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Syndicate 4242
Annual Report and Accounts for the year ended
Contents
Contents
Directors and Administration
1
Active Underwriter's Report
2
Managing Agent’s report
5
Statement of Managing Agent’s responsibilities
11
Independent auditor’s report to the Members of Syndicate 4242
12
Statement of profit or loss and other comprehensive income
16
Statement of Financial Position
18
Statement of changes in Members’ balances
20
Statement of cash flows
21
Notes to the financial statements – (forming part of the financial statements)
22
1
Directors and administration
Managing Agent
Directors
P Allen *
C Bulmer
P Chubb *
A Cunningham
S Fordham
A Ganger
I Harman **
H Marsden **
J Scofield
K Shah *
Independent Non-Executive Director *
Group Non-Executive Director **
Managing Agent's registered office
The Hallmark Building
2
nd
Floor
52-56 Leadenhall Street
London
EC3A 2BJ
Managing Agent's registered number
16059213
Active Underwriter
A Cunningham
Bankers and investment managers
Barclays Bank plc
Royal Bank of Canada
Citibank
JP Morgan
New England Asset Management
Registered Auditor
Ernst & Young LLP
Signing Actuary
Ernst & Young LLP
2
Active Underwriter’s report
2025 was the third year for me riding up Alpe d’Huez, the daunting test at the end of cycling’s
gruelling Marmotte challenge - it’s also the third time I’ve had the honour of preparing this
report on the Syndicate’s performance. As pleased as I was to conquer the Alpe’s famed 21
bends, I have been even more pleased with the 2025 results of Syndicate 4242. Getting round
that course depends on countless hours of effort put in during the preceding months and years
and the same is true of the efforts that have been required when it comes to the success of
4242. The results presented below have been built on the foundations of the diversified
underwriting proposition that we have assembled and which I have written about in prior years’
reports, as well as the hard work and dedication of our incredibly talented non-underwriting
support crew.
I am pleased to report that 4242 is posting a total recognised result for the calendar year of a
$35.6m profit (2024: profit of $16.1m) with a net combined ratio of 87.5% (2024: 96.5%). This
makes it our third-best performing year of the past 10 years. The 2025 calendar year result
aggregates the performance during the year of all open years of account (2023, 2024 and
2025). Thanks to the RITC that we concluded last year, there are no movements from prior
closed years.
Gross written premium income by class of business for the calendar year was as follows;
2025
2024
$'000
$'000
US Binders
100,189
108,049
Alternative Risks Binders
54,552
63,388
Specialty Treaty Reinsurance
53,000
56,310
Global D&F
41,108
51,834
E&O
24,384
30,271
Energy
31,176
28,668
Credit
41,373
23,394
Directors & Officers
15,752
17,338
Cyber and Tech E&O
(476)
5,352
Accident and Health
25,476
5,275
US property insurance in catastrophe exposed regions
0
42
Invoice factoring insurance
0
25
386,534
389,946
2023 Year of Account
Looking at each individual YOA contributing to the result. 2023 is the YOA closing at this point
and I am delighted to report that it closes with an NCOR of 87.0% which is 4.8pp better than
plan. This produces a profit of $41.9m and a return on stamp of 12.0%.
This result is hugely pleasing given that it was a year which contained over $100bn of insured
market losses, including the most expensive year on record for severe convective storm
activity in the US. The market also experienced Hurricane Idalia, wildfires in Hawaii, the
cyclones and flooding in Australia and New Zealand, and the Turkish earthquake. The
outperformance of plan despite all this, on top of a substantial premium miss and adverse
results in our motor and construction segments, demonstrates the robustness of our business
model in aligning the underwriting teams to the performance mindset. Underwriters and senior
3
Active Underwriter’s report continued
management within 4242 have meaningful sums invested in the profitability of their portfolios
and consequently are fully aligned in writing a smaller amount of business with sufficient
forecast profit than diluting returns with risk which does not meet our collective return criteria.
2024 Year of Account
The 2024 calendar year also saw heightened loss activity all around the world. Nat cat losses
surpassed the $100bn mark for the fifth consecutive year starting with New Year’s Day 7.5
magnitude earthquake in Japan. Hurricanes Helene and Milton struck the US in September
and October, respectively, and were the costliest disasters of the year with insured losses of
around $55bn. Flooding was prevalent, most notably in Spain, Brazil, and Dubai but also other
parts of Europe as well while Typhoon Yagi contributed further to the significant nat cat impacts
on insurance markets. On the non-natural catastrophe side major events included the
Baltimore Bridge Collapse, the Hellas Oil Refinery explosion in Greece and the Crowdstrike
cyber event.
Markets had generally started to turn this year having reached the peak of the cycle in 2023
however we did record a slight, 0.5% improvement in risk adjusted rates thanks to our
underwriters’ discipline and experience of navigating cycles.
As our underwriters strive to achieve the profitability ambitions of their plans rather than top
line growth we recorded a 19% shortfall in gross written premiums against plan.
Despite these headwinds YOA 2024 remains in profitable territory with a forecast 95.1%
NCOR albeit against a plan of 91.0%. This equates to an expected profit of $20m and forecast
return on stamp of 6.1%. This has been driven by an above average frequency of major loss
events in the Onshore Energy sector affecting both our Energy and Specialty Treaty accounts.
While short tail classes suffer the impact of adverse experience immediately it can take longer
for positive experience on other parts of the portfolio to materialise and the YOA contains a
material volume of medium tail liability business however which is currently reserved at or
around plan.
2025 Year of Account
Fire events dominated the headlines in 2025. This began with the Palisades and Eaton
wildfires in LA in January. As the year progressed, the run of fires and explosions at refineries
in the Onshore Energy market continued with the PBF Martinez Fire in California, likely to
become the largest onshore energy insurance loss on record, Bayernoil in Germany, Marathon
Galveston Bay in Texas, MOL Danube refinery fire in Hungary, Ashdod Refineries in Israel,
and Rhone Energies in France.
For the Syndicate, many of these events produced only modest impacts, thanks in large part
to appropriately established risk appetites along with the ever-increasing diversification of the
portfolio. This increasing diversification has also been a key factor in narrowing our premium
shortfall to plan compared to prior years. For 2025 there is a much-reduced shortfall on plan
of 7.5%. As a result, and whilst very early days, our forecast NCOR is currently on plan at
92.1% with a profit forecast of $23m and a return on stamp of 7.7%.
4
Active Underwriter’s report continued
Looking forward to 2026
As mentioned above, markets peaked in 2023 and are now softening to some extent in each
class. Against this background, it is worth noting that each year we typically onboard one or
two new underwriting teams sourced by Octave Ventures (the rebrand of Beat Capital
Partners) and is the main reason why we maintain some headroom in our stamp capacity each
year. 2026 will be no exception to this. Octave Ventures have already established 1889
Specialty, a US-based Financial Institutions Management Liability and Professional Liability
insurance specialist and we have welcomed its addition to the 4242 stable along with US
Environmental Liability insurance for SME’s business sourced through Magnolia Grove, an
existing Octave franchise.
This will bring the total number of underwriting units to 13, with well over 30 different identifiable
subclasses of business written. Such ongoing development continues to underpin our offering
and will enhance our ability to optimise the business and sustain stability of performance as
the softening cycle develops in the coming years.
Summing Up
The end of 2025 marked a poignant moment for Syndicate 4242 as it bid farewell to Asta
Managing Agency Limited which managed the Syndicate from 2013. Asta have been a terrific
and thoroughly professional partner to the business throughout this period. We thank them
for their support and wish them well for their future endeavours as one of the largest managing
agencies within the Lloyd’s network.
However, within Octave we had been building out our capabilities in the non-underwriting
oversight and governance functions for some time and, in December, launched Statera
Managing Agency Limited which became the managing agency of record for 4242 on
December 30.
Statera has assembled a hugely talented and committed team of people as well as the systems
and resources required to look after the affairs of the varied insurance business that underpins
Syndicate 4242’s activities. I am privileged to witness every day the effort that they put in on
your behalf to ensure business is accurately accepted, administered, analysed, planned and
controlled against the plans that we form each year. They have immense pride in the work
that they do and a belief in the business model we are implementing. We are equally proud
of them for their commitment and skill, and we thank them all immensely for their efforts.
Finally, and to return to my alpine analogy, no two mountains are the same and each brings
its own challenge to the rider. The same is true of underwriting years of account. The report
above highlights the trials and tribulations that the Syndicate has faced over recent years as
well as the resources and strategies that we have at hand to surmount them. With a dedicated
team that constantly seeks to improve and puts in the required groundwork we ride towards
new and unknown challenges that lie ahead, confident in our abilities to meet them.
Andrew Cunningham
Active Underwriter
20 February 2026
5
Managing Agent's report
The Syndicate's Managing Agent is a company registered in England and Wales. The
Directors of the Managing Agent present their report for the year ended 31 December 2025.
The financial statements herein have been prepared using the annual basis of accounting as
required by Statutory Instrument No 1950 of 2008, The Insurance Accounts Directive (Lloyd's
Syndicate and Aggregate Accounts) Regulations 2008 (Lloyd’s Regulations 2008).
Results
The result for calendar year 2025 is a profit of $35.6m (2024: profit of $16.1m).
The Syndicate presents its results under FRS102, the Financial Reporting Standard applicable
in the UK and Republic of Ireland. In accordance with FRS102, the Syndicate has identified its
insurance contracts and accounted for them in accordance with FRS103 Insurance Contracts.
Principal activity and review of the business
The Syndicate’s principal activity is the underwriting of direct insurance and reinsurance
business in the Lloyd’s market.
A further review is included in the Active Underwriter’s report on page 2.
The Syndicate's financial key performance indicators during the year were as follows:
2025
2024
Change
$'000
$'000
Gross written premiums
386,534
389,946
-1%
Profit for the financial year
35,578
16,089
121%
Net Loss Ratio
45.7%
53.3%
-8%
Net Combined Ratio
87.5%
96.5%
-9%
The net loss ratio is the ratio of net claims incurred to net premiums earned in the calendar
year. The combined ratio is the ratio of net claims incurred and net operating expenses to net
premiums earned in the calendar year. Lower ratios represent better performance.
The performance of the Syndicate has been assessed by measuring, as a percentage of
underwriting capacity, the 36-month forecasted result on a funded accounting basis for an
individual underwriting year of account (YOA). The return on capacity for each underwriting
year is shown below.
2025
2024
2023
YoA
YoA
YoA
Open
Open
Closed
Capacity (£'000)
220,000
240,000
260,000
Capacity ($'000) (at 31.12.25 closing rates)
297,000
324,000
351,000
Forecast ($'000)
22,830
19,694
41,947
Forecast result on capacity (%)
7.7%
6.1%
12.0%
6
Managing Agent’s report continued
Note that the 2023 underwriting year is now closed. On 1 January 2025, the Syndicate
externally Reinsured-to-Close the 2022 and prior underwriting years to Syndicate 3500,
managed by Riverstone Managing Agency Limited.
Principal risks and uncertainties
The Syndicate sets risk appetite annually, which is approved by the Agency as part of the
Syndicate’s business planning and Solvency Capital Requirement (SCR) process. The
Agency Risk and Compliance Committee meets at least quarterly to oversee the risk
management framework. The Syndicate Board, an Executive committee charged with
overseeing the Syndicate, reviews the risk profile as reflected in the risk register, and monitors
performance against risk appetite using a series of key risk indicators. Other Syndicate-level
committees oversee specific aspects of business operations and report into the Syndicate
Board. The principal risk and uncertainties facing the Syndicate are as follows:
Insurance risk
Insurance risk includes the risks that a policy will be written for too low a premium or provide
inappropriate cover (underwriting risk), that the frequency or severity of insured events will be
higher than expected (claims risk), or that estimates of claims subsequently prove to be
insufficient (reserving risk). The Syndicate Board and Underwriting Committee manages
insurance risk through challenge and oversight of the approved business plan, which sets out
targets for volumes, pricing, line sizes and retention by class of business. The Syndicate
Board then monitors performance against the business plan and the aggregation of risk
through exposure management reporting through the year. The Syndicate Board considers
any proposed underwriting that impacts the Syndicate’s Environmental, Social and
Governance (ESG) profile to ensure consistency with the agreed ESG approach. Reserve
adequacy is monitored through quarterly review by the Claims and Reserving Committee.
Credit risk
The key aspect of credit risk is reinsurance counterparty risk which is the risk of default by one
or more of the Syndicate’s reinsurers and intermediaries. The Syndicate’s policy is to only use
approved reinsurers, supported by collateralisation where required. The Syndicate
Reinsurance Committee sets approval and usage criteria, monitors reinsurer ratings and is
required to approve and oversee the application of the reinsurer approval policy. The
Syndicate may also be exposed to broker credit risk, in particular where risk transfer
arrangements are in place. Aged debt reporting for premiums is reviewed in the Syndicate
Board.
7
Managing Agent’s report continued
Market risk
Market risk exposure impacting the Syndicate relates to fluctuations in interest rates or
exchange rates and inflation. The Syndicate is exposed to foreign exchange movements as
a result of mismatches between the currencies in which assets and liabilities are denominated.
The Agency’s policy is to maintain received income or incurred expenditure in the core
currencies in which they were received or paid. Any surplus or deficit in a core currency would
be subject to review by the Syndicate Board.
Investments are monitored through investment managers with quarterly Investment and
Liquidity Committees that review the performance, duration and ESG ratings for the
investments.
Liquidity risk
This is the risk that the Syndicate will not be able to meet its liabilities as they fall due, owing
to a shortfall in cash or can only meet obligations at excessive cost. To mitigate this risk the
Syndicate Board and Investment and Liquidity Committee reviews cash flow projections
regularly and ensures that, where needed, the Syndicate has liquidity facilities in place or has
utilised the option of a cash call from capital providers.
The Syndicate had in place a trade loan facility with Barclays of $25 million during 2024. No
funds were drawn on the facility during that year. It expired on the 31 December 2024 and has
not been renewed.
Operational risk
This is the risk that errors caused by people, processes, systems and external events lead to
losses to the Syndicate. The Agency seeks to manage this risk through a robust operational
risk and control framework including detailed procedure manuals and a thorough training
programme. This is underpinned by a structured programme of testing of processes and
systems by internal audit, who serve as an independent line of assurance, reporting directly to
the Chair of the Agency Audit and Conflicts Committee. Business continuity and disaster
recovery plans are in place and are regularly updated and tested.
Regulatory risk is the risk of loss owing to a breach of regulatory requirements or failure to
respond to regulatory change. The Agency is required to comply with the requirements of the
Financial Conduct Authority (FCA), Prudential Regulatory Authority (PRA) and Lloyd’s. Lloyd’s
requirements include those imposed on the Lloyd’s market by overseas regulators. The
Agency has a Compliance Director who manages a function that monitors business activity
and regulatory developments to assess any effects on both the Agency and the Syndicate.
The Syndicate has no appetite for failing to adhere to the requirements of the FCA Consumer
Duty regulations and continues its focus on ensuring that it is treating customers fairly. The
Syndicate manages and monitors consumer duty risk through a suite of risk indicators and
reporting metrics as part of its documented Customer Outcomes Policy. This Policy is applied
across the Syndicate and is overseen by the Agency Board.
8
Managing Agent’s report continued
Group and strategic risk
Group risk is the risk of contagion that arises from being associated with key stakeholders and
the impact that activities and events that occur within other connected or third parties has on
the business.
Strategic risk covers the risks faced by the Syndicate due to changes in underlying strategy of
the business or that of its key stakeholders (including strategic conflicts of interest).
Going concern
The Directors of the Managing Agent have prepared the Annual Accounts on a going
concern basis. In adopting the going concern basis, the Syndicate’s current and forecast
solvency and liquidity positions for the next 12 months have been reviewed. As part of the
consideration of the appropriateness of adopting the going concern basis, the Directors used
scenario analysis to assess the robustness of the Syndicate’s solvency and liquidity
positions. See note 1 for further information.
Future developments
The Syndicate will continue to transact the current classes of general direct insurance and
reinsurance business. If opportunities arise to write new classes of business, these will be
investigated at the appropriate time.
The capacity for the 2026 underwriting year is $297.0m (£220.0m) (2025 underwriting year:
$297.0m, £220.m).
Environmental, Social and Governance (ESG) and sustainability
The Syndicate has documented a position with regard to ESG and sustainability, which is
submitted annually to Lloyd’s as part of business planning. The position has been developed
in alignment with Lloyd’s principles and expectations, broader regulatory requirements, and to
support the Syndicate’s strategic objectives. Lloyd’s published an updated version of its
“Insuring the Transition” Roadmap as well as its principles for doing business regarding
sustainability, and the Syndicate continues to ensure its approach aligns with those
expectations.
The Agency has built a climate change framework, applicable to the Syndicate, covering
physical, transition and liability climate change risks, based on the underlying business written
by each syndicate. The Syndicate accepts climate change risk where it is an inherent part of
an insurance business model, providing it is understood, managed, and controlled and/or
compensated. There is no appetite for uncontrolled, unmanaged exposure to the financial
risks of climate change.
The framework ensures board-level engagement and accountability with Lloyd’s and PRA’s
requirements and expectations, assigning clear responsibilities for managing the financial risks
associated with climate change. The Agency’s Chief Risk Officer is responsible for the climate
change framework, including identifying and managing financial climate related risks.
Statera monitors regulatory guidance and expectations on managing the financial risks of
climate change.
9
Managing Agent’s report continued
Emerging risks
An emerging risk or opportunity is defined as “a developing issue, triggered externally, with
the potential to have a significant business impact but which may not be sufficiently understood
or accounted for”. The business impact in this case could represent a downside risk or an
upside opportunity. Emerging risks and opportunities include:
• Syndicate insurable risks, as areas of potential future losses or new product offerings;
• Those risks that may affect a syndicate’s ability to carry out normal business operations
and/or lead to unplanned significant costs/income;
• Both new risks and those which are re-emerging in a new context.
The Agency and Syndicate continue to monitor the impact of emerging risks on the Syndicate’s
business, taking into account their impacts on the strategic direction of the Syndicate.
Monitoring takes place in various forums, including the Emerging Risks Forum which meets
quarterly and considers emerging risks and opportunities from both an internal and external
lens. Specific areas of focus over the external environment across the year at Syndicate and
Agency level include:
• The geopolitical landscape from a tension and broader political risk impact, including
any exposures stemming from regional conflicts (e.g. Russia – Ukraine conflict).
• The operational and insurance implications of artificial intelligence.
Directors
Details of the Directors of the Managing Agent that were serving at the date of signing these
financial statements are provided on page 1. Changes to directors during 2025 were as
follows:
P Allen Appointed 23 October 2025
C Bulmer Appointed 23 October 2025
P Chubb Appointed 23 October 2025
A Ganger Appointed 23 October 2025
H Marsden Appointed 23 October 2025
J Scofield Appointed 23 October 2025
K Shah Appointed 9 December 2025
10
Managing Agent’s report continued
Disclosure of information to the auditor
So far as each person who was a director of the Managing Agent at the date of approving the
report is aware, there is no relevant audit information, being information needed by the
Syndicate auditor in connection with the auditor’s report, of which the auditor is unaware.
Having made enquiries of fellow directors of the Agency and the Syndicate’s auditors, each
director has taken all the steps that he or she ought to have taken as a director to become
aware of any relevant audit information and to establish that the Syndicate’s auditor is aware
of that information.
Auditor
The Managing Agent intends to reappoint Ernst & Young LLP as the Syndicate’s auditor.
Syndicate Annual General Meeting
In accordance with the Syndicate Meetings (Amendment No 1) Byelaw (No 18 of 2000) the
Managing Agent does not propose holding an annual meeting this year; objections to this
proposal or the intention to reappoint the auditors for a further 12 months can be made by
Syndicate members within 21 days of this notice.
On behalf of the Board,
Director
20 February 2026
11
Statement of Managing Agent’s responsibilities
The Managing Agent is responsible for preparing the financial statements in accordance with
applicable law and regulations.
The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations
2008 require the managing agent to prepare financial statements at 31 December each year
in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable law) including FRS 102 the Financial Reporting
Standard applicable in the UK and Republic of Ireland. The financial statements are required
by law to give a true and fair view of the state of affairs of the Syndicate as at that date and of
its profit or loss for that year.
In preparing the financial statements, the managing agent is required to:
• select suitable accounting policies and then apply them consistently subject to changes
arising on the adoption of new accounting standards in the year;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable Accounting Standards have been followed, subject to any
material departures disclosed and explained in the notes to the Syndicate accounts;
and
• prepare the Syndicate accounts on the basis that the Syndicate will continue to write
future business unless it is inappropriate to presume that the Syndicate will do so.
The Managing Agent is responsible for keeping adequate accounting records which disclose
with reasonable accuracy at any time the financial position of the Syndicate and enable it to
comply with the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008. It is also responsible for safeguarding the assets of the Syndicate and
hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
The Managing Agent is responsible for the maintenance and integrity of the corporate and
financial information included on the business’ website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements may differ from legislation
in other jurisdictions.
We confirm that to the best of our knowledge the Syndicate accounts, including the iXBRL
tagging applied to these accounts, comply with the requirements of the Lloyd’s Syndicate
Accounts Instructions version 3.1 as modified by the Frequently Asked Questions version 1.1
issued by Lloyd’s.
12
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SYNDICATE 4242
Opinion
We have audited the syndicate annual accounts of syndicate 4242 (‘the syndicate’) for the year
ended 31 December 2025 which comprise the Income Statement, the Statement of Comprehensive
Income, the Statement of Members’ Balances, the Statement of Financial Position, the Statement of
Cash Flows and the related notes 1 to 25, including a summary of significant accounting policies. The
financial reporting framework that has been applied in their preparation is applicable law including The
Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, United
Kingdom Accounting Standards including FRS 102 ‘The Financial Reporting Standard applicable in
the UK and Republic of Ireland’ and FRS 103 ‘Insurance Contracts’ (‘United Kingdom Generally
Accepted Accounting Practice’), and Section 1 of the Lloyd’s Syndicate Accounts Instructions V3.1 as
modified by the Frequently Asked Questions Version 1.1 issued by Lloyd’s (‘the Syndicate Accounts
Instructions).
In our opinion, the syndicate annual accounts:
– give a true and fair view of the syndicate’s affairs as at 31 December 2025 and of its profit for
the year then ended;
– have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice; and
– have been prepared in accordance with the requirements of The Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the Syndicate Accounts
Instructions.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)), The
Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, the
Syndicate Accounts Instructions, and other applicable law. Our responsibilities under those standards
are further described in the Auditor’s responsibilities for the audit of the syndicate annual accounts
section of our report. We are independent of the syndicate in accordance with the ethical requirements
that are relevant to our audit of the syndicate annual accounts in the UK, including the FRC’s Ethical
Standard as applied to other entities of public interest, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Conclusions relating to going concern
In auditing the syndicate annual accounts, we have concluded that the managing agent’s use of the
going concern basis of accounting in the preparation of the syndicate annual accounts is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the syndicate’s
ability to continue as a going concern for a period of 12 months from when the syndicate annual
accounts are authorised for issue.
13
Our responsibilities and the responsibilities of the directors of the managing agent with respect to
going concern are described in the relevant sections of this report. However, because not all future
events or conditions can be predicted, this statement is not a guarantee as to the syndicate’s ability to
continue as a going concern.
Other information
The other information comprises the information included in the annual report, other than the
syndicate annual accounts and our auditor’s report thereon. The directors of the managing agent are
responsible for the other information contained within the annual report.
Our opinion on the syndicate annual accounts does not cover the other information and, except to the
extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the syndicate annual accounts or our knowledge obtained in
the course of the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this gives
rise to a material misstatement in the syndicate annual accounts themselves. If, based on the work we
have performed, we conclude that there is a material misstatement of the other information, we are
required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by The Insurance Accounts Directive (Lloyd’s Syndicate
and Aggregate Accounts) Regulations 2008
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the managing agent’s report for the financial year in which the syndicate
annual accounts are prepared is consistent with the syndicate annual accounts; and
– the managing agent’s report has been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the syndicate and its environment obtained in the
course of the audit, we have not identified material misstatements in the managing agent’s report.
We have nothing to report in respect of the following matters where The Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 requires us to report to you, if in our
opinion:
– the managing agent in respect of the syndicate has not kept adequate accounting records; or
– the syndicate annual accounts are not in agreement with the accounting records; or
– certain disclosures of the managing agent’s emoluments specified by law are not made; or
– we have not received all the information and explanations we require for our audit.
Responsibilities of the directors of the managing agent
As explained more fully in the Statement of Managing Agent’s Responsibilities set out on page 11, the
directors of the managing agent are responsible for the preparation of the syndicate annual accounts
and for being satisfied that they give a true and fair view, and for such internal control as they
determine is necessary to enable the preparation of the syndicate annual accounts that are free from
material misstatement, whether due to fraud or error.
14
In preparing the syndicate annual accounts, the directors of the managing agent are responsible for
assessing the syndicate’s ability to continue in operation, disclosing, as applicable, matters related to
its ability to continue in operation and using the going concern basis of accounting unless the directors
of the managing agent either intends to cease to operate the syndicate, or has no realistic alternative
but to do so.
Auditor’s responsibilities for the audit of the syndicate annual accounts
Our objectives are to obtain reasonable assurance about whether the syndicate annual accounts as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these syndicate annual accounts.
Explanation as to what extent the audit was considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The
risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or
intentional misrepresentations, or through collusion.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed
below. However, the primary responsibility for the prevention and detection of fraud rests with both
those charged with governance of the managing agent and management.
Our approach was as follows:
• We obtained a general understanding of the legal and regulatory frameworks that are applicable
to the syndicate and determined that the most significant are direct laws and regulations related
to elements of Lloyd’s Byelaws and Regulations, and the financial reporting framework (UK
United Kingdom Generally Accepted Accounting Practice), and requirements referred to by
Lloyd’s in the Syndicate Accounts instructions. Our considerations of other laws and regulations
that may have a material effect on the syndicate annual accounts included permissions and
supervisory requirements of Lloyd’s of London, the Prudential Regulation Authority (‘PRA’) and
the Financial Conduct Authority (‘FCA’).
• We obtained a general understanding of how the syndicate is complying with those frameworks
by making enquiries of management, internal audit, and those responsible for legal and
compliance matters of the syndicate. In assessing the effectiveness of the control environment,
we also reviewed significant correspondence between the syndicate, Lloyd’s of London and other
UK regulatory bodies; reviewed minutes of the Board and Risk Committee of the managing
agent; and gained an understanding of the managing agent’s approach to governance. We also
performed procedures to understand the culture of compliance and governance including the
obtainment and review of the code of conduct, employee handbook and whistleblowing policy.
Furthermore in order to assess the internal views of risks and their likelihoods, we have reviewed
the risk register and risk event summary for the syndicate.
• For direct laws and regulations, we considered the extent of compliance with those laws and
regulations as part of our procedures on the related syndicate annual accounts’ items.
• For both direct and other laws and regulations, our procedures involved: making enquiries of the
directors of the managing agent and senior management for their awareness of any non-
compliance of laws or regulations, enquiring about the policies that have been established to
prevent non-compliance with laws and regulations by officers and employees, enquiring about
the managing agent’s methods of enforcing and monitoring compliance with such policies, and
inspecting significant correspondence with Lloyd’s, the PRA and the FCA.
• The syndicate operates in the insurance industry which is a highly regulated environment. As
such the Senior Statutory Auditor considered the experience and expertise of the engagement
15
team to ensure that the team had the appropriate competence and capabilities, which included
the use of specialists where appropriate.
• We assessed the susceptibility of the syndicate’s annual accounts to material misstatement,
including how fraud might occur by considering the controls that the directors of the managing
agent have established to address risks identified by them, or that otherwise seek to prevent,
deter or detect fraud. We also considered areas of significant judgement, complex transactions,
performance targets, economic or external pressures and the impact these have on the control
environment. Where this risk was considered to be higher, on the valuation of net IBNR reserves
and estimated premium income, we performed audit procedures to address each identified fraud
risk. These procedures included testing manual journals and were designed to provide
reasonable assurance that the syndicate annual accounts were free from fraud or error.
A further description of our responsibilities for the audit of the annual accounts is located on the
Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
Other matter
Our opinion on the syndicate annual accounts does not cover the iXBRL tagging included within these
syndicate annual accounts, and we do not express any form of assurance conclusion thereon.
Use of our report
This report is made solely to the syndicate’s members, as a body, in accordance with The Insurance
Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008. Our audit work has
been undertaken so that we might state to the syndicate’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than the syndicate and the syndicate’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Robert Bruce (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
20 February 2026
16
Statement of profit or loss and other comprehensive income
Technical account – general business
For the year ended 31 December 2025
Notes
2025
2024
$'000
$'000
Gross premiums written
4
Outwards reinsurance premiums
(173,610 )
(176,644 )
Premiums written, net of reinsurance
Change in unearned premium
Gross amount
(22,884 )
Reinsurers' share
Net change in provisions for unearned
premiums
5
(7,773 )
Earned premiums, net of reinsurance
Allocated investment return transferred
from the non-technical account
Claims Paid
Gross amount
(68,683 )
(133,038 )
Reinsurers' share
Net claims paid
(45,788 )
(89,030 )
Changes in the provision for claims
Gross amount
(78,674 )
(66,216 )
Reinsurers' share
Net change in provisions for claims
5
(47,870 )
(34,728 )
Claims incurred, net of reinsurance
(93,658 )
(123,758 )
Net operating expenses
6
(85,951 )
(100,364 )
Balance on technical account - general
business
All the amounts above are in respect of continuing operations.
The notes on pages 22 to 51 form part of these financial statements.
17
Statement of profit or loss and other comprehensive income continued
Non-technical account – general business
For the year ended 31 December 2025
Notes | 2025 | 2024 | |
$'000 | $'000 | ||
Balance on technical account - general business | |||
Investment income | |||
Realised gains/(losses) on investments | |||
Unrealised gains/(losses) on investments | ( | ||
Investment expenses and charges | ( | ( | |
Total investment return | 10 | ||
Allocated Investment return | ( | ( | |
Gain/(loss) on foreign exchange | ( | ||
Profit for the financial year |
There were no recognised gains and losses in the year other than those reported in the
statement of profit or loss, and hence no statement of other comprehensive income has been
presented.
All the amounts above are in respect of continuing operations.
The notes on pages 22 to 51 form part of these financial statements.
18
Statement of financial position
As at 31 December 2025
Notes | 2025 | 2024 | |
ASSETS | $'000 | $'000 | |
Investments | |||
Other financial investments | 12 | ||
Deposits with ceding undertakings | |||
Total Investments | |||
Reinsurers' share of technical provisions | |||
Provision for unearned premiums | 5 | ||
Claims outstanding | 5 | ||
Debtors | |||
Debtors arising out of insurance operations | 13 | ||
Debtors arising out of reinsurance operations | 14 | ||
Other debtors | 15 | ||
Other assets | |||
Cash at bank and in hand | |||
Prepayments and accrued income | |||
Deferred acquisition costs | 5 | ||
Other prepayments and accrued interest | |||
Total Assets |
The notes on pages 22 to 51 form part of these financial statements.
19
Statement of financial position continued
As at 31 December 2025
Notes
2025
2024
MEMBERS' BALANCE AND LIABILITIES
$'000
$'000
Capital and reserves
Members' balances
Total capital and reserves
Technical provisions
Provision for unearned premiums
5
Claims outstanding
5
Creditors
Creditors arising out of insurance operations
16
Creditors arising out of reinsurance
operations
17
Other creditors including taxation and social
security
18
Accruals and deferred income
Total Liabilities
Total liabilities, capital and reserves
The notes on pages 22 to 51 form part of these financial statements.
The financial statements on pages 16 to 19 were approved by Board of Directors on 18
February 2026 and were signed on its behalf by:
Director
20 February 2026
20
Statement of changes in Members' balances
For the year ended 31 December 2025
Notes
2025
2024
$'000
$'000
Members' balances brought forward at 1 January
Total recognised gains for the year
Payments of profit to Members' personal
reserve funds
(24,596 )
(13,272 )
Losses collected in relation to distribution on
closure of underwriting year
Cash calls on open underwriting years
Members agent fees
(517 )
(571 )
Net movement on funds in syndicate
Other
(1,152 )
Members' balances carried forward at 31 December
21
Statement of cash flows
For the year ended 31 December 2025
Notes | 2025 | 2024 | |
Cash flows from operating activities | $'000 | $'000 | |
Profit/(loss) for the financial year | |||
Adjustments | |||
Increase/(decrease) in gross technical provisions | ( | ||
(Increase)/decrease in reinsurers’ share of technical provisions | ( | ||
(Increase)/decrease in debtors | ( | ||
Increase/(decrease) in creditors | |||
Increase/(decrease) in deposits received from reinsurers | |||
Movement in other assets/liabilities | |||
Foreign exchange | ( | ||
Investment return | ( | ( | |
Net cash flows from operating activities | ( | ||
Cash flows from investing activities | |||
Purchase of equity and debt instruments | ( | ( | |
Sale of equity and debt instruments | |||
Investment income received | |||
Net cash flows from investing activities | ( | ||
Cash flows from financing activities | |||
Distribution of profit | ( | ( | |
Collection of losses | |||
Other | ( | ||
Net cash flows from financing activities | ( | ( | |
Net increase/(decrease) in cash and cash equivalents | ( | ||
Cash and cash equivalents at the beginning of the year | |||
Foreign exchange on cash and cash equivalents | |||
Cash and cash equivalents at the end of the year | 19 |
22
Notes to the financial statements
1. Basis of preparation
Statement of compliance
The financial statements have been prepared in accordance with The Insurance Accounts
Directive (Lloyd's Syndicate and Aggregate Accounts) Regulations 2008, applicable
Accounting Standards in the United Kingdom and the Republic of Ireland, including Financial
Reporting Standard 102 (FRS 102), Financial Reporting Standard 103 (FRS 103) in relation
to insurance contracts, and the Lloyd’s Syndicate Accounts Instructions Version 3.1 as
modified by the Frequently Asked Questions Version 1.1 issued by Lloyd’s.
The financial statements have been prepared on the historical cost basis, with the exception
of certain financial assets which are measured at fair value through the profit and loss account.
The financial statements are presented in USD, the functional currency of the Syndicate. All
amounts have been rounded to the nearest thousand, unless otherwise indicated.
Going Concern
The Directors of the Managing Agent have assessed the Syndicate’s ability to continue as a
going concern. As part of this assessment, the Directors have considered cash forecasts, the
availability of financial resources, consistency of loss ratios, credit worthiness of reinsurers,
capital support for the existing underwriting years, business plans for future underwriting years
and availability of future capital support. Following this assessment, the Directors consider it
appropriate to adopt the going concern basis in preparing the annual report and financial
statements.
2. Critical accounting estimates and judgements
In preparing these financial statements, the Directors of the Managing Agent have made
judgements, estimates and assumptions that affect the application of the Syndicate’s
accounting policies and the reported amounts of assets, liabilities, income and expenses.
The following critical accounting estimates have been made in applying the Syndicate’s
accounting policies:
• Valuation of claims reserves
The measurement of the provision for claims outstanding involves judgements and
assumptions about the future that have a significant effect on the value recognised in
the financial statements.
The provision for claims outstanding comprises the estimated cost of settling all claims
incurred but unpaid at the balance sheet date, whether reported or not. This is a
judgemental and complex area due to the subjectivity inherent in estimating the impact
of claims events that have occurred but for which the eventual outcome remains
uncertain.
23
Critical accounting estimates and judgements continued
Case estimates are generally set by skilled claims technicians applying their experience and
knowledge to the circumstances of individual claims. Critical judgement is applied when
estimating the value of amounts that should be provided for claims that have been incurred at
the reporting date but have not yet been reported (IBNR) to the Syndicate. This is a source of
significant estimation uncertainty.
The expected cost of future liabilities (best estimate reserves) is estimated using a range of
techniques using actuarial and statistical projections, benchmarking against market data, case
by case review and judgement. Statistical techniques assume that past claims development
experience can be used as a basis to project ultimate claims costs for each underwriting year.
Typical methods employed include, but are not limited to, the chain ladder method and the
Bornhuetter-Ferguson method, whilst plan and pricing loss ratios are also considered.
The reserving process groups the insured risks into reserving classes based on homogeneity
– these are collections of risks of a similar profile. When selecting historic data to use for claims
forecasting purposes, the suitability and reliability of the dataset is considered. The underlying
claims data for each reserving class is triangulated and supplemented with the benchmark
data provided by Lloyd’s and used to arrive at claims development patterns.
Each reserving class will be assessed separately, and corresponding claims development
pattern selected and used to forecast expected claims. These in addition to plan loss ratios
are used to estimate future best estimate reserves. Different approaches are followed for
specific large claims and catastrophes which require additional input from claims for
estimation.
Whilst the Directors consider that the claims reserves are fairly stated based on the information
currently available to them, the ultimate liability will vary as a result of subsequent information
and events.
Sensitivities relating to this critical judgement have been assessed in further detail in note 24.
• Estimated premium income (EPI)
For the majority of assumed (inwards) reinsurance policies, EPI is initially used as the
basis for reporting gross premiums written. EPI is a measure of expected premium
income over the life of a policy. These estimates, typically supplied by the cedant, are
judgemental and could result in misstatements of revenue recorded in the financial
statements.
• Pipeline premium
Pipeline premium relates to premium that has likely been written as at the report date,
but due to reporting delays through the distribution chain, the premium has not yet
been reported to the Syndicate. Reasons for the reporting delay typically revolve
around a natural lag in receiving the premium bordereaux from brokers or coverholders
– bordereaux are generally produced monthly or quarterly in arrears. Pipeline premium
is included within Gross Premiums Written on the statement of profit of loss.
24
Critical accounting estimates and judgements continued
There is significant uncertainty when estimating pipeline premium. Estimates are frequently
based upon information provided by the business producers, or sometimes a statistical
approach is adopted based on past experience. Given that pipeline premium primarily relates
to policies that have been bound just before the balance sheet date, the vast majority of this
premium is usually unearned.
3. Significant accounting policies
The following principal accounting policies have been applied consistently in dealing with items
which are considered material in relation to the Syndicate’s financial statements.
Gross premiums
Gross written premiums comprise the total premiums receivable for the whole period of cover
provided by the contracts entered into during the reporting period, regardless of whether these
are wholly due for payment in the reporting period, together with any adjustments arising in
the reporting period to such premiums receivable in respect of business written in prior
reporting periods. They are recognised on the date on which the policy commences. This is
applicable to both direct premium and assumed (inwards) reinsurance premium. Gross written
premiums are stated gross of brokerage payable to intermediaries, and exclude taxes and
duties levied on the policyholder.
Estimated premium income in respect of facility contracts and long-term policies, for example
binding authorities and lineslips, are deemed to be written in a manner that reflects the
expected profile of the underlying business which has been written.
Ceded reinsurance premiums
Reinsurance written premiums comprise the total premiums payable for the whole cover
provided by contracts entered into the period, including portfolio premiums payable, and are
recognised on the date on which the policy incepts. Premiums include any adjustments arising
in the accounting period in respect of reinsurance contracts incepting in prior accounting
periods. They are recognised on the date on which the policy commences.
Reinstatement premiums (RIPs)
Reinstatement premiums arise on certain non-proportional inwards and outwards reinsurance
contracts when losses exceed specified levels and cover is reinstated. RIPs that are
contractually due and/or invoiced at the reporting date are recognised as written and earned
premium and are presented within debtors or creditors arising out of insurance and
reinsurance operations.
Expected or future RIPs cash flows arising on in-force contracts, including those associated
with incurred but not reported losses, are reflected within technical provisions (and the
reinsurers’ share of technical provisions) as part of claims outstanding.
25
Significant accounting policies continued
Provisions for unearned premiums
Unearned premiums are those proportions of premiums written up to the reporting date that
relate to periods of risk after the reporting date. In respect of general insurance business,
written premiums are recognised as earned over the period of the policy on a time
apportionment basis having regard, where appropriate, to the incidence of risk. The proportion
attributable to subsequent periods is deferred as a provision for unearned premiums.
Unearned reinsurance premiums are those proportions of ceded premiums written up to the
reporting date that relate to periods of risk after the reporting date. Ceded reinsurance
premiums are earned on the same basis as the inwards business being protected.
Claims incurred
Claims incurred comprise claims and claims handling expenses (both internal and external)
paid in the year and the movement in provision for outstanding claims and settlement
expenses processed in the year. The provision for claims comprises amounts set aside for
claims notified and claims incurred but not yet reported (IBNR). The Syndicate does not
discount its liability for outstanding claims.
The amount included in respect of IBNR is based on statistical techniques of estimation applied
by actuaries. These techniques generally involve projecting from past experience of the
development of claims over time to form a view of the likely ultimate claims to be experienced,
having regard to variations in the business accepted and the underlying terms and conditions.
The provision for claims also includes amounts in respect of internal and external claims
handling costs. For the most recent years, where a high degree of volatility arises from
projections, estimates may be based in part on output from rating and other models of the
business accepted and assessments of underwriting conditions. An element of IBNR can also
relate to specific large losses.
The reinsurers’ share of provisions for claims is based on calculated amounts of outstanding
claims and projections for IBNR, net of estimated irrecoverable amounts, having regard to the
reinsurance programme in place for the class of business and the claims experience for the
year. The Syndicate uses a number of statistical techniques to assist in making these
estimates where relevant.
Accordingly, the two most critical assumptions with regards to claims provisions are that the
past is a reasonable predictor of the likely level of claims development and that the rating and
other models used for current business are fair reflections of the likely level of ultimate claims
to be incurred.
The Directors consider that the provisions for gross claims and related reinsurance recoveries
are fairly stated on the basis of the information currently available to them. However, ultimate
liability will vary as a result of subsequent information and events, and this may result in
significant adjustments to the amounts provided.
Adjustments to the amounts of claims provisions established in prior years are reflected in the
financial statements for the period in which the adjustments are made. The methods used,
and the estimates made, are reviewed regularly.
26
Significant accounting policies continued
Unexpired risks
A provision for unexpired risks is made where claims and related expenses are likely to arise
after the end of the financial period in respect of contracts concluded before that date, are
expected to exceed the unearned premiums and premiums receivable under these contracts,
after the deduction of any acquisition costs deferred.
The provision for unexpired risks is calculated separately by reference to classes of business
which are managed together.
As at 31 December 2025, the Syndicate had a nil net unexpired risk provision (2024: nil).
Reinsurance assets
The Syndicate cedes insurance risk in the normal course of business. Reinsurance assets
represent balances due from reinsurance companies. Amounts recoverable from reinsurers
are estimated in a manner consistent with the outstanding claims provision including IBNR or
settled claims associated with the reinsurer's policies and are in accordance with the related
reinsurance contract.
Reinsurance assets are reviewed for impairment at each reporting date, or more frequently if
an indication of impairment arises during the reporting year. Impairment occurs when there is
objective evidence as a result of an event that occurred after initial recognition of the
reinsurance asset that the Syndicate may not receive all outstanding amounts due under the
terms of the contract and the event has a reliably measurable impact on the amounts that the
Syndicate will receive from the reinsurer. The impairment loss is recorded in the statement of
profit or loss.
Gains or losses on buying reinsurance are recognised in the statement of profit or loss
immediately at the date of purchase and are not amortised.
Ceded reinsurance arrangements do not relieve the Syndicate from its obligations to
policyholders.
Acquisition costs
Acquisition costs comprise costs arising from the conclusion of insurance contracts, such as
intermediary brokerage and commissions. It is not the Syndicate’s policy to reallocate a portion
of indirect costs, such as the advertising costs or the administrative expenses connected with
the processing of proposals and the issuing of policies, to acquisition costs.
The deferred acquisition cost asset represents the proportion of acquisition costs
corresponding to the proportion of gross premiums written that is unearned at the balance
sheet date. Deferred acquisition costs are amortised over the period in which the related
premiums are earned.
Foreign currencies
Transactions denominated in currencies other than the functional currency are initially
recorded in the functional currency at the exchange rate ruling at the date of the transactions.
Monetary assets and liabilities (which include all assets and liabilities arising from insurance
contracts including unearned premiums and deferred acquisition costs) denominated in foreign
currencies are retranslated into the functional currency at the exchange rate ruling on the
reporting date.
27
Significant accounting policies continued
Foreign exchange differences are recorded in the non-technical account.
The following currency exchange rates have been used for principal foreign currency
transactions:
| 2025 | 2025 | 2025 | 2024 | 2024 | 2024 | |
Start of Period Rate | End of Period Rate | Average Rate | Start of Period Rate | End of Period Rate | Average Rate | |
GBP | ||||||
| USD | ||||||
| CAD | ||||||
| EUR | ||||||
| AUD | ||||||
JPY |
Financial assets and liabilities
In applying FRS 102, the Syndicate has chosen to apply the recognition and measurement
provisions of IAS 39 Financial Instruments: Recognition and Measurement (as adopted for use
in the UK).
The accounting classification of financial assets and liabilities determines the way in which
they are measured and changes in those values are presented in the statement of profit or
loss and other comprehensive income. Financial assets and liabilities are classified on their
initial recognition.
The initial classification of a financial instrument shall take into account contractual terms
including those relating to future variations. Once the classification of a financial instrument is
determined at initial recognition, reassessment is only required subsequently when there has
been a modification of contractual terms that is relevant to an assessment of the classification.
Financial assets and financial liabilities are classified at initial recognition as either fair value
through profit and loss or designated at amortised cost. Investments in shares and other
variable yield securities, units in unit trusts, and debt and other fixed income securities are
designated as at fair value through profit or loss on initial recognition, as they are managed on
a fair value basis in accordance with the Syndicate’s investment strategy.
Deposits with credit institutions, debtors, and accrued interest are classified as loans and
receivables.
Financial instruments are recognised when the Syndicate becomes a party to the contractual
provisions of the instrument. Financial assets are derecognised if the Syndicate’s contractual
rights to the cash flows from the financial assets expire or if the Syndicate transfers the
financial asset to another party without retaining control of substantially all risks and rewards
of the asset. A financial liability is derecognised when its contractual obligations are
discharged, cancelled or expired.
Regular way purchases and sales of financial assets are recognised and derecognised, as
applicable, on the trade date, i.e., the date that the Syndicate commits itself to purchase or sell
the asset.
28
Significant accounting policies continued
A financial asset or financial liability is measured initially at fair value plus, for a financial asset
or financial liability not at fair value through profit or loss, transaction costs that are directly
attributable to its acquisition or issue.
Financial assets at fair value through profit or loss are measured at fair value with fair value
changes recognised immediately in profit or loss. Net gains or net losses on financial assets
measured at fair value through profit or loss includes foreign exchange gains/losses arising on
their translation to the functional currency but excludes interest and dividend income.
A financial asset initially measured at the transaction price and subsequently measured at
amortised cost uses the effective interest method. The interest rate used is generally that as
stated in the loan agreement/bond (if applicable) or a standard market rate for a similar
product. The unwinding of the associated discount is subsequently recognised in the
statement of profit or loss.
Loans and receivables and non-derivative financial liabilities are measured at amortised cost
using the effective interest method, except Syndicate Loans to the Central Fund which are
measured at fair value through profit or loss.
Objective evidence that financial assets are impaired includes observable data that comes to
the attention of the Syndicate about any significant financial difficulty of the issuer, or significant
changes in the technological, market, economic or legal environment in which the issuer
operates.
Impairment losses on available for sale financial assets are recognised by reclassifying the
losses accumulated in other comprehensive income to profit or loss. The net cumulative loss
that is reclassified from other comprehensive income to profit or loss is the difference between
the acquisition cost, net of any principal repayment, and the current fair value, less any
impairment loss recognised previously in profit or loss. If, in a subsequent period, the fair value
of an impaired available for sale debt security increases and the increase can be related
objectively to an event occurring after the impairment loss was recognised, the impairment
loss is reversed through profit or loss. Otherwise, it is reversed through the statement of
comprehensive income.
Financial assets and financial liabilities are offset, and the net amount presented in the balance
sheet when, and only when, the Syndicate currently has a legal right to set off the amounts
and intends either to settle on a net basis or to realise the asset and settle the liability
simultaneously.
Investment return
Investment return comprises investment income and movements in unrealised gains and
losses on financial instruments at fair value through profit or loss, less investment management
expenses, interest expense, realised losses and impairment losses. Investment income
comprises interest income, amortisation on assets held at amortised cost and realised
investment gains.
For the purpose of separately presenting investment income and unrealised gains and losses
for financial assets at fair value through profit or loss, interest income is calculated using the
effective interest method excluding transaction costs that are expensed when incurred. For
investments at fair value through profit or loss, realised gains and losses represent the
difference between the net proceeds on disposal and the purchase price.
29
Significant accounting policies continued
Unrealised investment gains and losses represent the difference between the fair value at the
balance sheet date and the fair value at the previous balance sheet date, or purchase price if
acquired during the year. Movements in unrealised investment gains and losses comprise the
increase/decrease in the reporting period in the value of the investments held at the reporting
date and the reversal of unrealised investment gains and losses recognised in earlier reporting
periods in respect of investment disposals of the current period.
Investment return is initially recorded in the non-technical account. The return is transferred in
full to the general business technical account to reflect the investment return on funds
supporting underwriting business.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with maturities of three
months or less from the acquisition date that are subject to an insignificant risk of changes in
fair value and are used by the Syndicate in the management of its short-term commitments.
Cash and cash equivalents are carried at amortised cost in the statement of financial position.
Bank overdrafts that are repayable on demand and form an integral part of the Syndicate’s
cash management are included as a component of cash and cash equivalents for the purpose
of the statement of cash flows.
Taxation
Under Schedule 19 of the Finance Act 1993 managing agents are not required to deduct basic
rate income tax from trading income. In addition, all UK basic rate income tax (currently at
20%) deducted from Syndicate investment income is recoverable by managing agents and
consequently the distribution made to Members or their Members’ agents is gross of tax.
Capital appreciation falls within trading income and is also distributed gross of tax.
No provision has been made for any other overseas tax payable by Members on underwriting
results or investment earnings. Any payments on account made by the Syndicate during the
year have been included in the balance sheet under the heading ‘other debtors’.
Profit commission
Profit commission is charged by the managing agent at 5%. Such commission is recognised
when the year of account becomes profitable but does not become payable until after the
appropriate year of account closes normally at 36 months.
Deposits with ceding undertakings
Deposits with ceding undertakings are funds held by Lloyd’s Europe on behalf of the Syndicate
to settle Part VII claims. These funds are held at amortised cost in the balance sheet.
Operating expenses
Where expenses are incurred by the Managing Agent for the administration of managed
syndicates, these expenses are apportioned using various methods depending on the type of
expense. Expenses which are incurred jointly are apportioned between the Managing Agent
and the Syndicate depending on the amount of work performed, resources used, and volume
of business transacted.
30
Significant accounting policies continued
Reinsurers’ commission and profit participation
Reinsurers’ commissions and profit participations, which include reinsurance profit
commission and overriding commission, are treated as a contribution to expenses.
Debtors and creditors
Insurance debtors and creditors include amounts due to and from agents, brokers and
insurance contract holders. These are classified as debt instruments as they are non-derivative
financial assets with fixed or determinable payments that are not quoted on an active market.
Insurance debtors are measured at amortised cost less any provision for impairments.
Insurance creditors are stated at amortised cost. The Syndicate does not have any debtors
directly with policyholders, all transactions occur via an intermediary.
Where permitted under UK GAAP accounting standards, insurance creditors are netted off
against insurance debtors where the legally enforceable right to offset exists.
Reinsurance debtors and creditors include amounts due to and from reinsurers. These are
classified as debt instruments as they are non-derivative financial assets with fixed or
determinable payments that are not quoted on an active market. Reinsurance debtors are
measured at amortised cost less any provision for impairments. Reinsurance creditors are
stated at amortised cost. Reinsurance debtor principally relates to claims recoveries where the
underlying claim has been settled and the recovery is due. Reinsurance creditors are primarily
premiums payable for reinsurance contracts and are recognised as an expense when due.
Bad Debt
Bad debts are provided for only where specific information is available to suggest a debtor
may be unable or unwilling to settle its debt to the Syndicate. The provision is calculated on a
case-by-case basis.
Reinsurance-to-close (RITC)
The net reinsurance to close premium is determined based on estimated outstanding
liabilities and related claims settlement costs (including claims IBNR), net of estimated
collectible reinsurance recoveries, relating to the closed year of account and all previous
years of account reinsured therein. The estimate of claims outstanding is assessed on an
individual case basis and is based on the estimated ultimate cost of all claims notified but not
settled by the balance sheet date. It also includes the estimated cost of claims IBNR at the
balance sheet date. The reinsurer share is based on the amounts of outstanding claims and
projections for IBNR, net of estimated irrecoverable amounts, having regard to the
reinsurance programme in place. Statistical methods are used to assist in making these
estimates. The Directors consider that the estimates of gross claims and related reinsurance
recoveries are fairly stated based on the information currently available to them.
31
4. Analysis of underwriting result
An analysis of the underwriting result before investment return is presented in the table below:
| 2025 | Gross premiums written | Gross premiums earned | Gross claims incurred | Gross operating expenses | Reinsurance balance | Underwriting result |
$'000 | $'000 | $'000 | $'000 | $'000 | $'000 | |
Direct | ||||||
Accident & Health | ( | ( | ( | |||
Motor (Third party liability) | ( | ( | ( | |||
Motor (Other classes) | ( | ( | ( | |||
Marine, aviation and transport | ( | ( | ( | |||
Fire and other damage to property | ( | ( | ( | |||
Third party liability | ( | ( | ( | |||
Credit and suretyship | ( | ( | ( | ( | ||
Total Direct | ( | ( | ( | |||
Reinsurance Acceptances | ( | ( | ( | |||
( | ( | ( | ||||
The below is an additional disclosure for Lloyd’s reporting purposes and is included to facilitate | ||||||
| the classification of the above segments into the Lloyd’s aggregate classes of business: | ||||||
| 2025 | Gross premiums written | Gross premiums earned | Gross claims incurred | Gross operating expenses | Reinsurance balance | Underwriting result |
Additional analysis | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 |
Fire and damage to property of which | ||||||
is: | ||||||
Specialties | ||||||
Energy | ( | |||||
Third party liability of | ||||||
which is: | ||||||
Energy | ||||||
32
Analysis of underwriting result continued
| 2024 | Gross premiums written | Gross premiums earned | Gross claims incurred | Gross operating expenses | Reinsurance balance | Underwriting result |
$'000 | $'000 | $'000 | $'000 | $'000 | $'000 | |
Direct | ||||||
Accident & Health | ( | ( | ( | |||
Motor (Third party liability) | ( | ( | ( | |||
Motor (Other classes) | ( | ( | ( | ( | ||
Marine, aviation and transport | ( | ( | ( | ( | ||
Fire and other damage to property | ( | ( | ( | |||
Third party liability | ( | ( | ( | |||
Credit and suretyship | ( | ( | ( | ( | ||
Total Direct | ( | ( | ( | |||
Reinsurance Acceptances | ( | ( | ( | |||
( | ( | ( | ||||
The below is an additional disclosure for Lloyd’s reporting purposes and is included to facilitate | ||||||
| the classification of the above segments into the Lloyd’s aggregate classes of business: | ||||||
| 2024 | Gross premiums written | Gross premiums earned | Gross claims incurred | Gross operating expenses | Reinsurance balance | Underwriting result |
Additional analysis | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 |
Fire and damage to property of which | ||||||
is: | ||||||
Specialties | ||||||
Energy | ||||||
Third party liability of | ||||||
which is: | ||||||
Energy | ||||||
33
Analysis of underwriting result continued
The gross premiums written for direct insurance by underwriting location (where the contracts
were concluded) is presented in the table below:
| 2025 | 2024 | |
$'000 | $'000 | |
United Kingdom | ||
European Union Member States | ||
| US | ||
Rest of the world | ||
No gains or losses were recognised in profit or loss during the year on buying reinsurance
(2024: nil).
5. Technical provisions
Gross
Provisions
Reinsurance
Assets
Net
2025
$'000
$'000
$'000
Claims Outstanding:
Balance at 1 January
(168,570 )
Claims paid during the year
(68,683 )
(45,788 )
Expected cost of current year claims
(53,912 )
Other
(237,255 )
(158,378 )
Foreign exchange movements
(9,049 )
(4,762 )
Balance at 31 December
(116,424 )
Unearned premiums
Balance at 1 January
(89,995 )
Premiums written during the year
(173,610 )
Premiums earned during the year
(363,650 )
(205,151 )
Other
Foreign exchange movements
(826 )
Balance at 31 December
(105,932 )
Deferred acquisition costs | ||
Balance at 1 January | ||
Incurred deferred acquisition costs | ||
Amortised deferred acquisition costs | ( | ( |
Foreign exchange movements | ||
Balance at 31 December |
‘Other’ includes the external Reinsurance-to-Close of the 2022 and prior underwriting years
to Syndicate 3500, managed by Riverstone Managing Agency Limited.
34
Technical Provisions continued
Gross Provisions | Reinsurance Assets | Net | |
| 2024 | $'000 | $'000 | $'000 |
Claims Outstanding: | |||
Balance at 1 January | ( | ||
Claims paid during the year | ( | ( | |
Expected cost of current year claims | ( | ||
Other | |||
Foreign exchange movements | ( | ( | |
Balance at 31 December | ( | ||
Unearned premiums | |||
Balance at 1 January | ( | ||
Premiums written during the year | ( | ||
Premiums earned during the year | ( | ( | |
Other | |||
Foreign exchange movements | ( | ( | |
Balance at 31 December | ( |
Deferred acquisition costs | ||
Balance at 1 January | ||
Incurred deferred acquisition costs | ||
Amortised deferred acquisition costs | ( | ( |
Foreign exchange movements | ( | ( |
Balance at 31 December |
During 2025 the Syndicate refined its presentation of reinstatement premiums so that expected
or future RIPs cash flows on in-force contracts are included within claims outstanding (gross
provisions and reinsurance assets). RIPs that are contractually due and/or invoiced at the
reporting date continue to be presented within debtors or creditors.
Prior year comparatives have not been restated as the impact on 2024 balances was not
material.
6. Net Operating Expenses
| 2025 | 2024 | |
$'000 | $'000 | |
Acquisition costs | ||
Change in deferred acquisition costs | ( | |
Reinsurance commissions and profit participation | ( | ( |
Administration expenses | ||
Net operating expenses |
Total commissions for direct insurance business for the year amounted to $84.2 m (2024:
$88.6 m)
35
7. Auditors’ remuneration
| 2025 | 2024 | |
Auditors' remuneration: | $'000 | $'000 |
Fees payable to the Syndicate's auditor for the audit of these financial statements | ||
Fees payable to the Syndicate's auditor and its associates in respect of other services pursuant to legislation | ||
| 913 | 627 |
8. Key management personnel compensation
The active underwriter received the following aggregate remuneration charged to the
Syndicate:
| 2025 | 2024 | |
$'000 | $'000 | |
Emoluments | ||
| 762 | 609 |
No emoluments of the Directors of Asta Managing Agency Ltd were directly charged to the
Syndicate.
No emoluments of the Directors of Statera were charged to the syndicate post the Managing
Agency novation.
9. Staff Costs
| 2025 | 2024 | |
$'000 | $'000 | |
Wages and salaries | ||
Social security costs and other pension costs | ||
Staff are employed by a service company, and their salary costs per the table above are
recharged to the Syndicate with a mark-up. Staff costs are included as part of the
administrative expenses in note 6 to the financial statements.
36
10. Investment return
| 2025 | 2024 | |
$'000 | $'000 | |
Interest and similar income | ||
From financial assets designated at fair value through profit or loss | ||
Interest and similar income | ||
From financial assets at amortised cost | ||
Interest and similar income | ||
Other income from investments | ||
From financial assets designated at fair value through profit or loss | ||
Gains on realisation of investments | ||
Losses on realisation of investments | ( | ( |
Unrealised gains on investments | ||
Unrealised losses on investments | ( | ( |
From financial assets at amortised cost | ||
Gains on realisation of investments | ||
Investment management expenses | ( | ( |
Total investment return |
11. Distribution and open years of account
A distribution to members of $41.6m will be proposed in relation for the closing year of account
(2023 Underwriting Year) (2024: $19.7m, 2022 Underwriting Year).
| 2025 | 2024 | |
$'000 | $'000 | |
| 2025 | ( | |
| 2024 | ( | |
| 2023 | ||
| 2022 |
12. Financial Investments
The Syndicate classifies its financial instruments held at fair value in its balance sheet using
a fair value hierarchy based on the inputs used in the valuation techniques as follows:
• Level 1 – financial assets that are measured by reference to published quotes in an
active market. A financial instrument is regarded as quoted in an active market if quoted
prices are readily and regularly available from an exchange, dealer, broker, industry
group, pricing service or regulatory agency and those prices represent actual and
regularly occurring market transactions on an arm’s length basis.
37
Financial Investments continued
• Level 2 – financial assets measured using a valuation technique based on assumptions
that are supported by prices from observable current market transactions. For
example, assets for which pricing is obtained via pricing services but where prices have
not been determined in an active market, financial assets with fair values based on
broker quotes, investments in private equity funds with fair values obtained via fund
managers and assets that are valued using the Syndicate’s own models whereby the
significant inputs into the assumptions are market observable.
• Level 3 – financial assets measured using a valuation technique (model) based on
assumptions that are neither supported by prices from observable current market
transactions in the same instrument nor are they based on available market data.
Therefore, unobservable inputs reflect the Syndicate's own assumptions about the
assumptions that market participants would use in pricing the asset or liability (including
assumptions about risk). These inputs are developed based on the best information
available, which might include the Syndicate’s own data.
The following table shows financial investments recorded at fair value analysed between the
three levels in the fair value hierarchy
Assets Held at Fair Value
Assets
Held at
Amortised
Cost
Level 1
Level 2
Level 3
Subtotal
Total
31 December
2025
$'000
$'000
$'000
$'000
$'000
$'000
Shares and other
variable yield
securities and
units in unit
trusts
67,167
Debt securities
and other fixed
income securities
81,007
Loans and
Deposits with
credit institutions
-
Overseas
Deposits
12,419
Total
160,593
$'000 | $'000 | $'000 | $'000 | $'000 | $'000 | |
Shares and other variable yield securities and units in unit trusts | | | | 52,079 | | |
Debt securities and other fixed income securities | | | | 156,345 | | |
Loans and Deposits with credit institutions | | | | 20,000 | | |
Overseas Deposits | | | | 17,294 | | |
Total | | | | 245,718 | | |
38
Financial Investments continued
The table below presents an analysis of financial investments by their measurement
classification:
| 2025 | 2024 | |
| $’000 | $’000 | |
Financial assets measured at fair value through profit or loss | ||
Financial assets measured at fair value as available for sale | | |
Financial assets measured at amortised cost | ||
Total financial investments |
The amount repayable at maturity on the investments valued at amortised cost is $76.9m
(2024: $109.2m).
Information on the methods and assumptions used to determine fair values for each major
category of financial instrument measured at fair value is provided below.
Debt securities are generally valued using prices provided by external pricing vendors. Pricing
vendors will often determine prices by consolidating prices of recent trades for identical or
similar securities obtained from a panel of market makers into a composite price. The pricing
service may make adjustments for the elapsed time from a trade date to the valuation date to
take into account available market information. Lacking recently reported trades, pricing
vendors will use modelling techniques to determine a security price.
Some government and supranational securities are listed on recognised exchanges and are
generally classified as level 1 in the fair value hierarchy. Those that are not listed on a
recognised exchange are generally based on composite prices of recent trades in the same
instrument and are generally classified as level 2 in the fair value hierarchy.
Corporate bonds, including asset backed securities, that are not listed on a recognised
exchange or are traded in an established over the counter market are also mainly valued using
composite prices. Where prices are based on multiple quotes and those quotes are based on
actual recent transactions in the same instrument the securities are classified as level 2,
otherwise they are classified as level 3 in the fair value hierarchy.
At the reporting date Level 1 and Level 2 financial assets and liabilities were valued using
valuation techniques based on observable market data. All the investments categorised as
Level 3 are fair valued based on the inputs to the valuation technique used.
13. Debtors arising out of direct insurance operations
| 2025 | 2024 | |
$'000 | $'000 | |
Due within one year | ||
Due after one year | ||
Total |
39
14. Debtors arising out of reinsurance operations
| 2025 | 2024 | |
$'000 | $'000 | |
Due within one year | ||
Due after one year | ||
Total |
15. Other debtors
| 2025 | 2024 | |
$'000 | $'000 | |
Other related party balances (non-syndicate) | ||
Other | ||
Total |
16. Creditors arising out of direct insurance operations
| 2025 | 2024 | |
$'000 | $'000 | |
Due within one year | ||
Due after one year | ||
Total |
17. Creditors arising out of reinsurance operations
| 2025 | 2024 | |
$'000 | $'000 | |
Due within one year | ||
Due after one year | ||
Total |
18. Other creditors
| 2025 | 2024 | |
$'000 | $'000 | |
Profit commissions payable | ||
Other liabilities | ||
Total |
40
19. Cash and cash equivalents
| 2025 | 2024 | |
$'000 | $'000 | |
Cash at bank and in hand | ||
Short term debt instruments presented within other financial investments | ||
Deposits with credit institutions | ||
Total |
Shares and other variable yield securities and units in unit trusts are investments in nature but
are treated as cash and cash equivalents for cash flow purposes, so therefore are included in
both financial investments and cash and cash equivalents.
Deposits with credit institutions with maturities of three months or less that are used by the
Syndicate in the management of its short-term commitments are included in cash and cash
equivalents.
Of the total cash and cash equivalents, the following amount was held in regulated bank
accounts in overseas jurisdictions:
| 2025 | 2024 | |
| $’000 | $’000 | |
Total cash and cash equivalents held in regulated accounts in overseas jurisdictions |
20. Related parties
Asta provided service and support to Syndicate 4242 in its capacity as Managing Agent until
29
th
December 2025. During that period, the following fees were charged to the syndicate
2025
2024
$'000
$'000
Managing Agency fees on insurance capacity
(1,978)
(2,108)
Service Fees
(3,806)
(2,763)
Recharges
(3)
(15)
Profit Commissions
(1,821)
(1,076)
Total
(7,608)
(5,962)
From 30
th
December 2025, Statera Managing Agency became the Managing Agent for
Syndicate 4242. No fees were charged in the year.
Statera Managing Agency Ltd is a subsidiary of Octave Specialty Group, Inc. a company listed
on the New York Stock Exchange. Beat Syndicate Services Ltd, a company registered in
England and Wales, is a member of the Group that provides services to Syndicate 4242 and
SPA 1416. Expenses amounting to $8.5m (2024: $9.7m) were charged to the Syndicate during
2025. Octave Services Ltd, another Group member, also provides services to the Syndicate
and expenses amounting to $6.5m (2024: $3.7m) were charged during the year.
41
21. Disclosure of interests
During 2025, Asta was the Managing Agent for the following syndicates on behalf of third-party
capital providers:
• Syndicates 1322, 1609, 1618, 1699, 1892, 1947, 1984, 1985, 1988, 2525, 2689, 3123,
4242 and 4747,
• Special Purpose Arrangement 1416,
• Syndicates-in-a-Box 1796, 1902, 1922, 1966, 2427, 2880, 3456 and 5183.
During 2025, Asta took on management of the following syndicates:
• Syndicate 1618 on 1 January 2025
• Syndicate 1984 on 1 April 2025
• Syndicate 1947 on 1 July 2025
During 2025, Asta ceased to be the Managing Agent for the following syndicates:
• Syndicate 2786 on 1 July 2025
• Syndicate 4242 on 29
th
December
• Special Purpose Arrangement 1416 on 29
th
December
Asta also provides administrative services to syndicates and special purpose arrangements,
also undertaking several ancillary roles for other clients.
The financial statements of Asta Managing Agency can be obtained by application to the
Registered Office at 5th Floor, 20 Gracechurch Street, London, EC3V 0BG.
From the 30
th
December, the Managing Agency of the Syndicate changed from Asta to Statera
Managing Agency who is also the managing agent for Syndicate 4242’s SPA Syndicate 1416.
Alcor Underwriting London Ltd., Alcor Underwriting Bermuda Limited, Brace Underwriting Ltd.,
Tegron Specialty Ltd., Satinwood Underwriting Ltd., Chord Reinsurance Ltd., Munitus
Insurance Ltd., Redriff Underwriting Ltd., Convergence Credit Ltd. and Horace Underwriting
Ltd. are all majority owned entities of the Octave Group providing coverholder services to the
Syndicate.
Alitus Intermediaries Ltd. provides reinsurance management services to the Syndicate and
Capital management services to the Managing Agency.
All transactions between these entities are on normal commercial terms.
There are certain individuals that are part of Octave Specialty Group who participate on the
Syndicate as a capital provider. The following table shows their participation as a proportion
of the overall capital providers. None of the individuals are in the Managing Agency's
governance structure.
2023
2024
2025
Octave individuals
1.49%
1.61%
1.71%
42
22. Funds at Lloyd's
Every member is required to hold capital at Lloyd's which is held in trust and known as Funds
at Lloyd's (FAL). These funds are intended primarily to cover circumstances where Syndicate
assets prove insufficient to meet participating members' underwriting liabilities. The level of
FAL that Lloyd's requires a member to maintain is determined by Lloyd's based on PRA
requirements and resource criteria. FAL has regard to a number of factors including the nature
and amount of risk to be underwritten by the member and the assessment of the reserving risk
in respect of business that has been underwritten. Since FAL is not under the management of
the managing agent, no amount has been shown in these financial statements by way of such
capital resources. However, the managing agent is able to make a call on the members' FAL
to meet liquidity requirements or to settle losses.
23. Off-balance sheet items
The Syndicate has not been party to any arrangement, which is not reflected in its statement
of financial position, where material risks and benefits arise for the Syndicate. As at 31
December 2024, the syndicate had a $25m trade loan facility with Barclays Bank PLC
(Barclays). Nothing was drawn down during the year. This expired on 31 December 2024 and
has not been renewed in 2025.
24. Risk management
a) Governance framework
The Syndicate's risk and financial management framework aims to protect the Syndicate's
members capital from events that might otherwise prevent the Syndicate from meeting its
policyholder obligations, while maximising the returns to its members. The Directors recognise
the critical importance of having efficient and effective risk management systems in place.
Statera maintains a risk management function for the Agency and Syndicate with clear terms
of reference from the Agency Board, its committees and sub committees.
Statera supplements this with a clear organisational structure with documented delegated
authorities and responsibilities from the main Statera Managing Agency Board to the Syndicate
who perform the underwriting activities. Lastly, the Syndicate policy framework sets its risk
management and control and business conduct standards for operations. Statera reviews and
monitors each policy to ensure compliance with the policy throughout the Syndicate.
The Agency Risk and Compliance Committee approves the risk management policies and
meets regularly to approve any commercial, regulatory and organisational requirements of
such policies. These policies define the identification of risk and its interpretation to ensure the
appropriate quality and diversification of assets, align underwriting and reinsurance strategy
to the Syndicate goals, and specify reporting requirements. The Agency Board places
significant emphasis on the assessment and documentation of risks and controls, including
the articulation of the Syndicate's risk appetite.
43
Risk management continued
b) Capital management objectives, policies and approach
Capital framework at Lloyd's
The Society of Lloyd's (Lloyd's) is a regulated undertaking and subject to the supervision of
the Prudential Regulatory Authority (PRA) under the Financial Services and Markets Act 2000.
Within the supervisory framework, Lloyd's applies capital requirements at member level and
centrally to ensure that Lloyd's complies with UK capital requirements, and beyond that to
meet its own financial strength, licence and ratings objectives.
Although Lloyd's capital setting processes use a capital requirement set at Syndicate level as
a starting point, the requirement to meet Solvency UK and Lloyd's capital requirements apply
at overall and member level only respectively, not at Syndicate level. Accordingly the capital
requirement in respect of the Syndicate is not disclosed in these financial statements.
Lloyd's capital setting process
In order to meet Lloyd's requirements, each Syndicate is required to calculate its Solvency
Capital Requirement (SCR) for the prospective underwriting year. This amount must be
sufficient to cover a 1 in 200 year loss, reflecting uncertainty in the ultimate run-off of
underwriting liabilities (SCR 'to ultimate'). The Syndicate must also calculate its SCR at the
same confidence level but reflecting uncertainty over a one-year time horizon (one year SCR)
for Lloyd's to use in meeting Solvency UK requirements. The SCRs of each Syndicate are
subject to review by Lloyd's and approval by the Lloyd's Capital and Planning Group.
A Syndicate may be comprised of one or more underwriting members of Lloyd's. Each member
is liable for its own share of underwriting liabilities on the Syndicate on which it is participating
but not other members' shares. Accordingly, the capital requirement that Lloyd's sets for each
member operates on a similar basis. Each member's SCR shall thus be determined by the
sum of the member's share of the Syndicate SCR 'to ultimate'. Where a member participates
on more than one Syndicate, a credit for diversification is provided to reflect the spread of risk,
but consistent with determining an SCR which reflects the capital requirement to cover a 1 in
200 year loss 'to ultimate' for that member. Over and above this, Lloyd's applies a capital uplift
to the member's capital requirement, known as the Economic Capital Assessment (ECA). The
purpose of this uplift, which is a Lloyd's not a Solvency 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'.
Provision of capital by members
Each member may provide capital to meet its ECA either by assets held in trust by Lloyd's
specifically for that member (funds at Lloyd's), held within and managed within a Syndicate
(funds in Syndicate) or as the member's share of the members' balances on each Syndicate
on which it participates. Accordingly, the ending members balances reported on the Statement
of Financial Position on page 18, represent resources available to meet members' and Lloyd's
capital requirements.
44
Risk management continued
c) Insurance risk
The principal risk the Syndicate faces under insurance contracts is that the actual claims and
benefit payments or the timing thereof, differ from expectations. This is influenced by the
frequency of claims, severity of claims, actual benefits paid and subsequent development of
long-term claims. Therefore, the objective of the Syndicate is to ensure that sufficient reserves
are available to cover these liabilities.
The risk exposure is mitigated by diversification across a large portfolio of insurance contracts
and geographical areas. The variability of risks is also improved by careful selection and
implementation of underwriting strategy guidelines, as well as the use of reinsurance
arrangements.
The Syndicate purchases reinsurance as part of its risk mitigation programme. The Syndicate’s
reinsurance program is predominantly covered by a whole account, non-proportional losses
occurring during policy which covers the calendar year. Amounts recoverable from reinsurers
are estimated in a manner consistent with the outstanding claims provision and are in
accordance with the reinsurance contracts. The Syndicate's placement of reinsurance is
diversified such that it is neither dependent on a single reinsurer nor are the operations
substantially dependent upon any single reinsurance contract.
Sub committees of the Board oversee the management of reserving risk. The use of
standardised and internal modelling techniques, as well as benchmarking and the review of
claims development are key in mitigating reserving risk. The purpose of these underwriting,
reinsurance and reserving strategies is to limit exposure to catastrophes or large losses based
on the Syndicate's risk appetite as decided by the Board.
The Syndicate uses both its own and commercially available risk management software to
assess catastrophe exposure. However, there is always a risk that the assumptions and
techniques used in these models are unreliable or that claims arising from an un-modelled
event are greater than those arising from a modelled event.
Key assumptions
The principal assumption underlying the liability estimates is that the future claims
development will follow a similar pattern to past claims development experience. This includes
assumptions in respect of average claim costs, claim handling costs, claim inflation factors
and claim numbers for each underwriting year. Additional qualitative judgements are used to
assess the extent to which past trends may not apply in the future, for example: once-off
occurrence; changes in market factors such as public attitude to claiming: economic
conditions: as well as internal factors such as portfolio mix, policy conditions and claims
handling procedures. Judgement is further used to assess the extent to which external factors
such as judicial decisions and government legislation affect the estimates.
Other key circumstances affecting the reliability of assumptions include variation in interest
rates, delays in settlement and changes in foreign currency rates.
45
Risk management continued
Sensitivities
The claim liabilities are sensitive to the key assumptions that follow. It has not been possible
to quantify the sensitivity of certain assumptions, such as legislative changes, uncertainty in
the estimation process. The following analysis is performed for reasonably possible
movements in key assumptions with all other assumptions held constant, showing the impact
on net liabilities, profit and members' balances. The correlation of assumptions will have a
significant effect in determining the ultimate claims liabilities, but to demonstrate the impact
due to changes in assumptions, assumptions had to be changed on an individual basis. It
should be noted that movements in these assumptions are non-linear.
The tables below show the sensitivity to adjusting gross and net loss ratios. The amount
disclosed for the impact on claims outstanding – net of reinsurance represents the impact on
both the profit and loss for the year and member balances.
General insurance business sensitivities as at 31 December 2025 | 5.00% | -5.00% |
$'000 | $'000 | |
| Claims outstanding – gross of reinsurance | ( | |
| Claims outstanding – net of reinsurance | ( |
General insurance business sensitivities as at 31 December 2024 | 5.00% | -5.00% |
$'000 | $'000 | |
| Claims outstanding – gross of reinsurance | ( | |
| Claims outstanding – net of reinsurance | ( |
Claims development
The tables below show the Syndicate's cumulative incurred claims development, including
both claims notified and IBNR for each underwriting year, together with the cumulative
payments to date on a gross and net of reinsurance basis at the balance sheet date.
The Syndicate has elected to translate estimated claims and claims payments at a consistent
rate of exchange as determined by the balance sheet date.
Underwriting Year | 2023 | 2024 | 2025 |
Estimate of ultimate gross claims | |||
At end of first underwriting year | |||
One Year Later | |||
Two Years Later | |||
Less cumulative gross paid | ( | ( | ( |
Gross claims reserves |
46
Risk management continued
Underwriting Year | 2023 | 2024 | 2025 |
Estimate of ultimate net claims | |||
At end of first underwriting year | |||
One Year Later | |||
Two Years Later | |||
Less cumulative gross paid | ( | ( | ( |
Net claims reserves |
The uncertainty associated with the ultimate claims experience of an underwriting year is
greatest when the underwriting year is at an early stage of development and the margin for
future experience potentially being more adverse than assumed is at its highest. As claims
develop, and the ultimate cost of the claims becomes more certain, the relative level of margin
should decrease. Due, however, to the uncertainty inherent in the claims estimation process,
initial reserves may not always be in a surplus. This is particularly so for large catastrophe
claims where uncertainly is initially high.
a) Financial risk
The focus of financial risk management for the Syndicate is ensuring that the proceeds from
its financial assets are sufficient to fund the obligations arising from its insurance contracts.
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss by failing
to discharge an obligation. The Syndicate has the following policies and procedures in place
to mitigate the exposure to credit risk:
Reinsurance is placed with counterparties that have a good credit rating and concentration of
risk is avoided by following policy guidelines in respect of counterparties' limits. If the
counterparty is downgraded or does not have a good credit rating, then collateral is sought to
mitigate any risk. This is monitored by the Agency Board.
47
Risk management continued
The tables below show the maximum exposure to credit risk (including an analysis of financial
assets exposed to credit risk) for the components of the statement of financial position. The
maximum exposure is shown gross, before the effect of mitigation through collateral
agreements and the use of credit derivatives.
Neither
past due
or
impaired
Past due
Impaired
Total
2025
2025
2025
2025
$'000
$'000
$'000
$'000
Other financial investments
Reinsurers share of claims outstanding
Insurance debtors
Reinsurance debtors
Other Debtors
Cash and cash equivalents
Total
Neither
past due
or
impaired
Past due
Impaired
Total
2024
2024
2024
2024
$'000
$'000
$'000
$'000
Other financial investments
Reinsurers share of claims outstanding
Insurance debtors
Reinsurance debtors
Other Debtors
Cash and cash equivalents
Total
Past due by: | 0-3 months | 3-6 months | 6-12 months | Greater than 1 year | Total |
| 2025 | 2025 | 2025 | 2025 | 2025 | |
$'000 | $'000 | $'000 | $'000 | $'000 | |
Insurance debtors | |||||
Total |
Past due by: | 0-3 months | 3-6 months | 6-12 months | Greater than 1 year | Total |
| 2024 | 2024 | 2024 | 2024 | 2024 | |
$'000 | $'000 | $'000 | $'000 | $'000 | |
Insurance debtors | |||||
Total |
48
Risk management continued
The table below provides information regarding the credit risk exposure of the Syndicate at the
reporting date by classifying assets according to independent credit ratings of the
counterparties. AAA is the highest possible rating.
2025
AAA
AA
A
BBB
BBB or
less
NR
Total
Shares and other
variable yield
securities
Debt Securities
Loans with credit
institutions
Overseas Deposits
7,009
666
1,832
893
361
1,658
12,419
Deposits with
ceding
undertakings
Reinsurers share
of claims
outstanding
Debtors arising out
of direct insurance
operations
Reinsurance
debtors
Cash and cash
equivalents
Other debtors and
accrued interest
Total
2024
AAA
AA
A
BBB
BBB or
less
NR
Total
Shares and other
variable yield
securities
Debt Securities
Loans with credit
institutions
Overseas Deposits
8,419
1,410
1,902
1,339
1,628
2,597
17,295
Reinsurers share
of claims
outstanding
Debtors arising out
of direct insurance
operations
Reinsurance
debtors
Cash and cash
equivalents
Other debtors and
accrued interest
Total
49
Risk management continued
Maximum credit exposure
It is the Syndicate's policy to maintain accurate and consistent risk ratings across its credit
portfolio. This enables management to focus on the applicable risks and the comparison of
credit exposures across all lines of business.
During the year, no credit exposure limits were exceeded.
Liquidity risk
Liquidity risk is the risk that the Syndicate may not have enough cash to pay insurance claims
and other liabilities. This risk is reduced by reviewing the Syndicate’s expected cash
obligations on a weekly basis and keeping adequate cash on deposit to meet those obligations.
Further, an Investment and Liquidity Committee meets to review liquidity strength and
forthcoming liquidity needs on a quarterly basis.
The table below summarises the maturity profile of the Syndicate's financial liabilities based
on remaining undiscounted contractual obligations, including interest payable and outstanding
claim liabilities based on the estimated timing of claim payments resulting from recognised
insurance liabilities. Repayments which are subject to notice are treated as if notice were to
be given immediately.
No | ||||||
stated | ||||||
maturity | 0-1 Year | 1-3 Years | 3-5 Years | 5 Years+ | Total | |
| 2025 | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 |
Claims outstandings | ||||||
Creditors | ||||||
Total |
No | ||||||
stated | ||||||
maturity | 0-1 Year | 1-3 Years | 3-5 Years | 5 Years+ | ||
| 2024 | $'000 | $'000 | $'000 | $'000 | $'000 | Total |
Claims outstandings | ||||||
Creditors | ||||||
Total |
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument or
insurance contract will fluctuate because of changes in market prices. Market risk comprises
three types of risk: currency risk, interest rate risk and other price risk. Other price risk has
been assessed as negligible, given that the Syndicate does not invest in equities.
The objective of market risk management is to manage and control market risk exposures
within acceptable parameters, while optimising the return on risk.
50
Risk management continued
a) Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in foreign exchange rates.
The Syndicate's functional currency is US Dollar and its exposure to foreign exchange risk
arises primarily with respect to transactions in Sterling, Euro, Canadian Dollar and Australian
Dollar. The Syndicate seeks to mitigate the risk by matching the estimated foreign currency
denominated liabilities with assets denominated in the same currency.
The Syndicate matches its currency position, so it holds net assets across a number of
currencies. The Syndicate takes into consideration the underlying currency of the Syndicate's
required capital and invests its assets proportionately across these currencies so as to protect
the solvency of the Syndicate, against variation in foreign exchange rates.
The following table summarises the exposure of the financial assets and liabilities to foreign
currency exchange risk at the reporting date, as follows, with all numbers reported in converted
US Dollars:
2025 $'000 | GBP | USD | EUR | CAD | Total |
Investments | |||||
Reinsurers' share of technical provisions | |||||
Debtors | |||||
Other assets | |||||
Prepayments and accrued income | |||||
Total Assets | |||||
Technical provisions | ( | ( | ( | ( | ( |
Creditors | ( | ( | ( | ( | |
Accruals and deferred income | ( | ( | ( | ( | ( |
Total Liabilities | ( | ( | ( | ( | ( |
Total capital and reserve | ( | ( | ( |
2024 $'000 | GBP | USD | EUR | CAD | Total |
Investments | |||||
Reinsurers' share of technical provisions | |||||
Debtors | |||||
Other assets | |||||
Prepayments and accrued income | |||||
Total Assets | |||||
Technical provisions | ( | ( | ( | ( | ( |
Deposits received from reinsurers | - | - | - | - | - |
Creditors | ( | ( | ( | ( | |
Accruals and deferred income | ( | ( | ( | ( | ( |
Total Liabilities | ( | ( | ( | ( | ( |
Total capital and reserve | ( | ( | ( | ( |
51
Risk management continued
Sensitivity to changes
The table below gives an indication of the impact on profit of a percentage change in the
relative strength of the US Dollar against the value of Sterling, Euro, Canadian Dollar and
Australian Dollar simultaneously. The analysis is based on the information as at the reporting
date.
2025
2024
$'000
$'000
USD Weakens
10% against other currencies
(5,143)
6,778
20% against other currencies
(10,286)
13,556
USD Strengthens
10% against other currencies
5,143
(6,778)
20% against other currencies
10,286
(13,556)
b) Interest rate risk
Interest rate risk is the risk that the value or future cash flows of a financial instrument will
fluctuate in response to changes in market interest rates.
Floating rate instruments expose the Syndicate to cash flow interest risk, whereas fixed rate
instruments expose the Syndicate to fair value interest risk.
The analysis below is performed for reasonably possible movements in market interest rates
with all other variables held constant, showing the impact on the result before tax due to
changes in fair value of financial assets (whose fair values are recorded in the profit and loss
account) and Members’ balances.
| 2025 | 2024 | |
$'000 | $'000 | |
Interest rate risk | ||
Impact of 50 basis point increase on result | ( | ( |
Impact of 50 basis point decrease on result | ||
Impact of 50 basis point increase on net assets | ( | ( |
Impact of 50 basis point decrease on net assets |
Insurance liabilities are not discounted and therefore are not exposed to interest rate risk.
25. Post balance sheet events
The Syndicate will distribute the 2023 underwriting year profits to Members during 2026. The
Directors evaluated other events after the balance sheet date through to 20 February 2026,
the date the Syndicate issued these annual accounts, and no adjusting or significant non-
adjusting events have been identified that require disclosure in these accounts.
