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Syndicate 1988
Annual Report and Accounts for the year ended
31 December 2025
Contents
Directors and administration .................................................................................................. 1
Active Underwriter’s report .................................................................................................... 2
Managing Agent's report ....................................................................................................... 4
Statement of Managing Agent's responsibilities .................................................................. 11
Independent auditor’s report to the members of Syndicate 1988 ........................................ 12
Statement of profit or loss and other comprehensive income .............................................. 17
Statement of financial position ............................................................................................ 19
Statement of changes in Members' balances ...................................................................... 21
Statement of cash flows ...................................................................................................... 22
1. Basis of preparation ..................................................................................................... 23
2. Critical accounting estimates and judgements ............................................................. 23
3. Significant accounting policies ..................................................................................... 24
4. Analysis of underwriting result...................................................................................... 31
5. Technical provisions .................................................................................................... 34
6. Net operating expenses ............................................................................................... 35
7. Auditor’s remuneration ................................................................................................. 35
8. Key management personnel compensation ................................................................. 36
9. Staff numbers and costs .............................................................................................. 36
10. Investment return .................................................................................................... 37
11. Financial Investments .............................................................................................. 37
12. Debtors arising out of direct insurance operations ................................................... 40
13. Debtors arising out of reinsurance operations.......................................................... 40
14. Other debtors .......................................................................................................... 41
15. Creditors arising out of direct insurance operations ................................................. 41
16. Creditors arising out of reinsurance operations ........................................................ 41
17. Other creditors ......................................................................................................... 42
18. Cash and cash equivalents ...................................................................................... 42
19. Related parties ........................................................................................................ 43
20. Disclosure of interests ............................................................................................. 43
21. Funds at Lloyd's ...................................................................................................... 44
22. Off-balance sheet items ........................................................................................... 44
23. Risk management ................................................................................................... 45
24. Post balance sheet events ....................................................................................... 60
1
Directors and administration
Managing Agent
Directors
P A Jardine (Chairman)*
C V Barley
S Bradbury
E M Catchpole*
L Edmonds (subject to regulatory approval)
S Fisher*
L Harfitt
D A Hopkins
S B Logue
L J M McMaster
A F J Neden*
S D Redmond*
Non-Executive Directors*
Managing Agent's registered office
5th Floor
20 Gracechurch Street
London
EC3V 0BG
Managing Agent's registered number
1918744
Active Underwriter
M King
Bankers and investment managers
Barclays
Royal Bank of Canada
Citibank
Conning
Northern Trust
Registered Auditor
Deloitte LLP
Signing Actuary
Deloitte MCS Ltd
2
Active Underwriter’s report
Syndicate overview
CFC Syndicate 1988 (“the Syndicate”) was established in July 2021 to participate on specialty
insurance business with a focus on micro and SME business under the oversight of Asta
Managing Agency Limited.
The Syndicate only participates on business underwritten via delegated facilities with entities
that are part of CFC Group Limited and its subsidiaries.
The Syndicate’s portfolio is centred on emerging risk and specialty lines with its core products
addressing the intersection of technology and business, such as cyber, intellectual property,
digital media, FinTech, eHealth and software companies.
This mix creates a highly diversified portfolio by class, industry, and geography, with no critical
natural catastrophe exposure which is planned to deliver stable and profitable underwriting
results.
2025 Syndicate results
The 2025 calendar year delivered another good underwriting result bolstered by a significant
and growing contribution from investment return. The results continue to demonstrate the
value of the Syndicate’s proposition to our capital providers.
The Syndicate has now delivered consistent underwriting profit for the previous four years,
illustrating the benefits of CFC’s offering outlined in the overview including its focus on micro
and SME businesses, highly diversified portfolio and absence of critical natural catastrophe
exposure.
The result for the Syndicate in calendar year 2025 is a profit of $87.6 million (2024: profit of
$76.8 million). The Syndicate net combined ratio for the year is 82.0% (2024: 77.7%).
The 2023 underwriting year made a profit of $82.2m and is expected to close at a net combined
ratio of 78.4%.
The Syndicate has a strong track record of generating profits for its capacity providers, who
pay an additional portfolio participation fee as well as sharing in the underlying performance
of the Syndicate.
CFC continues to maintain its focus on underwriting profitability in the face of increasing
competition and moderating rates. One of the benefits of underwriting a largely micro and SME
portfolio is that when there are softening market conditions, the level of softening has
historically been less negative than that for larger, open market business.
3
Active Underwriter’s report continued
The forecast Syndicate results on an ultimate pure year basis as at the end of the fourth quarter
of 2025 are outlined below:
Underwriting Year
2025
2024
$’000
$’000
Gross written premium
453,200
396,500
Syndicate NCOR*
87.1%
83.0%
*The net combined ratio (“NCOR”) is the ratio of net claims and net operating expenses to net premiums on an
ultimate basis as per the above, this excludes the additional portfolio participation fee paid by members.
During 2025 the Syndicate took on the lead position on the US general liability and intellectual
property binders in addition to already leading on CFC’s cyber and technology facilities.
There are no material changes to the business planned for 2026.
M King
February 2026
4
Managing Agent's report
The Syndicate's Managing Agent is a company registered in England and Wales. The
Directors of the Managing Agent present their report for the year ended 31 December 2025.
The financial statements herein have been prepared using the annual basis of accounting as
required by Statutory Instrument No 1950 of 2008, The Insurance Accounts Directive (Lloyd's
Syndicate and Aggregate Accounts) Regulations 2008 (“Lloyds Regulations 2008”).
Results
The result for calendar year 2025 is a profit of $87,551,003 (2024: profit of $76,765,394).
The Syndicate presents its results under FRS102, the Financial Reporting Standard applicable
in the UK and Republic of Ireland. In accordance with FRS102, the Syndicate has identified its
insurance contracts and accounted for them in accordance with FRS103 Insurance Contracts.
Principal activity and review of the business
The Syndicate’s principal activity is the underwriting of direct insurance and reinsurance
business in the Lloyd’s market.
A further review is included in the Active Underwriter’s report on page 2.
Gross written premium income by class of business for the calendar year was as follows:
2025
$’000
2024
$’000
Cyber and technology
276,208
224,296
Professional Lines
78,006
67,656
Specialty Liability
40,744
36,057
Transaction Liability
28,160
19,285
Innovation
722
35
423,840
347,329
The Syndicate's financial key performance indicators during the year were as follows:
2025
$’000
2024
$’000
Gross premiums written
423,840
347,329
Profit for the financial year
87,551
76,765
Combined ratio*
82.0%
77.7%
*The combined ratio is the ratio of net claims incurred and net operating expenses to net
premiums earned in the calendar year. Lower ratios represent better performance.
5
Managing Agent’s report continued
The performance of the Syndicate has been assessed by measuring, as a percentage of
underwriting capacity, the 36-month forecasted result on a funded accounting basis for an
individual underwriting year of account (“YOA”). The return on capacity for each underwriting
year is shown below.
Note that the 2023 underwriting year is now closed, as of 31 December 2025 .
2025 YOA
Open
2024 YOA
Open
2023 YOA
Closed
Capacity ($’000)
405,000
371,250
371,250
Forecast result ($’000)
71,302
80,433
82,203
Forecast return on capacity (%)
17.6%
21.7%
22.1%
6
Managing Agent’s report continued
Principal risks and uncertainties
The Syndicate sets risk appetite annually, which is approved by the Agency as part of the
Syndicate’s business planning and Solvency Capital Requirement (“SCR”) process. The
Agency Risk Committee meets at least quarterly to oversee the risk management framework.
The Syndicate Board, which reports to the Agency Board, reviews the risk profile as reflected
in the risk register, and monitors performance against risk appetite using a series of key risk
tolerances. The principal risk and uncertainties facing the Syndicate are as follows:
Insurance risk
Insurance risk includes the risks that a policy will be written for too low a premium or provide
inappropriate cover (underwriting risk), that the frequency or severity of insured events will be
higher than expected (claims risk), or that estimates of claims subsequently prove to be
insufficient (reserving risk). The Syndicate Board and Underwriting Committee manages
insurance risk through challenge and oversight of the approved business plan, which sets out
targets for volumes, pricing, line sizes and retention by class of business. The Syndicate
Board then monitors performance against the business plan and the aggregation of risk
through exposure management reporting through the year. The Syndicate Board considers
any proposed underwriting that impacts the Syndicate’s Environmental, Social and
Governance (“ESG”) profile to ensure consistency with the agreed ESG approach. Reserve
adequacy is monitored through quarterly review by the Asta Actuarial team and the Reserving
Committee.
Credit risk
The key aspect of credit risk is reinsurance counterparty risk which is the risk of default by one
or more of the Syndicate’s reinsurers or intermediaries. The Syndicate’s policy is to use only
approved reinsurers, supported by collateralisation where required. The Agency Reinsurance
Security Committee sets approval and usage criteria, monitors reinsurer ratings and is required
to approve and oversee the application of the Reinsurer Approval policy. The Syndicate is also
exposed to credit risk from its premium transactions through brokers. The receivables consist
of a large number of policyholders, spread across diverse industries and geographical areas.
Ongoing evaluation of credit risk is maintained by monitoring of aged debts and is reviewed
regularly by the Syndicate Board.
7
Managing Agent’s report continued
Market risk
Market risk exposure impacting the Syndicate relates to fluctuations in interest rates or
exchange rates and inflation. The Syndicate is exposed to foreign exchange movements as
a result of mismatches between the currencies in which assets and liabilities are denominated.
The Agency’s policy is to maintain received income or incurred expenditure in the core
currencies in which they were received or paid. Any surplus or deficit in a core currency would
be subject to review by the Syndicate Board.
Investments are monitored through Investment Managers with quarterly Investment
Committees that review the performance, duration and ESG ratings for the investments.
Liquidity risk
This is the risk that the Syndicate will not be able to meet its liabilities as they fall due, owing
to a shortfall in cash or can meet obligations only at excessive cost. To mitigate this risk the
Syndicate Board and Investment Committee reviews cash flow projections regularly and
ensures that, where needed, the Syndicate has liquidity facilities in place or has utilised the
option of a cash call from Capital providers.
Operational risk
This is the risk that errors caused by people, processes, systems and external events lead to
losses to the Syndicate. The Agency seeks to manage this risk through a robust operational
risk and control framework including detailed procedure manuals and a thorough training
programme. This is underpinned by a structured programme of testing of processes and
systems by internal audit, who serve as an independent line of assurance, reporting directly to
the Chair of the Agency Audit Committee. Business continuity and disaster recovery plans
are in place and are regularly updated and tested.
Regulatory risk is the risk of loss owing to a breach of regulatory requirements or failure to
respond to regulatory change. The Agency is required to comply with the requirements of the
Financial Conduct Authority (FCA), Prudential Regulatory Authority (PRA) and Lloyd’s. Lloyd’s
requirements include those imposed on the Lloyd’s market by overseas regulators. The
Agency has a Compliance Director who manages a function that monitors business activity
and regulatory developments to assess any effects on both the Agency and the Syndicate.
The Syndicate has no appetite for failing to adhere to the requirements of the FCA Consumer
Duty regulations and continues its focus on ensuring that it is treating customers fairly. The
Syndicate manages and monitors consumer duty risk through a suite of risk indicators and
reporting metrics as part of its documented consumer duty risk framework. The consumer duty
risk framework is consistently applied across all Asta syndicates and is overseen by the
Conduct Oversight Group (COG), which is an Agency Board Committee that includes a non-
executive director as a member who fulfils the role of Consumer Duty Champion.
8
Managing Agent’s report continued
Group and strategic risk
Group Risk is the risk of contagion that arises from being associated with key stakeholders
and the impact that activities and events that occur within other connected or third parties has
on the business.
Strategic risk covers the risks faced by the Syndicate due to changes in underlying strategy of
the business or that of its key stakeholders (including strategic conflicts of interest).
Future developments
The Syndicate will continue to transact the current classes of general direct insurance and
reinsurance business. If opportunities arise to write new classes of business, these will be
investigated at the appropriate time.
The capacity for the 2026 underwriting year is £300m (2025 underwriting year: £300.0m).
Sustainability and climate risk
The Syndicate aligns to Asta’s Sustainability Risk Policy, which has been prepared to meet
sustainability-related regulatory expectations across all Asta entity jurisdictions, including
those set by the Prudential Regulatory Authority (PRA) and Financial Conduct Authority (FCA).
The policy is executed through a framework that is integrated within the wider enterprise risk
management framework, ensuring a proportionate response to material exposures arising
from sustainability-related risks. Asta’s Chief Risk Officer, who is a Board member, is
responsible for the Sustainability Risk Policy.
Asta monitors regulatory guidance and expectations on managing the risks and opportunities
arising from sustainability, including the PRA's Supervisory Statement 05/25 on climate risk
management.
The syndicate sets out its strategic ambitions with regards sustainability as part of the annual
business planning exercise and captures this as a standalone set of policy principles, which
are then cascaded throughout the underwriting control framework.
Emerging risks
An emerging risk or opportunity is defined as “a developing issue, triggered externally, with
the potential to have a significant business impact but which may not be sufficiently understood
or accounted for”. The business impact in this case could represent a downside risk or an
upside opportunity. Emerging risks and opportunities include:
• Syndicate insurable risks, as areas of potential future losses or new product offerings;
• Those risks that may affect a syndicate’s ability to carry out normal business operations
and/or lead to unplanned significant costs/income;
• Both new risks and those which are re-emerging in a new context.
The Agency and Syndicate continue to monitor the impact of emerging risks on the Syndicate’s
business, taking into account their impacts on the strategic direction of the Syndicate. Asta
has established a Horizon Scanning Policy, which sets out the varying methods and practices
available for collecting emerging risk and opportunity data, performing deep dive reviews, and
ongoing engagement.
9
Managing Agent’s report continued
Specific areas of focus over the external environment across the year at Syndicate and Asta
level include:
• Geopolitical risk: The geopolitical landscape continues to remain volatile due to
regional military conflicts and fluctuating trade wars, which have impacted market
stability and supply chain vulnerability.
• Physical Climate Change: Insurance losses from natural catastrophes continue to set
records as they exceed $100bn for the sixth continuous year, whilst insurance
protection gaps continue to grow in most jurisdictions.
• AI Adoption and Novel Technologies: AI adoption continues at a pace that challenges
regulatory oversight, technical capabilities and governance frameworks.
Directors and officers
Details of the Directors of the Managing Agent that were serving at the date of signing these
financial statements are provided on page 1. Changes to Directors and Officers from the last
report were as follows:
Directors
R P Barke Resigned 30 June 2025
S B Logue Appointed 26 August 2025
D B Jones Resigned 31 December 2025
K Shah Resigned 31 December 2025
D A Hopkins Appointed 9 February 2026
L Edmonds Subject to regulatory approval
Officers
M Taylor Resigned 2 April 2025
M King Appointed 2 April 2025
10
Managing Agent’s report continued
Disclosure of information to the auditor
So far as each person who was a Director of the Managing Agent at the date of approving the
report is aware, there is no relevant audit information, being information needed by the
Syndicate auditor in connection with the auditor's report, of which the auditor is unaware.
Having made enquiries of fellow Directors of the Agency and the Syndicate's auditors, each
Director has taken all the steps that he or she ought to have taken as a Director to become
aware of any relevant audit information and to establish that the Syndicate's auditor is aware
of that information.
Auditor
The Managing Agent intends to reappoint Deloitte LLP as the Syndicate’s auditor.
Syndicate Annual General Meeting
In accordance with the Syndicate Meetings (Amendment No 1) Byelaw (No 18 of 2000) the
Managing Agent does not propose holding an annual meeting this year; objections to this
proposal or the intention to reappoint the auditors for a further 12 months can be made by
Syndicate members within 21 days of this notice.
On behalf of the Board
S B Logue
Director
19 February 2026
11
Statement of Managing Agent's responsibilities
The Managing Agent is responsible for preparing the financial statements in accordance with
applicable law and regulations.
The Insurance Accounts Directive (Lloyd's Syndicate and Aggregate Accounts) Regulations
2008 require the managing agent to prepare financial statements at 31 December each year
in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable law) including FRS 102 the Financial Reporting
Standard applicable in the UK and Republic of Ireland. The financial statements are required
by law to give a true and fair view of the state of affairs of the Syndicate as at that date and of
its profit or loss for that year.
In preparing the financial statements, the managing agent is required to:
• select suitable accounting policies and then apply them consistently subject to changes
arising on the adoption of new accounting standards in the year;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable Accounting Standards have been followed, subject to any
material departures disclosed and explained in the notes to the Syndicate accounts;
and
• prepare the Syndicate Accounts on the basis that the Syndicate will continue to write
future business unless it is inappropriate to presume that the Syndicate will do so.
The Managing Agent is responsible for keeping adequate accounting records which disclose
with reasonable accuracy at any time the financial position of the Syndicate and enable it to
comply with the Insurance Accounts Directive (Lloyd's Syndicate and Aggregate Accounts)
Regulations 2008. It is also responsible for safeguarding the assets of the Syndicate and
hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
The Managing Agent is responsible for the maintenance and integrity of the corporate and
financial information included on the business' website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements may differ from legislation
in other jurisdictions.
The Managing Agent is 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,
whether due to fraud or error.
We confirm that to the best of our knowledge the Syndicate Accounts, including the iXBRL
tagging applied to these accounts, comply with the requirements of the Lloyd’s Syndicate
Accounts Instructions version 3.1 as modified by the Frequently Asked Questions version 1.1
issued by Lloyd’s.
On behalf of the Board
S B Logue
Director
19 February 2026
12
Independent auditor’s report to the members of Syndicate 1988
Report on the audit of the syndicate annual financial statements
Opinion
In our opinion the syndicate annual financial statements of Syndicate 1988 (the ‘syndicate’):
• give a true and fair view of the state of the syndicate’s affairs as at 31 December 2025
and of its profit for the year then ended;
• have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice, including Financial Reporting Standard 102 “The Financial
Reporting Standard applicable in the UK and Republic of Ireland”; and
• have been prepared in accordance with the requirements of The Insurance Accounts
Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and sections
1 and 5 of the Syndicate Accounts Instructions Version 3.1 as modified by the
Frequently Asked Questions Version 1.0 issued by Lloyd’s (the “Lloyd’s Syndicate
Accounts Instructions”).
We have audited the syndicate annual financial statements which comprise:
• the statement of profit or loss and other comprehensive income;
• the statement of financial position;
• the statement of changes in members’ balances;
• the statement of cash flows; and
• the related notes 1 to 24.
The financial reporting framework that has been applied in their preparation is applicable law
and United Kingdom Accounting Standards, including Financial Reporting Standard 102 “The
Financial Reporting Standard applicable in the UK and Republic of Ireland” (United Kingdom
Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs
(UK)), applicable law and the Lloyd’s Syndicate Accounts Instructions. Our responsibilities
under those standards are further described in the auditor's responsibilities for the audit of the
syndicate annual financial statements section of our report.
We are independent of the syndicate in accordance with the ethical requirements that are
relevant to our audit of the syndicate annual financial statements in the UK, including the
Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the managing agent’s use of the
going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties
relating to events or conditions that, individually or collectively, may cast significant doubt on
the syndicate’s ability to continue in operations for a period of at least twelve months from
when the syndicate financial statements are authorised for issue.
13
Independent auditor’s report continued
Our responsibilities and the responsibilities of the managing agent with respect to going
concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report, other than the
syndicate annual financial statements and our auditor’s report thereon. The managing agent
is responsible for the other information contained within the annual report. Our opinion on the
syndicate annual financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the syndicate annual financial statements or our
knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material misstatement themselves. 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 in this regard.
Responsibilities of managing agent
As explained more fully in the managing agent’s responsibilities statement, the managing
agent is responsible for the preparation of the syndicate annual financial statements and for
being satisfied that they give a true and fair view, and for such internal control as the managing
agent determines is necessary to enable the preparation of syndicate annual financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the syndicate annual financial statements, the managing agent is responsible for
assessing the syndicate’s ability to continue in operation, disclosing, as applicable, matters
related to the syndicate’s ability to continue in operation and to use the going concern basis of
accounting unless the managing agent intends to cease the syndicate’s operations, or has no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the syndicate annual financial statements
Our objectives are to obtain reasonable assurance about whether the syndicate annual
financial statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of
these syndicate annual financial statements.
A further description of our responsibilities for the audit of the syndicate annual financial
statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
14
Independent auditor’s report continued
Extent to which the audit was considered capable of detecting irregularities, including
fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We
design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud. The extent to which our procedures
are capable of detecting irregularities, including fraud is detailed below.
We considered the nature of the syndicate and its control environment, and reviewed the
syndicate’s documentation of their policies and procedures relating to fraud and compliance
with laws and regulations. We also enquired of management and internal audit about their own
identification and assessment of the risks of irregularities.
We obtained an understanding of the legal and regulatory frameworks that the syndicate
operates in, and identified the key laws and regulations that:
• had a direct effect on the determination of material amounts and disclosures in the
financial statements. These included the Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008, the Lloyd’s Syndicate
Accounting Byelaw (no. 8 of 2005) and the Lloyd’s Syndicate Accounts Instructions;
and
• do not have a direct effect on the financial statements but compliance with which may
be fundamental to the syndicate’s ability to operate or to avoid a material penalty.
These included the requirements of Solvency UK.
We discussed among the audit engagement team including relevant internal specialists such
as actuarial and IT regarding the opportunities and incentives that may exist within the
organisation for fraud and how and where fraud might occur in the financial statements.
As a result of performing the above, we identified the greatest potential for fraud in the following
area, and our procedures performed to address it are described below:
• Technical provisions, and in particular IBNR, are a key area of a management
judgement, contain inherent uncertainty and are material to Syndicate 1988. We have
identified the significant risk within Technical Provisions to the assumptions utilised to
derive the valuation of liabilities in the SME Cyber, Corporate Cyber, Professional
Indemnity and Tech & Media reserving classes, by virtue of their size and complexity.
In response to these risks, we involved our actuarial specialists to develop independent
estimates of the technical provisions and assess the underlying assumptions and
methodology applied.
In common with all audits under ISAs (UK), we are also required to perform specific procedures
to respond to the risk of management override. In addressing the risk of fraud through
management override of controls, we tested the appropriateness of journal entries and other
adjustments; assessed whether the judgements made in making accounting estimates are
indicative of a potential bias; and evaluated the business rationale of any significant
transactions that are unusual or outside the normal course of business.
In addition to the above, our procedures to respond to the risks identified included the
following:
• reviewing financial statement disclosures by testing to supporting documentation to
assess compliance with provisions of relevant laws and regulations described as
having a direct effect on the financial statements;
15
Independent auditor’s report continued
• performing analytical procedures to identify any unusual or unexpected relationships
that may indicate risks of material misstatement due to fraud;
• enquiring of management, and internal audit concerning actual and potential litigation
and claims, and instances of non-compliance with laws and regulations; and
• reading minutes of meetings of those charged with governance and reviewing
correspondence with Lloyd’s.
Report on other legal and regulatory requirements
Opinions on other matters prescribed by The Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 and the Lloyd’s Syndicate
Accounts Instructions
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the managing agent’s report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
• the managing agent’s report has been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the syndicate and its environment obtained
in the course of the audit, we have not identified any material misstatements in the managing
agent’s report.
Matters on which we are required to report by exception
Under The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008 we are required to report in respect of the following matters if, in our opinion:
• the managing agent in respect of the syndicate has not kept adequate accounting
records; or
• the syndicate annual financial statements are not in agreement with the accounting
records; or
• we have not received all the information and explanations we require for our audit.
We have nothing to report in respect of these matters.
Use of our report
This report is made solely to the syndicate’s members, as a body, in accordance with
regulation 10 of The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate
Accounts) Regulations 2008. Our audit work has been undertaken so that we might state to
the syndicate’s members those matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the syndicate’s members as a body, for our audit work, for
this report, or for the opinions we have formed.
As required by the Lloyd’s Syndicate Accounts Instructions, these financial statements will
form part of the Electronic Format Annual Syndicate Accounts filed with the Council of Lloyd’s
and published on the Lloyd’s website. This auditors’ report provides no assurance over
whether the Electronic Format Annual Syndicate Accounts have been prepared in compliance
with Section 2 of the Lloyd’s Syndicate Accounts Instructions. We have been engaged to
16
Independent auditor’s report continued
provide assurance on whether the Electronic Format Annual Syndicate Accounts has been
prepared in compliance with Section 2 of the Lloyd’s Syndicate Accounts Instructions and will
report privately to the directors of the managing agent and the Council of Lloyd’s on this.
Maike Filter (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
19 February 2026
17
Statement of profit or loss and other comprehensive income
Technical account – general business
| For the year ended 31 December 2025 | |||
Notes | 2025 $’000 | 2024 $’000 | |
Gross premiums written | 4 | ||
Outward reinsurance premiums | ( | ( | |
| Premiums written, net of reinsurance | |||
| Changes in unearned premium | |||
Change in the gross provision for unearned premiums | ( | ( | |
Change in the provision for unearned premiums reinsurers’ share | |||
| Net change in provisions for unearned premiums | 5 | ( | ( |
Earned premiums, net of reinsurance | |||
Allocated investment return transferred from the non-technical account | |||
Other technical income, net of reinsurance | |||
Claims paid | |||
Gross amount | ( | ( | |
| Reinsurers’ share | |||
Net claims paid | ( | ( | |
Changes in the provision for claims | |||
Gross amount | ( | ( | |
| Reinsurers’ share | |||
| Net change in provisions for claims | 5 | ( | ( |
Claims incurred, net of reinsurance | ( | ( | |
Net operating expenses | 6 | ( | ( |
| Balance on the technical account – general business |
All the amounts above are in respect of continuing operations.
The notes on pages 23 to 60 form part of these financial statements.
18
Statement of profit or loss and other comprehensive income continued
Non-technical account – general business
For the year ended 31 December 2025
Notes
2025
$’000
2024
$’000
Balance on the technical account – general
business
Investment income
Realised gains/(losses) on investments
Unrealised gains/(losses) on investments
Investment expenses and charges
(225 )
(134 )
Total investment return
Allocated investment return transferred to the
general business technical account
(13,811 )
(12,059 )
Gain/(loss) on foreign exchange
(3,311 )
Profit/(loss) for the financial year
Other comprehensive income – currency
translation gains/(losses)
Total comprehensive income/(loss) for the
financial year
All the amounts above are in respect of continuing operations.
The notes on pages 23 to 60 form part of these financial statements.
19
Statement of financial position
As at 31 December 2025
Notes | 2025 $’000 | 2024 $’000 | |
Assets | |||
Investments | |||
Financial investments | 11 | ||
Deposits with ceding undertakings | |||
Reinsurers' share of technical provisions | |||
Provision for unearned premiums | 5 | ||
Claims outstanding | 5 | ||
Debtors | |||
Debtors arising out of direct insurance operations | 12 | ||
Debtors arising out of reinsurance operations | 13 | ||
Other debtors | 14 | ||
Other assets | |||
Cash at bank and in hand | |||
Other | |||
Prepayments and accrued income | |||
| Deferred acquisition costs | 5 | ||
Other prepayments and accrued income | |||
Total assets |
The notes on pages 23 to 60 form part of these financial statements.
20
Statement of financial position continued
| As at 31 December 2025 | |||
Notes | 2025 $’000 | 2024 $’000 | |
| Members’ balance and liabilities | |||
Capital and reserves | |||
| Members’ balances | |||
Total capital and reserves | |||
| Technical provisions | |||
| Provision for unearned premiums | 5 | ||
Claims outstanding | 5 | ||
| Creditors | |||
Creditors arising out of direct insurance operations | 15 | ||
Creditors arising out of reinsurance operations | 16 | ||
Amounts owed to credit institutions | |||
Other creditors including taxation and social security | 17 | ||
Accruals and deferred income | |||
Total liabilities | |||
| Total liabilities, capital and reserves |
The notes on pages 23 to 60 form part of these financial statements.
The financial statements on pages 17 to 60 were approved by Board of Directors on 17
February 2026 and were signed on its behalf by:
S B Logue
Director
19 February 2026
21
Statement of changes in Members' balances
For the year ended 31 December 2025
2025
$’000
2024
$’000
Members’ balances brought forward at 1 January
Total comprehensive income/(loss) for the year
Payments of profit to members’ personal reserve funds
(67,344 )
(31,450 )
Losses collected on closure of underwriting year
Cash calls on open underwriting years
Members agent fees
(233 )
(95 )
Net movement on Funds In Syndicate
Other
(28 )
(22 )
Members’ balances carried forward at 31 December
22
Statement of cash flows
| For the year ended 31 December 2025 | |||
Notes | Year ended 31 December 2025 $’000 | Year ended 31 December 2024 $’000 | |
Cash flows from operating activities | |||
Profit/(loss) for the financial year | |||
Increase/(decrease) in gross technical provisions | |||
| (Increase)/decrease in reinsurers’ share of gross technical provisions | ( | ( | |
(Increase)/decrease in debtors | ( | ( | |
Increase/(decrease) in creditors | |||
Increase/(decrease) in deposits received from reinsurers | |||
Movement in other assets/liabilities | ( | ( | |
Foreign exchange | |||
Investment return | ( | ( | |
Net cash flows from operating activities | |||
| Cash flows from investing activities | |||
Purchase of equity and debt instruments | ( | ( | |
Sale of equity and debt instruments | |||
Investment income received | |||
Other | |||
Net cash flows from investing activities | ( | ( | |
| Cash flows from financing activities | |||
Distribution of profit | ( | ( | |
Collection of losses (on closed underwriting year) | |||
Open year cash calls made | - | - | |
Net movement of Funds In Syndicate | |||
Other | ( | ( | |
Net cash flows from financing activities | ( | ( | |
Net increase/(decrease) in cash and cash equivalents | ( | ||
Cash and cash equivalents at the beginning of the year | |||
Foreign exchange on cash and cash equivalents | |||
Cash and cash equivalents at the end of the year | 18 |
23
Notes to the financial statements
1. Basis of preparation
Statement of compliance
The financial statements have been prepared in accordance with The Insurance Accounts
Directive (Lloyd's Syndicate and Aggregate Accounts) Regulations 2008, applicable
Accounting Standards in the United Kingdom and the Republic of Ireland, including Financial
Reporting Standard 102 (FRS 102), Financial Reporting Standard 103 (FRS 103) in relation
to insurance contracts, and the Lloyd’s Syndicate Accounts Instructions Version 3.1 as
modified by the Frequently Asked Questions Version 1.0 issued by Lloyd’s.
The financial statements have been prepared on the historical cost basis, with the exception
of financial assets which are measured at fair value through the profit and loss account.
The financial statements are presented in USD, the functional currency of the Syndicate is
USD. All amounts have been rounded to the nearest thousand, unless otherwise indicated.
Going Concern
The Directors of the Managing Agent have assessed the Syndicate’s ability to continue as a
going concern. As part of this assessment, the Directors have considered cash forecasts, the
availability of financial resources, consistency of loss ratios, credit worthiness of reinsurers,
capital support for the existing underwriting years, business plans for future underwriting years
and availability of future capital support. Following this assessment, the Directors consider it
appropriate to adopt the going concern basis in preparing the annual report and financial
statements.
2. Critical accounting estimates and judgements
In preparing these financial statements, the Directors of the Managing Agent have made
judgements, estimates and assumptions that affect the application of the Syndicate’s
accounting policies and the reported amounts of assets, liabilities, income and expenses.
There are no critical accounting judgements made in applying the syndicate’s accounting
policies.
The Syndicate makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal the related actual results. The estimates
and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are addressed below:
• Valuation of claims reserves
The measurement of the provision for claims outstanding involves judgements and
assumptions about the future that have a significant effect on the value recognised in
the financial statements.
The provision for claims outstanding comprises the estimated cost of settling all claims
incurred but unpaid at the balance sheet date, whether reported or not. This is a
judgemental and complex area due to the subjectivity inherent in estimating the impact
of claims events that have occurred but for which the eventual outcome remains
uncertain.
24
Critical accounting estimates and judgements
Case estimates are generally set by skilled claims technicians applying their
experience and knowledge to the circumstances of individual claims. Critical
judgement is applied when estimating the value of amounts that should be provided for
claims that have been incurred at the reporting date but have not yet been reported
(IBNR) to the Syndicate. This is a source of significant estimation uncertainty.
The ultimate cost of outstanding claims is estimated using a range of techniques
including actuarial and statistical projections, benchmarking, case by case review and
judgement. Statistical techniques assume that past claims development experience
can be used as a basis to project ultimate claims costs. Typical methods employed
include, but are not limited to, the chain ladder method and the Bornhuetter-Ferguson
method, whilst plan and pricing loss ratios are also considered.
The reserving process will disaggregate the insured risks into reserving classes – these
are collections of risks of a similar profile. Each reserving class will be assessed
separately, and corresponding claims development patterns will be selected as bases
against which to forecast expected claims. Judgement is used to assess the extent to
which past trends may not apply in the future. When selecting historic data to use for
claims forecasting purposes, the suitability and reliability of the dataset is considered.
A dataset that most closely resembles the expected risk profile of a given reserving
class will be selected. The benchmark data provided by Lloyd’s is generally used as
reserving development patterns, but these can be substituted by or blended with
additional data, providing that this additional data has an established track record and
is relevant.
Whilst the Directors consider that the claims reserves are fairly stated based on the
information currently available to them, the ultimate liability will vary as a result of
subsequent information and events. Sensitivities relating to this critical judgement have
been assessed in further detail in note 23.
3. Significant accounting policies
The following principal accounting policies have been applied consistently in dealing with items
which are considered material in relation to the Syndicate’s financial statements.
Gross premiums
Gross written premiums comprise the total premiums receivable for the whole period of cover
provided by the contracts entered into during the reporting period, regardless of whether these
are wholly due for payment in the reporting period, together with any adjustments arising in
the reporting period to such premiums receivable in respect of business written in prior
reporting periods. They are recognised on the date on which the policy commences. This is
applicable to both direct premium and assured (inwards reinsurance) premium. Gross written
premiums are stated gross of brokerage payable to intermediaries, and exclude taxes and
duties levied on the policyholder.
Estimated premium income in respect of facility contracts, for example binding authorities and
lines slips, are deemed to be written in a manner that reflects the expected profile of the
underlying business which has been written.
Ceded reinsurance premiums
Reinsurance written premiums comprise the total premiums payable for the whole cover
provided by contracts entered into the period, including portfolio premiums payable, and are
25
Significant accounting policies continued
recognised on the date on which the policy incepts. Premiums include any adjustments arising
in the accounting period in respect of reinsurance contracts incepting in prior accounting
periods. They are recognised on the date on which the policy commences.
Provisions for unearned premiums
Unearned premiums are those proportions of premiums written up to the reporting date that
relate to periods of risk after the reporting date. In respect of general insurance business,
written premiums are recognised as earned over the period of the policy on a time
apportionment basis having regard where appropriate, to the incidence of risk. The proportion
attributable to subsequent periods is deferred as a provision for unearned premiums.
Unearned reinsurance premiums are those proportions of ceded premiums written up to the
reporting date that relate to periods of risk after the reporting date. Ceded reinsurance
premiums are earned on the same basis as the inwards business being protected.
Claims incurred
Claims incurred comprise claims and claims handling expenses (both internal and external)
paid in the year and the movement in provision for outstanding claims and settlement
expenses processed in the year. The provision for claims comprises amounts set aside for
claims notified and claims incurred, but not yet reported (IBNR). The Syndicate does not
discount its liability for outstanding claims.
The amount included in respect of IBNR is based on statistical techniques of estimation applied
by actuaries. These 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,
having regard to variations in the business accepted and the underlying terms and conditions.
The provision for claims also includes amounts in respect of internal and external claims
handling costs. For the most recent years, where a high degree of volatility arises from
projections, estimates may be based in part on output from rating and other models of the
business accepted and assessments of underwriting conditions. An element of IBNR can also
relate to specific large losses.
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 and the claims experience for the
year. The Syndicate uses a number of statistical techniques to assist in making these
estimates where relevant.
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.
The Directors consider that the provisions for gross claims and related reinsurance recoveries
are fairly stated on the basis of the information currently available to them. However, 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 amounts of claims provisions established in prior years are reflected in the
financial statements for the period in which the adjustments are made. The methods used,
and the estimates made, are reviewed regularly.
26
Significant accounting policies continued
Unexpired risks
A provision for unexpired risks is made where claims and related expenses are likely to arise
after the end of the financial period in respect of contracts concluded before that date, are
expected to exceed the unearned premiums and premiums receivable under these contracts,
after the deduction of any acquisition costs deferred.
The provision for unexpired risks is calculated separately by reference to classes of business
which are managed together.
As at 31 December 2025, the Syndicate had a nil net unexpired risk provision, (2024: nil).
Reinsurance assets
The Syndicate cedes insurance risk in the normal course of business. Reinsurance assets
represent balances due from reinsurance companies. Amounts recoverable from reinsurers
are estimated in a manner consistent with the outstanding claims provision including IBNR or
settled claims associated with the reinsurer's policies and are in accordance with the related
reinsurance contract.
Reinsurance assets are reviewed for impairment at each reporting date, or more frequently if
an indication of impairment arises during the reporting year. Impairment occurs when there is
objective evidence as a result of an event that occurred after initial recognition of the
reinsurance asset that the Syndicate may not receive all outstanding amounts due under the
terms of the contract and the event has a reliably measurable impact on the amounts that the
Syndicate will receive from the reinsurer. The impairment loss is recorded in the statement of
profit or loss.
Gains or losses on buying reinsurance are recognised in the statement of profit or loss
immediately at the date of purchase and are not amortised.
Ceded reinsurance arrangements do not relieve the Syndicate from its obligations to
policyholders.
Acquisition costs
Acquisition costs comprise costs arising from the conclusion of insurance contracts, such as
intermediary brokerage and commissions. It is not the Syndicate’s policy to reallocate a portion
of indirect costs, such as the advertising costs or the administrative expenses connected with
the processing of proposals and the issuing of policies, to acquisition costs.
The deferred acquisition cost asset represents the proportion of acquisition costs
corresponding to the proportion of gross premiums written that is unearned at the balance
sheet date. Deferred acquisition costs are amortised over the period in which the related
premiums are earned.
Foreign currencies
Transactions denominated in currencies other than the functional currency are initially
recorded in the functional currency at the exchange rate ruling at the date of the transactions.
Monetary assets and liabilities (which include all assets and liabilities arising from insurance
contracts including unearned premiums and deferred acquisition costs) denominated in foreign
currencies are retranslated into the functional currency at the exchange rate ruling on the
reporting date.
27
Significant accounting policies continued
Foreign exchange differences are recorded in the non-technical account.
The following currency exchange rates have been used for principal foreign currency
transactions:
2025
2025
2025
2024
2024
2024
Start of
Period Rate
End of
Period Rate
Average
Rate
Start of
Period Rate
End of
Period Rate
Average
Rate
GBP
USD
CAD
EUR
AUD
JPY
Financial assets and liabilities
In applying FRS 102, the Syndicate has chosen to apply the recognition and measurement
provisions of IAS 39 Financial Instruments: Recognition and Measurement (as adopted for use
in the UK).
The accounting classification of financial assets and liabilities determines the way in which
they are measured and changes in those values are presented in the statement of profit or
loss and other comprehensive income. Financial assets and liabilities are classified on their
initial recognition.
The initial classification of a financial instrument shall take into account contractual terms
including those relating to future variations. Once the classification of a financial instrument is
determined at initial recognition, reassessment is only required subsequently when there has
been a modification of contractual terms that is relevant to an assessment of the classification.
Financial assets and financial liabilities at fair value through profit and loss comprise financial
assets and financial liabilities held for trading and those designated as such on initial
recognition. Investments in shares and other variable yield securities, units in unit trusts, and
debt and other fixed income securities are designated as at fair value through profit or loss on
initial recognition, as they are managed on a fair value basis in accordance with the
Syndicate’s investment strategy. Other financial assets, principally certain debt and other fixed
income securities are classified as available for sale.
Deposits with credit institutions, debtors, and accrued interest are classified as loans and
receivables.
Financial instruments are recognised when the Syndicate becomes a party to the contractual
provisions of the instrument. Financial assets are derecognised if the Syndicate’s contractual
rights to the cash flows from the financial assets expire or if the Syndicate transfers the
financial asset to another party without retaining control of substantially all risks and rewards
of the asset. A financial liability is derecognised when its contractual obligations are
discharged, cancelled or expired.
28
Significant accounting policies continued
Regular way purchases and sales of financial assets are recognised and derecognised, as
applicable, on the trade date, i.e., the date that the Syndicate commits itself to purchase or sell
the asset.
A financial asset or financial liability is measured initially at fair value plus, for a financial asset
or financial liability not at fair value through profit or loss, transaction costs that are directly
attributable to its acquisition or issue.
Financial assets at fair value through profit or loss are measured at fair value with fair value
changes recognised immediately in profit or loss. Net gains or net losses on financial assets
measured at fair value through profit or loss includes foreign exchange gains/losses arising on
their translation to the functional currency but excludes interest and dividend income
Financial assets classified as available for sale are initially recognised at fair value, which
typically equates to the cost, plus transaction costs directly attributable to its acquisition. After
initial measurement, these assets are subsequently measured at fair value. Interest earned
whilst holding available for sale financial assets is reported as interest income. Impairment
losses and foreign exchange gains or losses are reported in profit or loss. Other fair value
changes are recognised in other comprehensive income. Any gain or loss recognised in OCI
will be recycled to profit and loss on derecognition of the asset.
Loans and receivables and non-derivative financial liabilities are measured at amortised cost
using the effective interest method, except Syndicate Loans to the Central Fund which are
measured at fair value through profit or loss.
Objective evidence that financial assets are impaired includes observable data that comes to
the attention of the Syndicate about any significant financial difficulty of the issuer, or significant
changes in the technological, market, economic or legal environment in which the issuer
operates.
Impairment losses on available for sale financial assets are recognised by reclassifying the
losses accumulated in other comprehensive income to profit or loss. The net cumulative loss
that is reclassified from other comprehensive income to profit or loss is the difference between
the acquisition cost, net of any principal repayment, and the current fair value, less any
impairment loss recognised previously in profit or loss. If, in a subsequent period, the fair value
of an impaired available for sale debt security increases and the increase can be related
objectively to an event occurring after the impairment loss was recognised, the impairment
loss is reversed through profit or loss. Otherwise it is reversed through the statement of
comprehensive income.
Financial assets and financial liabilities are offset, and the net amount presented in the balance
sheet when, and only when, the Syndicate currently has a legal right to set off the amounts
and intends either to settle on a net basis or to realise the asset and settle the liability
simultaneously.
Investment return
Investment return comprises investment income and movements in unrealised gains and
losses on financial instruments at fair value through profit or loss, less investment management
expenses, interest expense, realised losses and impairment losses. Investment income
comprises interest income, dividends receivable and realised investment gains.
29
Significant accounting policies continued
For the purpose of separately presenting investment income and unrealised gains and losses
for financial assets at fair value through profit or loss, interest income is calculated using the
effective interest method excluding transaction costs that are expensed when incurred. For
investments at fair value through profit or loss, realised gains and losses represent the
difference between the net proceeds on disposal and the purchase price.
Unrealised investment gains and losses represent the difference between the fair value at the
balance sheet date and the fair value at the previous balance sheet date, or purchase price if
acquired during the year. Movements in unrealised investment gains and losses comprise the
increase/decrease in the reporting period in the value of the investments held at the reporting
date and the reversal of unrealised investment gains and losses recognised in earlier reporting
periods in respect of investment disposals of the current period.
Investment return is initially recorded in the non-technical account. The return is transferred in
full to the general business technical account to reflect the investment return on funds
supporting underwriting business.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with maturities of three
months or less from the acquisition date that are subject to an insignificant risk of changes in
fair value and are used by the Syndicate in the management of its short-term commitments.
Bank overdrafts that are repayable on demand and form an integral part of the Syndicate’s
cash management are included as a component of cash and cash equivalents for the purpose
of the statement of cash flows.
Taxation
Under Schedule 19 of the Finance Act 1993 managing agents are not required to deduct basic
rate income tax from trading income. In addition, all UK basic rate income tax (currently at
20%) deducted from Syndicate investment income is recoverable by managing agents and
consequently the distribution made to members or their members’ agents is gross of tax.
Capital appreciation falls within trading income and is also distributed gross of tax.
No provision has been made for any other overseas tax payable by members on underwriting
results or investment earnings. Any payments on account made by the Syndicate during the
year have been included in the balance sheet under the heading ‘other debtors’.
Profit commission
There is no agency profit commission agreement in place.
Operating expenses
Where expenses are incurred by the Managing Agent for the administration of managed
syndicates, these expenses are apportioned using various methods depending on the type of
expense. Expenses which are incurred jointly are apportioned between the Managing Agent
and the Syndicate depending on the amount of work performed, resources used, and volume
of business transacted.
30
Significant accounting policies continued
Reinsurers’ commission and profit participation
Reinsurers’ commissions and profit participations, which include reinsurance profit
commission and overriding commission, are treated as a contribution to expenses.
Debtors and creditors
Insurance debtors and creditors include amounts due to and from agents, brokers and
insurance contract holders. These are classified as debt instruments as they are non-derivative
financial assets with fixed or determinable payments that are not quoted on an active market.
Insurance debtors are measured at amortised cost less any provision for impairments.
Insurance creditors are stated at amortised cost. The Syndicate does not have any debtors
directly with policyholders, all transactions occur via an intermediary.
Where permitted under UK GAAP accounting standards, insurance creditors are netted off
against insurance debtors where the legally enforceable right to offset exists.
Reinsurance debtors and creditors include amounts due to and from reinsurers. These are
classified as debt instruments as they are non-derivative financial assets with fixed or
determinable payments that are not quoted on an active market. Reinsurance debtors are
measured at amortised cost less any provision for impairments. Reinsurance creditors are
stated at amortised cost. Reinsurance debtor principally relates to claims recoveries where the
underlying claim has been settled and the recovery is due. Reinsurance creditors are primarily
premiums payable for reinsurance contracts and are recognised as an expense when due.
31
4. Analysis of underwriting result
An analysis of the underwriting result before investment return is presented in the table below:
| 2025 | Gross premiums written | Gross premiums earned | Gross claims incurred | Gross operating expenses | Reinsurance balance | Underwriting Result |
| $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | |
Direct insurance | ||||||
Marine, aviation and transport | ( | |||||
Fire and other damage to property | ( | ( | ||||
Third party liability | ( | ( | ( | |||
Credit and suretyship | ( | ( | ||||
Miscellaneous | - | - | - | - | - | - |
Total Direct | ( | ( | ( | |||
Reinsurance acceptances | ( | ( | ( | |||
Total | ( | ( | ( |
The below is an additional disclosure for Lloyd’s reporting purposes and is included to facilitate
the classification of the above segments into the Lloyd’s aggregate classes of business:
| 2025 | Gross premiums written | Gross premiums earned | Gross claims incurred | Gross operating expenses | Reinsurance balance | Underwriting Result |
Additional analysis | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 |
Fire and damage to property of which is: | ||||||
Specialties | ( | |||||
Energy | ||||||
Third party liability of which is: | ||||||
Energy | ||||||
32
Analysis of underwriting result continued
| 2024 | Gross written premiums | Gross premiums earned | Gross claims incurred | Gross operating expenses | Reinsurance balance | Underwriting Result |
| $’000 | $’000 | $’000 | $‘000 | $’000 | $’000 | |
Direct insurance | ||||||
Marine, aviation and transport | ( | ( | ||||
Fire and other damage to property | ( | ( | ||||
Third-party liability | ( | ( | ( | |||
Credit and suretyship | ( | ( | ||||
| Total Direct | ( | ( | ( | |||
Reinsurance acceptances | ( | ( | ( | ( | ||
Total | ( | ( | ( |
The below is an additional disclosure for Lloyd’s reporting purposes and is included to facilitate
the classification of the above segments into the Lloyd’s aggregate classes of business:
| 2024 | Gross premiums written | Gross premiums earned | Gross claims incurred | Gross operating expenses | Reinsurance balance | Underwriting Result |
Additional analysis | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 |
Fire and damage to property of which is: | ||||||
Specialties | ( | |||||
Energy | - | - | - | - | - | - |
Third party liability of which is: | ||||||
Energy | - | - | - | - | - | - |
33
Analysis of underwriting result continued
The gross premiums written for direct insurance by underwriting location (where contracts
were concluded) is presented in the table below:
| 2025 | 2024 | |
| $’000 | $’000 | |
United Kingdom | ||
European Union Member States | ||
| US | ||
Rest of the world | ||
Total gross premiums written |
No gains or losses were recognised in profit or loss during the year on buying reinsurance
(2024: nil).
34
5. Technical provisions
2025
Gross
provisions
$’000
Reinsurance
assets
$’000
Net
$’000
Claims outstanding
Balance at 1 January
Claims paid during the year
(85,929 )
(85,929 )
Expected cost of current year claims
Change in estimates of prior year provisions
Foreign exchange movements
Balance at 31 December
Unearned premiums
Balance at 1 January
(7,274 )
Premiums written during the year
(8,471 )
Premiums earned during the year
(384,204 )
(375,830 )
Foreign exchange movements
Balance at 31 December
(7,370 )
Deferred acquisition costs | |||
Balance at 1 January | |||
Incurred deferred acquisition costs | |||
Amortised deferred acquisition costs | ( | ( | |
Foreign exchange movements | |||
Balance at 31 December |
2024
Gross
provisions
$’000
Reinsurance
assets
$’000
Net
$’000
Claims outstanding
Balance at 1 January
Claims paid during the year
(52,522 )
(52,522 )
Expected cost of current year claims
Change in estimates of prior year provisions
(9,378 )
(9,378 )
Foreign exchange movements
(4,336 )
(4,336 )
Balance at 31 December
Unearned premiums
Balance at 1 January
(6,759 )
Premiums written during the year
(8,286 )
Premiums earned during the year
(312,499 )
(304,727 )
Foreign exchange movements
(5,808 )
(1 )
(5,809 )
Balance at 31 December
(7,274 )
Deferred acquisition costs | |||
Balance at 1 January | |||
Incurred deferred acquisition costs | |||
Amortised deferred acquisition costs | ( | ( | |
Foreign exchange movements | ( | ( | |
Balance at 31 December |
35
6. Net operating expenses
| 2025 | 2024 | |
| $’000 | $’000 | |
Acquisition costs | ||
Change in deferred acquisition costs | ( | ( |
Reinsurance commissions and profit participation | ||
Administration expenses | ||
| Members’ standard personal expenses | ||
Net operating expenses |
Total commissions for direct insurance business for the year amounted to:
| 2025 | 2024 | |
| $’000 | $’000 | |
Total commission for direct insurance business |
7. Auditor’s remuneration
| 2025 | 2024 | |
| $’000 | $’000 | |
| Fees payable to the Syndicate’s auditor for the audit of these financial statements | ||
| Fees payable to the Syndicate’s auditor and its associates in respect of other services pursuant to legislation | ||
Total | 432 | 386 |
Auditors’ remuneration is included as part of administrative expenses in note 6.
36
8. Key management personnel compensation
The active underwriter received the following aggregate remuneration charged to the
Syndicate:
| 2025 | 2024 | |
| $’000 | $’000 | |
Emoluments |
The aggregate emoluments of the Directors and staff of the Asta Group are charged to
companies of the Asta Group in accordance with the proportion of their time associated with
each company. Further disclosures regarding Directors’ emoluments are provided in the
financial statements of Asta Managing Agency Ltd.
No emoluments of the Directors of Asta Managing Agency Ltd were charged directly to the
Syndicate. No other compensation was payable to key management personnel.
9. Staff numbers and costs
All staff are employed by the service company (CFC Underwriting Ltd). The average number
of persons employed by the service company, but working for the Syndicate during the year,
analysed by category, was as follows:
Number of employees | ||
| 2025 | 2024 | |
Administration and finance | ||
Underwriting | ||
Claims | ||
Investments | - | - |
Total | ||
The following amounts were recharged by the service company to the Syndicate in respect of
payroll costs:
Payroll costs | ||
| 2025 | 2024 | |
| $’000 | $’000 | |
Wages and salaries | ||
Social security costs | ||
Other pension costs | ||
Total | ||
In 2024, no salary costs were recharged to the Syndicate.
37
10. Investment return
| 2025 | 2024 | |
From financial assets designated at fair value through profit or loss | $’000 | $’000 |
Interest and similar income | ||
Dividend income | ||
Interest on cash at bank | ||
Gains on the realisation of investments | ||
Losses on the realisation of investments | ( | ( |
Unrealised gains on investments | ||
| Unrealised losses on investments | ( | ( |
Investment management expenses | ( | ( |
Total investment return |
11. Financial Investments
31 December 2025 | Carrying value | Cost |
| $’000 | $’000 | |
Shares and other variable yield securities and units in unit trusts | ||
Debt securities and other fixed income securities | ||
Loans and deposits with credit institutions | ||
Syndicate loans to central fund | ||
Other investments | ||
Total financial investments |
Carrying value | Cost | |
| $’000 | $’000 | |
Shares and other variable yield securities and units in unit trusts | ||
Debt securities and other fixed income securities | ||
Loans and deposits with credit institutions | ||
Syndicate loans to central fund | ||
Other investments | ||
Total financial investments |
The amounts ascribable to listed investments is nil (prior year: nil).
38
Financial investments continued
The table below presents an analysis of financial investments by their measurement
classification:
| 2025 | 2024 | |
| $’000 | $’000 | |
Financial assets measured at fair value through profit or loss | ||
Financial assets measured at fair value as available for sale | ||
Financial assets measured at amortised cost | ||
Total financial investments |
The Syndicate classifies its financial instruments held at fair value in its balance sheet using a
fair value hierarchy based on the inputs used in the valuation techniques as follows:
• Level 1 – financial assets that are measured by reference to published quotes in an
active market. A financial instrument is regarded as quoted in an active market if quoted
prices are readily and regularly available from an exchange, dealer, broker, industry
group, pricing service or regulatory agency and those prices represent actual and
regularly occurring market transactions on an arm’s length basis.
• Level 2 – financial assets measured using a valuation technique based on assumptions
that are supported by prices from observable current market transactions. For
example, assets for which pricing is obtained via pricing services but where prices have
not been determined in an active market, financial assets with fair values based on
broker quotes, investments in private equity funds with fair values obtained via fund
managers and assets that are valued using the Syndicate’s own models whereby the
significant inputs into the assumptions are market observable.
• Level 3 – financial assets measured using a valuation technique (model) based on
assumptions that are neither supported by prices from observable current market
transactions in the same instrument nor are they based on available market data.
Therefore, unobservable inputs reflect the Syndicate's own assumptions about the
assumptions that market participants would use in pricing the asset or liability (including
assumptions about risk). These inputs are developed based on the best information
available, which might include the Syndicate’s own data.
39
Financial investments continued
The following table shows financial investments recorded at fair value analysed between the
three levels in the fair value hierarchy.
| 2025 | $’000 | ||||
Level 1 | Level 2 | Level 3 | Assets held at amortised cost | Total | |
Shares and other variable yield securities and units in unit trusts | |||||
Debt securities and other fixed income securities | |||||
Loans and deposits with credit institutions | |||||
Syndicate loans to central fund | |||||
Other investments | |||||
Total |
2024
$’000
Level 1
Level 2
Level 3
Assets
held at
amortised
cost
Total
Shares and other variable yield
securities and units in unit trusts
Debt securities and other fixed
income securities
Loans and deposits with credit
institutions
-
-
-
-
-
Syndicate loans to central fund
Other investments
-
-
-
-
-
Total
40
Financial investments continued
Information on the methods and assumptions used to determine fair values for each major
category of financial instrument measured at fair value is provided below.
Debt securities are generally valued using prices provided by external pricing vendors. Pricing
vendors will often determine prices by consolidating prices of recent trades for identical or
similar securities obtained from a panel of market makers into a composite price. The pricing
service may make adjustments for the elapsed time from a trade date to the valuation date to
take into account available market information. Lacking recently reported trades, pricing
vendors will use modelling techniques to determine a security price.
Some government and supranational securities are listed on recognised exchanges and are
generally classified as Level 1 in the fair value hierarchy. Those that are not listed on a
recognised exchange are generally based on composite prices of recent trades in the same
instrument and are generally classified as Level 2 in the fair value hierarchy.
Corporate bonds, including asset backed securities, that are not listed on a recognised
exchange or are traded in an established over the counter market are also valued mainly using
composite prices. Where prices are based on multiple quotes and those quotes are based on
actual recent transactions in the same instrument the securities are classified as Level 2,
otherwise they are classified as Level 3 in the fair value hierarchy.
At the reporting date Level 1 and Level 2 financial assets and liabilities were valued using
valuation techniques based on observable market data. All of the investments categorised as
Level 3 are fair valued based on the inputs to the valuation technique used.
12. Debtors arising out of direct insurance operations
| 2025 | 2024 | |
| $’000 | $’000 | |
Due within one year | ||
Due after one year | ||
Total |
13. Debtors arising out of reinsurance operations
| 2025 | 2024 | |
| $’000 | $’000 | |
Due within one year | ||
Due after one year | ||
Total |
41
14. Other debtors
| 2025 | 2024 | |
| $’000 | $’000 | |
Inter syndicate balances | - | - |
Other related party balances (non-syndicate) | - | - |
Amounts due from members | - | - |
Other | ||
Total |
15. Creditors arising out of direct insurance operations
| 2025 | 2024 | |
| $’000 | $’000 | |
Due within one year | ||
Due after one year | ||
Total |
16. Creditors arising out of reinsurance operations
| 2025 | 2024 | |
| $’000 | $’000 | |
Due within one year | ||
Due after one year | ||
Total |
42
17. Other creditors
2025
2024
$’000
$’000
Inter syndicate balances
-
-
Profit commissions payables
-
-
Other related party balances (non-syndicate)
-
-
Derivative liabilities
-
-
Other liabilities
-
-
Total
-
-
18. Cash and cash equivalents
| 2025 | 2024 | |
| $’000 | $’000 | |
Cash at bank and in hand | ||
Deposits with credit institutions | ||
Short term debt instruments presented within other financial investments | ||
Bank overdrafts | ||
Total cash and cash equivalents |
To improve returns on short term surplus cash the Syndicate utilises Money Market Funds
(MMF). These funds are short duration and remain highly liquid allowing for quick access.
Amounts held in such MMFs are reported as shares and variable yield securities within
investments reflecting the underlying assets within the funds and are treated as cash and cash
equivalents for cash flow purposes.
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.
Of the total cash and cash equivalents, the following amount was held in regulated bank
accounts in overseas jurisdictions:
2025
2024
$’000
$’000
Total cash and cash equivalents held in regulated accounts in overseas
jurisdictions
3,593
6,536
43
19. Related parties
Asta provides services and support to the Syndicate in its capacity as Managing Agent. During
the year, Managing Agency fees of $3.3m were charged to the Syndicate (2024: $3.1m). Asta
also recharged $2.4m worth of service charges in the year (2024: $2.3m) and as at 31
December 2025 a cumulative amount of $0.4m is owed to Asta in respect of this service (2024:
$0.1m).
CFC Underwriting Ltd recharged expenses to the Syndicate during 2025 of $1.6m (2024: nil),
and as at 31 December 2025 a cumulative amount of $0.8m is owed to CFC in respect of
these charges.
From time to time, syndicates managed by Asta enter into (re)insurance contracts with one
another. All such transactions are subject to Asta’s internal controls which ensure that all are
compliant with Lloyd’s Related Party Byelaw provisions.
Asta Capital Ltd, the parent of Asta Managing Agency Ltd, is owned by the Davies Group but
Asta Capital Ltd maintains a level of independence by virtue of separate boards and a separate
governance structure. Other entities within the wider Davies Group provide insurance-related
services to the syndicates under Asta’s management. The provision of these services is
managed by a separate management team distinct from Asta.
The ultimate parent company of Asta Managing Agency Ltd is Tennessee Topco Ltd.
20. Disclosure of interests
As at 31 December 2025, Asta was the Managing Agent for the following syndicates on behalf
of third-party capital providers:
• Syndicates 1322, 1609, 1618, 1699, 1892, 1902, 1947, 1984, 1985, 1988, 2525, 2689,
3123 and 4747,
• Syndicates-in-a-Box 1796, 1922, 1966, 2427, 2880, 3456 and 5183.
During 2025, Asta took on management of the following syndicates:
• Syndicate 1618 on 1 January 2025
• Syndicate 1984 on 1 April 2025
• Syndicate 1947 on 1 July 2025
On 1 January 2026, Asta took on management of syndicates 1918, 2126 and 2610.
On 1 January 2026, Asta ceased to be the Managing Agent for Syndicate 1966.
During 2025, Asta ceased to be the Managing Agent for the following syndicates:
• Syndicate 2786 on 17 August 2025
• Syndicate 4242 and Special Purpose Arrangement 1416 on 30 December 2025
The Managing Agency also provides administrative services to syndicates and special
purpose arrangements, also undertaking several ancillary roles for other clients.
44
Disclosure of interests continued
The Financial Statements of the Managing Agency can be obtained by application to the
Registered Office (see page 1).
21. Funds at Lloyd's
Every member is required to hold capital at Lloyd's which is held in trust and known as Funds
at Lloyd's (“FAL”). These funds are intended primarily to cover circumstances where Syndicate
assets prove insufficient to meet participating members' underwriting liabilities. The level of
FAL that Lloyd's requires a member to maintain is determined by Lloyd's based on PRA
requirements and resource criteria. 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 members' FAL
to meet liquidity requirements or to settle losses.
22. Off-balance sheet items
The Syndicate has not been party to an arrangement, which is not reflected in its statement of
financial position, where material risks and benefits arise for the Syndicate.
45
23. Risk management
a) Governance framework
The Syndicate's risk and financial management framework aims to protect the Syndicate's
members capital from events that might otherwise prevent the Syndicate from meeting its
policyholder obligations, while maximising the returns to its members. The Directors recognise
the critical importance of having efficient and effective risk management systems in place. Asta
maintains a risk management function for the Syndicate with clear terms of reference from the
Syndicate Board, its committees and sub committees.
Asta supplements this with a clear organisational structure with documented delegated
authorities and responsibilities from the main Asta Managing Agency board to the Syndicate
who perform the underwriting activities. Lastly, the Syndicate policy framework sets its risk
management and control and business conduct standards for operations. Asta reviews and
monitors each policy to ensure compliance with the policy throughout the Syndicate.
The Syndicate Board approves the risk management policies and meets regularly to approve
any commercial, regulatory and organisational requirements of such policies. These policies
define the identification of risk and its interpretation to ensure the appropriate quality and
diversification of assets, align underwriting and reinsurance strategy to the Syndicate goals,
and specify reporting requirements. The Syndicate Board places significant emphasis on the
assessment and documentation of risks and controls, including the articulation of the
Syndicate's risk appetite.
b) Capital management objectives, policies and approach
Capital framework at Lloyd's
The Society of Lloyd's (Lloyd's) is a regulated undertaking and subject to the supervision of
the Prudential Regulatory Authority (PRA) under the Financial Services and Markets Act 2000.
Within the supervisory framework, Lloyd's applies capital requirements at member level and
centrally to ensure that Lloyd's complies with Solvency UK capital requirements, and beyond
that to meet its own financial strength, licence and ratings objectives.
Although Lloyd's capital setting processes use a capital requirement set at Syndicate level as
a starting point, the requirement to meet Solvency UK and Lloyd's capital requirements apply
at overall and member level only respectively, not at Syndicate level. Accordingly the capital
requirement in respect of the Syndicate is not disclosed in these financial statements.
Lloyd's capital setting process
In order to meet Lloyd's requirements, each Syndicate is required to calculate its Solvency
Capital Requirement (SCR) for the prospective underwriting year. This amount must be
sufficient to cover a 1 in 200 year loss, reflecting uncertainty in the ultimate run-off of
underwriting liabilities (SCR 'to ultimate'). The Syndicate must also calculate its SCR at the
same confidence level but reflecting uncertainty over a one year time horizon (one year SCR)
for Lloyd's to use in meeting Solvency UK requirements. The SCRs of each Syndicate are
subject to review by Lloyd's and approval by the Lloyd's Capital and Planning Group.
46
Risk management continued
A Syndicate may be comprised of one or more underwriting members of Lloyd's. Each member
is liable for its own share of underwriting liabilities on the Syndicate on which it is participating
but not other members' shares. Accordingly, the capital requirement that Lloyd's sets for each
member operates on a similar basis. Each member's SCR 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, Lloyd's applies a capital uplift to
the member's capital requirement, known as the Economic Capital Assessment (ECA). The
purpose of this uplift, which is a Lloyd's not a Solvency UK requirement, is to meet Lloyd's
financial strength, licence and ratings objectives. The capital uplift applied for 2025 was 35%
of the member's SCR 'to ultimate'.
Provision of capital by members
Each member may provide capital to meet its ECA either by assets held in trust by Lloyd's
specifically for that member (funds at Lloyd's), held within and managed within a Syndicate
(funds in Syndicate) or as the member's share of the members' balances on each Syndicate
on which it participates. Accordingly, the ending members balances reported on the Statement
of Financial Position on page 20, represent resources available to meet members' and Lloyd's
capital requirements.
c) Insurance risk
The principal risk the Syndicate faces under insurance contracts is that the actual claims and
benefit payments or the timing thereof, differ from expectations. This is influenced by the
frequency of claims, severity of claims, actual benefits paid and subsequent development of
long-term claims. Therefore, the objective of the Syndicate is to ensure that sufficient reserves
are available to cover these liabilities.
The risk exposure is mitigated by diversification across a large portfolio of insurance contracts
and geographical areas. The variability of risks is also improved by careful selection and
implementation of underwriting strategy guidelines, as well as the use of reinsurance
arrangements.
The Syndicate purchases reinsurance as part of its risk mitigation programme. The Syndicate’s
reinsurance program is predominantly covered by a whole account, non-proportional losses
occurring during policy which covers the calendar year. Amounts recoverable from reinsurers
are estimated in a manner consistent with the outstanding claims provision and are in
accordance with the reinsurance contracts. The Syndicate's placement of reinsurance is
diversified such that it is neither dependent on a single reinsurer nor are the operations
substantially dependent upon any single reinsurance contract.
Sub committees of the Syndicate Board oversee the management of reserving risk. The use
of standardised and internal modelling techniques, as well as benchmarking and the review of
claims development are key in mitigating reserving risk. The purpose of these underwriting,
reinsurance and reserving strategies is to limit exposure to catastrophes or large losses based
on the Syndicate's risk appetite as decided by the Syndicate Board.
The Syndicate uses both its own and commercially available risk management software to
assess catastrophe exposure. However, there is always a risk that the assumptions and
techniques used in these models are unreliable or that claims arising from an un-modelled
event are greater than those arising from a modelled event.
47
Risk management continued
Key assumptions
The principal assumption underlying the liability estimates is that the future claims
development will follow a similar pattern to past claims development experience. This includes
assumptions in respect of average claim costs, claim handling costs, claim inflation factors
and claim numbers for each underwriting year. Additional qualitative judgements are used to
assess the extent to which past trends may not apply in the future, for example: one-off
occurrence; changes in market factors such as public attitude to claiming: economic
conditions: as well as internal factors such as portfolio mix, policy conditions and claims
handling procedures. Judgement is further used to assess the extent to which external factors
such as judicial decisions and government legislation affect the estimates.
Other key circumstances affecting the reliability of assumptions include variation in interest
rates, delays in settlement and changes in foreign currency rates.
Sensitivities
The claim liabilities are sensitive to the key assumptions that follow. It has not been possible
to quantify the sensitivity of certain assumptions, such as legislative changes, uncertainty in
the estimation process. The following analysis is performed for reasonably possible
movements in key assumptions with all other assumptions held constant, showing the impact
on net liabilities, profit and members' balances. The correlation of assumptions will have a
significant effect in determining the ultimate claims liabilities, but to demonstrate the impact
due to changes in assumptions, assumptions had to be changed on an individual basis. It
should be noted that movements in these assumptions are non-linear.
The tables below show the sensitivity to adjusting gross and net loss ratios. The amount
disclosed for the impact on claims outstanding – net of reinsurance represents the impact on
both the profit and loss for the year and member balance.
Sensitivity | ||
General insurance business sensitivities as at 31 December 2025 | +5.0% $’000 | -5.0% $’000 |
| Claims outstanding – gross of reinsurance | ( | |
| Claims outstanding – net of reinsurance | ( | |
Sensitivity | ||
General insurance business sensitivities as at 31 December 2024 | +5.0% $’000 | -5.0% $’000 |
| Claims outstanding – gross of reinsurance | ( | |
| Claims outstanding – net of reinsurance | ( | |
48
Risk management continued
Claims development
The tables below show the Syndicate's cumulative incurred claims development, including
both claims notified and IBNR for each underwriting year, together with the cumulative
payments to date on a gross and net of reinsurance basis at the balance sheet date. The
Syndicate has elected to translate estimated claims and claims payments at a consistent rate
of exchange as determined by the balance sheet date.
The uncertainty associated with the ultimate claims experience of an underwriting year is
greatest when the underwriting year is at an early stage of development and the margin for
future experience potentially being more adverse than assumed is at its highest. As claims
develop, and the ultimate cost of the claims becomes more certain, the relative level of margin
should decrease. Due, however, to the uncertainty inherent in the claims estimation process,
initial reserves may not always be in a surplus. This is particularly so for large catastrophe
claims where uncertainly is initially great.
| All numbers presented in $’000 | ||||||
Underwriting year | 2021 | 2022 | 2023 | 2024 | 2025 | Total |
Estimate of cumulative gross claims incurred | ||||||
At end of first underwriting year | ||||||
One year later | ||||||
Two years later | ||||||
Three years later | ||||||
Four Years Later | ||||||
Less cumulative gross claims paid | ( | ( | ( | ( | ( | |
Gross claims reserves |
All numbers presented in | ||||||
| $’000 | ||||||
Underwriting year | 2021 | 2022 | 2023 | 2024 | 2025 | Total |
Estimate of cumulative net claims incurred | ||||||
At end of first underwriting year | ||||||
One year later | ||||||
Two years later | ||||||
Three years later | ||||||
Four Years Later | ||||||
Less cumulative net claims paid | ( | ( | ( | ( | ( | |
Net claims reserves |
49
Risk management continued
d) Financial risk
The focus of financial risk management for the Syndicate is ensuring that the proceeds from
its financial assets are sufficient to fund the obligations arising from its insurance contracts.
Credit risk
Credit risk is the risk of financial loss to the Syndicate if a counterparty fails to discharge a
contractual obligation. The nature of the Syndicate’s exposures to credit risk and its objectives,
policies and processes for managing credit risk have not changed significantly from the prior
year.
The Syndicate has the following policies and procedures in place to mitigate the exposure to
credit risk:
• Reinsurance is placed with counterparties that have a good credit rating and
concentration of risk is avoided by following policy guidelines in respect of
counterparties' limits. If the counterparty is downgraded or does not have a good credit
rating, then collateral is sought to mitigate any risk. This is monitored by the Syndicate
Board.
• The Syndicate’s credit risk in respect of debt securities is managed by monitoring
concentration risk and by reference to the credit rating of the counterparty. Financial
assets are graded according to current credit ratings issued by rating agencies such
as Standard and Poor’s. The Syndicate has a policy of investing mainly in government
issued and government backed debts, as well as high-grade corporate bonds.
Debtors have been assessed for impairment by considering information such as the
occurrence of significant changes in the counterparty’s financial position, patterns of historical
payment information and disputes with counterparties.
Deferred acquisition costs, and reinsurers’ share of provision for unearned premium, have
specifically been excluded from management’s assessment of credit risk. This is on the basis
that the unearned balances do not have any intrinsic credit risk.
50
Risk management continued
The table below provides information regarding the credit risk exposure of the Syndicate at the
reporting date by classifying assets according to independent credit ratings of the
counterparties. AAA is the highest possible rating. Assets have only been rated if they are
neither past due nor impaired.
| 2025 | $’000 | ||||||
| AAA | AA | A | BBB | Other | Not Rated | Total | |
Shares and other variable yield securities and units in unit trusts | |||||||
Debt securities and other fixed income securities | |||||||
Syndicate loans to central fund | |||||||
Deposits with ceding undertakings | - | - | - | - | - | - | - |
Reinsurers’ share of claims outstanding | |||||||
Debtors arising out of direct operations | |||||||
Debtors arising out of reinsurance operations | |||||||
Other debtors and accrued interest | |||||||
Cash at bank and in hand | |||||||
Other assets | 12,817 | 2,121 | 3,691 | 1,638 | 325 | 1,888 | 22,480 |
Total |
51
Risk management continued
| 2024 | $’000 | ||||||
| AAA | AA | A | BBB | Other | Not Rated | Total | |
Shares and other variable yield securities and units in unit trusts | |||||||
Debt securities and other fixed income securities | |||||||
Syndicate loans to central fund | - | - | - | - | - | - | - |
Deposits with ceding undertakings | - | - | - | - | - | - | - |
Reinsurers’ share of claims outstanding | - | - | - | - | - | - | - |
Debtors arising out of direct operations | |||||||
Debtors arising out of reinsurance operations | |||||||
Other debtors and accrued interest | |||||||
Cash at bank and in hand | |||||||
Other Assets | 8,453 | 1,562 | 1,722 | 1,564 | 100 | 1,117 | 14,518 |
Total |
52
Risk management continued
An analysis of the carrying amounts of past due or impaired debtors is presented in the table
below:
| 2025 | $’000 | ||||
Neither past due nor impaired assets | Past due but not impaired assets | Gross value of impaired assets | Impairment allowance | Total | |
Shares and other variable yield securities and units in unit trusts | - | - | - | ||
Debt securities and other fixed income securities | - | - | - | ||
Syndicate loans to central fund | - | - | - | - | - |
Deposits with ceding undertakings | - | - | - | - | - |
Reinsurers’ share of claims outstanding | - | - | - | - | - |
Debtors arising out of direct operations | - | - | - | ||
Debtors arising out of reinsurance operations | - | - | - | ||
Other debtors and accrued interest | - | - | - | ||
Cash at bank and in hand | - | - | - | ||
Other Assets | 22,480 | - | - | - | 22,480 |
Total | - | - | - |
53
Risk management continued
| 2024 | $’000 | ||||
Neither past due nor impaired assets | Past due but not impaired assets | Gross value of impaired assets | Impairment allowance | Total | |
Shares and other variable yield securities and units in unit trusts | - | - | - | ||
Debt securities and other fixed income securities | - | - | - | ||
Syndicate loans to central fund | - | - | - | ||
Deposits with ceding undertakings | - | - | - | ||
Reinsurers’ share of claims outstanding | - | - | - | ||
Debtors arising out of direct operations | - | - | - | ||
Debtors arising out of reinsurance operations | - | - | - | ||
Other debtors and accrued interest | - | - | - | ||
Cash at bank and in hand | - | - | - | ||
Other Assets | 14,518 | - | - | - | 14,518 |
Total | - | - | - |
54
Risk management continued
The table below sets out the age analysis of financial assets that are past due but not impaired
at the balance sheet date:
2025
$’000
0-3 months
past due
3-6 months
past due
6-12
months
past due
Greater
than 1 year
past due
Total
Shares and other variable
yield securities and units in
unit trusts
-
-
-
-
-
Debt securities and other
fixed income securities
-
-
-
-
-
Syndicate loans to central
fund
-
-
-
-
-
Deposits with ceding
undertakings
-
-
-
-
-
Reinsurers’ share of claims
outstanding
-
-
-
-
-
Debtors arising out of direct
operations
-
-
-
-
-
Debtors arising out of
reinsurance operations
-
-
-
-
-
Other debtors and accrued
interest
-
-
-
-
-
Cash at bank and in hand
-
-
-
-
-
Other Assets
-
-
-
-
-
Total
-
-
-
-
-
55
Risk management continued
2024
$’000
0-3 months
past due
3-6 months
past due
6-12
months
past due
Greater
than 1 year
past due
Total
Shares and other variable
yield securities and units in
unit trusts
-
-
-
-
-
Debt securities and other
fixed income securities
-
-
-
-
-
Syndicate loans to central
fund
-
-
-
-
-
Deposits with ceding
undertakings
-
-
-
-
-
Reinsurers’ share of claims
outstanding
-
-
-
-
-
Debtors arising out of direct
operations
-
-
-
-
-
Debtors arising out of
reinsurance operations
-
-
-
-
-
Other debtors and accrued
interest
-
-
-
-
-
Cash at bank and in hand
-
-
-
-
-
Other Assets
-
-
-
-
-
Total
-
-
-
-
-
56
Risk management continued
Liquidity risk
Liquidity risk is the risk that the Syndicate may not have enough cash to pay insurance claims
and other liabilities. This risk is reduced by reviewing the Syndicate’s expected cash
obligations on a weekly basis and keeping adequate cash on deposit to meet those obligations.
Further, a Liquidity Committee meets monthly to review liquidity strength and forthcoming
liquidity needs on a monthly basis.
The table below summarises the maturity profile of the Syndicate's financial liabilities based
on remaining undiscounted contractual obligations, including interest payable and outstanding
claim liabilities based on the estimated timing of claim payments resulting from recognised
insurance liabilities. Repayments which are subject to notice are treated as if notice were to
be given immediately.
| 2025 | $’000 | |||||
No stated maturity | 0-1 Year | 1-3 Years | 3-5 Years | > 5 years | Total | |
Claims outstanding | ||||||
Deposits received from reinsurers | - | - | - | - | - | - |
Creditors | ||||||
Other credit balances | - | - | - | - | - | - |
Total |
| 2024 | $’000 | |||||
No stated maturity | 0-1 Year | 1-3 Years | 3-5 Years | > 5 years | Total | |
Claims outstanding | ||||||
Deposits received from reinsurers | - | - | - | - | - | - |
Creditors | ||||||
Other credit balances | - | - | - | - | - | - |
Total |
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Risk management continued
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument or
insurance contract will fluctuate because of changes in market prices. Market risk comprises
three types of risk: currency risk, interest rate risk and other price risk. Other price risk has
been assessed as negligible, given that the Syndicate does not invest in equities.
The objective of market risk management is to manage and control market risk exposures
within acceptable parameters, while optimising the return on risk.
a) Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in foreign exchange rates.
The Syndicate's functional currency is USD and its exposure to foreign exchange risk arises
primarily with respect to transactions in Sterling, Euro, Canadian Dollar and Australian Dollar.
The Syndicate seeks to mitigate the risk by matching the estimated foreign currency
denominated liabilities with assets denominated in the same currency.
The Syndicate matches its currency position, so it holds net assets across a number of
currencies. The Syndicate takes into consideration the underlying currency of the Syndicate's
required capital and invests its assets proportionately across these currencies so as to protect
the solvency of the Syndicate, against variation in foreign exchange rates.
The following table summarises the exposure of the financial assets and liabilities to foreign
currency exchange risk at the reporting date, as follows, with all numbers reported into
converted USD:
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Risk management continued
| 2025 | ||||||
GBP | USD | EUR | CAD | AUD | Total | |
Investments | ||||||
Reinsurers’ share of technical provisions | ||||||
Debtors | ||||||
Other assets | ||||||
Prepayments and accrued income | ||||||
Total assets | ||||||
Technical provisions | ( | ( | ( | ( | ( | ( |
Deposits received from reinsurers | - | - | - | - | - | - |
Creditors | ( | ( | ( | ( | ( | ( |
Accruals and deferred income | ( | ( | ( | |||
Total liabilities | ( | ( | ( | ( | ( | ( |
Total capital and reserves | ( | ( | ( | ( | ( | ( |
| 2024 | ||||||
GBP | USD | EUR | CAD | AUD | Total | |
Investments | ||||||
Reinsurers’ share of technical provisions | ||||||
Debtors | ||||||
Other assets | ||||||
Prepayments and accrued income | ||||||
Total assets | ||||||
Technical provisions | ( | ( | ( | ( | ( | ( |
Deposits received from reinsurers | - | - | - | - | - | - |
Creditors | ( | ( | ( | ( | ( | ( |
Accruals and deferred income | ( | ( | ( | |||
Total liabilities | ( | ( | ( | ( | ( | ( |
Total capital and reserves | ( | ( | ( | ( | ( | ( |
59
Risk management continued
Sensitivity to changes
The table below gives an indication of the impact on profit of a percentage change in the
relative strength of the functional currency against the value of the Sterling, Euro, Canadian
Dollar and Australian Dollar simultaneously. The analysis is based on the information as at the
reporting date.
Currency risk
Impact on profit and member’s balance
2025
2024
$’000
$’000
10 percent strengthening of functional currency
(7,701)
(6,855)
10 percent weakening of functional currency
7,701
6,855
b) Interest rate risk
Interest rate risk is the risk that the value or future cash flows of a financial instrument will
fluctuate in response to changes in market interest rates.
Floating rate instruments expose the Syndicate to cash flow interest risk, whereas fixed rate
instruments expose the Syndicate to fair value interest risk.
The analysis below is performed for reasonably possible movements in market interest rates
with all other variables held constant, showing the impact on the result before tax due to
changes in fair value of financial assets (whose fair values are recorded in the profit and loss
account) and members’ balances.
| Interest rate risk | Impact on profit and member’s balance | |||
| 2025 Impact on results before tax | 2025 Impact on members’ balance before tax | 2024 Impact on results before tax | 2024 Impact on members’ balance before tax | |
| $’000 | $’000 | $’000 | $’000 | |
50 basis points increase in yield curves | ( | ( | ( | ( |
50 basis points decrease in yield curves | ||||
Insurance liabilities are not discounted and therefore are not exposed to interest rate risk.
60
24. Post balance sheet events
The Syndicate will distribute the 2023 underwriting year profits of $82,117,880 to members
during 2026. (2024: $67,343,701)
