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SYNDICATE 3010
Annual Report and Accounts
Directors and Administration 1
Report of the Directors of the Managing Agent 2
Statement of Managing Agent’s Directors' Responsibilities 7
Syndicate Annual Accounts for the Year Ended 31 December 2025 8
Independent Auditor’s Report to the Members of Syndicate 3010 9
Statement of Profit or Loss - Technical Account - General Business 12
Statement of Profit or Loss - Non-Technical Account 13
Balance Sheet 14
Statement of Changes in Member's Balances 15
Statement of Cash Flows 16
Notes to the Syndicate Annual Accounts 17
Contents
Managing Agent:
29th Floor
20 Fenchurch Street
London EC3M 3BY
Managing Agent’s Registered Number
00292093
Directors
N P Davenport Non-Executive Chairman
C J Whittle
L J Gibbins Non-Executive (Resigned 12 February 2025)
P Martin Non-Executive
M Thomas (Appointed 01 April 2025)
J D Spence (Resigned 11 February 2026)
R D Milner
B A Schofield Non-Executive
K Turner
S J Churchill
B Cass
B Joseph Non-Executive
R L Sabbarton (Appointed 11 February 2026)
Company Secretary
P Kelly
Syndicate Active Underwriter
M Thomas
Bankers
Barclays Bank plc
Citibank N.A
Royal Bank of Canada
Investment Manager
Conning Asset Management Limited
24 Monument Street
London EC3R 8AJ
Lloyd’s Treasury Services
One Lime Street
London EC3M 7HA
Registered Auditor
KPMG LLP
15 Canada Square
Canary Wharf
London E14 5GL
Directors and Administration
1
Introduction
The Directors of Lancashire Syndicates Limited ("LSL"), the managing agent for Syndicate 3010, present their Annual Report and
Accounts for the year ended 31 December 2025.
These Annual Report and Accounts 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 and applicable
United Kingdom Accounting Standards including Financial Reporting Standard 102: The Financial Reporting Standard
Applicable in the United Kingdom and Ireland ('FRS102 ') and Financial Reporting Standard 103 Insurance Contracts ('FRS103'),
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 Directors continue to prepare the Syndicate annual accounts on a going concern basis as the Syndicate does not intend to
cease underwriting or cease its operations, and the Directors have concluded that the Syndicate's financial position means that
this is realistic. The Directors have also concluded that there are no material uncertainties that could cast significant doubt over
the Syndicate's ability to continue as a going concern for at least a year from the date of approval of the Syndicate annual
accounts. Management's assessment of the Syndicate as a going concern is set out in Note 1 on page 17.
Principal activity
The principal activity of Syndicate 3010 remains the transaction of general insurance and reinsurance business in the United
Kingdom at Lloyd’s of London. The main lines of business are grouped as Accident & Health, Marine, Aviation and Transport,
Energy (including Power Utility), Property, Political Risk, Casualty and Property Construction.
LSL is the Managing Agent for Syndicate 3010. It also acts as Managing Agent for Syndicate 2010. LSL is subject to the dual
regulation of the Prudential Regulation Authority ("PRA") and the Financial Conduct Authority ("FCA"), as well as Lloyd’s.
Cathedral Capital Holdings Limited ("CCHL"), registered in England and Wales, is the immediate parent company of LSL.
Lancashire Holdings Limited ("LHL"), incorporated in Bermuda, is the ultimate parent company of LSL.
Calendar year results and business review
The result for the 2025 calendar year is a profit of $31.9m (2024: profit of $51.4m) and a combined ratio of 97.5% (2024: 88.6%).
An analysis of the contribution to the overall result made by the individual underwriting years is as follows:
2023
account
$'000
2024
account
$'000
2025
account
$'000
31 December
2025
$'000
31 December
2024
$'000
Gross premiums written
(18,452) 61,873 455,268 498,689
464,198
Gross premiums earned
19,504 267,187 192,810 479,501
437,296
Net premiums earned
9,334 198,984 144,294 352,612
311,763
Profit for the financial year
(14,404) 56,426 (10,074) 31,948
51,406
Loss ratio (%)
300.0 47.1 59.7 59.0
53.3
Expense ratio (%)*
52.1 28.1 49.8 38.5
35.3
Combined ratio (%)
352.1 75.2 109.5 97.5
88.6
* The expense ratio excludes Other technical income for consortium fees which were $2.6m (2024: $2.4m) for the year.
Report of the Directors of the Managing Agent
31 December 2025
2
Underwriting
A breakdown of divisional performance is shown below:
31 December 2025
31 December 2024
Gross
premiums
written
$’000
Net loss
ratio
%
Gross
premiums
written
$’000
Net loss
ratio
%
Accident and Health
33,899 45.3 29,420 49.2
Marine, Aviation and Transport
208,844 69.2 207,869 58.6
Energy (including Power Utility)
112,543 56.7 84,440 60.9
Property
90,596 43.6 88,568 30.4
Political Risk
35,842 34.3 17,548 25.1
Casualty
16,301 70.8 14,654 74.9
Other*
664 66.1 21,699 87.2
Total
498,689 59.0 464,198 53.3
* Other includes the Lancashire UK Limited ("LUK") quota share class.
The gross written premiums for the calendar year have increased by 7.4% to $498.7m (2024: $464.2m).The Syndicate increased
the amount of premium income driven largely by new business opportunities across most product lines, with good levels of
business retention. Whilst we saw continued rate levels softening from their market-high, all classes can demonstrate healthy
rating adequacy. All classes made valuable contributions during the year, with all product lines now well established, after a period
of strong and profitable growth since their introduction.
The Syndicate continued to execute its profitable growth strategy, exceeding the gross written premium in the prior year. All
product lines have benefited from rate growth for 4 or 5 years, however, 2024 was the year that the specialty insurance market
peaked, and rates have since started to soften. That said we remain confident that rating adequacy remains healthy across all our
product lines, and this has resulted in strong performance for the year.
LSL maintains a strong underwriting discipline across all lines with a focus on the profitability of business being written rather
than top line premium income. Growth was sourced through sectors where we found the risk and rating environment aligned to
our appetite. 2025 saw a transition of our underwriting strategy, moving towards portfolio optimization and cycle management.
This is underpinned by our core underwriting values and will be key as the market continues to soften.
The Syndicate purchases outwards reinsurance cover principally to limit the impact of catastrophes or multiple large losses.
Reinsurance is purchased on both an excess of loss and proportional basis. Reinsurance premiums ceded in the year have
increased by 2.2% to $132.6m (2024: $129.8m). The increased programme spend reflects the continued growth of classes where
we purchase quota share reinsurance.
The underwriting result was impacted by mid-sized losses on the Energy, Power and Aviation books. Consistent with previous
years, losses from major natural catastrophes had limited impact.
The Russia/Ukraine conflict has caused significant disruption to worldwide economies, both directly through the invasion and
indirectly through sanctions being imposed on Russia by the UK, EU and US. Given the nature of the Russia/Ukraine Conflict,
the ultimate losses relating to the event are subject to a degree of uncertainty. Reserves have been set on a case by case and
probability basis. The exposures and associated loss pattern are more developed in 2025. We continue to monitor this closely.
The geopolitical landscape of 2025 remained in focus and was marked by ongoing complexities and shifting alliances, with
particular tension evident in the Middle East and North Africa region, especially concerning the United States and Iran.
Diplomatic relations between the US and Iran remain strained due to longstanding issues over nuclear proliferation, regional
influence, and economic sanctions. A notable factor shaping this dynamic is US economic policy, which continues to leverage
targeted sanctions and trade restrictions to deter Iran's nuclear ambitions and curb its regional activities, while also seeking to
stabilise energy markets in response to global shifts.
The broader MENA region is further destabilised by conflicts in Yemen, Syria, and Libya, as well as economic challenges and
fluctuating energy prices, all of which are impacted by the evolving US-Iran dynamic and American economic strategies.
We continue to evaluate the associated risk landscape and adapt our underwriting strategy and risk appetite to meet the
challenges presented.
Report of the Directors of the Managing Agent
31 December 2025
3
The net loss ratio for the 2025 calendar year is 59.0% (2024: 53.3%).
Net operating expenses, including business acquisition costs and administrative expenses, were $135.8m (2024: $109.9m) and the
expense ratio was 38.5% (2024: 35.3%). The increase in the expense ratio is largely due to business mix changes on new classes.
The breakdown of these costs is summarised in Note 6 of the accounts.
Outlook and business environment
Syndicate 3010 continues to attain outperforming status at Lloyd’s, and this has helped to drive the strategy for profitable growth
in existing core lines and the introduction of new lines of business during the hard market transition. During 2025, there has
been a further increase in market appetite and competition across all lines of business. A combination of new capacity and
existing market participants pushing for growth has led to increased competition, becoming fierce in some areas, which in turn
has seen rates softening across all classes.
We are in a strong position to navigate these increasing headwinds, reassured by the underlying robustness of our business
portfolio and the quality of our underwriting expertise. Our focus will always remain on underwriting for bottom line profitability
and whilst we recognise that rates are softening, the current rating environment remains strong. We will continue to evaluate new
business opportunities into 2026 and invest in our underwriting talent.
For 2026, the income is planned to increase through organic growth of existing specialty classes previously written through
consortia arrangements with Syndicate 2010. More broadly, all our product lines are now mature in their development, and as
such market forces will subdue prospects for further growth.
Syndicate 3010 is well established in the marketplace in the core classes written. We have experienced underwriting teams who are
ably assisted by capable support departments overseen by the LSL Executive team and Board. In addition, the Syndicate has the
full support of the wider Lancashire Group which enables it to capitalise on any underwriting opportunities. The Syndicate has a
prudent approach to reserving, a strong reinsurance programme with good security and a conservative investment portfolio. LSL
continues to be a lean organisation and responsive to market changes whilst providing dependable value, strength, longevity and
expertise to our clients and brokers.
The Syndicate capacity for the 2026 year of account has remained at £400.0m.
Underwriting year of account summary
The table below shows Syndicate 3010’s actual results for the closed 2023 year of account and the forecast results for the 2024 year
of account:
2025 forecast 2024 forecast 2023 actual
Year of account £’000 £’000 £’000
Stamp capacity 400,000 400,000 375,000
Profit n/a n/a 30,920
Return on stamp * 12.5% to 7.5% 8.2 %
*A formal forecast range for the 2025 year of account will be submitted in the Q1 2026 QMA.
Cathedral Capital (1998) Limited, an incorporated member of Lloyd’s and a Lancashire Group Company, is the sole capital
provider for all years of account.
2023 Underwriting result
The 2023 year of account closed on 31 December 2025 with a profit of $41.7m. This equates to a return of 8.2% of capacity.
2024 Account
The latest forecast for the 2024 year of account will be issued in the Syndicate’s Q4 QMA submission on 27 February 2026, with
the range at 12.5% to 7.5% of stamp capacity.
Report of the Directors of the Managing Agent
31 December 2025
4
2025 Account
For 2025, the Syndicate’s capacity remained at £400.0 m. Although it is still too early to produce a 2025 forecast range due to a
large amount of unexpired exposure, the events of 2026 will remain critical to how the year of account develops. The commentary
outlining the 2025 experience is contained within the Calendar Year Results and Business Review section of this report.
Syndicate investments
Investment policy
The investment objective for the Syndicate’s investment manager is to invest the Premium Trust Funds to preserve capital and
maintain liquidity to support underwriting operations in line with policies approved by the Board of LSL. The investment
mandate is to invest the Premium Trust Funds in a manner calculated to maximise returns within agreed restraints. Portfolios are
invested predominantly in short-term, high quality fixed maturity securities. The Syndicate investment manager has been
instructed to maintain adequate liquidity and security and has discretion to invest in private sector securities for a limited
proportion of the portfolio and within diversity limits for individual credits. Limiting the target duration of the overall portfolio
controls the exposure of the investments to adverse price movements.
Portfolio management is delegated to Conning Asset Management Limited. An Investment Committee and formal procedures for
monitoring investments exist in line with Lloyd’s guidance.
Investment performance
Syndicate 3010’s investment portfolio returned an investment gain of $19.4m in 2025 (2024: gain of $14.6m). The Syndicate’s
cash and investments totalled $384.3m at 31 December 2025 (2024: $372.1m).
Investment strategy
The investment strategy places an emphasis on the preservation of invested assets and provision of sufficient liquidity for the
prompt payment of claims, in conjunction with providing a reasonably stable income stream. These objectives are reflected in the
Syndicate’s investment guidelines and its relatively conservative asset allocation. Management reviews the composition, duration
and asset allocation of the investment portfolio on a regular basis in order to respond to changes in interest rates and other
market conditions.
Foreign exchange hedging
The Managing Agent, in so far as possible, matches assets and liabilities by currency within the Syndicate. To date, the Managing
Agency has not entered into any transaction to hedge the foreign exchange exposure to the non-US Dollar (Sterling, Canadian
Dollars or Euro) currencies held within the Syndicate’s premium trust funds. The Managing Agent will continue to keep this
possibility under review and may at some future date enter into such transactions. Foreign exchange exposures are hedged across
the Lancashire Group.
Principal risks and uncertainties
In addition to strategic risk, including an inappropriate or poorly executed business plan, the Syndicate is exposed to a variety of
risks when undertaking its activities all of which are taken into account when setting its Ultimate Solvency Capital Requirement
("uSCR"). The key risks to the Syndicate are: Insurance risk, Financial risk, Credit risk, Liquidity risk, Operational risk, Market risk
and Capital Management risk, details of which are disclosed in Note 4. All areas of risk are subject to the Managing Agency’s risk
management framework and enterprise-wide risk management practices and controls.
Below are risks for which quantitative assessment is difficult but for which a structured approach is still required to ensure that
their potential impact is considered and mitigated insofar as practicable.
Risks relating to Climate Change
The Syndicate is exposed to both climate-related risk and opportunities. The two major categories of risk being transition and
physical risk. Transition risks are those relating to the transition to a lower carbon economy and include risks such as policy and
legal risk, technology risk, market risk and reputation risk. Physical risks are those relating to the physical impacts of climate
change which can be acute (those from increased frequency and severity of climate related events) or chronic (due to longer-term
shifts in climate patterns). The Syndicate is more significantly affected by physical risk through its exposure to acute and chronic
climate change. However, consideration must be, and is, given to transition and climate-related litigation risks. The potential
financial impact from these climate-related risks is assessed through scenario testing and mitigated by the Syndicate's strategic and
risk management decisions on managing these risks. A risk radar has been prepared to illustrate the risks identified, the
Report of the Directors of the Managing Agent
31 December 2025
5
Report of the Directors of the Managing Agent
31 December 2025
likelihood of the risks and their product impact. The risk assessment also considers the products currently offered by the
Syndicate and how these might change over time during the transition to a lower carbon economy.
In our underwriting operations, we manage this risk effectively by supplementing our internal systems, data and procedures with
external vendor models. Underwriting guidelines were developed in 2021 to support the underwriting process and provide
guidance to assist underwriters in their decision making. These guidelines were reviewed and updated at the end of 2025, with
greater product focus across the Lancashire Underwriting Group. Performance against guidelines is monitored via the Group
Underwriting Executive committee, and respective Insurance and Reinsurance Forums. We have clear tolerances and preferences
in place to actively manage exposures, and the Board regularly monitors our Probable Maximum Loss (PMLs). The risks to the
asset side of our balance sheet from exposure to climate change are mitigated in part through providing climate-specific and
carbon intensity targets to our investment managers and by having regular reviews of our third-party asset managers, our asset
allocation, and the underlying securities within our portfolio.
Climate change, its related risks and opportunities and their financial impact are a key focus of the Board at their quarterly
meetings. The regulatory requirements around companies’ climate-related financial disclosures are increasing and failure to
address these requirements sufficiently may result in the risk of reputational damage or increased regulatory oversight.
Environmental, Social and Governance ("ESG")
Sustainable underwriting is one of the pillars of the Lancashire Group ESG strategy. However, in a complex world there are many
challenges and we understand that there are not always easy solutions. The risk solutions that we provide help protect people,
companies and economies from uncertainty and give them confidence and stability. Our property (re)insurance products insure
clients against the risk of major weather and other catastrophic events and we have long-standing expertise in this area. In our
energy portfolio, we support our clients’ transition to renewable energy and insure a number of projects, from wind and solar
farms to biomass facilities and others. Furthermore, in 2025 we developed a new standalone Onshore renewables class of business
as an extension to our conventional Power & Utilities product, to further assist with our energy clients focus on green energy
transition. Our product range will continue to evolve to meet the changing needs of our clients in supporting the world’s net-zero
target. We are committed to playing our part in making the world more sustainable in an open and honest way. To help us with
this, we have ratified a number of internal underwriting guidelines and investment guidelines focused on consideration of climate
change and other ESG factors in line with our values.
Syndicate Annual General Meeting
In accordance with the Syndicate Meetings (Amendment No. 1) Byelaw (No. 18 of 2000), notice is hereby given that the
Managing Agent does not propose to hold an Annual General Meeting of the members of the Syndicate.
Directors
The Directors of the Managing Agent who served during the year ended 31 December 2025, as well as any subsequent changes are
listed under the section ‘Directors and Administration’ on page 1.
Disclosure of information to auditors
The Directors of the Managing Agent who held office at the date of approval of this Managing Agent’s report confirm that, so far
as they are aware, there is no relevant audit information of which the Syndicate’s auditors are unaware; and each Director has
taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit information and to
establish that the Syndicate’s auditors are aware of that information.
Auditors
Pursuant to Section 14(2) of Schedule 1 of the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008, the auditor will be deemed to be reappointed and KPMG LLP will therefore continue in office.
On behalf of the Board
B Cass
Director & Chief Compliance Officer
19 February 2026
6
The Directors of the Managing Agent are responsible for preparing the Syndicate annual accounts in accordance with applicable
la
w and regulations.
Th
e Insurance Accounts Directive (Lloyds’s Syndicate and Aggregate Accounts) Regulations 2008 requires the Directors of the
Managing Agent to prepare their Syndicate’s annual accounts for each financial year. Under that law they have elected to prepare
the annual accounts in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting
Practice), including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland.
Unde
r Insurance Accounts Directive (Lloyds’s Syndicate and Aggregate Accounts) Regulations 2008 the Directors of the
Man
aging Agent must not approve the annual accounts unless they are satisfied that they give a true and fair view of the state of
affairs of the Syndicate and of the profit or loss of the Syndicate for that period. In preparing these annual accounts, the Directors
of the Managing Agent are required to:
• select suitable accounting policies and then apply them consistently;
• mak
e judgements and estimates that are reasonable and prudent;
• st
ate whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and
explained in the annual accounts;
• assess the Syndicate’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
• use the going concern basis of accounting unless they either intend to cease trading, or have no realistic alternative but to do
so.
The Directors of the Managing Agent are responsible for keeping adequate accounting records that are sufficient to show and
explain the Syndicate’s transactions and disclose with reasonable accuracy at any time the financial position of the Syndicate and
enable them to ensure that the Syndicate annual accounts comply with the Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008. They are responsible for such internal control as they determine is necessary to enable the
preparation of Syndicate annual accounts that are free from material misstatement, whether due to fraud or error, and have
general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Syndicate and to prevent
and detect fraud and other irregularities.
The Directors of the Managing Agent are responsible for the maintenance and integrity of the Syndicate and financial
information included on the Syndicate’s website. Legislation in the UK governing the preparation and dissemination of Syndicate
annual accounts may differ from legislation in other jurisdictions.
We confirm that to the best of our knowledge the Syndicate accounts, including the iXBRL tagging applied to these accounts,
comply with the requirements of the Lloyd’s Syndicate Accounts Instructions version 3.1 as modified by the Frequently Asked
Questions version 1.1 issued by Lloyd’s.
On behalf of the board
B Cass
Director & Chief Compliance Officer
19 February 2026
Statement of Managing Agent’s Directors' Responsibilities
31 December 2025
7
SYNDICATE ANNUAL ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2025
8
Opinion
We have audited the Syndicate annual accounts of Syndicate 3010 (“the Syndicate”) for the year ended 31 December 2025 which
comprise the Statement of Profit or Loss: Technical account – General Business, Statement of Profit or Loss: Non-Technical
Account, Balance Sheet – Assets, Balance Sheet – Liabilities, Statement of Changes in Members’ Balances, Statement of Cash
Flows, and related notes, including the accounting policies in note 3.
In our opinion the Syndicate annual accounts:
• give a true and fair view of the state of the Syndicate’s affairs as at 31 December 2025 and of its profit for the year then ended;
• have been properly prepared in accordance with UK accounting standards, including FRS 102 The Financial Reporting
Standard applicable in the UK and Republic of Ireland; and
• have been prepared in accordance with the requirements of the Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008, and Sections 1 and 5 of the Syndicate Accounts Instructions Version 3.1, as modified
by the Syndicate Accounts Frequently Asked Questions Version 1.1 dated 13 February 2026, issued by the Council of Lloyd’s (“the
Syndicate Accounts Instructions”).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”), applicable law, and, under
the terms of our engagement letter dated [date], the Syndicate Account Instructions. Our responsibilities are described below. We
have fulfilled our ethical responsibilities under, and are independent of the Syndicate in accordance with, UK ethical
requirements including the FRC Ethical Standard as applied to other entities of public interest. We believe that the audit evidence
we have obtained is a sufficient and appropriate basis for our opinion.
Going concern
The directors of the Managing Agent (“the Directors”) have prepared the Syndicate annual accounts on the going concern basis
as they do not intend to cease underwriting or to cease its operations, and as they have concluded that the Syndicate’s financial
position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast
significant doubt over its ability to continue as a going concern for at least a year from the date of approval of the Syndicate
annual accounts (“the going concern period”).
In our evaluation of the Directors’ conclusions, we considered the inherent risks to the Syndicate’s business model and analysed
how those risks might affect the Syndicate’s financial resources or ability to continue operations over the going concern period,
including inspecting correspondence with the Council of Lloyd’s to assess whether there were any known impediments to
establishing a further year of account.
Our conclusions based on this work:
• we consider that the Directors’ use of the going concern basis of accounting in the preparation of the Syndicate annual
accounts is appropriate; and
• we have not identified, and concur with the Directors’ assessment that there is not, a material uncertainty related to events or
conditions that, individually or collectively, may cast significant doubt on the Syndicate’s ability to continue as a going concern
for the going concern period.
However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the
Syndicate will continue in operation.
Fraud and breaches of laws and regulations – ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:
• Enquiring of directors, the audit committee, internal audit and inspection of policy documentation as to the Syndicate and
Managing Agent’s high-level policies and procedures to prevent and detect fraud, including the internal audit function, and
the Syndicate and Managing Agent’s channel for “whistleblowing”, as well as whether they have knowledge of any actual,
suspected or alleged fraud.
• Reading Board, audit committee, and Risk and Challenge Committee minutes.
• Considering remuneration incentive schemes and performance targets for management.
• Using analytical procedures to identify any unusual or unexpected relationships.
We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud throughout the
audit.
Independent Auditor's Report to the Members of Syndicate 3010
9
As required by auditing standards and taking into account possible pressures to meet profit targets and our overall knowledge of
the control environment, we perform procedures to address the risk of management override of controls, in particular the risk
that management may be in a position to make inappropriate accounting entries and the risk of bias in accounting estimates and
judgements such as such as the valuation of insurance contract liabilities.
We did not identify any additional fraud risks. We performed procedures including:
• Identifying journal entries and other adjustments to test based on risk criteria and comparing the identified entries to
supporting documentation. These included those posted containing key words such as error, restatement, correction; those
posted by individuals who typically do not make journal entries or are not authorized to post journal entries; those posted
without explanation, description, or numerical description only; those posted to seldom used accounts for which the other side
is cash; unusual postings to loss and loss adjustment reserve accounts, gross written premium, premium receivables and expense
accounts; unusual postings to cash accounts for which the other side is not a standard business transaction (including premium
receivable, reinsurance payable, claims paid, reinsurance on paid claims, other receivable, other payable, investment, clearing
intercompany, lease and General & Administrative expense account); any unusual entry to long term debt for which the other
side is not interest payable or interest expense and post-closing journals above our materiality threshold.
• Assessing whether the judgements made in making accounting estimates are indicative of a potential bias.
Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements
from our general commercial and sector experience, through discussion with the directors and other management (as required
by auditing standards), from inspection of the Syndicate’s and Managing Agent’s regulatory and legal correspondence, and
discussed with the directors and other management the policies and procedures regarding compliance with laws and regulations.
As the Syndicate is regulated, our assessment of risks involved gaining an understanding of the control environment including the
entity’s procedures for complying with regulatory requirements.
We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance
throughout the audit. The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the Syndicate is subject to laws and regulations that directly affect the financial statements including financial reporting
legislation (such as the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, and the
Lloyd’s Syndicate Accounts Instructions) and we assessed the extent of compliance with these laws and regulations as part of our
procedures on the related financial statement items.
Secondly, the Syndicate is subject to many other laws and regulations where the consequences of non-compliance could have a
material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation or
the loss of the Syndicate’s license to operate. We identified the following areas as those most likely to have such an effect:
regulatory capital, corruption, and bribery, recognising the financial and regulated nature of the Syndicate’s activities and its legal
form. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to
enquiry of the directors and other management and inspection of regulatory and legal correspondence, if any. Therefore, if a
breach of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that
breach.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non-compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards
would identify it.
In addition, as with any audit, there remained a higher risk of non-detection of fraud, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-
compliance with all laws and regulations.
Other information - Report of the directors of the Managing Agent
The Directors are responsible for the Report of the Directors of the Managing Agent. Our opinion on the Syndicate annual
accounts does not cover that report and, accordingly, in this audit report we do not express an audit opinion or, except as
explicitly stated below, any form of assurance conclusion thereon.
Independent Auditor's Report to the Members of Syndicate 3010
10
Our responsibility is to read the Report of the Directors of the Managing Agent and, in doing so, consider whether, based on our
Syndicate annual accounts audit work, the information therein is materially misstated or inconsistent with the Syndicate annual
accounts or our audit knowledge. Based solely on that work:
• we have not identified material misstatements in the Report of the Directors of the Managing Agent;
• in our opinion the information given in the Report of the Directors of the Managing Agent is consistent with the Syndicate
annual accounts; and
• in our opinion the Report of the Directors of the Managing Agent has been prepared in accordance with the requirements of
the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008.
Matters on which we are required to report by exception
Under the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, we are required to report
to you if, in our opinion:
• adequate accounting records have not been kept on behalf of the Syndicate; or
• the Syndicate annual accounts are not in agreement with the accounting records; or
• certain disclosures of 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.
We have nothing to report in these respects.
Responsibilities of the Directors of the Managing Agent
As explained more fully in their statement set out on page 7, the Directors of the Managing Agent are responsible for: the
preparation of the Syndicate annual accounts in accordance with the requirements of the Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 and the Syndicate Accounts Instructions, and for being satisfied that they
give a true and fair view; such internal control as they determine is necessary to enable the preparation of Syndicate annual
accounts that are free from material misstatement, whether due to fraud or error; assessing the Syndicate’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless
they either intend to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
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 our opinion in an auditor’s report. Reasonable assurance is a high level
of assurance, but does not 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
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Syndicate
annual accounts.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
The Directors of the Managing Agent are required, under the Syndicate Accounts Instructions, to include these financial
statements within a document to which XBRL tagging has been applied. This auditor’s report provides no assurance over whether
the XBRL tagged document has been prepared in accordance with those requirements.
The purpose of our audit work and to whom we owe our responsibilities
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 and the terms of our engagement letter with the Managing Agent. 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 the further matters we are required to state to them in accordance with the terms agreed with the
Managing Agent, 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.
Umar Jamil (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London
E14 5GL
19 February 2026
Independent Auditor's Report to the Members of Syndicate 3010
11
Notes | 2025 $'000 | 2024 $'000 | |
Earned premiums, net of reinsurance | |||
Gross premiums written | 5 | | |
Outward reinsurance premiums | ( | ( | |
Net premiums written | | | |
Change in the provision for unearned premiums: | |||
Gross amount | ( | ( | |
Reinsurers’ share | | | |
Net change in provisions for unearned premiums | ( | ( | |
Earned premiums, net of reinsurance | | | |
Allocated investment return transferred from the non-technical account | | | |
Other technical income | 5 | | |
Claims incurred, net of reinsurance | |||
Claims paid: | |||
Gross amount | 5 | ( | ( |
Reinsurers’ share | | | |
Net claims paid | ( | ( | |
Change in the provision for claims: | |||
Gross amount | 5 | ( | ( |
Reinsurers’ share | ( | | |
Net change in the provision for claims | ( | ( | |
Claims incurred, net of reinsurance | ( | ( | |
Net operating expenses | 5, 6 | ( | ( |
Balance on the technical account for general business | | |
All operations relate to continuing activities.
Statement of Profit or Loss
Technical Account - General Business
For the year ended 31 December 2025
12
Notes | 2025 $'000 | 2024 $'000 | |
Balance on technical account for general business | | | |
Investment income | 10 | | |
Realised gains on investments | 10 | | |
Unrealised gains on investments | 10 | | |
Investment expenses and charges | 10 | ( | ( |
Total investment return | | | |
Allocated investment return transferred to the general business technical account | ( | ( | |
Foreign exchange | | ( | |
Profit for the financial year | | | |
Other comprehensive income | | | |
Total comprehensive income for the year | | |
All operations relate to continuing activities.
There are no other comprehensive gains or losses in the year.
Statement of Profit or Loss
Non-Technical Account
For the year ended 31 December 2025
13
Notes | 2025 $'000 | 2024 $'000 | |
Investments: | |||
Financial investments | 11 | ||
Deposits with ceding undertakings | 12 | ||
Reinsurers’ share of technical provisions: | |||
Provision for unearned premiums | 19 | ||
Claims outstanding | 19 | ||
Debtors: | |||
Debtors arising out of direct insurance operations | 13 | ||
Debtors arising out of reinsurance operations | 14 | ||
Other debtors | 15 | ||
Other assets: | |||
Cash and cash equivalents | 16 | ||
Prepayments and accrued income: | |||
Deferred acquisition costs | 17 | ||
Other prepayments and accrued income | |||
| Total Assets | | ||
Capital and reserves: | |||
Members’ balances | |||
Technical provisions: | |||
Provision for unearned premiums | 19 | ||
Claims outstanding | 19 | ||
Creditors: | |||
Creditors arising out of direct insurance operations | 20 | ||
Creditors arising out of reinsurance operations | 21 | ||
Other creditors including taxation and social security | 22 | ||
| Accruals and deferred income | | ||
| Total Liabilities | | ||
| Total Liabilities, Capital and Reserves |
The notes on pages 17 to 42 form part of these annual accounts.
The
Syndicate annual accounts on pages 12 to 42 were approved by the Board of Lancashire Syndicates Limited on 18 February
20
26 and were signed on its behalf by:
C J Whittle
Chief Financial Officer
19 February 2026
Balance Sheet
As at 31 December 2025
14
2025
$'000
2024
$'000
Member's balances as at 1 January | | |
Profit for the financial year | | |
Transfer to member's personal reserve fund | ( | ( |
Member's balances as at 31 December | | |
Members participate on syndicates by reference to years of account and their ultimate result, assets and liabilities are assessed with
reference to policies incepting in that year of account in respect of their membership of that particular year.
Transfers to member's personal funds comprise the 2022 (2021) closed year of account profit.
Statement of Changes in Member's Balances
For the year ended 31 December 2025
15
Notes
2025
$'000
2024
$'000
Cash flows from operating activities | |||
Profit for the financial year | | | |
Adjustments for : | |||
Investment return | 10 | ( | ( |
Exchange (gains)/loss | ( | | |
Increase in debtors | ( | ( | |
Increase in creditors | | | |
Increase in gross technical provisions | | | |
Increase in reinsurers' share of gross technical provisions | ( | ( | |
Movement in other assets/liabilities | ( | ( | |
Net cash inflow/(outflow) from operating activities | | | |
Cash flows from investing activities | |||
Interest received | | | |
Purchase of equity and debt securities | ( | ( | |
Sale of equity and debt securities | | | |
Net cash outflow from investing activities | | ( | |
Cash inflow/(outflow) from financing activities | |||
Transfer to members in respect of underwriting participations | ( | ( | |
Net cash (outflow) from financing activities | ( | ( | |
Increase/(decrease) in cash and cash equivalents in the year | | ( | |
Cash and cash equivalents at 1 January | | | |
Effect of exchange rates and change in market value on cash and cash equivalents | | ( | |
Cash and cash equivalents at 31 December | 16 | | |
Statement of Cash Flows
For the year ended 31 December 2025
16
1 Basis of Preparation
Syndicate 3010 ("The Syndicate") comprises a group of members of the Society of Lloyd’s that underwrites insurance
business in the London Market. The address of the Syndicate’s Managing Agent is Lancashire Syndicates Limited, 29th
Floor, 20 Fenchurch Street, London, EC3M 3BY.
The financial statements/annual accounts have been prepared in accordance with the Insurance Accounts Directive (Lloyd's
Syndicate and Aggregate Accounts) Regulations 2008 and applicable Accounting Standards in the United Kingdom and the
Republic of Ireland, including Financial Reporting Standard 102 (FRS 102), 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 Lloyds.
The annual accounts have been prepared on the historical cost basis, except for financial assets at fair value through profit or
loss that are measured at fair value.
The annual accounts are prepared in US Dollars
Syndicate. All amounts have been rounded to the nearest thousand, unless otherwise indicated.
The annual accounts are prepared on a going concern basis in accordance with FRS102.
In assessing the Syndicate's going concern position as at 31 December 2025, the Directors have considered a number of
factors. These include the current balance sheet and liquidity position, the level and composition of the Syndicate's capital
and solvency ratios, the current performance against the Syndicate's strategic and financial business plan, and the current
market environment including consideration of the ongoing Russia/Ukraine Conflict, inflation and climate change.
The Russia/Ukraine Conflict has caused significant disruption to worldwide economies, both directly through the invasion
and indirectly through sanctions being imposed on Russia by the UK, EU and US. Given the complexity and evolving nature
of the Russia/Ukraine Conflict, the ultimate losses relating to the event are subject to a degree of uncertainty. Reserves have
been set on a case by case basis for the Contingent War exposure and on a probability basis for Operator policy exposure and
Aviation XoL exposures. Furthermore, the recoverability of associated reinsurance balances is also subject to uncertainty.
Current loss estimates and reinsurance recoveries are based on information available at the reporting date.
Whilst our longer tail lines, such as casualty, remain a small proportion of the overall book, these lines, due to their very
nature, are more difficult to reserve for and will, over time, increase the inherent risk within this principal risk.
The Syndicate's financial forecasts reflect the outcomes that the Directors consider most likely, based on the information
available at the date of signing these annual accounts. To assess the Syndicate's going concern, the financial stability of the
Syndicate was modelled for a period of at least 12 months and a number of sensitivity, stress and scenario tests were applied.
This included, among other analysis, a best estimate forecast as well as various scenarios. This incorporated different reserve
movements and, attritional, large and catastrophe events plus optimistic and pessimistic investment return scenarios. To
further stress the financial stability of the Syndicate, additional stress testing was performed. This included modelling the
breakeven capital requirements of our regulators, the impact of potential management actions to reduce the Syndicate's
exposure to climate change-related risks, an operational risk stress of the main input assumption to the base case, the
occurrence of a number of high severity loss events impacting the Syndicate in 2026 alongside an investment shock and
finally a reverse stress test scenario designed to render the business model unviable. The testing identified that under the
plausible stress scenarios, the Syndicate had more than adequate liquidity and solvency headroom. Under the severe stress
scenario, the corporate member would replenish any cash calls, however this scenario is extremely unlikely and does not take
into account the potential upside opportunities for the Syndicate.
Based on the going concern assessment performed as at 31 December 2025, the Directors consider there to be no material
uncertainties that may cast significant doubt over the Syndicate’s ability to continue to operate as a going concern. The
Directors have formed a judgement that there is a reasonable expectation that the Syndicate has adequate resources to
continue in operational existence in the foreseeable future, a period of at least 12 months from the date of signing these
annual accounts.
During 2025, Lloyd's introduced changes to the syndicate accounts process to rationalise and standardise financial reporting
across the market. As a result, certain comparative information has been reclassified within the financial statements and
related notes to ensure consistency with current year presentation and compliance with the Lloyd's Syndicate Accounts
Instructions.
Notes to the Syndicate Annual Accounts
For the year ended 31 December 2025
17
2 Use of Judgements and Estimates
In preparing these annual accounts, 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.
Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to estimates are recognised prospectively.
Estimation of premiums
The measurement of premium estimates comprises the estimated gross premium written during the year, that have not yet
been notified by the financial year-end. For certain insurance contracts, premium is initially recognised based on estimated
premium income ("EPI"). When premium is sourced through binders or treaty business, the binder EPI is pro-rated across
the contract period. This is done on a straight-line basis unless the underlying writing pattern from the prior period indicates
the actual underlying writing pattern is materially different. The underwriters adjust their EPI estimates as the year of
account matures. After a set amount of time after a contract expires, premiums are adjusted to match the actual signed
premium. Premiums are earned on a straight-line basis over the life of each contract. At a portfolio level, this is considered to
provide a reasonable estimate for the full year of the pattern of risk over the coverage period.
Estimation of claims
The measurement of 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. In particular, 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.
The amount included in respect of IBNR is based on statistical techniques of estimation applied by the Syndicate Managing
Agent’s in house actuaries and compared to the independent assessment performed by the external consulting actuaries.
These techniques generally involve projecting from past experience the development of claims over time in view of the likely
ultimate claims to be experienced and for more recent underwriting, having regard to variations in 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 business accepted and assessments of underwriting conditions. In
arriving at the level of claims provisions a margin is applied over and above the actuarial best estimate so as to minimise any
adverse run-off deviation. Further information about the risk that the provision for claims outstanding could be materially
different from the ultimate cost of claims settlement is included in Note 4.
3 Accounting Policies
a) Premiums written
Premiums written comprise premiums on contracts incepted during the financial year, together with adjustments made in
the year to premiums written in prior accounting periods. They also include estimates for pipeline premiums, representing
amounts due to the Syndicate not yet notified. Premiums are shown gross of commission payable and exclude taxes and
duties levied on them.
b) Reinsurance premium ceded
Outwards reinsurance premiums are accounted for in the same accounting period as the premiums for the related direct or
inwards business being reinsured.
c) Unearned premiums
The provision for unearned premiums comprises the proportion of premiums written which is estimated to be earned in the
following or subsequent financial periods, computed separately for each insurance contract using the daily pro rata method,
adjusted if necessary to reflect any variation in the incidence of risk during the period covered by the contract.
d) Claims provisions and related recoveries
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.
Notes to the Syndicate Annual Accounts
For the year ended 31 December 2025
18
3 Accounting Policies continued
d) Claims provisions and related recoveries continued
Outstanding claims including an allowance for the cost of claims incurred by the balance sheet date but not reported until
after the year end (‘IBNR’). Claims outstanding are reduced by anticipated salvage and other recoveries.
The reinsurers’ share of provisions for claims is based on calculated amounts of outstanding claims and projections for
IBNR, net of estimated irrecoverable amounts, having regard to the reinsurance programme in place for the class of
business, the claims experience for the year and the current security rating of the reinsurance companies involved. A
number of statistical techniques are used to assist in making these estimates. The most critical assumption with regards to
claims provisions is that the past is a reasonable predictor of the likely level of claims development. In addition, a
management prudence margin is added to the actuarial best estimate.
Reinsurance assets are assessed for impairment at each balance sheet date. A reinsurance asset is deemed impaired if there is
objective evidence, as a result of an event that occurred after its initial recognition, that the Syndicate may not recover all
amounts due, and that event has a reliably measurable impact on the amount that the Syndicate will receive from the
reinsurer. Impairment losses are recognised immediately in the profit or loss account.
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, the ultimate liability will vary as a result of subsequent information
and events and this may result in significant adjustments to the amounts provided.
e) Unexpired risks provision
A provision for unexpired risks is made where claims and related expenses estimated to arise after the end of the financial
period in respect of contracts incepted before that date, are expected to exceed the unearned premiums under these
contracts, after the deduction of any deferred acquisition costs.
The need for any provision for unexpired risks is assessed at a total Syndicate Year of Account level.
f) Acquisition costs
Acquisition costs, comprising brokerage and commission and other internal and external costs related to the acquisition of
new insurance contracts are deferred to the extent that they are attributable to premiums unearned at the balance sheet
date.
g) Foreign currencies
The presentational and functional currency of the Syndicate is USD. Transactions denominated in currencies other the
functional currency are translated into the functional currency at the rate of exchange ruling at the date of the transaction
or at an appropriate average rate. The Syndicate’s monetary assets and liabilities denominated in foreign currencies are
translated into the functional currency at the exchange rate ruling on the reporting date. Non-monetary assets and liabilities
denominated in foreign currencies that are measured at fair value are retranslated to the functional currency using the
exchange rates at the date when the fair value was determined. Non-monetary items denominated in foreign currencies that
are measured at historical cost are translated to the functional currency using the exchange rate at the date of transaction.
For the purposes of foreign currency translation, unearned premiums and deferred acquisitions costs are treated as if they
are monetary items.
Differences arising on translation of the foreign currency amounts relating to the insurance operations of the Syndicate are
included in the non-technical account.
h) Financial assets and liabilities
As permitted by 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 EU).
(i) Classification
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. Subsequent reclassifications are permitted only in restricted circumstances.
Notes to the Syndicate Annual Accounts
For the year ended 31 December 2025
19
3 Accounting Policies continued
h) Financial assets and liabilities continued
(i) Classification continued
Financial assets and financial liabilities at fair value through profit and loss comprise financial assets and financial liabilities
held for trading and those designated as such on initial recognition. Investments in shares and other variable yield securities,
units in unit trusts, and debt and other fixed income securities are designated as at fair value through profit or loss on initial
recognition, as they are managed on a fair value basis in accordance with the Syndicate’s investment strategy.
(ii) Recognition
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 expire. 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.
(iii) Measurement
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 and 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.
Loans and receivables and non-derivative financial liabilities are measured at amortised cost using the effective interest
method. This includes Deposits with ceding undertakings.
(iv) Identification and measurement of impairment
At each reporting date the Syndicate assesses whether there is objective evidence that financial assets not measured at fair
value through profit or loss are impaired. Financial assets are impaired when objective evidence demonstrates that a loss
event has occurred after the initial recognition of an asset, and that the loss event has an impact on the future cash flows on
the asset that can be estimated reliably.
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.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its
carrying amount, and the present value of the estimated future cash flows discounted at the asset’s original effective interest
rate. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets
are assessed collectively in groups that share similar credit risk characteristics.
An impairment loss recognised reduces directly the carrying amount of the impaired asset. All impairment losses are
recognised in profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring
after the impairment loss was recognised. For financial assets measured at amortised cost the reversal is recognised in profit
or loss.
(v) Offsetting
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.
Notes to the Syndicate Annual Accounts
For the year ended 31 December 2025
20
3 Accounting Policies continued
h) Financial assets and liabilities continued
i) Investment return
Investment return comprises all investment income, realised investment gains and losses and movements in unrealised gains
and losses, net of investment expenses, charges and interest.
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. For investments measured at amortised cost, realised gains and losses
represents the difference between the net proceeds on disposal and the latest carrying value (or if acquired after the last
reporting date, the purchase price).
Unrealised gains and losses on investments represent the difference between the fair value at the balance sheet date and
their purchase price. 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, or the valuation at the
beginning of the year; as well as the reversal of previously recognised unrealised gains and losses in respect of investment
disposed of in the current period.
Investment return is initially recorded in the Non-Technical Account. The return is transferred in full to the Technical
Account – General Business to reflect the investment return on funds supporting underwriting business.
j) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, deposits held at call with banks and other short-term highly
liquid investments with maturities of three months or less from the 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 balance sheet.
k) Deposits with ceding undertakings
Deposits with ceding undertakings represent 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.
l) 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 U.S. Federal Income Tax payable on underwriting results or investment earnings. Any
payments on account made by the Syndicate during the year have been included in the Balance Sheet under the heading
‘other debtors’.
No provision has been made for any other overseas tax payable by members on underwriting results.
m) Pension costs
Lancashire Insurance Services Limited operates a defined contribution pension scheme. Pension contributions relating to
staff are recharged to the Syndicate via LSL as incurred and are included within net operating expenses.
n) Profit commission
Profit commission is not charged for the 2020 Year of Account onwards.
Notes to the Syndicate Annual Accounts
For the year ended 31 December 2025
21
4 Risk and Capital Management
The Syndicate is exposed to a variety of insurance and financial risks when undertaking its activities. The Board of Directors
of LSL, the Syndicate’s Managing Agent, has policies in place for measuring and managing insurance and financial risks, and
for managing the Syndicate’s capital. These risks can be split into the following categories:
• Insurance risk;
• Financial risk;
• Credit risk;
• Liquidity risk;
• Operational risk;
• Market risk; and
• Capital management risk.
Risk management framework
The Board of Directors of LSL has overall responsibility for the establishment and oversight of the Syndicate’s risk
management framework. The LSL Board has established a Risk and Compliance Committee to oversee the operation of the
Syndicate’s risk management framework and to review and monitor the management of the risks to which the Syndicate is
exposed. The Risk and Compliance Committee has delegated oversight of the management of aspects of insurance risks to
the Group Underwriting and LSL Reserving Committees, which are responsible for developing and monitoring insurance
risk management policies, and the management of aspects of financial risk to the LSL Investment Committee, which is
responsible for developing and monitoring financial risk management policies. The risk management policies are
established to identify and analyse the risks faced by the Syndicate, to set appropriate risk limits and controls, and to monitor
risks and adherence to limits.
The Risk, Reserving, Audit and Investment Committees report regularly to the Board of Directors on their activities.
The sections below explain how each category of risk is defined and managed.
Insurance Risk
Insurance risk arises from the possibility of an adverse financial result due to actual claims experience being different from
that expected when an insurance product was designed and priced. The actual performance of insurance contracts is subject
to the inherent uncertainty in the occurrence, timing and amount of the final insurance liabilities. The insurance risk the
Syndicate is exposed can be separated into underwriting risk and reserve risk.
Underwriting risk is the risk that the insurance premium will not be sufficient to cover future insurance losses and associated
expenses. This includes the risks that the premium is set too low, provides inappropriate levels of cover, or that the actual
frequency or severity of claims events will be significantly higher than was expected during the underwriting process.
Reserve risk is the risk that the reserves established in respect of insurance claims incurred are insufficient to settle the claims
and associated expenses in full.
Management of insurance risk
A key component of the management of underwriting risk for the Syndicate is a disciplined underwriting strategy that is
focused on writing quality business and not writing for volume. Product pricing is designed to incorporate appropriate
premiums for each type of assumed risk. The underwriting strategy includes monitoring underwriting limits on the
Syndicate’s total exposure to specific risks together with limits on geographical and industry exposures. The aim is to ensure
a well-diversified book is maintained with no excessive exposure in any one geographical region.
Contracts can contain a number of features which help to manage the underwriting risk, such as the use of deductibles, or
capping the maximum permitted loss, or number of claims (subject to local regulatory and legislative requirements).
The Syndicate makes use of reinsurance to mitigate the risk of incurring significant losses linked to one event, including
excess of loss and catastrophe reinsurance. Where an individual exposure is deemed surplus to the Syndicate’s appetite,
additional facultative reinsurance may also be purchased. The Syndicate may also choose to purchase quota share
reinsurance at selected sub account levels.
The Reserving Committee oversees the management of reserving risk. The use of proprietary and standardised modelling
techniques, internal and external benchmarking, and the review of claims development are all instrumental in mitigating
reserving risk. The Reserving Committee performs a comprehensive review of the projections, both gross and net of
Notes to the Syndicate Annual Accounts
For the year ended 31 December 2025
22
4 Risk and Capital Management continued
Insurance Risk continued
reinsurance. Following this review, the Reserving Committee makes recommendations to the Audit Committee and the
Managing Agent’s Board of Directors of the claims provisions to be established
The Managing Agent’s in-house actuaries perform a reserving analysis on a quarterly basis liaising closely with subject matter
experts within the underwriting, claims and reinsurance functions. The aim of this exercise is to produce a probability-
weighted average of the expected future cash outflows arising from the settlement of incurred claims. These projections
include an analysis of claims development compared to the previous ‘best estimate’ projections. The output of the reserving
analysis is compared on a twice-yearly basis to the independent analysis performed by the external consulting actuaries.
In addition, claims development is monitored against expectations on a monthly basis and reported to the Executive
Committee to give an early indication of changes expected at the next reserving analysis.The claims development table in
note number 18 shows the actual claims incurred to previous estimates for the last 10 years.
In arriving at the level of claims provisions a margin is applied over and above the actuarial best estimate so as to minimise
the likelihood of any adverse run-off deviation.
Concentration of insurance risk
The Syndicate’s underwriting covers various classes of business which, to some extent, have different exposure profiles and
therefore provide an element of diversification. The Managing Agency monitors the type of business underwritten by the
Syndicate at a whole account level and, where appropriate, adjusts either the business mix or the level of reinsurance
protection in place to try to reduce the extent of overly concentrated exposures.
The table below provides an analysis of the geographical breakdown of the Syndicate's gross written premium by class of
business.
As at 31 December 2025
Accident
and health
$’000
Marine,
aviation and
transport
$’000
Fire and
other
damage to
property
$’000
Reinsurance
$’000
Total
$’000
United Kingdom
964 10,157 6,999 911 19,031
US
13,211 56,200 27,796 17,158 114,365
European Union Member States
1,208 35,562 4,359 14,473 55,602
Other countries (including Worldwide)
2,845 109,009 35,193 162,644 309,691
Total 18,228 210,928 74,347 195,186 498,689
As at 31 December 2024
Accident
and health
$’000
Marine,
aviation and
transport
$’000
Fire and
other
damage to
property
$’000
Reinsurance
$’000
Total
$’000
United Kingdom 712 12,980 7,155 6,832 27,679
US 16,688 25,340 54,811 11,142 107,981
European Union Member States 21 25,503 1,356 55,062 81,942
Other countries (including Worldwide)
2,421 84,492 37,540 122,143 246,596
Total
19,842 148,315 100,862 195,179 464,198
Sensitivity of insurance risk
The frequency and severity of claims in respect of the Syndicate can be affected by several factors. The Syndicate specialises
in short-tail business lines, some of which have a degree of catastrophe exposure. The following analysis is performed for
reasonably possible movements in key assumptions with all other assumptions held constant, showing the impact on gross
and net liabilities, profit for the year and member's balances.
Notes to the Syndicate Annual Accounts
For the year ended 31 December 2025
23
4 Risk and Capital Management continued
Insurance Risk continued
31 December 2025 Movement in claims reserves
| +2.5% | -2.5% | +5% | -5% | |
Impact on gross liabilities | 15,004 | (15,004) | | ( |
Impact on net liabilities | 8,837 | (8,837) | | ( |
Impact on profit for the year and member's balances | 8,837 | (8,837) | 17,674 | (17,674) |
31 December 2024 Movement in claims reserves
| +2.5% | -2.5% | +5% | -5% | |
Impact on gross liabilities | 12,974 | (12,974) | | ( |
Impact on net liabilities | 6,766 | (6,766) | | ( |
| Impact on profit for the year and member's balances | 6,766 | (6,766) | 13,532 | (13,532) |
The catastrophe-exposed nature of these accounts is managed through the Syndicate’s underwriting strategy, aggregate
management and reinsurance arrangements.
Underwriting limits are in place to support appropriate risk selection criteria and loss aggregates are reviewed and managed
by the Syndicate. LSL is committed to monitoring and managing the financial risks from climate change in line with its
stated risk appetite. ESG underwriting guidelines have been established for the Lancashire Group that have been applicable
to all classes of business from 1st January 2022. The guidelines apply to all new business, with renewals in scope with effect
from 1st January 2030.
The reinsurance arrangements include excess and catastrophe coverage. These arrangements are designed to mitigate the
impact of any significant losses to a more manageable level. The Syndicate models various loss scenarios and also runs
specific realistic disaster scenarios ("RDS") in accordance with Lloyd’s franchise guidelines to enable it to monitor the
exposure at a gross and net level.
Based on the July 2025 Lloyd’s RDS submission, the largest RDS on a gross basis was for an Aviation Collision event at
$107.5m [unaudited and is not part of the financial statements]. The largest event net of reinsurance recoveries and
reinstatement costs was for a Marine Collision in US Waters event at $36.0m [unaudited and is not part of the financial
statements].
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. The goal of the investment management process is to optimise
the risk-adjusted investment income and risk-adjusted total return by investing in a diversified portfolio of securities, whilst
ensuring that the assets and liabilities are managed on a cash flow and duration basis. A climate value at risk ("VaR") has
been implemented to provide a forward looking return-based valuation assessment to measure climate-related risks and
opportunities in the investment portfolio.
Credit Risk
Credit risk is the risk of financial loss to the Syndicate if a counterparty fails to discharge a contractual obligation.
The Syndicate is exposed to credit risk in respect of the following:
• Debt securities;
• Reinsurers’ share of insurance liabilities;
• Amounts due from intermediaries;
• Amounts due from reinsurers in respect of settled claims; and
• Cash and cash equivalents.
The nature of the Syndicate’s exposures to credit risk and its objectives, policies and processes for managing credit risk have
not changed significantly from the prior year.
Notes to the Syndicate Annual Accounts
For the year ended 31 December 2025
24
4 Risk and Capital Management continued
Credit Risk continued
The Group Reinsurance Security Committee has established guidelines on its exposure to a single counterparty. These
guidelines are regularly reviewed by this committee and adjusted as appropriate by the Managing Agency’s Board. The
Lancashire Group's Broker Vetting Committee considers the approval of all new brokers and reviews all approved brokers on
a three year cycle.
Management of credit risk
The Syndicate’s credit risk in respect of debt securities is managed by placing limits on its exposure to a single counterparty,
by reference to the credit rating of the counterparty. Financial assets are graded according to current credit ratings issued by
rating agencies such as Standard and Poor’s. The Syndicate has a policy of investing mainly in government issued and
government backed debts and investment grade corporate debts. The Syndicate does not currently invest new monies in
speculative grade assets (i.e. those rated below BBB).
The Syndicate limits the amount of cash and cash equivalents that can be deposited with a single counterparty, and
maintains an authorised list of acceptable cash counterparties, with a minimum rating of AAA to A-.The Syndicate’s exposure
to intermediaries and reinsurance counterparties is monitored as part of its credit control processes. All intermediaries must
meet minimum requirements established by the Syndicate. The credit ratings and payment histories of intermediaries are
monitored on a regular basis.
The Group Reinsurance Security Committee assesses the creditworthiness of reinsurers by reviewing public rating
information and by internal investigations. The impact of potential reinsurer default is regularly assessed and managed
accordingly.
Exposure to credit risk
The carrying amount of financial assets and reinsurance assets represents the maximum credit risk exposure. The Syndicate
does not hold any collateral as security or purchase any credit enhancements (such as guarantees, credit derivatives and
netting arrangements that do not qualify for offset).
The following table analyses the credit rating by investment grade of financial investments, reinsurers’ share of technical
provisions, debtors arising out of reinsurance operations, cash at bank and in hand, and other assets that are neither past
due, nor impaired.
| As at 31 December 2025 | AAA to A- $’000 | BBB+ to B- $’000 | Unrated $’000 | Total $’000 |
Debt securities and other fixed income securities | | | | |
Overseas Deposits | | | | |
Cash and cash equivalents | | | | |
Deposits with ceding undertakings | | | | |
Reinsurers' share of claims outstandings | | | | |
Debtors arising out of direct insurance operations | | | | |
Debtors arising out of reinsurance operations | | | | |
Other debtors and accrued interest | | | | |
| Total | | | | |
As at 31 December 2024 | AAA to A- $’000 | BBB+ to B- $’000 | Unrated $’000 | Total $’000 |
| Debt securities and other fixed income securities | | | | |
| Overseas Deposits | | | | |
| Cash and cash equivalents | | | | |
| Deposits with ceding undertakings | | | | |
| Reinsurers' share of claims outstandings | | | | |
| Debtors arising out of direct insurance operations | | | ||
| Debtors arising out of reinsurance operations | | | | |
| Other debtors and accrued interest | | | | |
Total | | | | |
Notes to the Syndicate Annual Accounts
For the year ended 31 December 2025
25
4 Risk and Capital Management continued
Credit Risk continued
The $7.4m (2024: $4.4m) unrated reinsurers' share of claims outstanding relates to a handful of specific unsettled recoveries
from reinsurers that have subsequently merged or been taken over by another reinsurer and therefore the original
counterparty is no longer rated. However, no recovery issues are currently anticipated with respect to these specific
counterparties.
Of the $151.1m (2024: $109.5m) unrated debtors arising out of reinsurance operations, $150.8m (2024: $109.4m) are due
from ceding insurers under reinsurance business and $0.3m (2024:0.1m) relates to reinsurance recoverable on paid claims.
The total unrated financial investments represent overseas deposits held in trust funds.
Financial assets that are past due or impaired
The Syndicate has debtors arising from direct insurance and reinsurance operations that are past due but not impaired at
the reporting date. The Syndicate does not consider these debtors to be impaired on the basis of stage of collection of
amounts owed to the Syndicate.
| As at 31 December 2025 | Neither past due nor impaired assets $'000 | Past due but not impaired assets $'000 | Gross value of impaired assets $'000 | Impairment allowance $'000 | Total $’000 |
Debt securities and other fixed income securities | | | | | |
Overseas deposits | | | |||
Deposits with ceding undertakings | | | | | |
Reinsurers' share of claims outstanding | | | | | |
Debtors arising out of direct insurance operations | | | | | |
Debtors arising out of reinsurance operations | | | | | |
Other debtors and accrued interest | | | | | |
Cash at bank and in hand, including letters of credit and bank guarantees | | | | | |
| Total | | | | | |
| As at 31 December 2024 | Neither past due nor impaired assets $'000 | Past due but not impaired assets $'000 | Gross value of impaired assets $'000 | Impairment allowance $'000 | Total $’000 |
Debt securities and other fixed income securities | | | | ||
| Overseas deposits | | | | ||
| Deposits with ceding undertakings | | | | ||
| Reinsurers' share of claims outstanding | | | | | |
Debtors arising out of direct insurance operations | | | | ||
Debtors arising out of reinsurance operations | | | | ||
| Other debtors and accrued interest | | | | | |
Cash at bank and in hand, including letters of credit and bank guarantees | | | | ||
| Total | | | | | |
Notes to the Syndicate Annual Accounts
For the year ended 31 December 2025
26
4 Risk and Capital Management continued
Credit Risk continued
An analysis of the carrying amounts of past due but not impaired debtors is presented in the table below.
As at 31 December 2025 | 0-3 months past due $’000 | 3-6 months past due $’000 | 6-12 months past due $’000 | Greater than 1 year past due $’000 | Total $’000 |
Debtors arising out of direct insurance operations | | | | | |
Debtors arising out of reinsurance operations | | | | | |
| Total | | | | | |
As at 31 December 2024 | 0-3 months past due $’000 | 3-6 months past due $’000 | 6-12 months past due $’000 | Greater than 1 year past due $’000 | Total $’000 |
Debtors arising out of direct insurance operations | | | | | |
Debtors arising out of reinsurance operations | | | | | |
| Total | | | | | |
Liquidity Risk
Liquidity risk is the risk that the Syndicate will encounter difficulty in meeting obligations arising from its insurance contracts
and financial liabilities. The Syndicate is exposed to daily calls on its available cash resources mainly from claims arising from
insurance contracts.
The nature of the Syndicate’s exposures to liquidity risk and its objectives, policies and processes for managing liquidity risk
have not changed significantly from the prior year.
Management of liquidity risk
The Syndicate’s approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity
to meet its liabilities when they fall due, under both normal and stressed conditions, without incurring unacceptable losses or
risking damage to the Syndicate’s reputation.
The Syndicate’s approach to managing its liquidity risk is as follows:
• Forecasts are prepared and revised on a regular basis to predict cash outflows from insurance contracts over the short,
medium and long term;
• The Syndicate purchases assets with durations not greater than its estimated insurance contract outflows;
• Assets purchased by the Syndicate are required to satisfy specified marketability requirements;
• The Syndicate maintains cash and liquid assets to meet daily calls on its insurance contracts; and
• The Syndicate regularly updates its contingency funding plans to ensure that adequate liquid financial resources are in
place to meet obligations as they fall due in the event of reasonably foreseeable abnormal circumstances.
Notes to the Syndicate Annual Accounts
For the year ended 31 December 2025
27
4 Risk and Capital Management continued
Liquidity Risk continued
The following table shows the financial liabilities (gross provision for outstanding claims and creditors) grouped into
maturity dates.
| As at 31 December 2025 | < 1 year $’000 | 1-3 years $’000 | 4-5 years $’000 | > 5 years $’000 | Total $’000 |
Gross provision for claims outstanding | | | | | |
Creditors | | | | | |
| Total | | | | | |
| As at 31 December 2024 | < 1 year $’000 | 1-3 years $’000 | 4-5 years $’000 | > 5 years $’000 | Total $’000 |
| Gross provision for claims outstanding | | | | | |
| Creditors | | | | | |
| Total | | | | | |
Operational risk
Operational risk is the risk of loss from people, processes, systems or external events with origins outside the scope of other
risk categories. The Managing Agent actively monitors and controls its operational risks.
LSL recognises that the ability to continue operations in the event of a business interruption, whether from a major disaster
or minor incident, is a fundamental factor in meeting the expectations of our customers and internal and external
stakeholders. Both the Syndicate and Lloyd’s have a formal disaster recovery plan which, in the event of an incident, will
support alternative strategies to ensure business continuity and operational resilience.
Market Risk
Market risk is the risk that the fair value or future cash flows of a financial instrument or insurance contract will fluctuate
because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other
price risk.
The objective of market risk management is to manage and control market risk exposures within acceptable parameters,
while optimising the return on risk. The nature of the Syndicate exposures to market risk and its objectives, policies and
processes for managing market risk have not changed significantly from the prior year.
Management of market risks
For each of the major components of market risk, the Syndicate has policies and procedures in place which detail how each
risk should be managed and monitored. The management of each of these major components of market risk and the
exposure of the Syndicate at the reporting date to each major risk is addressed as follows:
Interest rate risk
Interest rate risk arises primarily from the Syndicate’s financial investments, cash and overseas deposits. The risk of changes
in the fair value of these assets is managed by primarily investing in short-duration financial investments and cash and cash
equivalents. The Investment Committee monitors the duration of these assets on a regular basis.
Currency risk
The Syndicate writes business primarily in US Dollars, Canadian Dollars, Sterling and Euros and is therefore exposed to
currency risk arising from fluctuations in the exchange rates of US Dollars against these currencies.
The foreign exchange policy is to, as far as possible, maintain assets in the currency in which the cash flows from liabilities
are to be settled in order to match the currency risk inherent in these contracts. Foreign exchange exposures across the
Lancashire Group are hedged by Lancashire Holdings Limited.
Notes to the Syndicate Annual Accounts
For the year ended 31 December 2025
28
4 Risk and Capital Management continued
Market Risk continued
The table below summarises the carrying value of the Syndicate’s assets and liabilities, at the reporting date.
| As at 31 December 2025 | GBP | USD | EUR | CAD | Total |
| $'000 | $'000 | $'000 | $'000 | $'000 | |
Investments | | | | | |
Reinsurers' share of technical provisions | | | | | |
Debtors | | | | | |
Other assets | | | | | |
Prepayments and accrued income | | | | | |
Total assets | | | | | |
Technical provisions | ( | ( | ( | ( | ( |
Creditors | ( | ( | ( | ( | ( |
Accruals and deferred income | ( | ( | ( | ( | ( |
Total liabilities | ( | ( | ( | ( | ( |
Total Capital and reserves | | ( | ( | ( | ( |
| As at 31 December 2024 | GBP | USD | EUR | CAD | Total |
| $'000 | $'000 | $'000 | $'000 | $'000 | |
| Investments | | | | | |
| Reinsurers' share of technical provisions | | | | | |
| Debtors | | | | | |
| Other assets | | | | | |
| Prepayments and accrued income | | | | | |
Total assets | | | | | |
| Technical provisions | ( | ( | ( | ( | ( |
| Creditors | ( | ( | ( | ( | ( |
| Accruals and deferred income | ( | ( | ( | ( | ( |
Total liabilities | ( | ( | ( | ( | ( |
Total Capital and reserves | ( | ( | ( | ( | ( |
The Syndicate participates in the currency conversion scheme at Lloyd’s and as a result holds assets and liabilities in the four
currencies disclosed above. Any other currencies are converted to sterling and disclosed under the GBP caption.
Sensitivity analysis to market risks for financial instruments
An analysis of the Syndicate’s sensitivity to interest rate and currency risk is presented in the tables below. The tables show
the effect on profit or loss of reasonably possible changes in the relevant risk variable, assuming that all other variables
remain constant, if that change had occurred at the end of the reporting period and had been applied to the risk exposures
at that date.
| Interest rate risk | 2025 $'000 | 2024 $'000 |
Increase/(decrease) on profit for the year ended | ||
+50 basis points increase | ( | ( |
- 50 basis points decrease | ||
+100 basis points increase | (5,288) | (5,105) |
- 100 basis points decrease | 5,288 | 5,103 |
Notes to the Syndicate Annual Accounts
For the year ended 31 December 2025
29
4 Risk and Capital Management continued
Market Risk continued
Currency risk 2025
$'000
2024
$'000
Increase/(decrease) on profit for the year ended
10% strengthening of Sterling to US Dollar
(615)
1,234
10% weakening of Sterling to US Dollar
615
(1,234)
10% strengthening of Euro to US Dollar
(282)
334
10% weakening of Euro to US Dollar
282
(334)
10% strengthening of Canadian Dollar to US Dollar
2,062
115
10% weakening of Canadian Dollar to US Dollar
(2,062)
(115)
Capital Management Risk
Capital framework at Lloyd’s
The Society of Lloyd’s ("Lloyd’s") is regulated by the Financial Conduct Authority ("FCA") and the Prudential Regulatory
Authority ("PRA"), under the Financial Services and Markets Act 2000, and in accordance with the Solvency II framework.
This reflects the finalized transition from Solvency II to Solvency UK effective year end 2024.
Within this supervisory framework, Lloyd’s applies capital requirements at member level and centrally to ensure that Lloyd’s
would comply with the Solvency UK requirements, and beyond that to meet its own financial strength, license and ratings
objectives.
Although, as described below, Lloyd’s capital setting processes use a capital requirement set at Syndicate level as a starting
point, the requirement to meet Solvency UK and Lloyd’s capital requirements apply overall and member level only
respectively. Accordingly, the capital requirement in respect of Syndicate 3010 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 in accordance with the Solvency UK framework. 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 comprises one or more underwriting members of Lloyd’s. Each member is liable for its own share of
underwriting liabilities on the Syndicates on which it is participating but not other members’ shares. Accordingly, the capital
requirements that Lloyd’s sets for each member operate on a similar basis. Each member’s SCR shall thus be determined by
the sum of the member’s share of the Syndicate’s SCR ‘to ultimate’. Where a member participates on more than one
Syndicate, a credit for diversification is provided to reflect the spread of risk, but consistent with determining an SCR which
reflects the capital requirement to cover a 1 in 200 loss ‘to ultimate’ for that member. Over and above this, Lloyd’s applies a
capital uplift to determine the member’s capital requirement, known as the Economic Capital Assessment ("ECA"). The
purpose of this uplift, which is a Lloyd’s and not a Solvency UK requirement, is to meet Lloyd’s financial strength, licence
and ratings objectives. The capital uplift applied for 2025 was maintained at 35.0% of the member’s SCR ‘to
ultimate’ [unaudited and is not part of the financial statements].
Provision of capital by members
Each member may provide capital to meet its ECA either by assets held in trust by Lloyd’s specifically for that member
(Funds at Lloyd’s), assets held and managed within a Syndicate (Funds in Syndicate), or as the member’s share of the
members’ balances on each Syndicate on which it participates.
Accordingly, all of the assets less liabilities of the Syndicate, as represented in the members’ balances reported on the
Balance Sheet on page 14, represent resources available to meet members’ and Lloyd’s capital requirements.
Notes to the Syndicate Annual Accounts
For the year ended 31 December 2025
30
5 Analysis of Underwriting Result
An analysis of the underwriting result before investment return for the year and the net technical provisions for the year end
are presented in the table below:
31 December 2025
Type of business | Gross premiums written $’000 | Gross premiums earned $’000 | Gross claims incurred $’000 | Gross operating expenses $’000 | Reinsurance balance $’000 | Total excluding investment return $’000 |
Direct insurance | ||||||
Accident and health | | | ( | ( | ( | |
Marine, aviation and transport | | | ( | ( | | ( |
Fire and other damage to property | | | ( | ( | ( | |
| | | ( | ( | | ( | |
Reinsurance acceptances | | | ( | ( | ( | |
Total | | | ( | ( | | |
31 December 2025
Gross premiums written $’000 | Gross premiums earned $’000 | Gross claims incurred $’000 | Gross operating expenses $’000 | Reinsurance balance $’000 | Total excluding investment return $’000 | |
Fire and damage to property of which is: | ||||||
Specialities | | | ( | ( | | ( |
Energy | | | ( | ( | | ( |
31 December 2024
Type of business | Gross premiums written $’000 | Gross premiums earned $’000 | Gross claims incurred $’000 | Gross operating expenses $’000 | Reinsurance balance $’000 | Total excluding investment return $’000 |
Direct insurance | ||||||
Accident and health | | | ( | ( | ( | |
Marine, aviation and transport | | | ( | ( | | |
Fire and other damage to property | | | ( | ( | ( | |
| | | ( | ( | | | |
Reinsurance acceptances | | | ( | ( | ( | ( |
Total | | | ( | ( | | |
Notes to the Syndicate Annual Accounts
For the year ended 31 December 2025
31
5 Analysis of Underwriting Result continued
31 December 2024
Gross premiums written $’000 | Gross premiums earned $’000 | Gross claims incurred $’000 | Gross operating expenses $’000 | Reinsurance balance $’000 | Total excluding investment return $’000 | |
Fire and damage to property of which is: | ||||||
Specialities | | | ( | ( | ( | ( |
| Energy | | | ( | ( | | |
Other technical income of $2.6m (2024: $2.4m) is included in gross operating expenses and is for consortia fee income.
Syndicate 3010 leads and manages three consortia: Cargo, Accident and Health and Property Construction. The Syndicate
charges fee income based on percentages outlined in the agreements.
The gross premiums written for direct insurance by location is presented in the table below. All premiums written are for
contracts with external customers and are concluded in the UK, except for EU-domiciled business which is written through
Lloyd's Europe, reinsured to the Syndicate and concluded in Belgium.
2025 $'000 | 2024 $'000 | |
United Kingdom | | |
US | | |
European Union Member States | | |
Other countries (including Worldwide) | | |
Total | |
Notes to the Syndicate Annual Accounts
For the year ended 31 December 2025
32
6 Net Operating Expenses
2025 $'000 | 2024 $'000 | |
Brokerage and commissions | | |
Financing costs | 643 | — |
Change in deferred acquisition costs | ( | ( |
Administrative expenses | | |
Reinsurance commission and profit participation | ( | ( |
Personal expenses | | |
Total | | |
Total commissions for direct insurance business accounted for in the year amounted to :
2025
$'000
2024
$'000
Total commission for direct insurance business
Administrative expenses include:
2025 $'000 | 2024 $'000 | |
Auditors’ remuneration: | ||
Audit of the Syndicate annual accounts | | |
Other services pursuant to regulations and Lloyd's Byelaws | | |
Total | 566 | 580 |
7 Staff Number and Costs
Lancashire Insurance Services Limited ("LISL") pays all salaries to the employees and recharges a proportion to LSL, which
in turn recharges the Syndicate. All staff are employed by LISL. The following amounts were recharged by LSL to the
Syndicate in respect of salary costs:
2025 $'000 | 2024 $'000 | |
Wages and salaries | | |
Social security costs | | |
Pension costs | | |
| Total | | |
The average number of employees employed by LISL but working for the Syndicate during the year, analysed by category, is
as follows:
2025 Number | 2024 Number | |
Operations, administration and finance | | |
Underwriting and claims | 58 | 49 |
| Total | | |
8 Emoluments of the Directors of Lancashire Syndicates Limited
The Syndicate has incurred the following amounts in respect of emoluments paid to its managing agent’s Directors,
excluding the Active Underwriter of the Syndicate (see Note 9). Fees relates to fees paid to the Non-Executive Directors.
2025 $'000 | 2024 $'000 | |
Emoluments | | |
Fees | | |
Other benefits | 460 | 407 |
Notes to the Syndicate Annual Accounts
For the year ended 31 December 2025
33