Syndicate Accounts

Accounts disclaimer

Important information about Syndicate Reports and Accounts Access to this document is restricted to persons who have given the certification set forth below. If this document has been forwarded to you and you have not been asked to give the certification, please be aware that you are only permitted to access it if you are able to give the certification. The syndicate reports and accounts set forth in this section of the Lloyd’s website, which have been filed with Lloyd’s in accordance with the Syndicate Accounting Byelaw (No. 8 of 2005), are being provided for informational purposes only. The syndicate reports and accounts have not been prepared by Lloyd’s, and Lloyd’s has no responsibility for their accuracy or content. Access to the syndicate reports and accounts is not being provided for the purposes of soliciting membership in Lloyd’s or membership on any syndicate of Lloyd’s, and no offer to join Lloyd’s or any syndicate is being made hereby. Members of Lloyd’s are reminded that past performance of a syndicate in any syndicate year is not predictive of the related syndicate’s performance in any subsequent syndicate year. You acknowledge and agree to the foregoing as a condition of your accessing the syndicate reports and accounts. You also agree that you will not provide any person with a copy of any syndicate report and accounts without also providing them with a copy of this acknowledgment and agreement, by which they will also be bound.

Classification: Unclassified

Lloyd’s Syndicate

Newline Syndicate 1218

Annual Report and Accounts for the year ended

31 December 2025

Contents

Syndicate Information..............................................................................................................4

Managing Agent’s Report........................................................................................................5

Independent auditors’ report to the member of Syndicate 1218............................................15

Statement of Profit or Loss and Other Comprehensive Income............................................20

Balance Sheet – Assets.........................................................................................................22

Balance Sheet – Liabilities.....................................................................................................23

Statement of Changes in Members’ Balances.......................................................................24

Statement of Cash Flows.......................................................................................................25

Notes to the Financial Statements – (Forming Part of the Financial Statements)................26

Syndicate Information

At 31 December 2025

NEWLINE SYNDICATE 1218

MANAGING AGENTNewline Underwriting Management Limited

1 Fen Court

London

EC3M 5BN

DIRECTORS OF MANAGINGE Ahearn(appointed 1 January 2026)

AGENTM J Beane

R F Beaver

R F Coerver

N D Duncan

S Kapur

R B Kastner

M C Newman

A Pecover

R S Pollock

M G Wacek (resigned 31 December 2025)

H J L Withinshaw

COMPANY SECRETARYH J L Withinshaw

ACTIVE UNDERWRITERA Pecover

REGISTERED INDEPENDENTPricewaterhouseCoopers LLP

AUDITORS7 More London Riverside

London

SE1 2RT

Managing Agent’s Report

For the year ended 31 December 2025

The Directors of the managing agent present their report and annual report and accounts for the year ended 31 December 2025.

This annual report and accounts is prepared using the annual basis of accounting as required by Regulation 5 of Statutory Instrument No 1950 of 2008, the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 (“the Regulations”).

PRINCIPAL ACTIVITY

Newline Underwriting Management Limited (“NUML”) is the managing agent for Syndicate 1218. The principal activity of the Syndicate is primarily the underwriting of casualty (re)insurance business at Lloyd’s. Syndicate 1218, whose capacity is 100% provided by Newline Corporate Name Limited (“NCNL”), had a capacity of £270.0m for the 2025 year of account (2024: £271.0m, 2023: £279.0m). Syndicate capacity is based on gross premiums net of commissions.

NUML and NCNL are wholly owned subsidiaries of Newline Holdings UK Limited (“NHUKL”), a wholly owned subsidiary of Odyssey Reinsurance Company (“ORC”), part of the Odyssey Group. The ultimate parent is Fairfax Financial Holdings Limited (“Fairfax”), a company incorporated in Canada.

The insurance cover provided by the Syndicate includes the following lines of business:

Affinity and Special Risks

This line of business provides motor-related warranty (extended warranty, collision waiver, tyre and alloy wheel and dent protection), non-motor warranty (brown, white and yellow goods, mobile phones, etc.) credit card enhancement products, Truck, Bus and Motor Physical damage protection and value-driven add-ons (e.g. excess waiver).

Cargo and Specie

This line of business provides physical damage coverage for all types of goods and fine art during transit, store, exhibition, consolidation, clearing, distribution, restoration and whilst at manufacturing centres.

Clinical Trials

This line of business protects pharmaceutical and biotech manufacturers and developers as well as clinical research organisations in respect of claims made by research subjects who participated in clinical trials and assert they sustained bodily injury by exposure to the products being tested in the clinical trial.

Crime

This line of business protects financial institutions and other organisations against losses that are discovered during the policy period arising from a variety of dishonest, fraudulent or criminal acts committed by either employees or third parties and includes coverage for robbery, hold-ups, forged documents or computer crime.

Cyber

This line of business protects companies in relation to the financial exposure that arises in the digital and data protection age either on a first party and/or third party basis.

Directors’ and Officers’ (D&O) Liability

This line of business protects directors and officers of commercial entities, financial institutions and other organisations against claims that are made during the policy period seeking to hold directors and officers liable for alleged wrongful acts in their capacity as directors and officers.

Errors and Omissions (E&O)

This line of business protects professional service firms, commercial entities and financial institutions against claims made during the policy period by third parties alleging negligence and seeking to hold the company liable.

Managing Agent’s Report

(continued)

General Liability

This line of business protects companies against claims made by employees or third parties for alleged bodily injury and property damage losses, arising from employee injuries at work or activities of the company that are alleged to cause damage to employees or third parties.

Life Sciences

This line of business protects manufacturers, developers and distributors of a wide range of pharmaceutical, nutraceutical, biotech, medical, health and wellbeing related products against claims made during the policy period by third parties for alleged bodily injury and property damage by use of or exposure to the products manufactured, developed and distributed by these insureds.

Medical Malpractice

This line of business protects hospitals, other health care facilities and individual physicians and other health care professionals against claims made during the policy period by third parties alleging negligence and seeking to hold the insureds liable.

Reinsurance

This line of business protects, on a treaty reinsurance basis, underwriters of property, casualty, marine and aerospace insurance.

The Syndicate also underwrites satellite business, mainly through a consortium participation.

BUSINESS REVIEW

Results and performance

The result for the calendar year 2025 is a profit of £161.8m (2024: profit of £90.6m). Profits and losses will continue to be distributed or called by reference to the results of individual underwriting years.

The combined ratio for 2025 is 83.8% (2024: 86.1%), resulting in an underwriting profit excluding investment return of £42.3m (2024: profit £32.0m). A tougher rating environment in our markets, and increased competition from MGA’s and international service company platforms has made adherence to our disciplined underwriting principles all the more important, and combined with prior year releases across a number of casualty classes, has helped contribute to a combined ratio of 83.8%.

The investment return for the year was a positive of £116.0m (2024: positive £69.1m) driven by gains on our equity portfolio, income from the fixed income portfolio, dividends and modest gains on the fixed income portfolio. The Syndicate’s investment portfolio recorded a positive investment return of £31.0m (2024: investment gain of £20.9m). The investments supporting the Funds in Syndicate and surplus capital accumulated positive investment returns totalling £85.0m (2024: positive return of £48.2m).

Gross written premiums for the year were £313.2m (2024: £280.5m), £32.7m or 11.6% higher, in converted sterling terms. At constant rates of exchange, this represents an increase in premium of £39.1m or 13.9%. The increase in gross premiums is largely driven by the Commercial Professional Liability, Affinity and Marine Cargo segments. Overall, we remain cautious in our underwriting approach, given the continuing uncertain economic outlook, seeking growth only in opportunistic or otherwise profitable areas. Market conditions continue to be competitive.

The result for the year of £161.8m has contributed to an increase of £137.5m (after a net distribution of £24.3m to Newline Corporate Name Limited) to the net asset position of £549.7m (2024: £412.2m), with Funds in Syndicate accounting for £469.9m (2024: £350.1m).

Managing Agent’s Report

(continued)

Results and performance (continued)

The Syndicate’s capacity for the 2025 year of account decreased slightly to £270.0m from £271.0m on the 2024 year of account. During 2026 we anticipate a slightly negative rating environment, with rating pressure due to intense competition in the classes in which the Syndicate underwrites, and therefore our income estimates for 2026 are for a modest reduction over 2025. We will continue to look for cost-effective means of growing our portfolio, and expanding, if possible, in those areas where we feel that the market dynamics mean there is potential for increased profitability. Notwithstanding this, we are cognisant of the challenges of doing so in the current environment, and the need to retain bottom line profitability in the business we underwrite which will remain paramount.

Business environment

Competition between insurance entities can be based on a number of factors inter alia product, price, service, coverage, financial strength, distribution channels, enhanced commissions and reputation. The Syndicate’s competitors include independent insurance companies, subsidiaries or affiliates of established worldwide insurance companies, MGAs, and other syndicates underwriting at Lloyd’s. Some of these competitors have larger capital bases than Syndicate 1218 and, in addition, greater underwriting, marketing, and administrative resources. Whilst new entrants at Lloyd’s and the re-emergence of MGAs may threaten the positive pricing environment, we anticipate the opportunity to attract new business with the flight to quality carriers; providing this falls within our risk appetite.

Underwriters are targeting underwriting discipline around risk selection and pricing adequacy on new and renewal business. We continue to develop our overseas footprint through regional service companies to support access to broader and new distribution opportunities.

Casualty market participants continue to compete aggressively for business and we expect the rating environment to remain highly competitive. We will maintain our focus on maximising the opportunities presented by the market thorough strict adherence to our disciplined approach to underwriting.

Strategy

The Syndicate has an established book of business and renewals constitute a significant element of our premium volume, one year to the next. Excellent producer relationships have been established with the aim of providing commercial advantage when faced by challenging market conditions. Experience gained over the last market cycle in shaping, refining and redefining our core portfolio will serve us well as we move into the next phase of the market cycle.

Price is a primary means of competition in the (re)insurance business. We continue to emphasise disciplined underwriting over premium growth, focusing on carefully selecting the risks we insure and determining the appropriate price for assuming such risks. We are committed to maintaining our underwriting discipline and standards; as a consequence, premium volumes within our product lines and in overall terms will vary in line with our risk appetite and the opportunities presented by prevailing market conditions.

Key factors that enable us to select, price and manage our business successfully are experience, strict underwriting discipline, analytical tools, and access to real time data. We have invested considerable time and effort in developing our systematic approach to underwriting and placing an appropriate control environment around it.

Managing Agent’s Report

(continued)

Strategy (continued)

To ensure that underwriting objectives are properly understood we have implemented strict review and referral processes, sophisticated and flexible rate engines, rate level monitoring, reporting, and enlisted the assistance of actuarial and claims personnel.

Principal risks and uncertainties

The process of risk acceptance and risk management is addressed through a framework of policies, procedures and internal controls as set out in the Risk Management Framework. This ensures that all risks are identified, recorded, assessed and taken into account when determining the Syndicate’s Solvency Capital Requirement (“SCR”) using the Internal Model. The control environment operating around these key risks is regularly reviewed to ensure that controls are operating effectively. A description of the risks and uncertainty from the insurance risks and financial risks facing the Syndicate are set out in note 4 of these annual report and accounts.

All key policies are approved by the Board and the framework is subject to ongoing review by management, Risk Management and Internal Audit as part of the “Own Risk and Solvency Assessment” (“ORSA”) process. An ORSA Lite report is presented to the Board on at least a quarterly basis. The ORSA Lite report sets out the risk profile and key risk indicators of the Syndicate, together with the resulting impact on the SCR, and confirmation that sufficient own and ancillary funds are in place.

Climate risk

Climate risk relates to a range of economic exposures that may impact the business, encompassing:

Physical risk arising from an increase in frequency and severity of natural weather events, leading to increased losses within property lines of business.

Transition and litigation risk resulting from the movement to a zero carbon footprint for individuals, companies and the global community. The impact may be felt in our investment portfolio, from certain assets in our investment portfolio that have to change their business models away from a high carbon emission base. Additionally, litigation risks may impact casualty lines of business in a variety of ways, including potentially through class actions being taken against publicly listed insureds that fail to meet increased reporting requirements, through to lawsuits against organisations’ and individuals’ perceived adverse impact upon the environment or claims against professional services firms and financial institutions alleging climate related breaches of duty.

In managing the risks to the Syndicate associated with climate change, Newline has:

-Underwriting guidelines and authorities to incorporate sustainability factors in underwriting decisions, including:

oThe alignment of environmentally sensitive risk exposures within core risk appetite philosophy and underwriting best practice;

oSustainability being included within underwriter client meetings;

oEnvironmental referrals are being used in the underwriting process;

oMetrics based on our scenario analysis are currently being developed as part of our exposure management process.

Managing Agent’s Report

(continued)

Principal risks and uncertainties (continued)

-Included financial risks from climate change in the risk management framework.

-Considered climate change as part of the underwriting loss distribution reviews for the internal model.

-Considered climate change risks and scenario analysis and reported them in the annual ORSA.

-Given consideration to the reputational damage of climate change activism to the Syndicate through the risk management framework and stress and scenario testing.

Newline’s climate change scenario analysis was updated during 2025, and for each scenario, Newline analysed the physical, transition and litigation risks, the sectors/geographies at higher risk and the potential underwriting losses.

As Newline is primarily a casualty underwriter, it has very limited first party exposure to the transition and physical risks associated with climate change; within its casualty portfolio there is limited exposure to high emission sectors, public administration, large utility/infrastructure risks and physically exposed territories. The most material potential exposures identified were in the D&O book due to the potential for increasing disclosure requirements. This remains an emerging area as plaintiff firms continue to be proactive in filing new and varied lawsuits against a wide array of defendants and the Syndicate’s exposure here is under constant review.

Newline has wider sustainability risk exposure (such as Reputational Risk in respect of insurers, employees and the wider Newline, Odyssey and Fairfax groups) and is continuing to develop its approach to sustainable investments and operational activities. Sustainability considerations are now included within the statement of investment risk appetite, to include an additional objective of gradually increasing the sustainable standing of the portfolio. Newline achieved its stated objective to phase out existing investments in respect of companies with business models which derive at least 30% of their revenues from either thermal coal-fired power plants, thermal coalmines, oil sands or new Arctic energy exploration activities by the end of 2025. Newline has not identified any specific impacts on its operations and infrastructure from the physical risks of climate change.

Newline has developed its sustainability framework and strategy as part of its overall Governance Management Framework. This sustainability framework sets out Newline’s approach to developing operational, investment and underwriting policies. Newline’s high level sustainability strategy is to embed sustainability factors into our business activities and decision-making to ensure our business remains sustainable for the long-term to the benefit of our employees, customers, members and to promote resilience, inclusivity and sustainability in our operations.

The risk of reputational damage through climate change activism has been considered, although Newline does not have any obvious underwriting or investment exposures which might trigger this.

External conflicts

Geopolitical tensions remain high, with continued potential for inflation shocks, in particular from disruption to supply chains and energy price volatility arising from conflicts in the Middle East and Ukraine. Whilst recent diplomatic efforts, notably the Trump administration’s active pursuit of peace deals in both regions provide hope for de-escalation, significant risks remain. Newline continues to give consideration to the possible financial impact on its insurance and investment portfolios to the ongoing conflicts.

Managing Agent’s Report

(continued)

Principal risks and uncertainties (continued)

Israel Gaza War and the wider Middle East region

Following the ceasefire that took effect in October 2025, the situation has transitioned into a complex second phase, mediated by a US led “Board of Peace”. Whilst the agreement has reduced the intensity of direct conflict, the risk of escalation remains high. Concerns persist that a wider regional conflict involving Iran could flare up, especially given the campaign of new US sanctions and threats of military action against Iran in early 2026. Such developments pose a threat to regional oil production and shipping and have added a ‘geopolitical risk premium’ to oil prices.

Newline writes business in Israel, but the business is not directly impacted by the conflict.

Events in Ukraine

Following Russia’s invasion of Ukraine, geopolitical tensions have increased, though the landscape is shifting due to intense diplomatic efforts by the Trump administration, which has prioritised a 2026 resolution. Trilateral talks between the US, Ukraine and Russia in early 2026 provide some hope of a peace deal, though significant challenges regarding territorial concessions and security guarantees remain. Despite these effort, active combat and Russian strikes on energy infrastructure continue, maintaining market volatility, and international sanctions continue to impact the financial system.

Newline does not insure any of the following classes: war or terrorism, political risk or violence, contract frustration, trade credit or surety, energy, hull, personal accident, A&H, aviation or medical expenses. Newline derives minimal premium income from Ukraine and took the conscious decision in 2024 to avoid wherever possible any income from Russia either directly or indirectly, either non-renewing existing business or declining new business with known Russian domiciled insureds. Newline may face some indirect exposure in its Financial Lines book should third party claims be made against financial institutions or Directors and Officers for losses sustained as a result of the wider economic consequence of the international community’s response to the events in Ukraine. Newline has written a small number of Cyber risks, from which it may also face some exposure.

The events unfolding in Ukraine have also been amongst the causal factors that had been instrumental in raising inflation across the world. This is considered within ‘Inflation’ below. Newline is monitoring closely the impact the government of the United States could have on the conflict in Ukraine which may result in some form of resolution.

Inflation

Inflationary pressures in the UK not seen since the 1980s started to ease from their peaks in late 2022 to the Bank of England’s 2% target by mid-2024, but has not come down as quickly as had been hoped. Since then, it has exhibited a ‘bumpy’ path driven by persistent services inflation and rising food and energy costs. After holding interest rates at a peak of 5.25% until the latter half of 2024, the Monetary Policy Committee has begun cutting UK interest rates with six subsequent 25 basis point cuts, whilst the Bank of England continues to take a gradual approach in reversing quantitative easing.

Managing Agent’s Report

(continued)

Principal risks and uncertainties (continued)

Regulatory Risk

Newline writes business on a worldwide basis and is exposed to local regulatory requirements in those jurisdictions. The principal risks in this area are:

oThe Financial Conduct Authority’s oversight of the ongoing transition of Consumer Duty requirements into business as usual;

oThe Prudential Regulation Authority implementation of Solvency UK;

oEnsuring that Newline’s local wholly owned service companies in various jurisdictions remain compliant with local regulatory requirements.

These risks are mitigated by having a dedicated Compliance Function who monitor and track new regulatory requirements, lead on their implementation within the business, monitor ongoing compliance and liaise with the regulators as required.

Future Outlook

Our client focus for casualty business remains the mid-market and corporate sector where we consider our ability and expertise to lead business adds the most value. The UK, Commonwealth countries, Continental Europe, Israel and Asia will continue to be our core markets. The Syndicate will take full advantage of Lloyd’s licensing to exploit opportunities in certain sectors or markets in our chosen fields of expertise as and when they develop. Given the changing broker landscape and developments in local (re)insurance markets, we envisage less business coming to London. To counter this, we are making increasing effort to access business regionally, whether this be through:

i)Establishment of and/or expanding existing service companies;

ii)Accessing business through other (re)insurance partners within the Fairfax Group;

iii)Using overseas MGAs where we have strong relationships and/or proven track records.

The Syndicate has an overseas presence in Australia, Canada, Singapore, Malaysia and Hong Kong through insurance agents owned by the parent company of the Syndicate’s capital provider, and operates a distribution hub in Mexico. In addition, the Syndicate participates on the Lloyd’s China platform and through the Lloyd’s European insurance subsidiary in Brussels, ensuring that we continue to provide a service to our stakeholders and customers across Europe. Other overseas opportunities are being explored.

Managing Agent’s Report

(continued)

Financial instruments

Information on the use of financial instruments by the Syndicate and its management of financial risk is disclosed in Note 4 to the annual report and accounts. In particular, the Syndicate’s exposures to price risk, credit risk and liquidity risk are separately disclosed in that note. The Syndicate’s exposure to cash flow risk is addressed under the headings of ‘Credit risk’, ‘Liquidity risk’ and ‘Market risk’.

Economic Uncertainty

The Syndicate is also monitoring the possible economic uncertainty surrounding the potential for trade wars as, inter alia, the EU, China, Canada, India and the UK respond to the imposition of tariffs by the United States. At present the extent of the imposition of further trade tariffs is unknown, however, the threat of tariffs is real.

Solvency UK

With respect to our capital requirements for 2025, Lloyd’s approved the Syndicate Solvency Capital Requirement, calculated using the Syndicate’s Internal Model, in November 2024. Our 2026 capital requirement has also been approved by Lloyd’s, in November 2025.

Key performance indicators (KPIs) and metrics

The Board monitors the progress of the Syndicate by reference to the following KPI’s and metrics:

2025

2024

Gross Written Premiums

£313.2m

£280.5m

Gross premiums written, including acquisition costs, in respect of insurance contracts

Net written premiums

£264.7m

£233.5m

Gross Written Premiums less outward reinsurance in respect of insurance contracts

Technical result

£73.4m

£52.9m

Balance on technical account for general business

Net loss ratio

42.0%

45.1%

Ratio of net claims incurred to net earned premiums

Combined ratio

83.8%

86.1%

Ratio of net claims incurred, commissions and expenses to net premiums earned

Net assets

£549.7m

£412.2m

Excess of assets over liabilities

Managing Agent’s Report

(continued)

DIRECTORS OF THE MANAGING AGENT

The Directors listed below have held office from 1 January 2025 to the date of this report unless otherwise stated.

E Ahearn(appointed 1 January 2026)

M J Beane

R F Beaver

A R Carey(resigned 1 July 2025)

R F Coerver

N D Duncan

S Kapur

R B Kastner

M Killeen(appointed 1 July 2025, resigned 26 August 2025)

M C Newman

A Pecover

R S Pollock

M G Wacek (resigned 31 December 2025)

H J L Withinshaw

None of the Directors participate in the Syndicate, whose capacity is provided entirely by Newline Corporate Name Limited, a wholly owned subsidiary of Odyssey Reinsurance Company (“ORC”).

Third-party indemnity providing cover for claims for actual or alleged acts, errors, omissions, misstatements, misleading statements, neglect or breach of duty in the rendering of professional services was in place for the above directors throughout the year and up to the time of approval of the annual report and accounts.

STATEMENT OF DISCLOSURE OF INFORMATION TO AUDITORS

Each of the persons who is a director at the date of this report confirms that:

•so far as each of them is aware, there is no information relevant to the audit of the Syndicate’s annual report and accounts for the year ended 31 December 2025 of which the auditors are unaware; and

•each director has taken all steps that they ought to have taken in their duty as a director in order to make themselves aware of any relevant audit information and to establish that the Syndicate’s auditors are aware of that information.

INDEPENDENT AUDITORS

The independent auditors of the Syndicate are PricewaterhouseCoopers LLP.

Managing Agent’s Report

(continued)

STATEMENT OF MANAGING AGENT’S RESPONSIBILITIES

The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 require the managing agent to prepare syndicate annual report and accounts as at 31 December each year in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including Financial Reporting Standard 102 The Financial Reporting Standard Applicable in the UK and Republic of Ireland (“FRS 102”), and Financial Reporting Standard 103 Insurance Contracts (“FRS 103”). The annual report and accounts 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 that year.

In preparing the syndicate annual report and accounts, the managing agent is required to:

•select suitable accounting policies and then apply them consistently;

•make judgements and estimates that are reasonable and prudent;

•state whether applicable United Kingdom Accounting Standards, including FRSs 102 and 103 have been followed, subject to any material departures disclosed and explained in the annual report and accounts;

•notify the member in writing about the use of disclosure exemptions, if any, of FRS 102 and FRS 103 used in preparation of the annual report and accounts;

•prepare the annual report and 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; and

•the preparation and review of the iXBRL tagging that has been applied to the Syndicate Accounts in accordance with the instructions issued by Lloyd’s, including designing, implementing and maintaining systems, processes and internal controls to result in tagging that is free from material non-compliance with the instructions issued by Lloyd’s, whether due to fraud or error.

The directors confirm they have complied with the above requirements in preparing the annual report and accounts.

The managing agent is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the syndicate and to enable it to ensure that the syndicate annual accounts report and comply with the 2008 Regulations. 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.

On behalf of the Board

S Kapur

Director

19th February 2026

Independent auditors’ report to the member of Syndicate 1218

Report on the audit of the syndicate annual accounts

Opinion

In our opinion, Syndicate 1218’s syndicate annual accounts:

●give a true and fair view of the state of the syndicate’s affairs as at 31 December 2025 and of its profit and cash flows for the year then ended;

●have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law); and

●have been prepared in accordance with the requirements of The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the requirements within the Lloyd’s Syndicate Accounts Instructions version 3.1 as modified by the Frequently Asked Questions issued by Lloyd’s version 1.1 (“the Lloyd’s Syndicate Instructions”).

We have audited the syndicate annual accounts included within the Annual Report and Accounts (the “Annual Report”), which comprise: the balance sheet – assets and the balance sheet – liabilities as at 31 December 2025, the statement of profit or loss and other comprehensive income, the statement of cash flows, and the statement of changes in members’ balances for the year then ended; and the notes to the syndicate annual accounts, which include a description of the significant accounting policies.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”), The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, the Lloyd’s Syndicate Instructions and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the syndicate annual accounts section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We remained independent of the syndicate in accordance with the ethical requirements that are relevant to our audit of the syndicate annual accounts in the UK, which includes the FRC’s Ethical Standard, as applicable to other entities of public interest, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided.

Other than those disclosed in note 6, we have provided no non-audit services to the syndicate in the period under audit.

Conclusions relating to going concern

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the syndicate’s ability to continue as a going concern for a period of at least twelve months from when the syndicate annual accounts are authorised for issue.

In auditing the syndicate annual accounts, we have concluded that the Managing Agent’s use of the going concern basis of accounting in the preparation of the syndicate annual accounts is appropriate.

However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the syndicate's ability to continue as a going concern.

Our responsibilities and the responsibilities of the Managing Agent with respect to going concern are described in the relevant sections of this report.

Reporting on other information

The other information comprises all of the information in the Annual Report other than the syndicate annual accounts and our auditors’ report thereon. The Managing Agent is responsible for the other information. Our opinion on the syndicate annual accounts does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the syndicate annual accounts, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the syndicate annual accounts or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the syndicate annual accounts or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.

With respect to the Managing Agent’s Report, we also considered whether the disclosures required by The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 have been included.

Based on our work undertaken in the course of the audit, The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 requires us also to report certain opinions and matters as described below.

Managing Agent’s Report

In our opinion, based on the work undertaken in the course of the audit, the information given in the Managing Agent’s Report for the year ended 31 December 2025 is consistent with the syndicate annual accounts and has been prepared in accordance with applicable legal requirements.

In light of the knowledge and understanding of the syndicate and its environment obtained in the course of the audit, we did not identify any material misstatements in the Managing Agent’s Report.

Responsibilities for the syndicate annual accounts and the audit

Responsibilities of the Managing Agent for the syndicate annual accounts

As explained more fully in the Statement of Managing Agent’s Responsibilities, the Managing Agent is responsible for the preparation of the syndicate annual accounts in accordance with the applicable framework and for being satisfied that they give a true and fair view. The Managing Agent is also responsible for such internal control as they determine is necessary to enable the preparation of syndicate annual accounts that are free from material misstatement, whether due to fraud or error.

In preparing the syndicate annual accounts, the Managing Agent is responsible for assessing the syndicate’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless it is intended for the syndicate to cease operations, or it has no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the syndicate annual accounts

Our objectives are to obtain reasonable assurance about whether the syndicate annual accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these syndicate annual accounts.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Based on our understanding of the syndicate and industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of regulatory principles, such as those governed by the Prudential Regulation Authority and the Financial Conduct Authority, and those regulations set by the Council of Lloyd’s, and we considered the extent to which non-compliance might have a material effect on the syndicate annual accounts. We also considered those laws and regulations that have a direct impact on the syndicate annual accounts such as The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the Lloyd’s Syndicate Instructions. We evaluated management’s incentives and opportunities for fraudulent manipulation of the syndicate annual accounts (including the risk of override of controls), and determined that the principal risks were related to the posting of inappropriate journals and management bias in accounting estimates. Audit procedures performed by the engagement team included:

●Discussions with management, internal audit and the compliance function of the Managing Agent, including consideration of known or suspected instances of fraud or non-compliance with laws and regulation;

●Reviewing relevant meeting minutes including those of the Audit Committee and correspondence with regulatory authorities, including Lloyd’s of London, the Financial Conduct Authority and the Prudential Regulation Authority;

●Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to valuation of claims incurred but not reported (“IBNR”) and estimated premium income;

●Identifying and testing journal entries for potential indicators of fraud; and

●Designing audit procedures to incorporate unpredictability around the nature, timing and extent of testing.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the syndicate annual accounts. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

A further description of our responsibilities for the audit of the syndicate annual accounts is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.

Use of this report

This report, including the opinions, has been prepared for and only for the syndicate’s member in accordance with part 2 of The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Other required reporting

Under The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 we are required to report to you if, in our opinion:

●we have not obtained all the information and explanations we require for our audit; or

●adequate accounting records have not been kept by the Managing Agent in respect of the syndicate; or

●certain disclosures of Managing Agent remuneration specified by law are not made; or

●the syndicate annual accounts are not in agreement with the accounting records.

We have no exceptions to report arising from this responsibility.

Other matter

We draw attention to the fact that this report may be included within a document to which iXBRL tagging has been applied. This auditors’ report provides no assurance over whether the iXBRL tagging has been applied in accordance with section 2 of the Lloyd’s Syndicate Instructions version 3.1.

Andrew Lyttle (Senior statutory auditor)

for and on behalf of PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

London

19th February 2026

Statement of Profit or Loss and Other Comprehensive Income

Technical account – General business

For the year ended 31 December 2025

Note

2025

£000

2024

£000

Gross premiums written

313,186

280,526

Outwards reinsurance premiums

(48,471)

(47,005)

Premiums written, net of reinsurance

264,715

233,521

Changes in unearned premium

Change in the gross provision for unearned premiums

(3,582)

(4,176)

Change in the provision for unearned premiums reinsurers’ share

(51)

761

Net change in provisions for unearned premiums

(3,633)

(3,415)

Earned premiums, net of reinsurance

261,082

230,106

Allocated investment return transferred from the non-technical account

31,024

20,929

Claims paid

Gross amount

(103,624)

(91,796)

Reinsurers’ share

16,277

24,949

Net claims paid

(87,347)

(66,847)

Change in the provision for claims

Gross amount

(50,992)

(43,711)

Reinsurers’ share

28,693

6,687

Net change in provisions for claims

(22,299)

(37,024)

Claims incurred, net of reinsurance

(109,646)

(103,871)

Net operating expenses

(109,109)

(94,220)

Balance on the technical account – general business

73,351

52,944

Statement of Profit or Loss and Other Comprehensive Income: (cont’d)

Non-technical account – General business

For the year ended 31 December 2025

The accompanying notes from page

to 56 form an integral part of these financial statements.

Note

2025£000

2024£000

Balance on the technical account – general business

73,351

52,944

Investment income

27,958

24,903

Realised gains on investments

9,577

11,402

Unrealised gains on investments

79,940

34,701

Investment expenses and charges

(1,491)

(1,894)

Total investment return

115,984

69,112

Allocated investment return transferred to the general business technical account

(31,024)

(20,929)

Profit/(loss) on foreign exchange

3,495

(10,549)

Profit for the financial year

161,806

90,578

Total comprehensive income for the year

161,806

90,578

Balance Sheet – Assets

As at 31 December 2025

Note

2025£000

2024£000

Financial investments

1,034,042

892,221

Deposits with ceding undertakings

2,399

4,425

Investments

1,036,441

896,646

Provision for unearned premiums

29,931

31,815

Claims outstanding

235,175

215,329

Reinsurers’ share of technical provisions

265,106

247,144

Debtors arising out of direct insurance operations

103,059

97,190

Debtors arising out of reinsurance operations

4,044

2,305

Other debtors

6,588

6,488

Debtors

113,691

105,983

Cash at bank and in hand

13,372

21,753

Other

59,655

58,971

Other assets

73,027

80,724

Accrued interest and rent

5,602

4,695

Deferred acquisition costs

42,549

39,770

Other prepayments and accrued income

3,473

3,888

Prepayments and accrued income

51,624

48,353

Total assets

1,539,889

1,378,850

Balance Sheet – Liabilities

As at 31 December 2025

Note

2025£000

2024£000

Members’ balances

549,732

412,174

Total capital and reserves

549,732

412,174

Provision for unearned premiums

120,273

120,325

Claims outstanding

836,814

806,566

Technical provisions

957,087

926,891

Creditors arising out of direct insurance operations

527

2,037

Creditors arising out of reinsurance operations

17,616

16,685

Other creditors including taxation and social security

9,992

13,974

Creditors

28,135

32,696

Accruals and deferred income

4,935

7,089

Total liabilities

990,157

966,676

Total liabilities, capital and reserves

1,539,889

1,378,850

The Syndicate financial statements on pages 20 to 25 were approved by the board of Newline Underwriting Management Limited on 19th February 2026 and were signed on its behalf by;

S KapurDirector

19th February 2026

Statement of Changes in Members’ Balances

For the year ended 31 December 2025

2025£000

2024£000

Members’ balances brought forward at 1 January

412,174

394,465

Total comprehensive income for the year

161,806

90,578

Payments of profit to members’ personal reserve funds

(57,401)

(47,615)

Net movement on funds in syndicate

33,153

(25,254)

Members’ balances carried forward at 31 December

549,732

412,174

Statement of Cash Flows

For the year ended 31 December 2025

Note

2025£000

2024£000

Cash flows from operating activities

Profit for the financial year

161,806

90,578

Adjustments:

Increase in gross technical provisions

53,333

47,374

(Increase) in reinsurers’ share of gross

technical provisions

(27,021)

(6,905)

(Increase)/decrease in debtors

(13,247)

1,627

(Decrease) in creditors

(5,252)

(3,015)

Investment return

(115,985)

(69,112)

Other

3,908

6,448

Net cash flows from operating activities

57,542

66,995

Cash flows from investing activities

Purchase of equity and debt instruments

(461,574)

(310,456)

Sale of equity and debt instruments

370,220

314,435

Purchase of derivatives

(8,702)

(4,851)

Sale of derivatives

20,065

13,046

Investment income received

25,527

27,783

Other

2,262

534

Net cash flows from investing activities

(52,202)

40,491

Cash flows from financing activities

Distribution of profit

(57,401)

(47,615)

Funds In Syndicate released to members

(25,254)

Other

33,153

Net cash flows from financing activities

(24,248)

(72,869)

Net (decrease)/increase in cash and cash equivalents

(18,908)

34,617

Cash and cash equivalents at the beginning of the year

50,395

16,085

Foreign exchange on cash and cash equivalents

(1,593)

(307)

Cash and cash equivalents at the end of the year

29,894

50,395

Notes to the Financial Statements – (Forming Part of the Financial Statements)

1.Basis of Preparation

Newline Syndicate 1218 (‘The Syndicate’) comprises a member of the Society of Lloyd's that underwrites insurance business in the London Market. The address of the Syndicate’s managing agent is 1 Fen Court, London, EC3M 5BN.

The financial statements have been prepared in accordance with the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and applicable Accounting Standards in the United Kingdom and the Republic of Ireland, including Financial Reporting Standard 102 (FRS 102). FRS 102 requires the application of Financial Reporting Standard 103 (FRS 103) in relation to insurance contracts, and the Lloyd’s Syndicate Accounts Instructions Version 3.1 as modified by the Frequently Asked Questions Version 1.1 issued by Lloyd’s.

The financial statements have been prepared on the historical cost basis, except for financial assets at fair value through profit or loss account.

The financial statements are presented in GBP, which is also the Syndicate’s functional currency.

All amounts have been rounded to the nearest thousand, unless otherwise indicated.

Going Concern

The Syndicate has financial resources to meet its financial needs and manages its portfolio of insurance risk. The directors have continued to review the business plans, liquidity and operational resilience of the Syndicate and are satisfied that the Syndicate is well positioned to manage its business risks in the current economic environment. The Syndicate

2026

year of account has opened and the directors have concluded that the Syndicate has sufficient resources to, and a reasonable expectation that it will, open a

2027

year of account. The Syndicate has sufficient capital for each year of account in its Funds in Syndicate (“FIS”).

There is no intention to cease underwriting or cease the operations of the Syndicate.

Accordingly, the directors of the Managing Agent continue to adopt the going concern basis in preparing the annual report and financial statements.

Notes to the Financial Statements (Continued)

2.Use of Judgements and Estimates

In preparing these financial statements, the directors of the Managing Agent have made judgements, estimates and assumptions that affect the application of the Syndicate’s accounting policies and the reported amounts of assets, liabilities, income and expenses.

The following critical judgements have been made in applying the Syndicate’s accounting policies:

Estimation of claims incurred but not reported (“IBNR”)

The estimation of claims incurred but not reported (“IBNR”) is generally subject to a greater degree of uncertainty than the estimation of the cost of settling claims already notified to the Syndicate, where more information about the claim event is generally available. Claims IBNR may often not be apparent to the insured until many years after the event giving rise to the claim has happened. Classes of business where the IBNR proportion of the total reserve is high will typically display greater variation between initial estimates and final outcomes because of the greater degree of difficulty of estimating these reserves. Classes of business where claims are typically reported relatively quickly after the claim event tend to display lower levels of volatility.

This uncertainty varies between classes written by the Syndicate, but is typically highest for those classes where there are significant delays in the settlement of the final claims amount, more specifically from Liability and other long-tail direct and long-tailed reinsurance classes. In calculating the estimated cost of unpaid claims, the Syndicate uses a variety of estimation techniques, generally based upon statistical analyses of historical experience, which assumes that the development pattern of the current claims will be consistent with past experience. In order to determine the ultimate cost of claims, the Syndicate uses statistical projections on the claims to be included within each reserving class and for each underwriting year. The projections use a number of methods, with chain-ladder and Bornhuetter-Ferguson being the most extensively used on both gross and ceded information. Allowance is made, however, for changes or uncertainties which create distortion in the underlying statistics or which might cause the cost of unsettled claims to increase or reduce when compared with the cost of previously settled claims including:

•changes in syndicate processes which might accelerate or slow down the development and/or recording of paid or incurred claims compared with the statistics from previous periods;

•changes in the legal environment;

•the effects of inflation;

•changes in the mix of business;

•changes in underlying terms and conditions;

•the impact of large losses; and

•movements in industry benchmarks.

Notes to the Financial Statements (Continued)

In setting the provision for insurance liabilities, a best estimate is determined on an undiscounted basis. For areas of specific uncertainty, it may be necessary to include a loading as part of the reserve estimate, known as the Management Adjustment. At 31 December 2025, the carrying value of net claims IBNR is £474.3m (2024: £458.6m), and the Management Adjustment in excess of the best estimate of net reserves was £50.6m (2024: £49.7m). This level of Management Adjustment is considered appropriate in light of the uncertainties surrounding the current economic environment, loss exposure on opioids and other pharma losses.

Our reserving methods incorporate an implicit allowance for inflation, allowing for both economic and excess inflation. The impact of uncertainty in the rate of inflation has been assessed via sensitivity testing.

Premium income

Written premiums include estimates of premiums due but not yet received or notified to the Syndicate (known as ‘pipeline premium’), in particular from those written under delegated authority agreements. The Syndicate considers relevant information when determining estimates, including information provided by brokers and coverholders, past underwriting experience, market conditions, and the contractual terms of policies. As updated information relating to such variables becomes available, for example when bordereaux are received, adjustments to estimates are recorded in the period in which they are determined, and will impact gross premiums written and provisions for unearned premium in the technical account. The pipeline premium included within gross written premium is £29.8m (2024: £28.4m); of that £19.6m is unearned at 31 December 2025 (2024: £21.4m).

Fair values of financial instruments (Level 3)

The fair value of Level 3 financial instruments is determined by using valuation techniques that require more judgement than those that are either traded in an active market with quoted prices, or are based on observable market information. Level 3 financial instruments are financial assets and liabilities for which the values are based on prices or valuation techniques that require inputs that are both unobservable, and significant, to the fair value measurement. The carrying value of these instruments is £167.5m (2024: £159.2m). The Syndicate uses its judgement to select a variety of methods and makes assumptions that are mainly based on market conditions existing at the end of each reporting period (see note 11).

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.

3.Significant accounting policies

The following significant accounting policies have been applied consistently in dealing with items which are considered material in relation to the Syndicate’s financial statements.

Premiums written

Premiums written relate to business which incepted during the year, together with any differences between booked premiums for prior years and those previously accrued, and include estimates of premiums due but not yet received or notified to the Syndicate. Premiums are stated gross of acquisition costs payable, and exclude taxes and duties levied on them.

Notes to the Financial Statements (Continued)

Insurance contracts

Insurance contracts are those contracts that transfer significant insurance risk. Such contracts may also transfer financial risk. The Syndicate considers significant insurance risk to exist where there is a reasonable possibility of a significant claim arising on the occurrence of an insured event. The Syndicate’s insurance products are classified as insurance contracts.

Unearned premiums

Unearned premiums represent the proportion of premiums written in the year that relate to unexpired terms of policies in force at the balance sheet date, calculated on the basis of established earning patterns on a time apportionment basis as appropriate.

Acquisition costs

Acquisition costs comprise all direct and indirect costs arising from the acquisition of insurance contracts, and are deferred to the extent that they are attributable to premiums unearned at the balance sheet date.

Reinsurance premiums ceded

Outward reinsurance premiums are accounted for in the same accounting period as the premiums for the related inwards business being reinsured.

Reinsurance

Contracts entered into by the Syndicate with reinsurers, under which the Syndicate is compensated for claims on one or more contracts issued by the Syndicate and that meet the classification requirements for insurance contracts are classified as reinsurance contracts. Contracts that do not meet these classification requirements are classified as financial instruments. Insurance contracts entered into by the Syndicate under which the contract holder is another insurer (inwards reinsurance) are included within insurance contracts; provided there is significant transfer of insurance risk.

The amounts that will be recoverable from reinsurers are estimated based upon the gross claims provisions, having due regard to collectability. Reinsurance recoveries in respect of estimated claims incurred but not reported are assumed to be consistent with the historical pattern of such recoveries, adjusted to reflect changes in the nature and extent of the Syndicate’s reinsurance programme over time. The recoverability of reinsurance recoveries is assessed having regard to market data on the financial strength of each of the reinsurance companies. The reinsurers’ share of claims incurred, in the profit and loss account, reflects the amounts received or receivable from reinsurers in respect of those claims incurred during the period. Reinsurance liabilities are primarily premiums payable for reinsurance contracts and are recognised in the profit and loss account as ‘Outward reinsurance premiums’ when written.

Claims incurred

Gross claims incurred comprise claims and related expenses paid in the year and changes in the provisions for outstanding claims, including provisions for claims incurred but not reported and related expenses, together with any other adjustments to claims from previous years. Where applicable, deductions are made for salvage and other recoveries.

Notes to the Financial Statements (Continued)

Claims provisions and related reinsurance recoveries

Provision is made for the estimated cost of claims incurred but not settled at the balance sheet date, including the cost of claims incurred but not yet reported to the Syndicate. The estimated cost of claims includes expenses to be incurred in settling claims and a deduction for the expected value of salvage and other recoveries. The Syndicate takes all reasonable steps to ensure that it has appropriate information regarding its claims exposures. However, given the uncertainty in establishing claims provisions (see note

), it is likely that the final outcome will prove to be different to the original liability established.

Large claims impacting a class of business are generally assessed separately, being measured on a case-by-case basis or projected separately in order to allow for the possible distortive effect of the development and incidence of these claims.

Provisions are calculated undiscounted, and gross of any reinsurance recoveries. A separate estimate is made of the amounts that will be recoverable from reinsurers based upon the gross provisions and having a due regard to collectability.

Unexpired risks provision

A provision for unexpired risks is made where claims and related expenses arising after the end of the financial year in respect of contracts concluded before that date are expected to exceed the unearned premiums, after the deduction of any acquisition costs deferred. The provision for unexpired risks is calculated separately by classes of business which are managed together, after taking into account the relevant investment return.

Financial instruments

The Syndicate has chosen to adopt the provisions of Sections 11 and 12 of FRS 102 in respect of the valuation of financial investments, which are designated by the Syndicate at fair value through profit or loss.

i)Financial assets

Financial investments, including shares and other variable yield securities and units in unit trusts, derivatives, debt, other fixed income securities and overseas deposits are designated at fair value through profit and loss. Other receivables, including short term debtors arising out of direct insurance and reinsurance operations, and deposits with ceding undertakings, are initially recognised at transaction price or cost, less any impairment.

The fair value of financial investments at the balance sheet date are determined through quoted bid prices in an active market for identical instruments. Common stocks and preferred stocks are also valued utilising observable price to book multiples of peer companies and applying such to the most recently available book value per share. When quoted prices are unavailable, the price of a recent transaction for an identical asset provides evidence of fair value as long as there has not been a signiﬁcant change in economic circumstances or a signiﬁcant lapse of time since the transaction took place. If the market for the asset is not active and recent transactions of an identical asset on their own are not a good estimate of fair value, the Syndicate estimates the fair value by using a valuation technique. These include the use of comparable recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and others commonly used by market participants and which make the maximum use of observable inputs.

Receivables are initially recognised at transaction price, and are reviewed for impairment as part of the impairment review of receivables. This basis of valuation is viewed by the directors as having prudent regard to the likely realisable value.

Notes to the Financial Statements (Continued)

ii)Cash and cash equivalents

Cash and cash equivalents includes cash at bank and in hand, deposits held at call with banks, other short term highly liquid investments with an original maturity date of three months or less and bank overdrafts. Bank overdrafts, when applicable, are shown within borrowings in current liabilities.

iii) Financial liabilities

Short term creditors, including creditors arising out of direct insurance and reinsurance operations are measured at transaction price.

iv) Derivative instruments

The Syndicate uses forward foreign exchange contracts to reduce exposure to foreign exchange rates. Derivative financial instruments are initially measured at fair value on the date on which a derivative contract is entered into, and are subsequently re-measured at fair value. Derivatives are carried as assets when the fair value is positive and as a liability when the fair value is negative.

The Syndicate applies hedge accounting for transactions entered into to manage the foreign exchange exposure and has designated them as a fair value hedge. Changes in fair value of foreign exchange hedges are reported directly in profit and loss. Derivatives under hedge accounting are carried as assets when the fair value is positive and as a liability when the fair value is negative.

Investment return

Investment return comprises all investment income, interest receivable and dividends received plus realised gains and losses on the disposal of investments and movements in unrealised gains and losses, net of investment expenses.

Dividend income is recognised when the right to receive payment is established. Interest and expenses are accounted for on an accruals basis.

Realised gains and losses on investments carried at market value are calculated as the difference between net sale proceeds and purchase price.

Unrealised gains and losses on investments represent the difference between the valuation at the balance sheet date and their purchase price, or their valuation at the previous balance sheet date. The movement in unrealised investment gains and losses includes an adjustment for previously recognised unrealised gains and losses of those investments disposed of in the accounting period.

Investment expenses and charges comprise investment management expenses.

Investment return is initially recorded in the non-technical account. A transfer is made from the non-technical account to the general business technical account to reflect the investment return on the funds supporting underwriting obligations arising from insurance policies. Investment return on the Funds in Syndicate is not transferred and remains in the non-technical account.

Notes to the Financial Statements (Continued)

Foreign currencies

i)Functional and presentation currency

The Syndicate’s functional and presentation currency is the Pound Sterling.

ii)Transactions and balances

Income and expenditure in US Dollars, Euros, Australian Dollars, Canadian Dollars, Egyptian pounds and Polish Zlotys are translated at the average rates of exchange for the period. Underwriting transactions denominated in other foreign currencies are translated at the rates of exchange ruling at the date the transaction is processed. Assets and liabilities denominated in foreign currencies are translated into Sterling at the rates of exchange prevailing at the balance sheet date.

Realised exchange differences are included in the non-technical account.

iii)Translation

Exchange differences arising from translating the result from average rates of exchange to closing rates of exchange, and the translation of the opening balance sheet to closing rates of exchange are taken through the non-technical account.

Taxation

Under Schedule 19 of the Finance Act 1993, managing agents are not required to deduct basic rate income tax from trading income, including capital appreciation, of syndicates. In addition, all UK basic rate income tax deducted from syndicate investment income is recoverable by managing agents; therefore the distribution made to members is gross of tax.

No provision has been made for any United States Federal Income Tax payable on underwriting results or investment earnings. Any payments on account made by the Syndicate during the year have been included in the balance sheet under the heading ‘other debtors’. No provision has been made for any other overseas tax payable by members on the underwriting results.

Overseas deposits

Overseas deposits are stated at fair value at the balance sheet date and comprise deposits which are lodged as a condition of conducting underwriting business in certain countries. Overseas deposits have been included in the balance sheet under the heading ‘other assets’.

Syndicate operating expenses

Where expenses are incurred by the managing agent or on behalf of the managing agent on the administration of the managed Syndicate, these expenses are apportioned using various methods depending on the type of expense, the amount of work performed, resources used and the volume of business transacted. These costs include the costs of staff, who are employed by Newline Group Services Limited. Short term benefits (including holiday pay) and annual bonus arrangements for employees performing work on behalf of the Syndicate are included within this expense.

Pension costs

Newline Group Services Limited operates the Group Personal Pension Plan which is on a defined contribution basis. Pension contributions apportioned to the Syndicate are charged and included within net operating expenses.

Notes to the Financial Statements (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.

4.Risk and Capital Management

Introduction and overview

This note presents information about the nature and extent of insurance and financial risks to which the Syndicate is exposed, the Managing Agent’s objectives, policies and processes for measuring and managing insurance and financial risks, and for managing the Syndicate’s capital.

Risk management framework

The Board of Directors of the Managing Agent has overall responsibility for the establishment and oversight of the Syndicate’s risk management framework. The Board has established a Risk Management Committee to oversee the operation of the Syndicate’s risk management framework and to review and monitor the management of the risks to which the Syndicate is exposed.

The Board has retained oversight of the management of underwriting and reserving aspects of insurance risk, and is responsible for developing and monitoring insurance risk management policies. The Board has delegated to the Investment Committee management of aspects of financial risks, which is responsible for developing and monitoring financial risk management policies.

The Risk Committee reports regularly to the Board of Directors on its activities.

The risk management policies are established to identify and analyse the risks faced by the Syndicate, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.

A.Insurance risk

Insurance risk is defined as the risk of loss arising from the inherent uncertainties as to the occurrence, amount and timing of insurance liabilities. Insurance risk is sub-divided into underwriting, reinsurance and reserving risks:

Underwriting risk

Underwriting risk arises from fluctuations in the frequency and severity of financial losses incurred as a result of acceptance of insurance policies. The Syndicate manages underwriting risk by agreeing its appetite for these risks annually through the business plan, which sets out targets for volumes, pricing, line sizes and retention by class of business and through the purchase of reinsurance. Performance is monitored against the business plan on a regular basis. The Syndicate uses modelling software to model maximum probable losses from its exposure to catastrophes and large losses as part of its Realistic Disaster Scenario process.

A proportion of the Syndicate’s business is written through delegated authorities. A delegated authority management group monitors coverholder performance, carries out due diligence on new and existing coverholders and manages regulatory requirements. The Syndicate has identified the areas of potential concentration of insurance exposure and monitors this and purchases reinsurance to protect against its gross effect.

Reinsurance risk

Reinsurance risk arises from the reinsurance purchased to protect the gross loss not responding as intended due to a mismatch with gross losses, poorly worded contracts, reinsurer counterparty risk or exhaustion of reinsurance limits. The primary purpose for our purchase of reinsurance cover is to reduce volatility associated with severe losses and systemic losses.

Notes to the Financial Statements (Continued)

Reinsurance arrangements include excess of loss cover, and it is used to protect capital against underwriting risk volatility. Reinsurance creditworthiness is overseen by the reinsurance management group in placing cover.

Reserving risk

Reserving risk arises from claims reserves held on the balance sheet being understated or overstated. Reserves may be under or overstated due to the inherent uncertainty of knowing the ultimate timing and quantum of liabilities incurred.

Claims provisions represent estimates, based on the internal reserving actuary’s statistical projections. The Syndicate estimates the ultimate settlement and administration costs of the claims incurred. Claims estimates are subject to independent review by the external actuary on an annual basis. The external actuary signs an annual Statement of Actuarial Opinion on the sufficiency of the Syndicate’s reserves.

Assumptions

In order to determine the ultimate cost of claims, the Syndicate uses statistical projections on the claims to be included within each reserving class and for each underwriting year. The projections use a number of methods, with chain-ladder and Bornhuetter-Ferguson being the most extensively used on both gross and ceded information.

The basic chain-ladder method uses cumulative data to derive a set of development factors based on historical information, and are most appropriate for those classes and years of account that have reached a relatively stable development pattern.

The Bornhuetter-Ferguson method is a standard actuarial method used to project a set of underwriting year claims ultimates, and is usually used for more recent underwriting years where there is little claims development. The Bornhuetter-Ferguson method weights two independent estimates of the ultimates, the estimate calculated from the basic chain-ladder method and another independent estimate of the claims ultimate.

The Syndicate also performed detailed analysis using cashflow modelling to estimate the impact of the heightened inflationary environment by Year of Account.

At the end of 2022, we projected that claims inflation would be 8% in 2023 and 2024 before returning to 3%. While headline CPI eased during this period, the composition of inflation shifted. Throughout 2025, UK headline CPI stabilized above 3%, driven primarily by services inflation, which remained elevated near 4.5%. Claims costs are more sensitive to wage pressures, which are correlated with service costs. The disconnect between falling goods prices and rising service costs suggests that claims inflation risk persists.

There has been no change in the methodologies used in determining the ultimate cost of claims in the year.

The claims development table in note

shows the actual claims incurred to previous estimates for the last 10 years.

Development

Conditions and trends that have affected the development of the liabilities in the past may not occur in the future. Accordingly, conclusions about future results may not necessarily be derived from the information presented in the table.

Notes to the Financial Statements (Continued)

Sensitivity to insurance risk

The following table presents the sensitivity of the value of net insurance liabilities disclosed in this note to movements in the assumptions used in the estimation of insurance liabilities. The sensitivity impact on the result for the year and net assets is determined by applying the factors listed below separately to net claims reserves excluding future claims handling costs, and future claims handling costs.

General insurance business sensitivities as at 31 December 2025

Sensitivity

+5.0%£000

-5.0%£000

Claims outstanding – gross of reinsurance

41,061

(41,061)

Claims outstanding – net of reinsurance

29,302

(29,302)

General insurance business sensitivities as at 31 December 2024

Sensitivity

+5.0%£000

-5.0%£000

Claims outstanding – gross of reinsurance

39,579

(39,579)

Claims outstanding – net of reinsurance

28,812

(28,812)

B.Financial risk

The Syndicate is exposed to a range of financial risks. The key financial risk is that the proceeds of sale from financial assets are insufficient to fund the obligations arising from insurance policies and investment contracts as they fall due. The most important components of this financial risk are market risk (including interest rate risk, price risk and currency risk), credit risk and liquidity risk.

All key policies are approved by the Board of the managing agent and the framework is subject to ongoing review by management, Risk Management and Internal Audit as part of the ORSA process. An ORSA report is presented to the Board on at least a quarterly basis. The ORSA report sets out the risk profile and key risk indicators of the Syndicate, together with the resulting impact on the SCR, and confirmation that sufficient own and ancillary funds are in place.

a.Credit risk

Credit risk is the risk of loss if another party fails to perform its obligations or fails to perform them in a timely fashion. Key areas where the Syndicate is exposed to credit risk are:

•reinsurers’ share of insurance liabilities;

•amounts due from reinsurers in respect of claims already paid;

•amounts due from insurance contract holders and intermediaries; and

•amounts due from investment counterparties.

Notes to the Financial Statements (Continued)

The Syndicate places limits on its exposure to a single counterparty or group of counterparties. Reinsurance is used to manage underwriting and reserving risk. This does not, however, discharge the Syndicate’s liability as primary insurer.

If a reinsurer fails to pay a claim, the Syndicate remains liable for the payment to the policyholder. The creditworthiness of reinsurers is considered on an annual basis by reviewing their financial strength prior to finalisation of any contract. In addition, the recent payment history of reinsurers is used to update the reinsurance purchasing strategy.

i.Premiums receivable and reinsurers share of claims outstanding

The maximum exposure to credit risk at the end of the reporting year is the carrying amount of receivables on the balance sheet.

ii.Credit rating of financial assets

The following tables provide information regarding assets bearing credit risk that are neither overdue nor impaired, based on Standard and Poor’s counterparty credit ratings. These ratings for assets in respect of reinsurers’ share of claims outstanding relate to balances accumulated over a number of years and so will not necessarily align with the rating allocations for current reinsurance programs. The credit risk relating to investments is monitored and assessed within an agreed risk appetite. The maximum exposure to credit risk loss at the end of the reporting year is the carrying amount of the investments on the balance sheet as they are measured at fair value.

Other assets is comprised of overseas deposits of £59.7m (2024: £59.0m).

Year 2025

AAA£000

AA£000

A£000

BBB£000

Other£000

Not rated£000

Total£000

Shares and other variable yield securities and units in unit trusts

393,027

Debt securities and other fixed income securities

221,046

339,550

23,405

31,806

1,943

617,750

Derivative assets

3,146

Other investments

20,119

Deposits with ceding undertakings

2,399

Reinsurers’ share of claims outstanding

7,698

162,540

64,839

235,175

Debtors arising out of direct insurance operations

94,260

Debtors arising out of reinsurance operations

218

2,819

954

4,020

Cash at bank and in hand

2,933

10,439

13,372

Other debtors and accrued interest

1,655

2,968

136

567

276

5,602

Other assets

31,676

8,178

7,970

3,711

2,622

5,498

59,655

Total

262,293

521,387

107,743

36,084

4,565

516,453

1,448,525

Notes to the Financial Statements (Continued)

Year 2024

AAA£000

AA£000

A£000

BBB£000

Other£000

Not rated£000

Total£000

Shares and other variable yield securities and units in unit trusts

305,595

Debt securities and other fixed income securities

357,668

124,639

46,202

26,357

8,199

563,065

Derivative assets

4,838

Other investments

18,723

Deposits with ceding undertakings

4,425

Reinsurers’ share of claims outstanding

7,426

109,599

98,088

216

215,329

Debtors arising out of direct insurance operations

86,016

Debtors arising out of reinsurance operations

702

856

699

2,266

Cash at bank and in hand

591

21,162

21,753

Other debtors and accrued interest

2,663

637

608

493

282

4,695

Other assets

32,482

7,545

6,560

4,987

2,348

5,049

58,971

Total

400,941

248,292

173,319

31,837

10,559

420,728

1,285,676

Other assets have been reported separately in accordance with Lloyd’s instructions, and the 2024 table has been restated.

iii.Financial assets that are past due or impaired

An ageing analysis for certain receivables is provided below. Other receivable balances have not been shown below as they either have no overdue amounts or represent an insignificant portion of overdue amounts.

An analysis of the carrying amounts of past due or impaired debtors is presented in the table below:

Neither past due nor impaired assets

Past due but not impaired assets

Gross value of impaired assets

Impairment allowance

Total

2025

£000

Shares and other variable yield securities and units in unit trusts

393,027

Debt securities and other fixed income securities

617,750

Derivative assets

3,146

Other investments

20,119

Deposits with ceding undertakings

2,399

Reinsurers' share of claims outstanding

235,175

Debtors arising out of direct insurance operations

94,260

8,799

103,059

Debtors arising out of reinsurance operations

4,020

4,044

Other debtors and accrued interest

5,602

Other assets

59,655

Cash at bank and in hand

13,372

Total

1,448,525

8,823

1,457,348

Notes to the Financial Statements (Continued)

Neither past due nor impaired assets

Past due but not impaired assets

Gross value of impaired assets

Impairment allowance

Total

2024

£000

Shares and other variable yield securities and units in unit trusts

305,595

Debt securities and other fixed income securities

563,065

Derivative assets

4,838

Other investments

18,723

Deposits with ceding undertakings

4,425

Reinsurers' share of claims outstanding

215,329

Debtors arising out of direct insurance operations

86,016

11,174

97,190

Debtors arising out of reinsurance operations

2,266

2,305

Other debtors and accrued interest

4,695

Other assets

58,971

Cash at bank and in hand

21,753

Total

1,285,676

11,213

1,296,889

Other assets have been reported separately in accordance with Lloyd’s instructions, and the 2024 table has been restated.

The table below sets out the age analysis of financial assets that are past due but not impaired at the balance sheet date:

Past due but not impaired

0-3 months past due

3-6 months past due

6-12 months past due

Greater than 1 year past due

Total

2025

£000

Debtors arising out of direct insurance operations

4,736

2,150

725

1,188

8,799

Debtors arising out of reinsurance operations

Total

4,736

2,150

725

1,212

8,823

Past due but not impaired

0-3 months past due

3-6 months past due

6-12 months past due

Greater than 1 year past due

Total

2024

£000

Debtors arising out of direct insurance operations

4,832

3,509

1,497

1,336

11,174

Debtors arising out of reinsurance operations

Total

4,832

3,509

1,497

1,375

11,213

Notes to the Financial Statements (Continued)

b.Liquidity risk

Liquidity risk is the risk that sufficient financial resources are not maintained to meet liabilities as they fall due. The Investment Committee, a sub-committee of the Board, approves annually agreed limits on the minimum proportion of funds available to meet such calls, based on experience of claims settlement history and contemporaneous information. Management regularly review available funds to mitigate any cash flow risk.

i.Maturity analysis of syndicate liabilities

A maturity analysis of the estimated gross claims outstanding liability based on the remaining term to payment at the reporting date is provided below.

000

Undiscounted net cash flows

Year 2025

No maturity stated£000

0-1 yrs£000

1-3 yrs£000

3-5 yrs£000

>5 yrs£000

Total£000

Claims outstanding

111,400

222,645

164,669

338,100

836,814

Derivative liabilities

210

Creditors

19,049

8,876

27,925

Total

19,049

120,486

222,645

164,669

338,100

864,949

000

Undiscounted net cash flows

Year 2024

No maturity stated£000

0-1 yrs£000

1-3 yrs£000

3-5 yrs£000

>5 yrs£000

Total£000

Claims outstanding

99,425

203,535

151,314

352,292

806,566

Derivative liabilities

5,585

Creditors

17,153

9,958

27,111

Total

17,153

114,968

203,535

151,314

352,292

839,262

c.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: interest rate risk, currency risk and other price risk.

i.Interest rate risk

Interest rate risk arises primarily from holding investments in fixed interest securities. In addition, to the extent that claims inflation is correlated to interest rates, liabilities to policyholders are exposed to interest rate risk. The Syndicate monitors interest rate risk by modelling the impact of changes in interest rates (+/-50 bps, +/-100 bps, +/-200 bps, +/- 300 bps) on the values of the fixed interest securities and liabilities. The Investment Committee monitors the sensitivity of the investment portfolio to movements in current interest rates. Holding a proportion of the investment portfolio in cash and cash equivalents also helps to mitigate interest rate risk.

Notes to the Financial Statements (Continued)

ii.Currency risk

Currency risk is the risk of loss arising from adverse exchange rate movements in unhedged foreign exchange exposures. The Syndicate writes business internationally, and so is exposed to foreign exchange risk from various activities conducted in the normal course of business. The Syndicate monitors currency exposure, and through the Investment Committee, mitigates this risk by appropriately matching significant foreign currency denominated liabilities with assets denominated in the same currency, the purchase or sale of the relevant currencies, and forward exchange contracts. The table below sets out the significant currency exposures of the Syndicate.

Sterling

US dollar

Euro

Canadian dollar

Australian dollar

Other

Total

2025

£000

Investments

542,432

208,108

134,048

65,844

36,141

49,868

1,036,441

Reinsurers' share of technical provisions

29,445

151,057

31,135

25,522

27,947

265,106

Debtors

25,398

47,527

13,348

7,560

12,040

7,818

113,691

Other assets

3,260

4,092

1,767

15,385

38,279

10,244

73,027

Prepayments and accrued income

17,913

17,518

9,291

4,389

2,398

115

51,624

Total assets

618,448

428,302

189,589

118,700

116,805

68,045

1,539,889

Technical provisions

(149,508)

(390,570)

(174,181)

(104,760)

(110,756)

(27,312)

(957,087)

Creditors

(6,344)

(5,230)

3,088

(5,253)

(7,150)

(7,246)

(28,135)

Accruals and deferred income

(1,866)

(2,066)

(434)

(237)

(302)

(30)

(4,935)

Total liabilities

(157,718)

(397,866)

(171,527)

(110,250)

(118,208)

(34,588)

(990,157)

Total capital and reserves

(460,730)

(30,436)

(18,062)

(8,450)

1,403

(33,457)

(549,732)

Sterling

US dollar

Euro

Canadian dollar

Australian dollar

Other

Total

2024

£000

Investments

457,533

183,006

125,416

64,852

36,537

29,302

896,646

Reinsurers' share of technical provisions

29,489

133,431

27,115

27,171

29,938

247,144

Debtors

23,170

38,345

12,201

9,382

11,723

11,162

105,983

Other assets

4,784

7,971

3,996

14,057

36,969

12,947

80,724

Prepayments and accrued income

15,630

16,942

8,321

4,707

2,735

48,353

Total assets

530,606

379,695

177,049

120,169

117,902

53,429

1,378,850

Technical provisions

(144,209)

(384,562)

(166,565)

(105,987)

(109,920)

(15,648)

(926,891)

Creditors

(7,455)

(10,235)

2,172

(4,629)

(7,320)

(5,229)

(32,696)

Accruals and deferred income

(3,862)

(2,280)

(294)

(165)

(367)

(121)

(7,089)

Total liabilities

(155,526)

(397,077)

(164,687)

(110,781)

(117,607)

(20,998)

(966,676)

Total capital and reserves

(375,080)

17,382

(12,362)

(9,388)

(295)

(32,431)

(412,174)

Notes to the Financial Statements (Continued)

At the 2024 year end, following a release of USD funds in Syndicate, the Syndicate reported a net deficit in USD. This deficit was within the FIS portfolio, as this is where it held a forward exchange derivative contract for the sale of US$225.4m. This contract was adjusted in the first quarter of 2025 to eliminate the deficit.

The Syndicate holds sufficient USD free funds to meet short term USD expenses as they become due. In addition, free funds in GBP and other currencies are also available to meet USD expenses should they be required.

iii.Price risk

Price risk is the risk that changes in equity market prices will impact upon the fair value of financial instruments held by the Syndicate, whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded on the market.

iv.Sensitivity analysis to market risks

The analysis below is performed for reasonably possible movements in market indices on financial instruments with all other variables held constant, showing the impact on the result before tax due to changes in fair value of financial assets and liabilities (whose fair values are recorded in the profit and loss account) and members’ balances.

2025Impact on results before tax£000

2025Impact on

members’

balances£000

2024Impact on results before tax£000

2024Impact on

members’

balances£000

Interest rate risk

+ 50 basis points shift in yield curves

(4,217)

(5,125)

- 50 basis points shift in yield curves

4,314

5,334

Equity price risk

5 percent increase in equity prices

13,646

11,609

5 percent decrease in equity prices

(13,646)

(11,609)

A 5% increase (or decrease) in equity prices and a 50 basis point increase (or decrease) in yield curves have been selected on the basis that these are considered to be reasonably possible changes in these risk variables over the following year.

The sensitivity analysis demonstrates the effect of a change in a key variable while other assumptions remain unchanged. However, the occurrence of a change in a single market factor may lead to changes in other market factors as a result of correlations.

The sensitivity analyses do not take into consideration that the Syndicate’s financial investments are actively managed. Additionally, the sensitivity analysis is based on the Syndicate’s financial position at the reporting date and may vary at the time that any actual market movement occurs. As investment markets move past pre-determined trigger points, action would be taken which would alter the Syndicate’s position.

Notes to the Financial Statements (Continued)

Capital management

i.Capital framework at Lloyd’s

The Society of Lloyd’s (Lloyd’s) is a regulated undertaking and subject to supervision by the Prudential Regulatory Authority (PRA) under the Financial Services and Markets Act 2000, and in accordance with the Solvency UK Framework.

Within this supervisory framework, Lloyd’s applies capital requirements at member level and centrally to ensure that Lloyd’s would comply with the Solvency UK requirements, and beyond that to meet its own financial strength, licence and ratings objectives.

Although, as described below, 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 Newline Syndicate 1218 is not disclosed in these financial statements.

ii.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.

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 Syndicates on which it is participating but not other members’ shares. Accordingly, the capital requirements that Lloyd’s sets for each member operates on a similar basis.

Each member’s SCR shall thus be determined by the sum of the member’s share of the Syndicate SCR ‘to ultimate’. Where a member participates on more than one syndicate, a credit for diversification is provided to reflect the spread of risk, but consistent with determining an SCR which reflects the capital requirement to cover a 1 in 200 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% (2024: 35%) of the member’s SCR ‘to ultimate’.

iii.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), assets held and managed within a syndicate (FIS), or as the member’s share of the members’ balances on each syndicate on which it participates.

Accordingly, all of the assets less liabilities of the Syndicate, as represented in the members’ balances reported on the balance sheet on page 23, represent resources available to meet members’ and Lloyd’s capital requirements.

Notes to the Financial Statements (Continued)

5.Analysis of underwriting result

An analysis of the underwriting result before investment return is presented in the table below:

2025

Gross premiums written£000

Gross premiums earned£000

Gross claims incurred£000

Gross operating expenses£000

Reinsurance balance£000

Underwriting result£000

Direct insurance

Motor (other classes)

(2)

Marine, aviation, and transport

10,745

10,889

(3,272)

(4,240)

(707)

2,670

Fire and other damage to property

4,361

3,987

(1,689)

(1,583)

(57)

658

Third party liability

167,207

164,764

(81,177)

(59,126)

948

25,409

Credit and suretyship

48,029

47,836

(30,069)

(14,033)

3,734

Total direct insurance

230,340

227,476

(116,197)

(78,982)

184

32,481

Reinsurance acceptances

82,846

82,128

(38,419)

(35,128)

1,265

9,846

Total

313,186

309,604

(154,616)

(114,110)

1,449

42,327

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£000

Gross premiums earned£000

Gross claims incurred£000

Gross operating expenses£000

Reinsurance balance£000

Underwriting result£000

Additional analysis

Fire and damage to property of which is:

Specialities

4,361

3,987

(1,689)

(1,583)

(57)

658

Energy

Third party liability of which is:

Energy

Notes to the Financial Statements (Continued)

2024

Gross premiums written£000

Gross premiums earned£000

Gross claims incurred£000

Gross operating expenses£000

Reinsurance balance£000

Underwriting result£000

Direct insurance

Motor (other classes)

Marine, aviation, and transport

6,913

6,940

(5,860)

(2,871)

698

(1,093)

Fire and other damage to property

3,069

2,803

(969)

(1,232)

(288)

314

Third party liability

154,761

155,529

(65,982)

(55,098)

(7,659)

26,790

Credit and suretyship

39,717

33,218

(21,967)

(10,958)

293

Total direct insurance

204,460

198,490

(94,774)

(70,159)

(7,249)

26,308

Reinsurance acceptances

76,066

77,860

(40,733)

(28,076)

(3,344)

5,707

Total

280,526

276,350

(135,507)

(98,235)

(10,593)

32,015

Note that the underwriting result reported under the Miscellaneous segment has been restated to Credit and Suretyship and Third party liability in line with current year reporting, as this better reflects the underlying classes.

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£000

Gross premiums earned£000

Gross claims incurred£000

Gross operating expenses£000

Reinsurance balance£000

Underwriting result£000

Additional analysis

Fire and damage to property of which is:

Specialities

3,069

2,803

(969)

(1,232)

(288)

314

Energy

Third party liability of which is:

Energy

The gross premiums written for direct insurance by underwriting location of risk is presented in the table below:

2025£000

2024£000

United Kingdom

230,340

204,460

European Union Member States

Rest of the world

Total gross premiums written

230,340

204,460

The gross premiums written for direct insurance in 2024 has been restated to only include direct insurance.

Notes to the Financial Statements (Continued)

6.Net operating expenses

2025£000

2024£000

Acquisition costs

96,826

83,127

Change in deferred acquisition costs

(3,116)

(2,796)

Administrative expenses

20,870

18,181

Reinsurance commissions and profit participation

(5,471)

(4,292)

Net operating expenses

109,109

94,220

Total commissions for direct insurance business for the year amounted to:

2025£000

2024£000

Total commission for direct insurance business

53,586

43,205

Administrative expenses include:

2025£000

2024£000

Auditors’ remuneration:

fees payable to the Syndicate’s auditor for the audit of these financial statements

221

225

fees payable to the Syndicate’s auditor and its associates in respect of other services pursuant to legislation

301

300

7.Key management personnel compensation

The directors of Newline Underwriting Management Limited received the following aggregate remuneration charged to the Syndicate:

2025£000

2024£000

Directors’ emoluments

1,743

1,614

Fees

The active underwriter received the following aggregate remuneration charged to the Syndicate.

2025£000

2024£000

Emoluments

511

425

Notes to the Financial Statements (Continued)

8.Staff numbers and costs

All staff were employed by Newline Group Services. 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

Total

109

The following amounts were recharged by the service company to the Syndicate in respect of payroll costs:

2025£000

2024£000

Wages and salaries

13,379

11,537

Social security costs

2,390

1,570

Other pension costs

1,433

1,367

Other [short/long] term incentive costs

1,522

1,451

Total

18,724

15,925

Notes to the Financial Statements (Continued)

9.Investment return

2025£000

2024£000

Interest and similar income

From financial instruments designated at fair value through profit or loss

Interest and similar income

19,109

18,886

Dividend income

8,552

5,208

Interest on cash at bank

297

809

Other income from investments

From financial instruments designated at fair value through profit or loss

Gains on the realisation of investments

11,368

15,230

Losses on the realisation of investments

(1,791)

(3,828)

Unrealised gains on investments

79,940

34,701

Investment management expenses

(1,491)

(1,894)

Total investment return

115,984

69,112

Transferred to the technical account from the non-technical account

31,024

20,929

Investment return on Funds in Syndicate

84,960

48,183

Impairment losses on debtors recognised in administrative expenses

The above figures include a positive return of £85.0m (2024: positive £48.2m) arising from investment returns earned on cash, equities and bonds deposited by Newline Corporate Name Limited into Funds in Syndicate.

10.Distribution and open years of account

A distribution to members of £75.0m will be proposed in relation to the closing year of account (

2023

) (2024: £57.4m distribution in relation to the closing year of account (

2022

)).

11.Financial investments

Carrying value

Cost

2025£000

2024£000

2025£000

2024£000

Shares and other variable yield securities and units in unit trusts

393,027

305,595

318,710

264,430

Debt securities and other fixed income securities

617,750

563,065

604,631

569,976

Derivative assets

3,146

4,838

Other investments

20,119

18,723

20,204

18,723

Total financial investments

1,034,042

892,221

943,545

853,129

Notes to the Financial Statements (Continued)

Included in the carrying values above are listed investments as follows:

2025£000

2024£000

Listed investments

244,784

165,035

The table below presents an analysis of financial investments by their measurement classification:

2025£000

2024£000

Financial assets measured at fair value through profit or loss

1,034,042

892,221

Financial assets measured at fair value as available for sale

Financial assets measured at amortised cost

Total financial investments

1,034,042

892,221

The table below analyses the derivative assets by type:

2025Notional amount£000

2025Fair value£000

2024Notional amount£000

2024Fair value£000

Foreign exchange forward contracts

547,059

3,012

514,465

4,651

Equity options

10,216

134

10,809

187

Total

557,275

3,146

525,274

4,838

The Syndicate has entered into a number of forward currency contracts to mitigate the exchange rate risk of its foreign currency denominated assets and liabilities. At 31 December 2025, the outstanding contracts mature within 6 months of the year end. The Syndicate is committed to sell US $294.8m, CAD $163.1m, €238.2m, AUD $63.4m, and to receive fixed Sterling, and to sell GBP 55.6m, and receive fixed Euro amounts.

As the Syndicate is fully aligned, the Syndicate holds the capital supporting their underwriting in their Syndicate’s premium trust funds. These funds are known as funds in syndicate (FIS). At 31 December 2025, the following amount was held as Funds in Syndicate:

2025£000

2024£000

Funds in Syndicate (FIS)

469,859

350,099

Total funds in syndicate

469,859

350,099

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 – the fair value is based on the unadjusted quoted price in an active market, for identical assets or liabilities that the Syndicate can access at the measurement date.

•Level 2 – inputs to level 2 fair values are inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or indirectly.

Notes to the Financial Statements (Continued)

•Level 3 – Level 3 financial instruments are financial assets and liabilities for which the values are based on prices or valuation techniques that require inputs that are both unobservable, and significant, to the fair value measurement.

The table below analyses financial instruments (excluding overseas deposits) held at fair value in the Syndicate’s balance sheet at the reporting date by its level in the fair value hierarchy:

2025

Level 1£000

Level 2£000

Level 3£000

Assets held at amortised cost

Total£000

Shares and other variable yield securities and units in unit trusts

211,241

34,580

147,206

393,027

Debt securities and other fixed income securities

59,539

558,211

617,750

Derivative assets

3,012

134

3,146

Other investments

20,119

Total financial investments

270,780

595,803

167,459

1,034,042

Derivative liabilities

(210)

Total

270,780

595,593

167,459

1,033,832

2024

Level 1£000

Level 2£000

Level 3£000

Assets held at amortised cost

Total£000

Shares and other variable yield securities and units in unit trusts

130,006

35,323

140,266

305,595

Debt securities and other fixed income securities

46,483

516,582

563,065

Derivative assets

4,651

187

4,838

Other investments

18,723

Total financial investments

176,489

556,556

159,176

892,221

Derivative liabilities

(5,585)

Total

176,489

550,971

159,176

886,636

During the year ended 31 December 2025, the Syndicate held £167.5m (2024: £159.2m) of financial instruments that are classified as Level 3. Financial instruments classified as Level 3 include assets invested in common stock, preferred stocks, limited partnerships, fixed income securities and loans to the Society of Lloyd's.

Limited partnerships are valued based on the net asset values received from the general partners. These limited partnerships invest in securities that trade in active markets, and as a result, their net asset values reflect their fair values. The unobservable inputs in valuing limited partnerships include inputs such as time lags in receiving distributions by the general partners.

Common stocks and preferred stocks are also valued utilising observable price to book multiples of peer companies and applying such to the most recently available book value per share. The Syndicate uses a market approach, based on quoted prices and other information from independent pricing sources, to determine fair values for its fixed income financial instruments, adjusted for a risk premium for credit risk.

Notes to the Financial Statements (Continued)

12.Debtors arising out of direct insurance operations

2025£000

2024£000

Due within one year

103,059

97,190

Total

103,059

97,190

13.Debtors arising out of reinsurance operations

2025£000

2024£000

Due within one year

4,044

2,305

Total

4,044

2,305

14.Other debtors

2025£000

2024£000

Other related party balances (non-syndicate)

3,312

3,765

Other

3,276

2,723

Total

6,588

6,488

15.Deferred acquisition costs

The table below shows changes in deferred acquisition costs assets from the beginning of the period to the end of the period:

2025

2024

Gross£000

Reinsurance£000

Net£000

Gross£000

Reinsurance£000

Net£000

Balance at 1 January

39,770

(3,008)

36,762

37,164

(2,789)

34,375

Incurred deferred acquisition costs

96,826

(5,471)

91,355

83,128

(4,292)

78,836

Amortised deferred acquisition costs

(93,240)

5,001

(88,239)

(80,055)

4,015

(76,040)

Foreign exchange movements

(807)

168

(639)

(467)

(409)

Balance at 31 December

42,549

(3,310)

39,239

39,770

(3,008)

36,762

Notes to the Financial Statements (Continued)

16.Claims development

The following tables illustrate the development of the estimates of earned ultimate cumulative claims incurred, including claims notified and IBNR, for each successive underwriting year, illustrating how amounts estimated have changed from the first estimates made.

As these tables are on an underwriting year basis, there is an apparent large increase from amounts reported for the end of the first underwriting year to one year later as a large proportion of premiums are earned in the year of account’s second year of development.

Balances have been translated at exchange rates prevailing at 31 December 2025 in all cases.

Gross:

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Total

Pure underwriting year

£000

Estimate of gross claims

at end of underwriting year

25,796

38,051

43,327

41,342

50,838

57,720

59,373

60,045

61,307

64,135

one year later

61,666

83,297

110,794

101,863

125,273

138,306

140,840

148,403

162,640

two years later

64,342

106,261

135,183

109,708

123,906

144,902

150,898

151,813

three years later

73,454

101,579

135,179

117,042

112,499

145,641

145,474

four years later

85,397

98,833

141,957

111,905

103,277

143,157

five years later

81,468

104,565

131,115

107,968

99,783

six years later

84,305

94,478

126,655

100,942

seven years later

84,735

92,618

149,409

eight years later

81,481

89,123

nine years later

76,476

Estimate of gross claims reserve

76,476

89,123

149,409

100,942

99,783

143,157

145,474

151,813

162,640

64,135

1,182,952

Provision in respect of prior years

68,339

Less gross claims paid

(56,278)

(55,359)

(87,717)

(42,155)

(32,490)

(30,897)

(36,294)

(40,737)

(25,848)

(6,702)

(414,477)

Gross claims reserve

20,198

33,764

61,692

58,787

67,293

112,260

109,180

111,076

136,792

57,433

836,814

Notes to the Financial Statements (Continued)

Net:

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Total

Pure underwriting year

£000

Estimate of net claims

at end of underwriting year

19,091

28,281

29,042

31,301

38,161

46,552

47,869

47,345

49,147

49,527

one year later

46,479

64,105

72,921

75,489

92,402

111,417

111,888

116,763

130,050

two years later

50,447

70,835

84,132

84,649

98,545

113,889

118,873

128,343

three years later

49,056

66,226

91,078

87,445

93,498

113,570

118,074

four years later

47,302

62,522

90,005

84,660

90,290

108,854

five years later

46,039

61,694

91,108

82,704

84,475

six years later

50,843

63,718

88,121

78,419

seven years later

51,279

60,201

86,203

eight years later

48,151

57,528

nine years later

45,748

Estimate of net claims reserves

45,748

57,528

86,203

78,419

84,475

108,854

118,074

128,343

130,050

49,527

887,221

Provision in respect of prior years

58,558

Less net claims paid

(37,728)

(41,573)

(61,733)

(38,281)

(31,932)

(30,831)

(32,088)

(38,959)

(24,390)

(6,625)

(344,140)

Net claims reserve

8,020

15,955

24,470

40,138

52,543

78,023

85,986

89,384

105,660

42,902

601,639

17.Technical provisions

The table below shows changes in the insurance contract liabilities and assets from the beginning of the period to the end of the period.

2025

2024

Gross provisions£000

Reinsurance

Assets£000

Net£000

Gross provisions£000

Reinsurance

Assets£000

Net£000

Claims outstanding

Balance at 1 January

806,566

(215,329)

591,237

779,179

(211,749)

567,430

Claims paid during the year

(103,624)

16,277

(87,347)

(91,796)

24,949

(66,847)

Expected cost of current year claims

169,630

(27,449)

142,181

153,844

(32,863)

120,981

Change in estimates of prior year provisions

(15,014)

(17,521)

(32,535)

(18,337)

1,227

(17,110)

Foreign exchange movements

(20,744)

8,847

(11,897)

(16,324)

3,107

(13,217)

Balance at 31 December

836,814

(235,175)

601,639

806,566

(215,329)

591,237

Notes to the Financial Statements (Continued)

2025

2024

Gross provisions£000

Reinsurance

Assets£000

Net£000

Gross provisions£000

Reinsurance

Assets£000

Net£000

Unearned premiums

Balance at 1 January

120,325

(31,815)

88,510

118,127

(31,966)

86,161

Premiums written during the year

313,186

(48,471)

264,715

280,526

(47,005)

233,521

Premiums earned during the year

(309,604)

48,522

(261,082)

(276,350)

46,244

(230,106)

Foreign exchange movements

(3,634)

1,833

(1,801)

(1,978)

912

(1,066)

Other

Balance at 31 December

120,273

(29,931)

90,342

120,325

(31,815)

88,510

18.Creditors arising out of direct insurance operations

2025£000

2024£000

Due within one year

527

2,037

Total

527

2,037

19.Creditors arising out of reinsurance operations

2025£000

2024£000

Due within one year

17,616

16,685

Total

17,616

16,685

20.Other creditors

2025£000

2024£000

Other related party balances (non-syndicates)

7,556

6,480

Derivative liabilities

210

5,585

Other liabilities

2,226

1,909

Total

9,992

13,974

Notes to the Financial Statements (Continued)

21.Cash and cash equivalents

2025£000

2024£000

Cash at bank and in hand

13,372

21,753

Deposits with credit institutions

16,522

28,642

Total cash and cash equivalents

29,894

50,395

Only deposits with credit institutions with maturities of three months or less that are used by the Syndicate in the management of its short-term commitments are included in cash and cash equivalents.

Included within cash and cash equivalents are the following amounts which are not available for use by the Syndicate because these are held in trust in overseas deposits.

2025£000

2024£000

Cash at bank and in hand

Total cash and cash equivalents not available for use by the syndicate

22.Related parties

Newline Underwriting Management Limited (“NUML”), a company incorporated in England, is the managing agent for Syndicate 1218. Newline Corporate Name Limited (“NCNL”), a company incorporated in England, is the sole member of Syndicate 1218. NUML and NCNL are wholly owned subsidiaries of Newline Holdings UK Limited (“NHUKL”), a wholly owned subsidiary of Odyssey Reinsurance Company (“ORC”), part of the Odyssey Group. The ultimate parent is Fairfax Financial Holdings Limited (“Fairfax”), a company incorporated in Canada, where the results of the Syndicate are consolidated. Group accounts for Fairfax are available from the company secretary of NUML, 1 Fen Court, London, EC3M 5BN.

Newline Group Services Limited (“NGSL”), a company incorporated in England, became the principal employer for United Kingdom based employees within the Newline Holdings UK Limited Group in 2023. From 2024, finance, risk and capital modelling staff costs have been charged directly from NGSL to the Syndicate, and all other staff have been charged via NUML to the Syndicate.

During the calendar year 2025, NUML recharged expenses amounting to £20.3m (2024: £22.0m) to the Syndicate, and NGSL has recharged expenses amounting to £5.7m (2024: £2.3m) to the Syndicate.

Newline Underwriting Limited, Newline Asia Services PTE Limited, Newline Hong Kong Services Limited, Newline Australia Insurance Pty Limited, Newline Malaysia Limited and Newline Canada Insurance Limited are wholly owned subsidiaries of NHUKL and operate as insurance agents for the Syndicate. Newline Underwriting Limited specialises in smaller value employers’ and public liability and professional indemnity risks, Newline Asia Services PTE Limited, Newline Malaysia Limited and Newline Hong Kong Services Limited specialise in casualty insurance business in Singapore and other Asian territories, Newline Australia Insurance Pty Limited specialises in casualty insurance business in Australia, and Newline Canada Insurance Limited specialises in casualty insurance business in Canada. No commission, charges or fees are received by NHUKL from the activities of these service companies.

Notes to the Financial Statements (Continued)

Hamblin Watsa Investment Counsel Ltd. (“HWIC”), a Fairfax subsidiary, provides investment management services to the Syndicate. Fees are charged to NUML and recharged to the Syndicate. During 2025, investment management charges totalled £1.3m (2024: £1.7m).

The Syndicate holds reinsurance contracts with Allied World Assurance Company, Limited (“AWAC”) a subsidiary of Fairfax. Reinsurance premiums of £3.9m (2024: £4.1m) have been ceded to AWAC in respect of the Syndicates core excess of loss program. At the year end, £0.1m (2024: £nil) was due on recoveries.

During 2025, the London and Paris branches of ORC have placed inwards treaty business with the Syndicate. The Syndicate has also placed outwards business with ORC through quota share agreements in respect of this inwards business written. In 2025, ORC London and Paris branches placed £0.2m (2024: £0.4m) of gross written premiums with Syndicate 1218, on an arm’s length basis. Reinsurance premiums of £9.0m (2024: £5.4m) have been ceded to ORC in the year. At the end of the year, £12,000 was due from ORC (2024: £5,000).

Brit Limited (“Brit”) which provides 100% of the capacity for Lloyd’s Syndicate 2987 is a subsidiary of Fairfax. Reinsurance premiums of £nil (2024: £nil) have been paid to Brit in the year. At the year end, £186,000 (2024: £135,000) was due on recoveries from Syndicates 2987.

These disclosure requirements are in addition to the requirement to disclose key management personnel compensation. This disclosure is given in note

23.Off-balance sheet items

There are no off-balance sheet items to report (2024: none).

24.Post balance sheet events

The amounts that are proposed to be transferred to members are disclosed in note

25.Contingencies and commitments

There are no contingencies and commitments to report (2024: none)

26.Foreign exchange rates

The following currency exchange rates have been used for principal foreign currency transactions:

2025

2024

Start of period rate

End of period

rate

Average

rate

Start of period rate

End of period rate

Average

rate

Sterling

1.00

Euro

1.21

1.15

1.17

1.15

1.21

1.18

US dollar

1.25

1.35

1.31

1.27

1.25

1.28

Canadian dollar

1.80

1.84

1.68

1.80

1.74

Australian dollar

2.02

2.04

1.87

2.02

1.93

Japanese Yen

196.90

210.82

195.56

179.75

196.90

193.13