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Report & Financial Statements
Syndicate 3902
2025
Ark Syndicate Management Limited
Syndicate 3902
Contents
Directors and administration
2
Syndicate Information
3
Managing agent’s report
4
Statement of managing agent’s responsibilities
9
Independent auditors’ report to the member of Syndicate 3902
10
Statement of profit or loss and other comprehensive income
13
Balance sheet – Assets
15
Balance sheet - Liabilities
16
Statement of changes in member’s balances
17
Statement of cash flows
18
Notes to the financial statements
19
Ark Syndicate Management Limited
Syndicate 3902
2
Directors and administration
Managing agent
Directors
C Atkin
(non-executive Chairman)
I Beaton
(Chief Executive)
N Brothers
M Burch
(Non-executive)
P Dawson
N Fox
P McIntosh
M Raven
M Rountree
(Non-executive)
N Smith
J Wardrop
(Non-executive)
J Welman
(Non-executive)
Company secretary
J Masson
Managing agent’s registered office
40 Leadenhall Street
London
EC3A 2BJ
Managing agent’s company registration number
05887810
Ark Syndicate Management Limited
Syndicate 3902
3
Syndicate information
Active underwriter
P Dawson
Bankers
Lloyds TSB Bank plc
Citibank NA
Royal Bank of Canada
Investment managers
Conning Asset Management Limited
55 King William Street
London
EC4R 9AD
Independent auditors
PricewaterhouseCoopers LLP
7 More London Riverside
London
SE1 2RT
Ark Syndicate Management Limited
Syndicate 3902
4
Managing agent’s report
The directors of the managing agent present their annual report and audited accounts for the year to 31 December 20 25 (prior period: year to 31 December 202 4 ).
Principal activity and review of the business
The principal activity of the Syndicate is the underwriting of direct and reinsurance business in the Lloyd’s market. The managing agent of the Syndicate is Ark Syndicate
Management Limited (“ASML”), a company incorporated in the UK. ASML also manages the affairs of Syndicate 4020. Gross written premium income for the Year of
Account (“YOA”) and calendar (“Cal”) year is set out below, along with a brief description of each class of business:
2025
2024
2023
2025
2024
YOA Estimate
YOA Estimate
YOA Closed
Cal year
Cal year
£’000
£’000
£’000
£’000
£’000
Marine & Energy
53,518 59,355 69,593 56,487 71,718
Property
49,897 67,766 68,383 48,601 74,147
Casualty
10,357 - - 10,617 -
Specialty
66,151 60,152 56,477 69,387 63,849
Total
179,923 187,273 194,453 185,092 209,714
Line of business
Reserving class and description
Marine & Energy
Cargo & Specie: Focus on small / medium sized accounts, excludes cash in transit, war on land and jewellers block.
Marine & Energy
Marine Hull & Liability: emphasis on smaller brown water tonnage and older vessels on limited conditions and of protection &
indemnity (“P&I”), charters and umbrella liability.
Marine & Energy
Energy: Upstream oil and gas focussed with a broad geographical spread.
Property
Direct & Facultative: predominately written on an excess of loss basis, and consists of a diverse mix of municipalities, real
estate, heavy industry, energy, utility, transport and leisure.
Specialty
Aviation: consists of airline, general aviation (including rotor wing), hull war and excess of loss / space.
Specialty
Accident & Health: Excess of loss reinsurance makes up c.60% of the account, with the remainder covering key man, disability,
credit card, sports and other personal accident risks, along with a small direct and facultative account.
Specialty
Contingency: predominantly short tail with event cancellation the largest part.
Specialty
Political Risk & Violence: Covers all areas of the broad Political Risks and Political Violence suite of products capitalising on
cross-class, client sector and territorial knowledge.
Casualty
Professional Lines: provides Professional Indemnity insurance for a range of professions globally. Focus is on large, complex
risks, generally on an excess basis.
Principal risks and uncertainties
ASML maintains a risk register within its risk management framework. Identified risk events are grouped into major risk categories according to the nature of the
potential threat they pose to the business. The risk management framework allows risks to be identified and controls to be put in place as necessary, either to prevent
the occurrence of the event or to mitigate its impact. The principal risks of the Syndicate are set out in note 2 of the accounts.
Auditors and Annual general meeting
As permitted under the Syndicate Meeting (Amendment No.1) Byelaw it is not proposed to hold a Syndicate Annual General Meeting. The members of the Syndicate
appointed PricewaterhouseCoopers LLP as auditors for the financial year ending 31 December 2021.
Disclosure of information to auditors
The directors of ASML who held office at the date of approval of this report confirm that, so far as they are each aware, there is no relevant audit information of which
the auditors of the Syndicate are 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 auditors of the Syndicate are aware of that information.
Ark Syndicate Management Limited
Syndicate 3902
5
Managing agent’s report
Six year summary - closed years
2023
YOA
2022
YOA
2021
YOA
2020
YOA
2019
YOA
2018
YOA
Syndicate allocated capacity (£m)
200.0
150.0
150.0
100.0
100.0
100.0
Number of Underwriting Members
1
1
1
1
1
1
Aggregate net premiums (£‘000)
121,808
103,767
87,392
75,611
45,427
51,025
Illustrative share of £10,000
% % % % % %
Gross premium written (% of illustrative share)
81.0
91.5
78.0
85.1
71.0
76.5
Net premium written (% of illustrative share)
61.3
69.7
61.1
63.8
47.0
49.9
Profit / (Loss) (% of gross premium)
23.9
20.3
12.5
21.4
0.9
12.6
Profit / (Loss) (% of capacity)
19.3
18.6
9.8
18.2
0.7
9.7
Results for illustrative share of £10,000
£ £ £ £ £ £
Gross premiums written
8,095
9,147
7,795
8,512
7,101
7,646
Net premiums
6,129
6,972
6,107
6,377
4,704
4,992
RITC from an earlier year of account
3,534
4,098
2,250
1,601
1,065
975
Net claims
(2,027)
(2,860)
(2,042)
(1,424)
(2,404)
(2,861)
Reinsurance to close
(4,348)
(4,949)
(4,087)
(2,956)
(1,922)
(1,065)
Underwriting profit
3,288
3,261
2,228
3,598
1,443
2,041
Other syndicate operating expenses
(1,215)
(1,096)
(918)
(1,065)
(1,336)
(1,005)
Movement on foreign currency translation
147
21
(61)
(111)
-
-
Net investment return
333 293 139 (9) 105 76
Illustrative personal expenses:
Managing agent’s fee
(75)
(75)
(75)
(75)
(75)
(75)
Profit commission (“PC”)
(487)
(465)
(261)
(449)
-
-
Other personal expenses
(58)
(77)
(75)
(66)
(69)
(69)
Profit / (Loss) after illustrative personal
expenses / PC
1,933 1,862 977 1,823 68 968
Underwriting performance
YOA::
The 2023 YOA has closed with a profit of £38.7m after all standard personal expenses, equivalent to a profit on stamp capacity of 19.3%. Losses arising from the
ongoing Ukraine conflict have increased in the year following the Butcher ruling, although the impact of this has been more than offset by the low incidence of major
natural catastrophe losses. Investment return was also better than expectations, boosted by increased interest rates.
The 2024 YOA is forecast at the 24 months to make a mid-point profit of £16.9m. The YOA has been impacted by a number of significant losses, including the Baltimore
Bridge collision, Hurricanes Helene and Milton
and the California Wildfires in early 2025. A forecast is not currently required for the 2025 YOA.
2025 YOA
2024 YOA
Capacity
£250.0m £250.0m
Forecast r
esults (% of capacity) na 4.3% - 9.3%
Ark Syndicate Management Limited
Syndicate 3902
6
Managing agent’s report
Calendar year:
The profit for the 2025 calendar year is £28.9m (2024: £32.2m), which is better than plan. Premium growth has been strong, and underwriting returns are healthy
despite the impact of the Butcher ruling on the Ukraine conflict loss estimates.. The premium growth and favourable claims environment have led to strong inwards
underwriting cashflow in the year while investment returns in the year have been boosted by elevated interest rates. The calendar year result together with key
performance indicators is shown below:
2025
2024
Profit for the financial year (£’000) 28,884 32,211
Claims ratio (%) 47.2% 39.6%
Expense ratio (%) 41.2% 44.3%
Combined ratio (%) 88.4% 83.9%
The claims ratio is the ratio of claims incurred net of reinsurance to earned premiums net of reinsurance. The expense ratio is the ratio of operating expenses
and
acquisition costs (excluding foreign exchange movements) to earned premiums net of reinsurance. The claims ratio reflects the underwriting issues previously noted,
and the expense ratio is broadly in line with plan. The combined ratio including all foreign exchange movements is 90.9%. (2024: 83.4%)
Operating expenses
Operating expenses, as set out below, are in line with plan.
2025
2024
£’000
£’000
Acquisition costs – brokerage and commissions
34,333 38,116
Acquisition costs – other
4,132 3,539
Administrative expenses
16,098 22,288
Managing agency fee
1,838 1,763
Personal expenses
7,184 8,379
Operating expenses 63,585 74,085
Cash flow
There was a net cash flow decrease of £21.5m (restated 2024: £5.3m) in the year arising from normal operating activities. Profit releases on open years of £28.4m
(2024: £14.7m) were made during the year. On 18 February 2026, the ASML board approved a profit release of £17.0m for the 2024 YOA.
Investment return
Syndicate 4020 holds the majority of the cash and investments of the Syndicate, and allocates the appropriate share of investment return to the Syndicate. Funds are
actively managed by third party investment managers. Syndicate 4020 has a diversified portfolio in corporate debt, cash, property funds and investment funds with an
average duration that is appropriate compared to the expected liability duration. As set out below, the investment portfolio has returned a profit for the 2025 calendar
year.
2025
2024
Average funds available for investment in Syndicate 4020 and Syndicate 3902 (US$’000) 1,352,944 1,152,450
Investment return for the year before allocation to Syndicate 3902 (US$’000) 67,890 53,329
Annualised investment return (%) 5.0% 5.2%
Investment gains in the syndicate totalled £9.7m (2024: £5.4m), generated from average assets of £154.2m (2024: £105.3m).
Ark Syndicate Management Limited
Syndicate 3902
7
Managing agent’s report
Financial position
The main components of the balance sheet are technical provisions and investments and cash.
Technical provisions include a provision for outstanding claims of £232.8m (2024: £219.3m) and a provision for unearned premiums of £96.1m (2024: £107.6m). The
reinsurers’ share of technical provisions is £63.3m (2024: £66.3m) in respect of unearned premiums and £10.4m (2024: £8.7m) for outstanding claims. The provision
for outstanding claims is based on evaluations of reported claims and estimates for losses incurred but not reported (“IBNR”). As claims may not be settled for a number
of years after they are incurred, the setting of provisions involves a degree of judgement as to the ultimate exposure to losses. Investments and cash total £190.0m
(2024: £225.6m).
Auditors and Annual general meeting
As permitted under the Syndicate Meeting (Amendment No.1) Byelaw it is not proposed to hold a Syndicate Annual General Meeting. The member of the Syndicate
appointed PricewaterhouseCoopers LLP as auditors for the financial year ending 31 December 2025.
Disclosure of information to auditors
The directors of ASML who held office at the date of approval of this report confirm that, so far as they are each aware, there is no relevant audit information of which
the auditors of the Syndicate are 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 auditors of the Syndicate are aware of that information
Directors
The directors of ASML served from 1 January 2025 to the date of this report, unless stated otherwise. Shareholdings in the ultimate parent company of ASML, Ark
Insurance Holdings Limited (“AIHL”) are stated as at 31 December 2025.
A1
Ordinary
shares
A2
Ordinary
shares
A3
Ordinary
shares
B1
Ordinary
shares
B3
Ordinary
shares
Z
Ordinary
shares
Z1
Ordinary
shares
C1
Ordinary
shares
C2
Ordinary
shares
Name
No.
No.
No.
No.
No.
No.
No.
No.
No.
C Atkin - - - - - - - - -
I Beaton 129,803 18,309 - 78,777 - 908,621 555,439 76,894 12,857
N Brothers - - 6,970 - 4,230 - - 12,726 2,127
M Burch - - - - - - - - -
P Dawson - - 24,729 - 15,008 - - 35,632 5,957
N Fox - - 18,079 - 10,972 - - 22,906 3,830
P McIntosh - - 21,046 - 12,773 - - 15,271 2,553
M Raven - - 18,079 - 10.972 - - 22,906 3,830
M Rountree - - - - - - - - -
N Smith - - 19,577 - 11,881 - - 35,632
5,957
J Wardrop
- - - - - - - - -
J Welman
- - - - - - - - -
Going concern
The directors of ASML have reviewed the business plan, liquidity and operational resilience of the company, including the risks associated with the ongoing conflict in
Ukraine. They have concluded that there are no material uncertainties that could cast significant doubt over the Syndicate’s ability to continue as a going concern for
at least a year from the date of approval of the Syndicate annual accounts. Management's assessment of going concern is set out in note 1 on page 19.
Ark Syndicate Management Limited
Syndicate 3902
8
Managing agent’s report
Future developments
The capacity of the Syndicate for the 2026 YOA is £250.0m (2025 YOA: £250.0m). The capacity of Syndicate 4020 for the 2026 YOA is £850.0m (2025 YOA: £750.0m).
P Dawson,
Active Underwriter,
18 February 2026
Ark Syndicate Management Limited
Syndicate 3902
9
Statement of managing agent’s responsibilities
The directors of the managing agent are responsible for preparing the Syndicate annual accounts in accordance with applicable law and regulations.
The Insurance Accounts Directive (Lloyds’s Syndicate and Aggregate Accounts) Regulations 2008 requires the directors of the managing agent to prepare their
Syndicate’s 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 (Lloyds’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 profit or loss of the Syndicate for that period. In
preparing these annual accounts, 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 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.
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 Syndicate annual accounts comply with the
Insurance Accounts Directive (Lloyds’s Syndicate and Aggregate Accounts) Regulations 2008. They are responsible for such internal control as they determine is
necessary to enable the preparation of Syndicate annual accounts that are free from material misstatement, whether due to fraud or error, and have general responsibility
for taking such steps as are reasonably open to them to safeguard the assets of the Syndicate 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 Syndicate annual accounts may differ from legislation in other jurisdictions.
We Confirm that to the best or our knowledge the syndicate accounts, including iXBRL tagging applied to these accounts, comply with the requirements of the Lloyd’s
Syndicate Accounts Instruction version 3.1 as modified by the Frequently Asked Questions version 1.1 issued by Lloyd’s.
On behalf of the board
Neil Smith
Director
18 February 2026
Independent auditors’ report to the member of Syndicate 3902
O
pinion
In our opinion, 3902’s syndicate annual accounts:
• give a true and fair view of the state of the syndicate’s affairs as at 31 December 2025 and of its profit and cash flows for the year then ended;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards,
including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law); and
• have been prepared in accordance with the requirements of The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations
2008 and the requirements within the Lloyd’s Syndicate Accounts Instructions version 3.1 as modified by the Frequently Asked Questions issued by Lloyd’s
version v1.1 (“the Lloyd’s Syndicate Instructions”).
We have audited the syndicate annual accounts included within the Report & Financial Statements (the “Annual Report”), which comprise: the Balance sheet -
Assets and the Balance sheet - Liabilities as at 31 December 2025; the statement of profit or loss and other comprehensive income, the statement of cash
flows, and the statement of changes in member's balances for the year then ended; and the notes to the syndicate annual accounts, which include a description
of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”), The Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008, the Lloyd’s Syndicate Instructions and other applicable law. Our responsibilities under ISAs (UK) are further described
in the Auditors’ responsibilities for the audit of the syndicate annual accounts section of our report. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Independence
We remained independent of the syndicate in accordance with the ethical requirements that are relevant to our audit of the syndicate annual accounts in the UK,
which includes the FRC’s Ethical Standard, as applicable to other entities of public interest, and we have fulfilled our other ethical responsibilities in accordance
with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided.
Other than those disclosed in note 5, we have provided no non-audit services to the syndicate in the period under audit.
Conclusions relating to going concern
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may
cast significant doubt on the syndicate’s ability to continue as a going concern for a period of at least twelve months from when the syndicate annual accounts are
authorised for issue.
In auditing the syndicate annual accounts, we have concluded that the Managing Agent’s use of the going concern basis of accounting in the preparation of the
syndicate annual accounts is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the syndicate's ability to continue as a going
concern.
Our responsibilities and the responsibilities of the Managing Agent with respect to going concern are described in the relevant sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the syndicate annual accounts and our auditors’ report thereon. The
Managing Agent is responsible for the other information. Our opinion on the syndicate annual accounts does not cover the other information and, accordingly, we
do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the syndicate annual accounts, our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the syndicate annual accounts or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material
misstatement of the syndicate annual accounts or a material misstatement of the other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.
Ark Syndicate Management Limited
Syndicate 3902
10
Independent auditors’ report to the member of Syndicate 3902
With respect to the Managing agent’s report, we also considered whether the disclosures required by The Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008 have been included.
Based on our work undertaken in the course of the audit, The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 requires us
also to report certain opinions and matters as described below.
Managing Agent’s Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Managing agent’s report for the year ended 31 December 2025
is consistent with the syndicate annual accounts and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the syndicate and its environment obtained in the course of the audit, we did not identify any material misstatements in
the Managing agent’s report.
Responsibilities for the syndicate annual accounts and the audit
Responsibilities of the Managing Agent for the syndicate annual accounts
As explained more fully in the Statement of Managing Agent’s Responsibilities, the Managing Agent is responsible for the preparation of the syndicate annual accounts
in accordance with the applicable framework and for being satisfied that they give a true and fair view. The Managing Agent is also responsible for such internal control
as they determine is necessary to enable the preparation of syndicate annual accounts that are free from material misstatement, whether due to fraud or error.
In preparing the syndicate annual accounts, the Managing Agent is responsible for assessing the syndicate’s ability to continue as a going concern, disclosing as
applicable, matters related to going concern and using the going concern basis of accounting unless it is intended for the syndicate to cease operations, or it has no
realistic alternative but to do so.
Auditors’ responsibilities for the audit of the syndicate annual accounts
Our objectives are to obtain reasonable assurance about whether the syndicate annual accounts as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these syndicate annual accounts.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to
detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is
detailed below.
Based on our understanding of the syndicate and industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of
regulatory principles, such as those governed by the Prudential Regulation Authority and the Financial Conduct Authority, and those regulations set by the Council of
Lloyd’s, and we considered the extent to which non-compliance might have a material effect on the syndicate annual accounts. We also considered those laws and
regulations that have a direct impact on the syndicate annual accounts such as The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008 and the Lloyd’s Syndicate Instructions. We evaluated management’s incentives and opportunities for fraudulent manipulation of the syndicate annual
accounts (including the risk of override of controls), and determined that the principal risks were related to the risk of fraud in revenue recognition, journal entries, and
the potential for management bias in significant accounting estimates, particularly in relation to incurred but not reported claims provisions included in technical provisions
and the estimation of gross written premiums.
Ark Syndicate Management Limited
Syndicate 3902
11
Independent auditors’ report to the member of Syndicate 3902
A
udit procedures performed by the engagement team included:
• Discussions with senior management involved in the Risk and Compliance functions, including consideration of known or suspected instances of
noncompliance with laws and regulation and fraud;
• Assessment of any matters reported in the fraud suspicion log and the compliance issues and breach log and the results of management’s investigation of
such matters;
• Reading key correspondence with Lloyd’s, the Prudential Regulation Authority and the Financial Conduct Authority in relation to compliance with laws and
regulations;
• Reviewing relevant meeting minutes including those of the Board and Audit and Risk Assurance Committee;
• Testing journal entries identified in accordance with our fraud risk assessment;
• Testing and challenging where appropriate the assumptions and judgements made by management in their significant accounting estimates, particularly in
relation to incurred but not reported provisions included in technical provision and the estimation of gross written premiums; and;
• Designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing.
T
here are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations
that are not closely related to events and transactions reflected in the syndicate annual accounts. Also, the risk of not detecting a material misstatement due to fraud is
higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or
through collusion.
A
further description of our responsibilities for the audit of the syndicate annual accounts is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditors’ report.
U
se of this report
This report, including the opinions, has been prepared for and only for the syndicate’s member in accordance with part 2 of The Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
O
ther required reporting
Under The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Managing Agent in respect of the syndicate; or
• certain disclosures of Managing Agent remuneration specified by law are not made; or
• the syndicate annual accounts are not in agreement with the accounting records.
We have no exceptions to report arising from this responsibility.
Other matter
We draw attention to the fact that this report may be included within a document to which iXBRL tagging has been applied. This auditors’ report provides no assurance
over whether the iXBRL tagging has been applied in accordance with section 2 of the Lloyd’s Syndicate Instructions version 2.0.
Sean Forster (Senior statutory auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
18 February 2026
Ark Syndicate Management Limited
Syndicate 3902
12
Ark Syndicate Management Limited
Syndicate 3902
13
Statement of profit or loss and other comprehensive income
For the year ended 31 December 2025
| 2025 | 2024 | ||
| Notes | £’000 | £’000 | |
| Technical account – General business Earned premiums, net of reinsurance | |||
| Gross premiums written | 3 | | |
| Outward reinsurance premiums | ( | ( | |
| Premiums written, net of reinsurance | | ||
| Changes in unearned premiums | 14 | ||
| Change in the gross provision for unearned premiums | ( | ||
| Change in the provision for unearned premiums, reinsurers’ share | | ||
| Net change in provisions for unearned premiums | ( | ||
| Earned premiums, net of reinsurance | | ||
| Allocated investment return transferred from the non-technical account | 4 | | |
| Claims incurred, net of reinsurance | 14 | ||
| Claims paid | |||
| Gross amount | ( | ( | |
| Reinsurers’ share | | ||
| Net claims paid | ( | ( | |
| Change in the provision for claims | 14 | ||
| Gross amount | ( | ( | |
| Reinsurers’ share | ( | | |
| Net change in provisions for claims | ( | ( | |
| Claims incurred, net of reinsurance | ( | ( | |
| Net operating expenses * | 5 | ( | ( |
| Balance on the technical account for general business | | ||
| Non-technical account | |||
| Balance on the technical account for general business | | ||
| Investment income | | ||
| Realised gains on investments | | ||
| Unrealised gains on investments | | ||
| Investment expenses and charges | ( | ( | |
| Total investment return | 4 | | |
| Allocated investment return transferred to technical account | ( | ( | |
| Gains on foreign exchange * | | ||
| Profit for the financial year | |
All operations are continuing. The notes on pages 19 to 44 form part of these accounts.
* represented in note 23
Ark Syndicate Management Limited
Syndicate 3902
14
Statement of profit or loss and other comprehensive income (cont.)
For the year ended 31 December 2025
2025
2024
Notes
£’000
£’000
Other comprehensive income
Profit for the financial year
28,884 32,211
Currency translation (losses) / gains
(3,776 ) 879
Total comprehensive income for the year
The notes on pages 19 to 44 form part of these accounts.
Ark Syndicate Management Limited
Syndicate 3902
15
Balance sheet - Assets
As at 31 December 2025
| 2025 | 2024 | ||
| Notes | £’000 | £’000 | |
| Assets Financial Investments | 7 | | |
| Deposit with ceding undertakings | | | |
| Investments | |||
| Provision for unearned premium | |||
| Claims outstanding | 8 | ||
| Reinsurers’ share of technical provisions | 14 | ||
| Debtors arising out of direct insurance operations | 10 | | |
| Debtors arising out of reinsurance operations | 11 | | |
| Other debtors | 12 | | |
| Debtors | |||
| Cash at bank and in hand | 13 | ||
| Other assets | | ||
| Deferred acquisition costs | 9 | | |
| Other prepayments and accrued income | | ||
| Prepayments and accrued income | |||
| Total assets | |
Ark Syndicate Management Limited
Syndicate 3902
16
Balance sheet – Liabilities
As at 31 December 2025
Notes
2025
£’000
2024
£’000
Capital, reserves and liabilities
Capital and reserves
Member’s balances
15
Liabilities
Provision for unearned premium
Claims outstanding
Technical provisions
14
Creditors arising out of direct insurance operations
16
Creditors arising out of reinsurance operations
17
Creditors
Accruals and deferred income
Total liabilities
Total capital, reserves and liabilities 388,471 422,006
Comparative has been presented in compliance with the Lloyd’s syndicate Accounts Instructions. Further details provided in notes 1 and 23. The notes on pages
19 to 44 form part of these accounts. The accounts were approved by the Board of Ark Syndicate Management Limited on 18 February 2026 and signed on its
behalf by
N Smith
Director
18 February 2026
Ark Syndicate Management Limited
Syndicate 3902
17
Statement of changes in member’s balances
For the year ended 31 December 2025
| 2025 | 2024 | ||
| Notes | £’000 | £’000 | |
| Members balances brought forward at 1 January | |||
| Total comprehensive income for the year | |||
| Payments of profit to members’ personal reserve funds | ( | ( | |
| Other | ( | ||
| Members balances carried forward at 31 December | 15 |
The notes on pages 19 to 44 form part of these accounts.
Ark Syndicate Management Limited
Syndicate 3902
18
Statement of cash flows
For the year ended 31 December 2025
Notes
2025
£’000
2024
*restated
£’000
Profit for the financial year
Increase in gross technical provisions
Decrease / (increase) in reinsurers’ share of gross technical provisions
(Increase) in insurance receivables and other debtors
(1,251 ) (4,835 )
Increase/ (decrease) in insurance payables and other creditors
Movement in deferred acquisition costs and other assets/ liabilities
(27,691 ) 14,413
Investment return
(9,724 ) (5,423 )
Foreign exchange
Net cash flows from operating activities
Purchase of equity and debt instruments
(34,302 ) (131,857 )
Sale of equity and debt instruments
Investment income received
Investment management fees
(81 ) (52 )
Net cash flows used in investing activities
Distribution (profit) / loss
(6,425 ) 3,752
Open year profit release
15
(29,305 ) (14,701 )
Net cash flows used in financing activities
(35,730 ) (10,949 )
Net decrease in cash and cash equivalents
(21,549 ) (5,291 )
Cash and cash equivalents at 1 January
Foreign exchange on cash and cash equivalents
(5,252 ) 785
Cash and cash equivalents at 31 December
18
The notes on pages 19 to 44 form part of these accounts.
* restated in note 22
Ark Syndicate Management Limited
Syndicate 3902
19
Notes to the financial statements
1. Statement of accounting policies
Basis of preparation
Syndicate 3902 (‘The Syndicate’)
comprises a group of members of the Society of Lloyd's that underwrites insurance business in the London Market. The address of
the Syndicate’s managing agent is 40 Leadenhall Street, London EC3A 2BJ.
The financial statements have been prepared in accordance with the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and
Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (“FRS 102”) as issued in August 2015, and Financial
Reporting Standard 103 Insurance Contracts (“FRS 103”) as issued in March 2015, as well as the Lloyd’s Syndicate Accounts Instructions Version 2.0 as modified by
the Frequently Asked Questions Version 1.1 issued by Lloyd’s.
The financial statements are prepared using the historical cost convention except that financial investments and derivative financial instruments are stated at their fair
value. All amounts presented are stated in Sterling, unless stated otherwise.
The financial statements have been prepared on a going concern basis. The directors of ASML have performed an assessment of the Syndicate’s ability to continue as
a going concern, including the impact of the ongoing conflict in Ukraine. A going concern assessment has been undertaken, taking into consideration availability of
capital, liquidity and stress testing. The Syndicate is expected to remain a key underwriting platform for the Ark group. Ark Corporate Member Limited (“ACML”) has
already provided capital to support the 2025 YOA. On the basis of this and the improvement in performance as a result of rate increases, ACML is also expected to
have the ability and intention to form a 2026 underwriting year. The directors of ASML have therefore concluded that there are no material uncertainties that could have
cast significant doubt over the ability of the company to continue as a going concern for at least a year from the date of approval of the financial statements.
The prior year cashflow has been restated due to an error in the classification of the short-term deposit accounts. Also, the analysis of underwriting result has been
restated, as our methodology has been amended as part of the process to align the segments to those required for Lloyd’s. Further details are in note 22.
During 2024 and 2025, Lloyd’s introduced changes to the syndicate accounts process to rationalise and standardise financial reporting across the market. As a result,
certain comparative information has been represented to ensure consistency with current year presentation and compliance with the Lloyd’s Syndicate Accounts
Instructions. These changes comprise of reclassification and aggregation changes and are presented in further detail with note 23.
Use of judgements and estimates
In preparing these accounts, the directors of ASML have made judgements, estimates and assumptions that affect the application of the Syndicate’s accounting policies
and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to estimates are recognised prospectively. The measurement of written premium inwards, and the provision for claims
outstanding are the two most critical estimates and both involve judgements and assumptions about the future that have a significant effect on the amounts recognised
in the financial statements. Refer to the Premiums written and earned section and note 13 (Technical provisions) for further details on these estimates.
Insurance contracts
Insurance contracts (including inwards reinsurance contracts) are defined as those containing significant insurance risk. Insurance risk is considered significant if, and
only if, an insured event could cause Ark to pay significant additional benefits in any scenario, excluding scenarios that lack commercial substance. Such contracts
remain insurance contracts until all rights and obligations are extinguished or expire.
Premiums written and earned
Gross premium written is initially based on estimated premium income (“EPI”) of each contract. EPI is based on information provided by the brokers, policyholders,
coverholders, past underwriting experience, and the contractual terms of the policy. Uncertainty arises because EPI could be different to the signed premium ultimately
received. This risk is mitigated by detailed reviews of EPI and signed premium and regular reviews that coverholder income is coming through as expected.
Gross premium written includes an estimation for reinstatement premium which is determined based on incurred losses held in the technical provisions. Reviews of the
reinstatement premiums held is carried out on a regular basis as part of the reserve review process.
Ark Syndicate Management Limited
Syndicate 3902
20
Notes to the financial statements
1. Statement of accounting policies (continued)
Written premiums are recognised as earned according to the risk profile of the policy. Unearned premiums represent the proportion of premiums written in the year
that relate to unexpired terms of policies in force at the balance sheet date. The provision is calculated on a policy by policy basis.
Reinsurance premiums ceded
Outwards reinsurance premiums are accounted for in the same accounting year as the premiums for the direct or inwards business being reinsured.
Claims provisions and related recoveries
The provision for claims comprises amounts set aside for claims notified and IBNR. Claims incurred comprise claims and claims handling expenses paid in the year
and the movement in provision for outstanding claims and future claims handling expenses. Recoverable amounts arising out of subrogation and salvage together with
reinsurance recoveries are deducted from the cost of gross claims.
Outstanding claims consist of amounts set aside for notified claims and a provision for IBNR claims. The amount included in respect of IBNR is arrived at by considering
the actuarially calculated provision, using techniques that generally involve statistical techniques of estimation applied by ASML’s actuaries and reviewed by external
consulting actuaries, as well as the opinion of the class underwriters and executive management. The actuarial techniques generally involve projecting from past
experience of the development of claims over time to form a view of the likely ultimate claims to be experienced for more recent underwriting having regard to variations
in the business accepted and the underlying terms and conditions. Large claims are generally assessed individually, being calculated on a case by case basis or
projected separately to allow for the possible distortive effects of the developments of these claims on the balance of the data. The provision for claims also includes
amounts in respect of internal and external claims handling costs.
The reinsurers’ share of provisions for claims is based on calculated amounts of outstanding claims 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 year and the current security rating of the reinsurance
companies involved. The Syndicate uses a number of statistical techniques to assist in making these estimates.
Accordingly the two most critical assumptions as regards claims provisions are that the past is a reasonable predictor of the likely level of claims development and that
the rating and other models used for current business are fair reflections of the likely level of ultimate claims to be incurred. Ultimate liability will vary as a result of
subsequent information and events and this may result in significant adjustments to the amounts provided. Adjustments to the amount of claims provisions established
in prior years are reflected in the financial statements for the year in which the adjustments are made. The methods used, and the estimates made, are reviewed
regularly.
Acquisition costs
Acquisition costs, comprising brokerage and taxes and duties levied on them are deferred to the extent that they are attributable to premiums unearned at the balance
sheet date.
Foreign currency translation
a) Functional and presentation currency
Items included in the financial statements are measured using the US dollar, the currency of the primary economic environment in which the Syndicate operates
(“functional currency”). The financial statements are presented in Sterling, being the presentation currency of the Syndicate.
Differences arising from the translation
from the functional to presentation currency are presented in the statement of other comprehensive income.
b) Transactions and balances
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 company 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 profit
or loss.
Non-monetary items recorded at historical cost in foreign currencies are translated using the exchange rate on the date of the initial transaction. For the
purposes of foreign currency translation, unearned premiums and deferred acquisition costs are treated as if they are monetary items.
Ark Syndicate Management Limited
Syndicate 3902
21
Notes to the financial statements
1. Statement of accounting policies (continued)
Investments
Investments are recognised in the balance sheet at such time as the Syndicate becomes a party to the contractual provisions of the investment. Purchases and sales
of investments are recognised on the trade date, which is the date the Syndicate commits to purchase or sell the asset. An investment is derecognised when the
contractual rights to receive cash flows from the investments expire, or where the investments have been transferred, together with substantially all the risks and rewards
of ownership. Financial liabilities are derecognised if the obligations specified in the contract expire, are discharged or cancelled.
On acquisition of an investment, the Syndicate is required to classify the asset into one of the following categories: investments at fair value through the statement of
profit or loss, loans and receivables, assets held to maturity and assets available for sale. The Syndicate has classified its investments as investments at fair value
through profit or loss because they are managed and their performance is evaluated on a fair value basis. Information about these investments is provided internally
on a fair value basis to management, and the investment strategy is to invest and evaluate their performance with reference to their fair values.
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.
When available, the fair value of an instrument is measured using quoted prices in an active market for that instrument. A market is regarded as active if quoted prices
are readily and regularly available and represent actual and regularly occurring market transactions on an arm’s length basis. If a market for a financial instrument is
not active, the fair value is established using a valuation technique. Valuation techniques include using recent orderly transactions between market participants (if
available), reference to the current fair value of other instruments that are substantially the same, discounted cash flow analyses and option pricing models. The chosen
valuation technique makes maximum use of market inputs, relies as little as possible on specific estimates, incorporates all factors that market participants would
consider in setting a price, and is consistent with accepted economic methodologies for pricing financial instruments. Inputs to valuation techniques reasonably represent
market expectations and measures of the risk-return factors inherent in the financial instrument.
Where possible, valuation techniques are calibrated and tested for validity using prices from observable current market transactions in the same instrument or based
on other available observable market data.
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 profit or loss 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 fair value through profit or loss are recognised in the statement of profit or loss
when incurred. Investments at fair value through profit or loss are continually measured at fair value, and changes therein are recognised in the statement of profit or
loss. Net changes in the fair value of investments at fair value through profit or loss exclude interest and dividend income, as these items are accounted for separately
as set out below.
Debtors and creditors arising out of insurance operations
Debtors and creditors arising out of insurance operations are recognised when due. These include amounts due to and from agents, brokers and insurance contract
holders. Debtors arising out of insurance operations are classified as ‘loans and receivables’ as they are non-derivative investments with fixed or determinable payments
that are not quoted on an active market. Debtors arising out of insurance operations are measured at amortised cost less any impairment losses. Insurance payables
are stated at amortised cost.
Debtors and creditors are offset, and the net amount presented in the balance sheet when, and only when, the Syndicate currently has a legal right to set off the
amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
Other receivables
Other receivables are carried at amortised cost less any impairment losses.
Ark Syndicate Management Limited
Syndicate 3902
22
Notes to the financial statements
1. Statement of accounting policies (continued)
Investment return
Investment return consists of dividends, interest, realised and unrealised gains and losses and foreign exchange gains and losses on investments at fair value through
the statement of profit or loss. Dividends on equity securities are recorded as revenue on the ex-dividend date. Interest is recognised separately on an amortised cost
basis using the effective interest rate method for investments at fair value through the statement of profit or loss. The realised gains or losses on disposal of an
investment are the difference between the proceeds and the original cost of the investment. Unrealised investment gains and losses represent the difference between
the carrying value at the reporting date, and the carrying value at the previous period end or purchase value during the period.
Creditors arising out of insurance operations
Creditors arising out of insurance operations are stated at amortised cost determined on the effective interest rate method.
Cash and cash equivalents
Cash and cash equivalents consist of cash at bank and in hand, deposits held at call with banks and other short-term highly liquid investments with maturities of three
months or less from the date of acquisition. They are classified as loans and receivables and carried at amortised cost less any impairment losses.
Profit commission
Profit commission is charged by the managing agent at a rate of 17.5% if the profit is under 10% of the Syndicates’ capacity, 20% if the profit is over 10% of the
Syndicates’ capacity. This is charged to the Syndicate as incurred and is payable on demand.
Net operating expenses
Where expenses are incurred by the Managing Agent for the administration of the Syndicate, these expenses are apportioned appropriately based on type of expense.
Expenses that are incurred jointly are apportioned between the Managing Agent and the Syndicate on bases depending on the amount of work performed, resources
used, and the volume of business transacted.
2. Management of risk
Approach to risk management
Ark’s core business relies on the assumption of internal and external risk within the appetites and tolerances established by the Board. Primarily Ark’s business is the
assumption of Insurance Risk and Market Risk, with the additional categories of Credit Risk, Liquidity Risk, Operational Risk and Group Risk. Managing these risks in
a manner that is consistent with the strategy, appetites and tolerances established by the Board requires that Ark has in place a systematic, objective, and robust set
of governance arrangements and processes for identifying and quantifying the risks to which it is exposed. This enables Ark to determine appropriate strategies and
approaches for prevention and mitigation.
The effectiveness with which Ark manages risk is a key determinant of the level of capital resources required to run the business and its ability to achieve its strategic
objectives including, in relation to capital efficiency and the production of acceptable levels of return.
Insurance risk
This is the risk arising from the uncertainties in timing, frequency and severity of insured losses, relative to the expectations made at the time of business planning or
underwriting. Ark’s business is based on the seeking and assumption of insurance risk. The Syndicate writes a balanced and diversified book of business through a
team of experienced underwriters with the objective of charging appropriate premiums to cover claims and operational costs whilst optimising the expected return on
equity. Target returns are assessed each year, taking into account the insurance market outlook and realistic expectations of return on equity. Insurance risk comprises
the following elements:
a) Exposure management risk
This is the risk of exposure to an event, or a series of events, which causes a potential financial loss that exceeds expectations. The nature of Ark’s business and
underwriting portfolio includes the assumption of a high degree of catastrophe, non-catastrophe and accumulative exposure to different events. This is managed through
the purchase of reinsurance and diversification of business lines and geographical areas to balance exposures, with the aim of reducing the risk that one event, or a
series of events, will cause unacceptable loss to the business. Ark’s catastrophe and non-natural catastrophe modelling processes incorporate Ark-specific disaster
scenarios, aggregate caps and cross-class modelling which reflect the diversity of the portfolio.
Ark Syndicate Management Limited
Syndicate 3902
23
Notes to the financial statements
2. Management of risk (continued)
b) Underwriting quality risk
This is the risk of inappropriate underwriting or the inadequate pricing of risks which can lead to unprofitable business or inefficient line utilisation and risk selection.
The management of underwriting quality can be difficult in a competitive market where underwriters are often under pressure to meet premium and pricing targets. Ark
operates an underwriting controls framework which includes individual underwriting authorities, continual quality monitoring and peer review of risks. The framework
aims to ensure a high quality of underwriting through monitoring of pricing and rate change, contract certainty and agreement of appropriate terms and conditions.
c) Delegated underwriting quality risk
This is the risk of exposure to inappropriate risks through the delegation of underwriting authorities to third parties or the delegation of authority to inappropriate third
parties. The nature of delegated underwriting naturally increases the risk of underwriting, through the ability of third parties being able to bind the Syndicate to risks
without detailed review of the risk involved. This risk is mitigated through the application of strict guidelines, managed by a dedicated team within the Compliance
department. This team reviews coverholder and third party authority (“TPA”) approvals pre-bind and monitors a programme of audits to ensure compliance with
regulations and guidelines.
d) Claims management risk
This is the risk that claims made are not managed in an appropriate manner, leading to material adverse results through an increase in claims, payments or exposure
to legal issues. The management of claims is conducted in accordance with claims procedures, which are, in turn, in line with the Lloyd’s Minimum Standards. This
includes the management of claims workflows and response times, reviews of major claims to ensure accurate estimates, regular reserving reviews and management
of complaints. These processes are enhanced through communication with underwriting teams to understand the policy or portfolio and with the Compliance department
to manage coverholders and TPAs.
e) Reserving risk
This is the risk that the estimated claims reserves differ materially from the ultimate cost of the claim or event. Reserving risk is a significant category in the Internal
Model and has the potential to significantly impact profitability. The potential impact is controlled through the use of a mix of actuarial models and methods, industry
data and underwriter experience to produce reliable estimates that are based on up to date information, and consistently applied over time and across classes of
business. Reserves for losses arising from the conflict in Ukraine are included in the normal process as a major loss. This does not pose a potential threat to the
business or risk of going concern. These estimates are subject to an external review each year.
f) Reinsurance purchasing
This is the risk of purchasing insufficient or inappropriate reinsurance, or the exhaustion of reinsurance, leading to excessive or unexpected losses. The process of
reinsurance purchasing forms a major part of Ark’s business planning process and includes the use of the Internal Model as a tool for decision making. Reinsurance
is purchased for a mixture of risk and event losses across the majority of classes, in a mixture of excess of loss and proportional cover, dependent on the scale and
characteristics of the class or treaty concerned. Ark also employs controls and monitoring around the use of insurers, credit ratings and concentration risk.
g) Underwriting management
This is the risk that returns from the policies written are different from expectations or are not in line with the business plan. Examples include a failure to reduce or exit
from unprofitable business or a failure of underwriters to follow the business plan which sets out the parameters, classes, limitations and profitability expectation of
underwriting teams for the forthcoming year. Communication of the business plan to the underwriting teams is therefore imperative. The performance of each class
and the syndicate portfolio as a whole is reviewed against the business plan on a regular basis by the Board and various committees using information available from
the management information portal. Various controls are in place to ensure constant vigilance including underwriting authorities, monitoring of risk codes, geographical
aggregates and data quality.
Ark Syndicate Management Limited
Syndicate 3902
24
Notes to the financial statements
2. Management of risk (continued)
| +5% | -5% | |
| 2025 - General insurance business sensitivities | £’000 | £’000 |
Claims outstanding - gross of reinsurance | ( | |
Claims outstanding – net of reinsurance | ( |
| +5% | -5% | |
| 2024 - General insurance business sensitivities | £’000 | £’000 |
Claims outstanding - gross of reinsurance | ( | |
Claims outstanding – net of reinsurance | ( |
Credit risk
Credit risk arises when counterparties fail to meet their obligations in full as they fall due. The key areas where credit risk can arise include reinsurers, brokers,
coverholders and investment counterparties.
The probability of reinsurer default is modelled by the Actuarial team as part of the Internal Model. Ark seeks to reduce this risk by avoiding over-reliance on specific
reinsurers through the application of concentration limits and thresholds. This is monitored by the Security Advisory Committee (“SAC”). Prior to the transaction of
business, broker and coverholder default is mitigated through the application of due diligence on new and existing counterparties, and a rolling audit schedule post-
bind. Overdue premium is also monitored by class, broker and age of debt. The investment portfolio is managed in line with asset allocation guidelines which are
monitored by type, counterparty, quality and duration. Ark outsources the management of a significant proportion of its investment portfolio to managers who monitor
and report on performance and adherence to guidelines on a regular basis.
202
5 – credit risk analysis
AAA
£’000
AA
£’000
A
£’000
BBB
£’000
Other
£’000
Not rated
£’000
Total
£’000
Shares and other variable securities
Debt securities
Syndicate loan to central fund
Other investments
Deposits with ceding undertakings
Reinsurers share of claims outstanding
Debtors arising out of insurance
operations
Debtors arising out of reinsurance
operations
Cash at bank and in hand
Other debtors and accrued interest
Total
Ark Syndicate Management Limited
Syndicate 3902
25
Notes to the financial statements
2. Management of risk (continued)
202
4 – credit risk analysis
AAA
£’000
AA
£’000
A
£’000
BBB
£’000
Other
£’000
Not rated
£’000
Total
£’000
Shares and other variable securities
Debt securities
Syndicate loan to central fund
Other investments
Deposits with ceding undertakings
Reinsurers share of claims outstanding
Debtors arising out of insurance
operations *
Debtors arising out of reinsurance
operations *
Cash at bank and in hand
Other debtors and accrued interest
Total
* restated in note 22
Debtors arising out of insurance operations and other debtors balances have not been impaired, based on all evidence available, and no impairment provision has been
recognised in respect of these assets. Inwards premium receivables are credit controlled by third-party managers. Ark monitors third party coverholders’ performance
and their financial processes through the coverholder management team. A provision for doubtful debts is included within reinsurers' share of technical provisions of
£1.7m (2024: £1.5m).
Financial assets that are past due or impaired
The Syndicate has debtors arising from direct insurance and reinsurance operations that are past due but not impaired at the reporting date. An analysis of the carrying
amounts of past due or impaired debtors is presented in the table below:
202
5
Neither past due nor impaired
£’000
Past due but not impaired
£’000
Total
£’000
Shares and other variable securities
Debt securities
Syndicate loan to central fund - - -
Other investments
Deposits with ceding undertakings 18 - 18
Reinsurers share of claims outstanding
Debtors arising out of insurance operations
Debtors arising out of reinsurance operations
Cash at bank and in hand
Other debtors and accrued interest
Total
Ark Syndicate Management Limited
Syndicate 3902
26
Notes to the financial statements
2. Management of risk (continued)
202
4
Neither past due nor impaired
£’000
Past due but not impaired
£’000
Total
£’000
Shares and other variable securities
Debt securities
Syndicate loan to central fund
Other investments
Deposits with ceding undertakings 20 - 20
Reinsurers share of claims outstanding
Debtors arising out of insurance operations
Debtors arising out of reinsurance operations
Cash at bank and in hand
Other debtors and accrued interest
Total
The table below sets out the age analysis of insurance assets that are past due but not impaired at the balance sheet date:
0-3 months past
due
3-6 Months past
due
6-12 months past
due
Greater than one
year past due
Total
2025
£’000
£’000
£’000
£’000
£’000
Debtors arising out of direct insurance operations
Debtors arising out of reinsurance operations
Total
0-3 months past
due
3-6Months past
due
6-12 months past
due
Greater than one
year past due
Total
2024
£’000
£’000
£’000
£’000
£’000
Debtors arising out of direct insurance operations
Debtors arising out of reinsurance operations
Total
Market risk
This is the risk that the value of assets and liabilities changes as a result of market movements e.g. foreign exchange rates, interest rates and market prices.
a) Foreign exchange risk
The functional currency of the Syndicate is the US dollar and the presentation currency in which the Syndicate reports its results is Sterling. Therefore, the Syndicate
is exposed to fluctuations in exchange rates for non-dollar denominated transactions. The Syndicate operates in five main currencies: US dollars, Sterling, Canadian
dollars, Australian dollars and Euros. The underwriting capital is matched by currency to the principal underlying currencies of its written premiums. This helps to
mitigate the risk that the capital required to underwrite business is materially affected by any future movements in exchange rates.
Ark Syndicate Management Limited
Syndicate 3902
27
Notes to the financial statements
2. Management of risk (continued)
| Sterling | US dollars | Euros | Canadian dollars | Australian dollars | Total | |
| 2025 - Currency analysis | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 |
Investments | | | | | | |
Reinsurers’ share of technical provisions | | | | | | |
Debtors | | | | | | |
Other assets | | | | | | |
Prepayments and accrued income | | | | | | |
Total assets | | | | | | |
Technical provisions | ( | ( | ( | ( | ( | ( |
Creditors | ( | ( | ( | ( | ( | ( |
Accruals and deferred income | ( | | ( | | | ( |
Total liabilities | ( | ( | ( | ( | ( | ( |
Total Capital and reserves | ( | | ( | ( | ( |
| Sterling | US dollars | Euros | Canadian dollars | Australian dollars | Total | |
| 2024 - Currency analysis | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 |
Investments | | | | | | |
Reinsurers’ share of technical provisions | | | | | | |
Debtors | | | | | | |
Other assets | | | | | | |
Prepayments and accrued income | | | | | | |
Total assets | | | | | | |
Technical provisions | ( | ( | ( | ( | ( | ( |
Creditors | ( | ( | ( | ( | | ( |
Accruals and deferred income | ( | | ( | | | ( |
Total liabilities | ( | ( | ( | ( | ( | ( |
Total Capital and reserves | ( | | ( | ( | ( |
The table below gives an indication of the impact on profit after tax and net assets of a percentage change in the relative strength of the US dollar against the value of
the main currencies, simultaneously.
2025
2025
2024
2024
Impact on
profit
Impact on net
assets
Impact on
profit
Impact on net
assets
Sensitivity to foreign exchange risk
£’000
£’000
£’000
£’000
USD weakens by
10% against other currencies (6,621) (6,621) (8,845) (8,845)
USD strengthens by
10% against other currencies 8,092 8,092 10,811 10,811
EURO weakens
by 10% against other currencies (1,188) (1,188) 140 140
EURO
strengthens by 10% against other currencies 1,452 1,452 (171) (171)
Ark Syndicate Management Limited
Syndicate 3902
28
Notes to the financial statements
2. Management of risk (continued)
b) Interest rate risk
Some of the financial instruments, including certain investments at fair value, cash and cash equivalents and borrowings, are exposed to movements in market interest
rates. Interest rate risk is managed by primarily investing in short-duration investments and cash and cash equivalents. The duration of assets is monitored on a regular
basis. The duration of assets exposed to movements in market interest rates is xx (2024: 0.44). Changes in interest rates, with all other variables constant, would
result in changes in the capital value of debt securities and borrowings as well as subsequent interest receipts and payments.
2025
2025
2024
2024
Impact on
Profit
Impact on net
assets
Impact on
Profit
Impact on net
assets
Sensitivity to interest rate risk
£’000
£’000
£’000
£’000
5
0 basis point increase in interest rates (453 ) (453 ) 262 262
5
0 basis point decrease
in interest rates 47 47 (258 ) (258 )
c) Price risk
Investments recognised at fair value are exposed to movements in market prices, an assessment of which is set out below.
2025
2025
2024
2024
Impact on
profit
Impact on net
assets
Impact on
profit
Impact on net
assets
Sensitivity to price risk
£’000
£’000
£’000
£’000
5% increase in stock market prices
5% decrease in stock market prices
(597 ) (597 ) - -
Liquidity risk
Liquidity risk arises where cash may not be available to pay obligations when they fall due without incurring unreasonable penalties or expense costs. The risk is
minimised by holding sufficient liquid assets to enable large and unexpected payments, predominately claims, to be made in all but the most extreme scenarios. Ark’s
Catastrophe Event Response Plan provides information to quantify liquidity implications of losses, reinsurance recoveries, cashflows and trust funds in the event of a
catastrophe or large loss. The process is stress tested using historic scenarios to determine the behaviour of the portfolio following an event or series of events.
202
5 – Maturity analysis
0-1yr
£’000
1-3yrs
£’000
3-5yrs
£’000
>5yrs
£’000
Total
£’000
Gross c
laims outstanding 52,554 112,223 40,619 27,446 232,842
Creditors
Total
202
4 – Maturity analysis
0-1yr
£’000
1-3yrs
£’000
3-5yrs
£’000
>5yrs
£’000
Total
£’000
Gross c
laims outstanding 47,960 108,368 38,264 24,694 219,286
Creditors
Total
Ark Syndicate Management Limited
Syndicate 3902
29
Notes to the financial statements
2. Management of risk (continued)
In the above analysis, assets with no duration are included as “less than one year”.
<1yr
1-3yrs
3-5yrs
>5yrs
Total
Weighted
average
term
Net claim liability cashflow
£’000
£’000
£’000
£’000
£’000
(years)
2025
38,273 81,728 29,581 19,988 169,570 2.47
2024
33,449 75,580 26,687 17,222 152,938 3.13
Operational risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes or systems. Risks are identified within the risk register and are modelled via
operational scenarios. Ark aims to minimise its exposure to operational risk by monitoring controls and management information in the form of key indicators that
indicate changes to the risk profile.
Ark outsources a number of key functions, such as investment management, inwards premium credit control and human resources. This introduces the risk that the
Syndicate may be exposed to liability or may fail to achieve its objectives due to inappropriately arranged, or a failure of, outsource arrangements. This risk is mitigated
through pre-contract due diligence and performance review throughout the contract life cycle.
Ark recognises that the success of a business depends on the ability to retain the services of existing key staff and to attract and retain additional people in the future,
both in underwriting and support functions. This risk is managed through the provision of sufficient education and development, support for qualifications and competitive
remuneration packages.
Ark is also impacted by the risk of information technology system failure or disruption. This is mitigated through a control framework which includes network security,
data, hardware and applications and is complimented by detailed planning around back-ups, contingency and disaster recovery, all of which are monitored and tested
on a regular basis.
Regulatory risk
Regulatory risk is the risk of censure following a breach of regulatory or legal requirements, or a failure to respond to deadlines or information requests from regulators
in a satisfactory and timely manner.
Ark is regulated, overseen or required to report to the Prudential Regulation Authority (“PRA”), the Financial Conduct Authority (“FCA”), Lloyd’s and other overseas
regulators. Each body requires adherence to specific requirements and guidelines. In order to mitigate this, Ark seeks to conform to the regulations as they apply to
each functional area. Much of this is operated through training and awareness to promote correct behaviour at source, as opposed to corrective action at a later stage.
The overall risk is managed by the Compliance department which seeks to ensure that deadlines are met and changes in regulation are communicated in a timely
manner.
Ark has put in place processes and controls to identify and manage the conduct risk associated with the business it underwrites. Ark will continue to lead high product
risk business where risks are consistent with the probability targets taking into account the additional requirements for oversight and monitoring conduct risk.
Capital management risk
Capital is primarily required to support underwriting at Lloyd’s. 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.
Ark Syndicate Management Limited
Syndicate 3902
30
Notes to the financial statements
2. Management of risk (continued)
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.
Each member of a syndicate is liable for its own share of underwriting liabilities on the syndicate(s) on which it is participating. Each member’s SCR is 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, an uplift is applied by Lloyd’s to the member’s capital requirement, known as the Economic Capital Assessment (“ECA”).
3. Analysis of underwriting result
An analysis of the underwriting result before investment return is set out below.
Gross
Premium
written
Gross
Premium
earned
Gross
Claims
incurred
Gross
Operating
expense
Reinsurance
balance
Underwriting
result
2025
£’000
£’000
£’000
£’000
£’000
£’000
Direct insurance:
Accident and health
Motor (third party liability)
- - - - - -
Motor (other classes)
Marine
aviation and transport 61,054 65,948 (46,959 ) (24,100 ) 5,368 257
Fire and other damage to property
Third party liability
Credit and suretyship
Total direct insurance
Reinsurance
Total
Gross
Premium
written
Gross
Premium
earned
Gross
Claims
incurred
Gross
Operating
expense
Reinsurance
balance
Underwriting
result
2025
£’000
£’000
£’000
£’000
£’000
£’000
Additional analysis
Fire and damage to property
Speciality 6,947 6,537 2,401 (2,421 ) (3,052 ) 3,465
Energy 12,415 14,585 (28,202 ) (3,769 ) 11,653 (5,733 )
Third party liability
Energy 380 306 71 (70 ) (137 ) 170
Ark Syndicate Management Limited
Syndicate 3902
31
Notes to the financial statements
3. Analysis of underwriting result (continued)
Gross
Premium
written
Gross
Premium
earned
Gross
Claims
incurred
Gross
Operating
expense
Reinsurance
balance
Underwriting
result
2024 – *represented
£’000
£’000
£’000
£’000
£’000
£’000
Direct insurance:
Accident and health
Motor (third party liability)
(16 ) 0 0 0 1 1
Motor (other classes)
Marine
aviation and transport 75,152 74,089 (51,102 ) (30,293 ) 4,253 (3,053 )
Fire and other damage to property
Third party liability
Credit and suretyship
Total direct insurance
Reinsurance
Total
Gross
Premium
written
Gross
Premium
earned
Gross
Claims
incurred
Gross
Operating
expense
Reinsurance
balance
Underwriting
result
2024 - *represented
£’000
£’000
£’000
£’000
£’000
£’000
Additional analysis
Fire and damage to property
Speciality 18,677 20,697 (2,575 ) (5,750 ) (3,277 ) 9,095
Energy 8,281 7,674 (159 ) (3,406 ) (2,934 ) 1,175
Third party liability
Energy 442 304 (9 ) (81 ) (125 ) 89
The gross premiums written for direct insurance location of risk is presented in the table below:
| 2025 | 2024 | |
| *represented | ||
| £’000 | £’000 | |
United Kingdon | | |
US | | |
Rest of the world | | |
Total | |
*represented in note 23
Ark Syndicate Management Limited
Syndicate 3902
32
Notes to the financial statements
4. Investment return
| 2025 | 2024 | |
| £’000 | £’000 | |
Income on financial investments at fair value | | |
Interest on cash and cash equivalents | | |
Gains on the realisation of investments | | |
Unrealised gains on investments | | |
Unrealised losses on investments | ( | ( |
Investment management charges | ( | ( |
Total | | |
| 5. Net operating expenses | ||
| 2025 | 2024 | |
| £’000 | £’000 | |
Acquisition costs | ||
| Change in deferred acquisition costs | | ( |
Administrative expenses | ||
Managing agency fee | ||
Personal expenses | ||
Total | |
Total commission for direct insurance business for the year amounted to:
| 2025 | 2024 | |
| £’000 | £’000 | |
Total commission for direct insurance business |
Administrative expenses are incurred on behalf of the Syndicate by ASML. These expenses include:
| 2025 | 2024 | |
| £’000 | £’000 | |
| Fees payable to the Syndicate’s auditors for the audit of these financial statements | | |
Other services pursuant to legislation and tagging | | |
Performance related pay | 5,183 | 9,559 |
6. Directors and employees
All executive directors and staff are employed and remunerated by ASML. The following staff and related costs were recharged to the syndicate.
| 2025 | 2024 | |
| £’000 | £’000 | |
Wages and salaries | ||
Social security costs | ||
Pension costs | | |
Total | |
Included above are the employment costs of underwriters attributable to acquisition of business and those of claims staff treated within the technical accounts as
acquisition costs and claims handling costs respectively.
Ark Syndicate Management Limited
Syndicate 3902
33
Notes to the financial statements
6. Directors and employees (continued)
The average number of employees employed by ASML but working on syndicate matters during the year is set out below.
| 2025 | 2024 | |
| Number | Number | |
Underwriting | | |
Claims | | |
Administration | | |
Total | |
The directors of ASML received the following aggregate remuneration charged as a syndicate expense:
| 2025 | 2024 | |
| £’000 | £’000 | |
Directors’ emoluments | | |
The active underwriters received the following remuneration charged as a syndicate expense.
| 2025 | 2024 | ||
| £’000 | £’000 | ||
E | moluments of the Active Underwriter | | |
No contributions were made to money purchases pension schemes in the year in respect of the Active Underwriter (2024: Nil).
7. Financial investments
Cost
Value
Cost
*represented
Value
*represented
2025
2025
2024
2024
Financial investments at fair value:
£’000
£’000
£’000
£’000
Shares and other variable yield securities
Debt and other fixed income securities
Syndicate loan to central fund
Other investments
Total financial investments
Total
169,830 189,985 225,947 225,647
*represented in note 23
The amount expected to mature before and after one year is:
Before one year
171,501
After one year
18,484
Total
189,985
The fair values of investments are based on prices provided by investment managers who obtain market data from numerous independent pricing services. The pricing
services used by the investment manager obtain actual transaction prices for securities that have quoted prices in active markets. For those securities which are not
actively traded, the pricing services use common market valuation pricing models. Observable inputs used in common market valuation pricing models include, but are
not limited to, broker quotes, credit ratings, interest rates and yield curves, prepayment speeds, default rates and other such inputs which are available from market
sources.
Ark Syndicate Management Limited
Syndicate 3902
34
Notes to the financial statements
7. Financial investments (continued)
Level 1 includes fair values measured using quoted prices (unadjusted) in active markets for identical instruments. Level 2 includes fair values measured using directly
or indirectly observable inputs or other similar valuation techniques for which all significant inputs are based on market observable data. Level 3 includes fair values
measured using valuation techniques for which significant inputs are not based on market observable data.
The fair value of these assets is based on the prices obtained from both investment managers and investment custodians.
| Level 1 | Level 2 | Level 3 | Total | |
| 2025 | 2025 | 2025 | 2025 | |
| Fair value hierarchy: | £’000 | £’000 | £’000 | £’000 |
Shares and other variable yield securities | | | ||
Debt and other fixed income securities | | | ||
| Participation in investment pools | | | ||
| Syndicate loan to central fund | - | - | - | - |
| Other investments | | | ||
Total financial investments | ||||
Total |
Level 1
Level 2
Level 3
Total
2024
2024
2024
2024
Fair value hierarchy: - *represented
£’000
£’000
£’000
£’000
Shares and other variable yield securities
Debt and other fixed income securities
Participation in investment pools - - - -
Syndicate loan to central fund
Other investments
Total financial investments
Total
*represented in note 23
8. Reinsurers’ share of technical provisions
2025
£’000
2024
£’000
Reinsurers’ share of claims reported
24,800 17,541
Reinsurers’ share of claims
incurred but not reported 38,472 48,807
Total
63,272 66,348
Ark Syndicate Management Limited
Syndicate 3902
35
Notes to the financial statements
9. Deferred acquisition costs
| 2025 | 2024 | |
| £’000 | £’000 | |
Balance at 1 January | ||
Additions | ||
Amortisation charge | ( | ( |
Foreign exchange movement | ( | ( |
At 31 December |
| 10. Debtors arising out of direct insurance operations | ||
| 2025 | 2024 | |
| £’000 | £’000 | |
| Due within one year | | |
Total | |
| 11. Debtors arising out of reinsurance operations | ||
| 2025 | 2024 | |
| £’000 | £’000 | |
Due within one year | | |
Due after one year | | |
Total | |
| 12. | Other debtors | ||
| 2025 | 2024 | ||
| £’000 | £’000 | ||
Other | | ||
Total | |
13. Cash at bank and in hand
2025
2024
£’000
£’000
Cash at bank and in hand
12,750 8,016
14. Technical Provisions
2025
2024
£’000
£’000
C
laims reported and loss adjustment expenses 80,023 65,404
C
laims incurred but not reported 152,819 153,882
Gross claims liabilities
232,842
219,286
Unearned premiums
96,134
107,619
Total
328,976 326,905
Ark Syndicate Management Limited
Syndicate 3902
36
Notes to the financial statements
14. Technical provisions (continued)
Movements in technical provisions and reinsurers' share of technical provisions are as follows:
| 2025 | 2025 | 2025 | 2024 | 2024 | 2024 | |
| Gross | Reinsurance | Net | Gross | Reinsurance | Net | |
| Claims and loss adjustment expenses | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 |
At 1 January | ( | | | ( | ||
Claims paid | ( | ( | ( | | ( | |
Movement arising from current years | | ( | | | ( | |
Movement arising from prior years | ( | ( | ( | | ( | |
Net exchange differences | ( | | ( | | ( | |
At 31 December | ( | | ( | |||
| 2025 | 2025 | 2025 | 2024 | 2024 | 2024 | |
| Gross | Reinsurance | Net | Gross | Reinsurance | Net | |
| Unearned premiums | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 |
At 1 January | | ( | | | ( | |
Increase in the year | | ( | | | ( | |
Release in the year | ( | | ( | ( | | ( |
Net exchange differences | ( | | ( | ( | | ( |
At 31 December | | ( | | | ( | |
Assumptions and processes
a) The reserving process
Ark uses a quarterly process to set its reserves. Several actuarial and statistical methods are used to estimate the ultimate premium and claims costs, with the most
appropriate method selected depending on the nature of each class of business. In addition, the underwriting teams review the development of the incurred loss ratio
over time, work with the claims team to set reserve estimates for identified claims and utilise their detailed understanding of both risks underwritten and the nature of
the claims to establish an alternative estimate of ultimate claims cost, which is compared to the actuarially established figures. The Reserving Committee then
determines the reserves held for accounting purposes. An annual independent actuarial review is undertaken to ensure that the reserves established are not lower
than an independently established best estimate.
Chain-ladder techniques are applied to premiums, paid claims and incurred claims (i.e. paid claims plus case estimates). The basic technique involves the analysis of
historical claims development factors and the selection of estimated development factors based on historical patterns. The selected development factors are then
applied to cumulative claims data for each underwriting year that is not yet fully developed to produce an estimated ultimate claims cost for each underwriting year. The
Bornhuetter-Ferguson method uses a combination of a benchmark / market-based estimate and an estimate based on claims experience. The former is based on a
measure of exposure such as premiums; the latter is based on the paid or incurred claims observed to date. The two estimates are combined using a formula that gives
more weight to the experience-based estimate as time passes.
The choice of selected results for each underwriting year of each class of business depends on an assessment of the technique that has been most appropriate to
observed historical developments. In certain instances, this has meant that different techniques or combinations of techniques have been selected for individual
underwriting years or groups of underwriting years within the same class of business. As such, there are many assumptions used to estimate general insurance liabilities.
Ark Syndicate Management Limited
Syndicate 3902
37
Notes to the financial statements
14. Technical provisions (continued)
Triangulations of the paid / outstanding claim ratios are also reviewed as a way of monitoring any changes in the strength of the outstanding claim estimates between
underwriting years so that adjustments can be made to mitigate any subsequent over / (under)reserving. Where significant large losses impact an underwriting year,
the development is usually very different from the attritional losses. In these situations, the large loss total is extracted from the remainder of the data and analysed
separately by the respective claims managers using exposure analysis of the policies in force in the areas affected. Further assumptions are required to convert gross
of reinsurance estimates of ultimate claims cost to a net of reinsurance level and to establish reserves for unallocated claims handling expenses and reinsurance bad
debt.
b) Major assumptions
The main assumption underlying these techniques is that the Syndicate’s past claims development experience (with appropriate adjustments for known changes) can
be used to project future claims development and hence ultimate claims costs. As such these methods extrapolate the development of premiums, paid and incurred
losses, average costs per claim and claim numbers for each underwriting year based on the observed development of earlier years. Throughout, judgement is used to
assess the extent to which past trends may not apply in the future; for example, to reflect changes in external or market factors such as economic conditions, public
attitudes to claiming, levels of claims inflation, premium rate changes, judicial decisions and legislation, as well as internal factors such as portfolio mix, policy conditions
and claims handling procedures.
The loss development tables below provide information about historical claims development by the identified operating segments. The tables are by underwriting year
which in our view provides the most transparent reserving basis. The top part of the table illustrates how the estimate of the claims ratio for each underwriting year has
changed at successive year ends. The bottom half of the table reconciles the gross and net claims to the amount appearing in the balance sheet. While the information
in the table provides a historical perspective on the adequacy of the claims liabilities established in previous years, users of these financial statements are cautioned
against extrapolating past redundancies or deficiencies on current claims liabilities. The Syndicate believes that the estimate of total claims liabilities selected is
adequate. However, due to inherent uncertainties in the reserving process, it cannot be assured that such balances will ultimately prove to be adequate.
| 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | Total | |
| Gross claims | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 |
| End of yr one | | | | | | | | | | |
| One year later | | | | | | | | | ||
| Two years later | | | | | | | | |||
| Three years later | | | | | | |||||
| Four years later | | | | | | |||||
| Five years later | | | | | ||||||
| Six years later | | | | |||||||
| Seven years later | | | ||||||||
| Eight years later | | |||||||||
| Gross claims | | | | | | | | | | |
| PY provision | - | |||||||||
| Less paid claims | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( |
| Claims reserve | | | | | | | | | | |
Ark Syndicate Management Limited
Syndicate 3902
38
Notes to the financial statements
14. Technical provisions (continued)
| 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | Total | |
| Net claims | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 |
| End of yr one | | | | | | | | | | |
| One year later | | | | | | | | | ||
| Two years later | | | | | | | | |||
| Three years later | | | | | | | ||||
| Four years later | | | | | | |||||
| Five years later | | | | | ||||||
| Six years later | | | | |||||||
| Seven years later | | | ||||||||
| Eight years later | | |||||||||
| Gross claims | | | | | | | | | | |
| PY provision | - | |||||||||
| Less paid claims | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( |
| Claims reserve | | | | | | | | | | |
15. Member’s balances attributable to underwriting participations
| 2025 YOA | 2024 YOA | 2023 YOA | Total | |
| 2025 | £’000 | £’000 | £’000 | £’000 |
| At 1 January | - | 6,673 | 29,305 | 35,978 |
| Profit for the year | 5,492 | 11,408 | 11,984 | 28,884 |
| Other recognised losses | (72) | (1,079) | (2,624) | (3,775) |
| Distribution | - | - | ( | (26,738) |
| At 31 December | 5,420 | 17,002 | 11,927 | 34,349 |
| 2024 YOA | 2023 YOA | 2022 YOA | Total | |
| 2024 | £’000 | £’000 | £’000 | £’000 |
| At 1 January | - | 9,430 | 14,701 | 24,131 |
| Profit for the year | 6,235 | 19,449 | 6,527 | 32,211 |
| Other recognised gains | 438 | 426 | 15 | 879 |
| Distribution | - | - | ( | (14,817) |
| At 31 December | 6,673 | 29,305 | 6,426 | 42,404 |
The member participate on the Syndicate by reference to YOA and the ultimate result, assets and liabilities are assessed with reference to policies incepting in that
YOA in respect of the membership of a particular year.
16.
| Creditors arising out of insurance operations | ||
| 2025 | 2024 | |
| £’000 | £’000 | |
Due within one year | | |
Total | |
Ark Syndicate Management Limited
Syndicate 3902
39
Notes to the financial statements
| 17. Creditors arising out of reinsurance operations | ||
| 2025 | 2024 | |
| £’000 | £’000 | |
Due within one year | | |
Total | |
| 18. Cash and cash equivalents | ||
| 2025 | 2024 | |
| £’000 | £’000 | |
Cash at bank and in hand | | |
Short term debt instruments presented with other financial investments | | |
Total | |
Only deposits with credit institutions with maturities of three months or less that are used by the Syndicate in the management of its short-term commitments are
included in cash and cash equivalents. Included within cash and cash equivalents are the following amounts which are restricted for use by the Syndicate because they
are held in regulated bank accounts in overseas jurisdictions.
| 2025 | 2024 | |
| £’000 | £’000 | |
Cash and cash equivalents not available for use by the syndicate | | |
Total | |
19. Related parties
The registered office of the ultimate parent company, White Mountains Insurance Group, Ltd., is Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda. The
parent company of the Ark group is AIHL, and the immediate parent company of ASML is Group Ark Insurance Holdings Limited (“GAIHL”).
The key management compensation charged to the syndicate is disclosed in note 6.
N Brothers serves without fee as a director of Accident & Health Underwriting Limited (“AHU”), a wholly owned subsidiary of GAIHL. The Syndicates underwrite business
through AHU under a binding authority. Gross premium income, excluding brokerage and commissions, due to the Syndicates under this binding authority amounted
to £5.3m (2024: £5.5m). Brokerage and commissions paid in the year by the Syndicates to AHU amounted to £3.3m (2024: £3.4m).
GAIHL is a member controlling 50% of Accident & Health Claims Services LLP (“AHC”), the other 50% being controlled by AHU. AHC provides claims handling services
to the Syndicates. Fees paid in the year by the Syndicates in respect of these services amounted to £0.3m (2024: £0.3m).
Until 30
th
April 2024, I Beaton served without fee as a director of Optio Group Limited (“Optio”), a managing general agent (“MGA”) focused on emerging insurance
risks. Optio owns Northcourt Limited, a specialty MGA. Gross premium income, excluding brokerage and commissions, due to the Syndicates under this binding
authority amounted to £2.8m (2024: £1.7m). Commissions paid to Northcourt during the year were £0.9m (2024: £0.5m).
C Atkin serves as a director of Alwen Hough Johnson Limited ("AHJ"), a Lloyd's broker. During the year the Syndicates wrote business with premium of £8.0m (2024:
£6.0m) through AHJ. Commissions paid to AHJ in the year totalled £1.0m (2024: £0.9m).
Since1st July 2025, C Atkin has served as a director of Miller Insurance Services LLP ("Miller") who act as a Lloyd's Broker. During the year the syndicates wrote
business with premium of £39.0m (2024: £38.4m) through Miller. Commissions paid to Miller in the year were £5.8m (2024: £8.0m). Miller also placed reinsurance
protection for the syndicates. During the year ORI premiums paid through Miller amounted to £0.4m (2024: less than £0.1m).
Ark Syndicate Management Limited
Syndicate 3902
40
Notes to the financial statements
19. Related parties (continued)
C Atkin serves as a director of AmWins, which owns a number of insurance intermediaries acting as Brokers and Coverholders of business to the Lloyd's Market,
including AmWins Global Risks Limited (AGR), who act as a Lloyd's Broker. During the year the Syndicates wrote business through AGR with premium of £25.2m
(2024: £28.3m). Commissions paid to AGR in the year were £5.5m (2024: £5.7m). AGR also placed reinsurance protection for the syndicates. During the year ORI
premiums paid through AGR amounted to £0.4m (2024: £1.3m).
C Atkin serves as a director of Whitespace Software Limited (“Whitespace”), a software company providing a Lloyd's recognised electronic placing system. The
Syndicates use Whitespace to accept risks from brokers. License fees paid to Whitespace during the year are less than £0.2m (2024: less than £0.1m).
M Raven serves without fee as a director of Nuclear Risks Insurers Ltd, who provide insurance cover for nuclear risks through a pooling system. In 2025, gross premium
income, excluding brokerage and commissions, written by the Syndicates through this pooling arrangement amounted to £0.8m. (2024: £0.8m).
20. Foreign exchange rates
The following currency exchange rates have been used for principal foreign currency transactions.
| 1 January | 31 December | 2025 | 1 January | 31 December | 2024 | |
| 2025 | 2025 | Average | 2024 | 2024 | Average | |
| Rate | Rate | Rate | Rate | Rate | Rate | |
Sterling | | | | |||
Euro | | | | | | |
US dollar | | | | | | |
Australian dollar | | | | | | |
Canadian dollar | | | | | | |
21. Funds at Lloyd’s
Every member is required to hold capital at Lloyd’s which is held in trust and known as 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.
Ark Syndicate Management Limited
Syndicate 3902
41
Notes to the financial statements
22. Restatement of
comparative information
The prior year cashflow has been restated due to an error in the classification of the short-term deposit accounts (£74.0m) to cash and cash equivalents. These are
deposits with credit institutions with maturities of three months or less that are used by the Syndicate in the management of its short-term commitments. The items
restated within the cashflow statement on page 18 are shown below:
Statement of cash flows
2024
Restated
£’000
2024
Correction
£’000
2024
Original
£’000
Foreign exchange
(1,103) (2,345) 1,242
Net cash flows from operating activities
59,333 (2,345) 61,678
Purchase of equity and debt instruments
(131,857) (213) (131,644)
Sale of equity and debt instruments
75,106 (3,641) 78,747
Net cash flows from investing activities
(53,675) (3,854) (49,821)
Net increase in cash and cash equivalents
(5,291) (6,199) 908
Cash and cash equivalents at 1 January
86,634 79,075 7,559
Foreign exchange on cash and cash equivalents
785 1,236 (451)
Cash and cash equivalents at 31 December
82,128 74,112 8,016
The prior year credit risk analysis has been restated due to an error in the inclusion of past due insurance and reinsurance debtors. The items restated within the
credit analysis table on page 25 are shown below:
2024
– credit risk analysis - Restated
AAA
£’000
AA
£’000
A
£’000
BBB
£’000
Other
£’000
Not rated
£’000
Total
£’000
Debtors arising out of insurance
operations
- - - - - 64,373 64,373
Debtors arising out of reinsurance
operations
- - 3,131 - - 2,776 5,907
Total
5,445 13,075 68,584 1,901 986 280,539 370,530
2024
– credit risk analysis – Correction
AAA
£’000
AA
£’000
A
£’000
BBB
£’000
Other
£’000
Not rated
£’000
Total
£’000
Debtors arising out of insurance
operations
- - - - - (9,739) (9,739)
Debtors arising out of reinsurance
operations
- - (9,975) - - - (9,975)
Total
- - (9,975) - - (9,739) (19,714)
2024
– credit risk analysis - Original
AAA
£’000
AA
£’000
A
£’000
BBB
£’000
Other
£’000
Not rated
£’000
Total
£’000
Debtors arising out of insurance
operations
- - - - - 74,112 74,112
Debtors arising out of reinsurance
operations
- - 13,106 - - 2,776 15,882
Total
5,445 13,075 78,559 1,901 986 290,278 390,244
Ark Syndicate Management Limited
Syndicate 3902
42
Notes to the financial statements
23. Representation of
comparative information
The comparative information below has been represented due to changes in Lloyd’s reporting requirements.
2024
Representation
2024
Original
Notes
£’000
£’000
Technical account – General business
Net operating expenses
5
(75,277) (74,085)
Balance on the technical account for general business
31,019 32,211
Non-technical account
Gains on foreign exchange
1,192 -
Profit for the financial year
32,211 32,211
Segmental analysis
Gross
Premium
written
Gross
Premium
earned
Gross
Claims
incurred
Gross
Operating
expense
Reinsurance
balance
Underwriting
(loss)/ profit
2024 - representation
£’000
£’000
£’000
£’000
£’000
£’000
Direct insurance:
Accident and health
7,769 6,755 (2,764) (3,399) 287 879
Motor (third party liability)
(16) 0 0 0 1 1
Motor (other classes)
0 2 18 (1) 0 19
Marine
aviation and transport 75,152 74,089 (51,102) (30,293) 4,253 (3,053)
Fire and other damage to property
84,943 87,835 (20,605) (27,387) (15,119) 24,724
Third party liability
700 449 26 (107) (214) 154
Credit and suretyship
32,983 26,866 (9,605) (10,469) (681) 6,111
Total direct insurance
201,531 195,996 (84,032) (71,656) (11,473) 28,835
Reinsurance
8,183 7,582 (5,960) (2,429) (1,238) (2,045)
Total
209,714 203,578 (89,993) (74,085) (12,711) 26,790
Gross
Premium
written
Gross
Premium
earned
Gross
Claims
incurred
Gross
Operating
expense
Reinsurance
balance
Underwriting
result
2024 - representation
£’000
£’000
£’000
£’000
£’000
£’000
Additional analysis
Fire and damage to property
Speciality 18,677 20,697 (2,575) (5,750) (3,277) 9,095
Energy 8,281 7,674 (159) (3,406) (2,934) 1,175
Third party liability
Energy 442 304 (9) (81) (125) 89
Ark Syndicate Management Limited
Syndicate 3902
43
Notes to the financial statements
23. Representation of
comparative information (continued)
Segmental analysis
Gross
Premium
written
Gross
Premium
earned
Gross
Claims
incurred
Gross
Operating
expense
Reinsurance
balance
Underwriting
profit/(loss)
2024 - original presentation
£’000
£’000
£’000
£’000
£’000
£’000
Direct insurance:
Accident and health
7,151 5,880 (1,704) (2,986) 25 1,215
Motor (other classes)
30 53 (429) (12) (8) (396)
Marine
aviation and transport 80,003 79,700 (51,998) (29,566) (4,590) (6,454)
Fire and other damage to property
99,131 94,502 (30,988) (32,409) (8,529) 22,576
Third party liability
328 352 (2) (107) (72) 171
186,643 180,487 (85,121) (65,080) (13,174) 17,112
Reinsurance
23,071 23,091 (4,871) (9,005) 463 9,678
Total
209,714 203,578 (89,992) (74,085) (12,711) 26,790
Gross written premium for direct insurance by location
2024
Representation
2024
Original
£’000
£’000
United Kingdon
4,690 4,344
US
57,457 53,212
Rest of the world
139,384 129,087
Total
201,531 186,643
Net operating expenses
2024
Representation
2024
Original
£’000
£’000
Acquisition costs 43,137 43,137
Change in deferred a
cquisition costs (1,482) (1,482)
Administrative expenses
23,480 22,288
Managing agency fee
1,763 1,763
Personal expenses
8,379 8,379
Total
75,277 74,085
Ark Syndicate Management Limited
Syndicate 3902
44
Notes to the financial statements
23. Representation of
comparative information (continued)
Investments
Cost
Value
2024
2024
Investments at fair value - representation
£’000
£’000
Shares and other variable yield securities
191,432 191,411
Debt and other fixed income securities
22,395 22,415
Syndicate loan to central fund
1,327 1,327
Other investments
10,493 10,494
Total
225,647 225,647
Cost
Value
2024
2024
Investments at fair value - original presentation:
£’000
£’000
Shares and other variable yield securities
191,432 191,411
Debt and other fixed income securities
22,395 22,415
Syndicate loan to central fund 1,327 1,327
Overseas Deposits 10,493 10,494
Deposits with ceding undertakings
20 20
Total
225,667 225,667
Level 1
Level 2
Level 3
Total
2024
2024
2024
2024
Fair value hierarchy - representation
£’000
£’000
£’000
£’000
Shares and other variable yield securities
75,604 15 115,792 191,411
Debt and other fixed income securities
22,415 22,415
Syndicate loan to central fund
- - 1,327 1,327
Other investments
5,735 4,759 - 10,494
Total
81,339 27,189 117,119 225,647
Fair value hierarchy
– original presentation:
2024
£’000
Level 1
81,359
Level 2
27,189
Level 3
117,119
Total
225,667
