicate has reinsurance assets that are impaired at the
reporting date. The total impairment provision made in respect of these assets at 31 December 2025 was
$19,412k (2024:$19,362k). This provision in respect of overdue reinsurance recoverables is included
within the debtors arising out of reinsurance operations balance and reinsurers' share of outstanding
claims. No other financial assets held at year end were impaired.
Financial investments falling within the unrated category comprise hedge funds and illiquid credit assets
for which there is no readily available market data to allow classification within the respective tiers.
Additionally, some debtors are classified as unrated in accordance with Lloyd’s guidelines.
The syndicate has insurance debtors and reinsurance assets that are past due but not impaired at the
reporting date. An aged analysis of these is presented below:
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
35
2 Risk management continued
31 December 2025
Neither past
due nor
impaired
$'000
Past due but
not impaired
$'000
Gross value of
impaired
assets
$'000
Impairment
allowance
$'000
Total
$'000
Investments
Shares and other variable yield
securities and units in unit trusts
Debt securities and other fixed
income securities
Participation in investment pools
Loans and deposits with credit
institutions
Derivative assets
Syndicate loans to central fund
Other investments
Deposits with ceding undertakings
Total investments
4,669,966 — — — 4,669,966
Reinsurers’ share of claims
outstanding
Debtors arising out of direct
insurance operations
Debtors arising out of reinsurance
operations
Cash at bank and in hand
Other debtors and accrued interest
Total
31 December 2024
Neither past
due nor
impaired
$'000
Past due but
not impaired
$'000
Gross value of
impaired
assets
$'000
Impairment
allowance
$'000
Total
$'000
Investments
Shares and other variable yield
securities and units in unit trusts
Debt securities and other fixed
income securities
Participation in investment pools
Loans and deposits with credit
institutions
Derivative assets
Syndicate loans to central fund
Other investments
Deposits with ceding undertakings
Total investments 5,453,709 — — — 5,453,709
Reinsurers’ share of claims
outstanding
Debtors arising out of direct
insurance operations
Debtors arising out of reinsurance
operations
Cash at bank and in hand
Other debtors and accrued interest
Total
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
36
2 Risk management continued
The table below sets out the reconciliation of changes in impairment allowance during the period for each
class of financial asset at the balance sheet date:
Impairment allowance
1 Jan
New
impairment
charges
added in
the year
Changes in
impairment
charges
Released
to profit
and loss
account
Foreign
exchange
and other
movements Others Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Debtors arising out of reinsurance operations
Reinsurers’ share of outstanding claims
Total
Impairment allowance
1 Jan
New
impairment
charges
added in
the year
Changes in
impairment
charges
Released
to profit
and loss
account
Foreign
exchange
and other
movements Others Total
31 December 2024
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Debtors arising out of reinsurance operations
Reinsurers’ share of outstanding claims
Total
The table below sets out the age analysis of financial assets that are past due but not impaired at the
balance sheet date:
Past due but not impaired assets
0 - 3
months
past due
3 - 6
months
past due
6 - 12
months
past due
Greater
than 1 year
past due
Total
31 December 2025
$'000 $'000 $'000 $'000 $'000
Debtors arising out of direct insurance operations
Debtors arising out of reinsurance operations
Total
Past due but not impaired assets
0 - 3
months
past due
3 - 6
months
past due
6 - 12
months
past due
Greater
than 1 year
past due
Total
31 December 2024
$'000 $'000 $'000 $'000 $'000
Debtors arising out of direct insurance operations
Debtors arising out of reinsurance operations
Total
2.4 Liquidity risk
Liquidity risk arises where cash may not be available to pay obligations when due at a reasonable cost.
The syndicate is exposed to daily calls on its available cash resources, principally from claims arising from
its insurance business. In the majority of the cases, these claims are settled from the premiums received.
The managing agent’s approach is to manage its liquidity position so that it can reasonably survive a
significant individual or market loss event. This means that the syndicate maintains sufficient liquid assets,
or assets that can be translated into liquid assets at short notice and without any significant capital loss, to
meet expected cash flow requirements. These liquid funds are regularly monitored using cash flow
forecasting to ensure that surplus funds are invested to achieve a higher rate of return.
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
37
2 Risk management continued
The maturity analysis presented in the table below shows the remaining contractual maturities for the
syndicate’s insurance contracts and financial instrument liabilities. 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.
Undiscounted net cash flows
No maturity
stated
0 - 1 yrs 1 - 3 yrs 3 - 5 yrs >5 yrs Total
31 December 2025
$'000 $'000 $'000 $'000 $'000 $'000
Claims outstanding
Derivative liabilities
Creditors
Other liabilities
Total
Undiscounted net cash flows
No maturity
stated
0 - 1 yrs 1 - 3 yrs 3 - 5 yrs >5 yrs Total
31 December 2024
$'000 $'000 $'000 $'000 $'000 $'000
Claims outstanding
Derivative liabilities
Creditors
Other liabilities
Total
2.5 Capital management
Capital framework at Lloyd’s
The Society of Lloyd’s is a regulated undertaking and subject to the supervision of the Prudential
Regulation Authority under the Financial Services and Markets Act 2000.
Within this supervisory framework, Lloyd’s applies capital requirements at member level and centrally to
ensure that Lloyd’s complies with Solvency II, and beyond that to meet its own financial strength, license
and ratings objectives. Although, as described below, the Lloyd’s capital setting processes use a capital
requirement set at syndicate level as a starting point, the requirement to meet Solvency II and Lloyd’s
capital requirements apply at an overall and member level respectively, not at a syndicate level.
Accordingly the capital requirement in respect of Syndicate 2623 is not disclosed in these financial
statements.
Lloyd’s capital setting process
In order to meet Lloyd’s requirements, each syndicate is required to calculate its Solvency Capital
Requirement ('SCR') for the prospective underwriting year. This amount must be sufficient to cover a 1 in
200 year loss, reflecting uncertainty in the ultimate run-off of underwriting liabilities (SCR ‘to ultimate’).
The syndicate must also calculate its SCR at the same confidence level but reflecting uncertainty over a
one year time horizon (one year SCR) for Lloyd’s to use in meeting Solvency II requirements. The SCRs of
each syndicate are subject to review by Lloyd’s and approval by the Lloyd’s Capital and Planning Group.
A syndicate comprises one or more underwriting members of Lloyd’s. Each member is liable for its own
share of underwriting liabilities on the syndicate(s) on which it participates but not other members’ shares.
Accordingly, the capital requirement that Lloyd’s sets for each member operates on a similar basis. Each
member’s SCR shall thus be determined by the sum of the member’s share of the syndicate SCR to
ultimate. Where a member participates on more than one syndicate, a credit for diversification is provided
to reflect the spread of risk, but consistent with determining an SCR which reflects the capital requirement
to cover a 1 in 200 year loss ‘to ultimate’ for that member. Over and above this, Lloyd’s applies a capital
uplift to the member’s capital requirement, known as the Economic Capital Assessment (‘ECA’). The
purpose of this uplift, which is a Lloyd’s not a Solvency II requirement, is to meet Lloyd’s financial
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
38
2 Risk management continued
strength, license and ratings objectives. The capital uplift applied for 2025 was 35% (2024: 35%) of the
member’s SCR to ultimate.
Provision of capital by members
Each member may provide capital to meet its ECA either by assets held in trust by Lloyd’s specifically for
that member (funds at Lloyd’s), held within and managed within a syndicate (funds in syndicate) and/or as
the member’s share of the Solvency II members’ balances on each syndicate on which it participates.
3 Analysis of underwriting result
Underwriting result is the balance on the technical result - general business, less the allocated investment
return transferred from the non-technical account.
Gross
premiums
written
Gross
premiums
earned
Gross claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
result
2025
$'000 $'000 $'000 $'000 $'000 $'000
Direct Insurance
Marine, aviation and
transport 318,733 309,064 (312,766 ) (124,701 ) 92,957 (35,446 )
Fire and other damage
to property 667,961 651,112 (235,079 ) (226,953 ) (42,244 ) 146,836
Third party liability 1,026,171 1,106,316 (702,948 ) (389,461 ) (39,051 ) (25,144 )
Credit and suretyship 118,778 111,541 (34,443 ) (36,280 ) (7,997 ) 32,821
Total direct insurance 2,131,643 2,178,033 (1,285,236 ) (777,395 ) 3,665 119,067
Reinsurance
acceptances 658,479 662,951 (205,522 ) (218,485 ) (84,042 ) 154,902
Total Direct and
Reinsurance accepted
Gross
premiums
written
Gross
premiums
earned
Gross claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
result
2025
$'000 $'000 $'000 $'000 $'000 $'000
Additional analysis
Fire and damage to
property of which is:
Specialities 48,256 48,637 (266 ) (18,370 ) (4,954 ) 25,047
Energy — — — — — —
Third party liability of
which is:
Energy — — — — — —
48,256 48,637 (266) (18,370) (4,954) 25,047
Gross
premiums
written
Gross
premiums
earned
Gross claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
result
2024*
$'000 $'000 $'000 $'000 $'000 $'000
Direct Insurance
Marine, aviation and
transport 359,951 368,190 (253,122 ) (159,066 ) 52,413 8,415
Fire and other damage
to property 663,446 868,749 (242,572 ) (261,257 ) (128,262 ) 236,658
Third party liability 1,121,827 1,641,635 (707,389 ) (574,605 ) (114,322 ) 245,319
Credit and suretyship 113,623 122,123 (20,179 ) (53,200 ) (14,299 ) 34,445
Total direct insurance 2,258,847 3,000,697 (1,223,262 ) (1,048,128 ) (204,470 ) 524,837
Reinsurance
acceptances
Total Direct and
Reinsurance accepted
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
39
3 Analysis of underwriting result continued
Gross
premiums
written
Gross
premiums
earned
Gross claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
result
2024
$'000 $'000 $'000 $'000 $'000 $'000
Additional analysis
Fire and damage to
property of which is:
Specialities 47,315 49,132 12,190 (21,626 ) (23,672 ) 16,024
Energy — — — — — —
Third party liability of
which is:
Energy — — — — — —
47,315 49,132 12,190 (21,626) (23,672) 16,024
*Certain balances which were previously classified within gross operating expenses have now been
classified within reinsurance balance. The prior period comparative has been restated accordingly.
The gross premiums written for direct insurance by location (where the contracts were concluded) is
presented in the table below:
Concentration of insurance risk
2025
$'000
2024
$'000
United Kingdom 2,131,643 2,258,847
Total gross premiums written
4 Net operating expenses
2025
$'000
2024
$'000
Acquisition costs 690,939
Change in deferred acquisition costs (7,444 )
Administrative expenses 312,385
Reinsurance commission and profit participation (32,681 )
(63,988 )
Net operating expenses
Total commissions for direct insurance business for the year amounted to:
2025
$'000
2024
$'000
Total commission for direct insurance business
Administrative expenses include:
2025
$'000
2024
$'000
Fees payable to the syndicate’s auditor for the audit of these annual
accounts
Fees payable to the syndicate’s auditor and its associates in respect of
other services pursuant to legislation to align with Lloyds
Total
1,835 1,269
Fees payable to the syndicate's auditor in relation to other services pursuant to legislation primarily relate
to the review and audit of syndicate regulatory returns along with the statement of actuarial opinion.
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
40
5 Key management personnel compensation
The Directors of BFL received the following aggregate remuneration charged to Syndicate 2623 and
included within net operating expenses:
| 2025 | 2024 | |
| $’000 | $’000 | |
| Directors' emoluments | | |
| 5,162 | 7,477 |
The active underwriter received the following aggregate remuneration charged to the syndicate.
| 2025 | 2024 | |
| $’000 | $’000 | |
| Emoluments | | |
| 702 | 3,132 |
6 Staff numbers and costs
The syndicate has no employees. All staff are employed by Beazley Management Limited ('BML'), a related
company to the managing agent, both of which operate within the Beazley Group. The average number of
persons employed by BML but working for the syndicate during the year, analysed by category, was as
follows:
Number of employees | ||
| 2025 | 2024 | |
| Administration and finance | | |
| Underwriting | | |
| Claims | | |
| Investments | | |
| Total | | |
The following amounts were recharged by BML to the syndicate in respect of payroll costs:
| 2025 | 2024 | |
| $’000 | $’000 | |
| Wages and salaries | | |
| Social security | | |
| Other pension costs | | |
| Other | | |
| Total | | |
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
41
7 Investment return
| 2025 | 2024 | |
| $’000 | $’000 | |
Interest and similar income | ||
From financial assets designated at fair value through profit or loss | ||
Interest and similar income | | |
From financial assets classified at amortised cost | ||
Interest on cash at bank | | |
Other income from investments | ||
From financial assets designated at fair value through profit or loss | ||
Gains on the realisation of investments | | |
Losses on the realisation of investments | ( | ( |
Unrealised gains on investments | | |
Unrealised losses on the investments | ( | ( |
Investment management expenses | ( | ( |
Total investment return | | |
| Transferred to the technical account from the non-technical account | | |
8 Distribution and open years of account
A distribution of $827,362 k to members will be proposed in relation to the closing YoA 2023 (2024:
distribution of $619,423 k profit for YoA 2022).
9 Financial investments
| Carrying value | Cost | |||
| 2025 | 2024 | 2025 | 2024 | |
| $’000 | $’000 | $’000 | $’000 | |
Shares and other variable yield securities and units in unit trusts | | | | |
Debt securities and other fixed income securities | | | | |
Participation in investment pools | | | | |
Loans and deposits with credit institutions | | | | |
Derivative assets | | | | |
Syndicate loans to central fund | | | | |
Other investments | | | | |
| Total financial investments | | |||
Included in the carrying values above are listed investments as follows:
| 2025 | 2024 | |
| $’000 | $’000 | |
| Listed investments | | |
The table below presents an analysis of financial investments by their measurement classification:
| 2025 | 2024 | |
| $’000 | $’000 | |
| Financial assets measured at fair value through profit or loss | | |
| Total financial investments | | |
A breakdown of derivative financial instruments is disclosed in Note 10.
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
42
9 Financial investments continued
Valuation hierarchy
All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorised within the fair value hierarchy described as follows, based on the lowest level input that is
significant to the fair value measurement as a whole. If the inputs used to measure the fair value of an
asset or a liability could be categorised in different levels of the fair value hierarchy, then the fair value
measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level
input that is significant to the entire measurement.
Level 1 – Valuations based on quoted prices in active markets for identical instruments. An active market
is a market in which transactions for the instrument occur with sufficient frequency and volume on an
ongoing basis such that quoted prices reflect prices at which an orderly transaction would take place
between market participants at the measurement date.
Level 2 – Valuations based on quoted prices in markets that are not active, or based on pricing models for
which significant inputs can be corroborated by observable market data, directly or indirectly (e.g. interest
rates, exchange rates). Level 2 inputs include:
• Quoted prices similar assets and liabilities in active markets;
• Quoted prices for identical or similar assets and liabilities in markets that are not active, the prices
are not current, or price quotations vary substantially either over time or among market makers,
or in which little information is released publicly;
• Inputs other than quoted prices that are observable for the asset or liability (for example, interest
rates and yield curves observable at commonly quoted intervals, implied volatilities and credit
spreads); and
• Market corroborated inputs. Included within level 2 are government bonds and treasury bills,
equity funds and corporate bonds which are not actively traded, hedge funds and senior secured
loans.
Level 3 – Valuations based on inputs that are unobservable or for which there is limited market activity
against which to measure fair value. The availability of financial data can vary for different financial assets
and is affected by a wide variety of factors, including the type of financial instrument, whether it is new
and not yet established in the marketplace, and other characteristics specific to each transaction. To the
extent that valuation is based on models or inputs that are unobservable in the market, the determination
of fair value requires more judgement. Accordingly the degree of judgement exercised by management in
determining fair value is greatest for instruments classified in level 3. The managing agent uses prices and
inputs that are current as of the measurement date for valuation of these instruments.
Valuation approach
The valuation approach for fair value assets and liabilities classified as Level 2 is as follows:
a) For the Syndicate’s level 2 government-issued bonds and corporate bonds included within 'Debt
securities and other fixed income investments', prices are derived from Bloomberg. On a monthly basis,
these are validated against both internal sources and prices provided by our administrator.
b) For the Syndicate’s level 2 collateralised loan obligations included within 'Debt securities and other fixed
income investments', our fund administrator provides daily pricing derived from a market-accepted
theoretical model using data sourced from Bloomberg/Reuters as inputs. On a monthly basis, prices from
our administrator are validated against those provided by our custodians. These are also checked
internally for consistency.
c) For our hedge funds which are included within 'Shares and other variable yield securities and units in
unit trusts', the pricing and valuation of each fund is undertaken by administrators in accordance with each
underlying fund’s valuation policy. Individual fund prices are communicated by the administrators to all
investors via the monthly investor statements. The fair value of the hedge fund portfolios are calculated by
reference to the underlying net asset values of each of the individual funds.
The valuation approach for fair value assets and liabilities classified as Level 3 is as follows:
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
43
9 Financial investments continued
a) Our illiquid credit fund investments included within 'Debt securities and other fixed income securities',
are managed by third party managers (generally closed ended limited partnerships or open ended funds).
While the funds provide full transparency on their underlying investments, the investments themselves are
predominantly in private and unquoted instruments. The valuation techniques used by the fund managers
to establish the fair value of the underlying private/unquoted investments may incorporate discounted
cash flow models or a more market-based approach, whilst the main inputs might include discount rates,
fundamental pricing multiples, recent transaction prices, or comparable market information to create a
benchmark multiple.
The table below shows the fair values of financial instruments at 31 December 2025, including their levels
in the fair value hierarchy:
2025
Level 1 Level 2 Level 3
Assets
held at
amortised
cost
Total
$’000 $’000 $’000 $’000 $’000
Shares and other variable yield
securities and units in unit trusts
Debt securities and other fixed
income securities
Participation in investment pools
Loans and deposits with credit
institutions
Derivative assets
Syndicate loans to central fund
Other investments
Total financial investments
Derivative financial liabilities (3,669 ) — — — (3,669 )
Total
2024
Level 1 Level 2 Level 3
Assets
held at
amortised
cost
Total
$’000 $’000 $’000 $’000 $’000
Shares and other variable yield
securities and units in unit trusts
Debt securities and other fixed
income securities
Participation in investment pools
Derivative assets
Syndicate loans to central fund
Other investments
Total financial investments
Derivative financial liabilities (10,044 ) — — — (10,044 )
Total
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
44
9 Financial investments continued
Additional information is obtained from fund managers relating to the underlying assets within individual
hedge funds. We identified that 79% (2024: 80%) of these underlying assets were level 1, with the
remainder classified as level 2. This enabled us to categorise hedge funds as level 2, and are included
within shares and other variable yield securities and units in unit trusts.
10 Derivative financial instruments
In 2025 and 2024, the syndicate entered into over-the-counter and exchange traded derivative contracts.
The syndicate had the right and the intention to settle each contract on a net basis.
Notional
contract
amount
2025
Fair
value
2025
Notional
contract
amount
2024
Fair
value
2024
Derivative financial instruments
$’000 $’000 $’000 $’000
Foreign exchange forward contract - assets 77,062 171 452,604 10,295
Foreign exchange forward contract - liabilities
Foreign exchange forward contracts
The syndicate entered into over-the-counter foreign exchange forward agreements in order to
economically hedge the foreign currency exposure resulting from transactions and balances held in
currencies that are different to the functional currency of the syndicate.
11 Debtors arising out of direct insurance operations
| 2025 | 2024 | |
| $'000 | $'000 | |
| Due within one year | | |
| Due after one year | | |
Total | | |
12 Debtors arising out of reinsurance operations
| 2025 | 2024 | |
| $'000 | $'000 | |
| Due within one year | | |
| Due after one year | | |
Total | | |
13 Other debtors
| 2025 | 2024 | |
| $'000 | $'000 | |
Inter-syndicate balances | ||
| Amounts due from Syndicate 623 | 36,985 | 1,973 |
| Amounts due from Syndicate 3623 | 93,303 | — |
| Amounts due from Syndicate 4321 | 1,538 | 1,211 |
| Amounts due from Syndicate 5623 | 17,891 | 11,262 |
| Total inter-syndicate balances | | |
Other related party balances (non-syndicate) | | |
Other | | |
| Total | | |
The balances listed above are due within one year. |
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
45
14 Deferred acquisition costs
The table below shows changes in deferred acquisition costs assets from the beginning of the period to the
end of the period.
| 2025 | 2024 | |||||
| Gross | Reinsurance | Net | Gross Reinsurance | Net | ||
| $'000 | $'000 | $'000 | $'000 | $'000 | $'000 | |
| Balance at 1 January | | ( | | | ( | |
Incurred deferred acquisition costs | | ( | | | ( | |
Amortised deferred acquisition costs | ( | | ( | ( | | ( |
Foreign exchange movements | | | | | ( | |
Balance at 31 December | | ( | | | ( | |
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 2024
Gross
provisions
Reinsurance
assets
Net
Gross
provisions
Reinsurance
assets
Net
Claims outstanding
$'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 January 5,982,650 (1,601,514 ) 4,381,136 5,947,372 (1,663,559 ) 4,283,813
Claims paid during the
year
(1,850,890 ) 409,222 (1,441,668 ) (1,648,250 ) 307,400 (1,340,850 )
Expected cost of current
year claims
Change in estimates of
prior year provisions
Foreign exchange
movements
Balance at 31
December
2025 2024
Gross
provisions
Reinsurance
assets
Net
Gross
provisions
Reinsurance
assets
Net
Unearned
premiums
$'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 January 1,589,544 (264,396 ) 1,325,148 2,352,164 (382,064 ) 1,970,100
Premium written during
the year
Premiums earned
during the year
(2,840,984 ) 455,975 (2,385,009 ) (3,689,391 ) 593,298 (3,096,093 )
Foreign exchange
movements
Balance at 31
December
Refer to note 2 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.
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
46
15 Technical provisions continued
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. The below tables were previously shown
on a fully earned basis. This is the first year presenting these tables on a earned basis. 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.
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | Total | |
Pure underwriting year | $ '000 | $ '000 | $ '000 | $ '000 | $ '000 | $ '000 | $ '000 | $ '000 | $ '000 | $ '000 | $ '000 |
Estimate of gross claims at end of underwriting year | | | | | |||||||
One year later | | | | | | ||||||
Two years later | | | |||||||||
Three years later | | | | ||||||||
Four years later | | | | | |||||||
Five years later | | | | ||||||||
Six years later | | | | ||||||||
Seven years later | | ||||||||||
Eight years later | |||||||||||
Nine years later | |||||||||||
Estimate of gross claims reserves | | | | | | | | ||||
Provision in respect of prior years | |||||||||||
Less gross claims paid | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( |
Gross claims reserves | | | | | | | | | | |
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | Total | |
Pure underwriting year | $ '000 | $ '000 | $ '000 | $ '000 | $ '000 | $ '000 | $ '000 | $ '000 | $ '000 | $ '000 | $ '000 |
Estimate of net claims | |||||||||||
at end of underwriting year | | | | | | | | | | | |
One year later | | | | | | | | | | ||
Two years later | | | | | | | | | |||
Three years later | | | | | | | | ||||
Four years later | | | | | | | |||||
Five years later | | | | | | ||||||
Six years later | | | | | |||||||
Seven years later | | | | ||||||||
Eight years later | | | |||||||||
Nine years later | | ||||||||||
Estimate of net claims reserves | | | | | | | | | | | |
Provision in respect of | |||||||||||
prior years | | ||||||||||
Less net claims paid | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( |
Net claims reserves | | | | | | | | | | | |
16 Creditors arising out of direct insurance operations | ||
| 2025 | 2024 | |
| $'000 | $'000 | |
| Due within one year | | |
| Due after one year | | |
Total | | |
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
47
17 Creditors arising out of reinsurance operations
| 2025 | 2024 | |
| $'000 | $'000 | |
| Due within one year | | |
| Due after one year | | |
Total | | |
18 Other creditors
| 2025 | 2024 | |
| $'000 | $'000 | |
Inter-syndicate balances | ||
| Amounts due to Syndicate 3622 | — | 20 |
| Amounts due to Syndicate 3623 | — | 48,461 |
| Amounts due to Syndicate 6107 | 25,788 | 54,450 |
| Total inter-syndicate balances | | |
| Derivative liabilities | | |
| Other liabilities | | |
Total | | |
The above other creditors balances are payable within one year.
19 Cash and cash equivalents
| 2025 | 2024 | |
$'000 | $'000 | |
| Cash at bank and in hand* | | |
Short term debt instruments presented within other financial investments | | |
| Total cash and cash equivalents | | |
*Included within Cash at bank and in hand are money market funds of $68,517k (2024: nil).
Cash at bank and in hand includes $11,926k (2024: $53,806k) held in Lloyd's Singapore trust accounts
which is only available for use by the syndicate to meet local claim and expense obligations.
Short term deposits disclosed in this table are included within financial investments. Included within cash
and cash equivalents are the following amounts which are not available for use by the syndicate as they
are held for regulatory purposes:
| 2025 | 2024 | |
$'000 | $'000 | |
| Short term debt instruments presented within other financial investments | | |
Total cash and cash equivalents not available for use by the syndicate | | |
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
48
20 Analysis of net debt
All amounts in $'000 | At 1 January 2025 | Cash flows | Acquired | Fair value and exchange movements | Non cash charges | At 31 December 2025 |
Cash and cash equivalents | | | | | | |
| Derivative financial liabilities | ( | | | ( | | ( |
| Total | | | | | | |
All amounts in $'000 | At 1 January 2024 | Cash flows | Acquired | Fair value and exchange movements | Non cash charges | At 31 December 2024 |
Cash and cash equivalents | | | | ( | | |
| Derivative financial liabilities | ( | | | ( | | ( |
| Total | | | | ( | | |
21 Related party transactions
Since 2010, Syndicate 2623, alongside Syndicate 623 has ceded part of its international reinsurance
account to Syndicate 6107 at Lloyd's, and since 2017 has also ceded part of its Cyber Risks business to
Syndicate 6107. Syndicate 6107 is a special purpose syndicate managed by BFL and commissions are
received by the syndicates in respect of these transactions.
Receivable/payable positions between this syndicate and other syndicates which share the same managing
agent are set out in the other debtors and other creditors notes.
22 Subsequent events
The 2023 YoA has closed with a profit of $827,362k. It is the intention that these funds will be distributed
to the members reserve funds in May 2026.
23 Foreign exchange rates
The syndicate used the following exchange rates to translate foreign currency assets, liabilities, income
and expenses into US dollars, being the syndicate’s presentational currency:
| 2025 | 2024 | |||||
| Start of period | End of period | Average | Start of period | End of period | Average | |
| Sterling | | | | | | |
| Euro | | | | | | |
| US dollar | | | | | | |
| Canadian 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.
SYNDICATE 2623
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 DECEMBER 2025
49
Beazley Furlonge Limited has been the managing agent of Syndicate 2623 throughout the period covered
by this report and the registered office is 22 Bishopsgate, London EC2N 4BQ.
Directors
R A Stuchbery* - Chair
R S Anarfi - (resigned 28/02/2025)
P J Bantick - (resigned 17/03/2025)
W W E Barkholt* - (appointed 01/01/2025)
R J Clark*
A P Cox - (resigned 18/03/2025)
M E Diacon - (appointed 10/03/2025)
B J Greenwood - (appointed 18/03/2025)
G A Hayes - (appointed 13/03/2025)
A J Reizenstein* - (resigned 30/04/2025)
L Santori*
K J Somasundaram* - (appointed 03/11/2025)
N Wall*
C C J Wong
* Non-Executive Director.
Active underwriter
G A Hayes
Company secretary
R Yeoman
Managing agent’s registered office
22 Bishopsgate
London
EC2N 4BQ
United Kingdom
Registered number
01893407
Syndicate number
2623
Auditor
Ernst & Young LLP
25 Churchill Place
London
E14 5EY
Banker
Deutsche Bank AG
Winchester House
London
1 Great Winchester Street
EC2N 2DB
SYNDICATE 2623
MANAGING AGENT'S CORPORATE INFORMATION
YEAR ENDED 31 DECEMBER 2025
50
50
