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Lloyd’s Syndicate
Syndicate 1254
Annual Report and Accounts for the year ended
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Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
www.polo.works
Contents
Directors and Administration
2
Managing Agent’s Report
3
Statement of Managing Agent’s Responsibilities
7
Independent Auditor’s Report to the Member of Syndicate 1254
8
Statement of profit or loss and other comprehensive income
12
Balance sheet – Assets
14
Balance sheet (cont’d) – Liabilities
15
Statement of changes in member’s balances
16
Statement of cash flows
17
Notes to the financial statements
18
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Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
www.polo.works
Directors and Administration
Managing Agent
Registered Office
Grange Park, Bishop's Cleeve,
Cheltenham, England,
GL52 8YQ
Registered Number
03935227
Directors
P D Andrews
M J Bishop (resigned 13 Mar 2025)
I J Bremner*
K D Curtis*
J A Hummerston (resigned 19 Feb 2025)
C E Layton (appointed 3 Jan 2025)
S Minshall
G H J Nokes (appointed 13 Mar 2025)
R M Richardson-Bunbury
Dr M Sebold-Bender*
P R Smith
Z Szalkai
P I Wooldridge
* Independent non-executive Director
Company Secretary
L Robinson (appointed 6 Oct 2025)
P M Laws (resigned 15 Sep 2025)
Syndicate
Run-Off Manager
P Close (appointed 6 Mar 2025)
P R Smith (resigned 6 Mar 2025)
Bankers
Barclays Bank - London
Citibank NA - London and New York
RBC Investor & Treasury Services - Toronto
European Depositary Bank - Luxembourg
Investment Managers
Conning Asset Management Limited
New England Asset Management Limited (“NEAM”)
Auditors
Forvis Mazars LLP
Statement of actuarial opinion signing actuary
PricewaterhouseCoopers LLP
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Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
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Managing agent’s report
The Directors of PMA, the Managing Agent for the Syndicate, present their report and the audited financial
statements for the year ended 31 December 2025.
The financial statements have been prepared in accordance with the Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008, United Kingdom Accounting Standards including FRS
102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” and FRS 103 “Insurance
Contracts” (United Kingdom Generally Accepted Accounting Practice), and the Lloyd’s Syndicate Accounts
Instructions V3.1 as modified by the Frequently Asked Questions Version 1.1 issued by Lloyd’s (the Syndicate
Accounts Instructions).
Results
The result for the year ended 31 December 2025 is a loss of $(20.8)m (2024: profit of $5.1m).
Principal Activity and Business of the Syndicate
The principal activity of Syndicate 1254 is the transaction of reinsurance business in the Lloyd’s market by way
of reinsurance to close (“RITC”) or other legacy solution.
Management of the Syndicate
Polo Managing Agency Limited is the Managing Agent for the Syndicate.
The Managing Agent is a wholly owned subsidiary of Marco Capital Holdings Limited; a company incorporated
in Malta.
Review of Financial Performance
The key financial performance indicators for the year ended 31 December 2025 were as follows:
Year
ended
31 Dec 2025
$m
Year
ended
31 Dec 2024
(restated)
$m
Gross premiums written
1.9
1.6
Net premiums earned
1.9
1.7
Claims incurred
(26.7)
5.7
Operating expenses
(1.8)
(1.9)
Investment return
10.4
(1.0)
(Loss)/Profit
(20.8)
5.1
As a legacy solutions provider, the Syndicate does not report loss ratios or combined ratios, as premium income
is directly related to claims acquired. Movements in claims incurred relate to prior underwriting year movements
on policies written in previous calendar years.
Syndicate 1975 reinsured to close (“RITC”) into the 2025 year of account of the Syndicate, effective 1
st
January
2025. The Syndicate received a premium of $3.3m for taking on these liabilities.
In line with common market practice and the Syndicate’s accounting policy, the initial premium and the liabilities
have been taken straight to the balance sheet rather than through the statement of profit and loss. In effect, the
transfer of the portfolio is a sale/purchase at fair market value based on an arm's-length commercial agreement,
therefore the net value of the transferring assets and liabilities is nil.
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The business transferred through the Syndicate 1975 RITC is protected by a reinsurance agreement. The
economics of this agreement are that the Syndicate is protected on all items in the profit and loss statement.
Funds are also withheld from the reinsurer to protect against credit risk. The funds withheld are assessed on a
quarterly basis and topped up or released as required.
Incurred claims development is a primary performance indicator for a run-off syndicate. Claims reserves are
expected to decrease as claims are settled. Claims settled below booked reserves will generate profits for the
Syndicate and vice versa. Nevertheless, future insurance claims payments are inherently uncertain and this needs
to be understood when interpreting the Syndicate's results.
Claims incurred of $(26.7)m (2024: $5.7m positive experience) were largely attributable to unfavourable
development in US casualty business, which is being experienced across the market. Reserves have been
strengthened on a best estimate basis to a level where no further deterioration is expected.
The Syndicate currently invests in government bonds, investment grade corporate bonds, money market funds
and other select funds as it attempts to generate stable returns, whilst maintaining liquidity for settling claims and
maintaining capital. Oversight of investment activities is governed by the Syndicate Management Committee
(“SMC”), which reports to the Managing Agent Board.
Investment income of $10.4m (2024: $(1.0)m loss) was impacted in the prior year by unrealised losses from
increasing yields on fixed rate investments, in contrast to the current year where realised and unrealised gains
were experienced due to falling yields.
Net operating expenses of $1.8m (2024: $1.9m) includes both gross commission of $2.5m (2024: $0.4m) and
ceding commission of $2.1m (2024: $nil), arising from premium movements and profit commission payments in
the year.
Principal risks and uncertainties
The Managing Agent has a Risk Management Function for the Syndicate with clear terms of reference from the
Board of Directors, its committees and the associated Executive Management Committees. The Board approves
the risk management policies and meets regularly to approve commercial, regulatory and organisational
requirements of such policies. The Board reviews and approves its risk appetite annually.
The Risk Management Function has implemented a Board approved Risk Management Framework to enable the
ongoing identification, assessment and management (mitigation, monitoring and reporting) of risks and is also
responsible for producing the Syndicate’s Own Risk and Solvency Assessment (“ORSA”); recommending the
assessment to the Board for approval.
The principal risks and uncertainties facing the Syndicate are as follows:
Insurance risk
Insurance risk includes the risks that a policy will be written for too low a premium or provide inappropriate cover
(underwriting risk), or that estimates of claims subsequently prove to be insufficient (reserving risk).
Underwriting and pricing for inwards legacy reinsurance contracts are the responsibility of the Marco Group. This,
together with the run-off nature of the business mean that the Syndicate is primarily exposed to:
•
the uncertainty in the reporting and quantification of claim payments in respect of losses that have already
occurred (Reserving Risk); as opposed to
•
the additional uncertainty of losses that might arise due to as yet unknown future events, as would be the
case for a traditional syndicate writing live risks (Underwriting Risk).
PMA is responsible for approving all inwards legacy reinsurance contracts, including that sufficient and effective
due diligence has been undertaken on behalf of the Syndicate before approving any transactions. The
Underwriting function is responsible for the day-to-day operational aspects of managing the Syndicate’s portfolio,
including any reinsurance arrangements.
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Credit risk
Credit risk relates to the risk of default on the settlement of balances receivable by the Syndicate. The Syndicate’s
reinsurers and the default of investment counterparties represent the principal sources of this risk. This risk is
actively managed by the policies, procedures and controls overseen by Management. The Syndicate has
reinsurance with highly rated or reputable reinsurers and where appropriate reinsurance is supported by
collateral or funds withheld.
A diversified portfolio of investment grade corporate bonds and government
securities is held to mitigate investment counterparty default.
Market risk
The Syndicate is exposed to foreign exchange movements as a result of mismatches between the currencies in
which assets and liabilities are denominated. The Managing Agent seeks to minimise these mismatches via
currency sales and purchases, except where specific acceptance is agreed at the SMC.
Interest rate risk
Interest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Syndicate's assets are mainly fixed interest bonds for which the price is
determined by nominal interest rates and credit spreads. The Syndicate seeks to hold assets to maturity, and
this mitigates the risk of short-term price movements. However, the Syndicate is exposed to movements in
interest rates on both the asset and liability portfolios. As yields rise, asset values tend to fall, and when they
decrease asset values tend to rise. Conversely, the rate upon which the Syndicate discounts eligible long term
claims liabilities move in the opposite direction to the asset portfolio, providing a partial natural hedge.
Liquidity risk
This is the risk that the Syndicate will not be able to meet its liabilities as they fall due, owing to a shortfall in cash
or can only meet obligations at excessive cost. This risk is mitigated by holding highly marketable bonds, such as
government bonds and investment grade corporate bonds with large issues. As a legacy syndicate, the Syndicate
is not reliant on cashflows generated from trading activities to be able to pay claims and expenses. To manage
liquidity requirements, the SMC regularly reviews cash flow projections, including stress scenarios, monitors
duration and maintains cash levels consistent with the needs of the Syndicate.
Operational risk
This is the risk that errors caused by people, processes, systems and external events lead to losses to the
Syndicate. The Managing Agent seeks to manage this risk through the use of an operational risk and control
framework, detailed procedures manual, thorough training programme and a structured programme of testing of
processes and systems by internal audit. Business continuity and disaster recovery plans are in place and are
regularly updated and tested.
Regulatory risk
Regulatory risk is the risk of loss owing to a breach of regulatory requirements or failure to respond to regulatory
change. The Managing Agent is required to comply with the requirements of the Financial Conduct Authority
("FCA"), Prudential Regulatory Authority ("PRA") and Lloyd’s. Lloyd’s requirements include those imposed on the
Lloyd’s market by overseas regulators, particularly in respect of US situs business. PMA's Risk and Compliance
function manages and monitors business activity and regulatory developments to assess any effects on the
Syndicate and Managing Agent.
Future developments
The Syndicate will continue to transact insurance business as suitable opportunities are identified. If opportunities
arise to write new classes of business, these will be investigated at the appropriate time.
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Environmental matters
The Syndicate underwrites previously insured risks and is unable to take environmental matters into account
when settling valid claims. However, the Syndicate has discretion to consider environment, social and governance
issues ("ESG") when investing its assets and the types of portfolios underwritten in the future. The Syndicate's
appointed investment managers consider ESG criteria as instructed by PMA, when selecting investments and
monitor against agreed appetites.
Directors
Details of the Directors of the Managing Agent who served during the year and up to the date of signing of the
Syndicate Annual Report and Accounts are provided on page 2 in the Directors and Administration section.
Disclosure of information to the auditors
The Directors of the Managing Agent at the time the report is approved confirm that:
•
So far as each of them is aware, there is no relevant audit information, being information needed by the
Syndicate’s auditor in connection with the auditor’s report, of which the auditor is unaware; and
•
Having made enquiries of fellow Directors of the Managing Agent and the Syndicate’s auditor, each
director has taken all the steps that he or she ought to have taken as a director to become aware of
any relevant audit information and to establish that the Syndicate’s auditor is aware of that information.
Auditors
Forvis Mazars LLP remain in office as the Syndicate's auditors.
On behalf of the Board
G H J Nokes
Director
17 February 2026
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Registered office: Polo Managing Agency, registered in England & Wales Registration no.
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Statement of Managing Agent’s Responsibilities
The Managing Agent is responsible for preparing the Syndicate annual report and accounts in accordance with
applicable laws and regulations.
The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 require the
Managing Agent to prepare Syndicate annual report and accounts at 31 December each year in accordance
with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and
applicable law). The Syndicate annual reports and accounts are required by law to give a true and fair view of
the state of affairs of the Syndicate as at that date and of its profit or loss for that year.
In preparing the Syndicate annual report and accounts, the Managing Agent is required to:
•
Select suitable accounting policies which are applied consistently;
•
Make judgements and estimates that are reasonable and prudent;
•
State whether applicable UK accounting standards have been followed, subject to any material
departures disclosed and explained in the notes to the Syndicate annual accounts;
•
Prepare the Syndicate annual report and accounts on the basis that the Syndicate will continue to
write future business unless it is inappropriate to presume that the Syndicate will do so; and
•
Prepare and review the iXBRL tagging that has been applied to the Syndicate Accounts in accordance
with the instructions issued by Lloyd’s, including designing, implementing and maintaining systems,
processes and internal controls to result in tagging that is free from material non-compliance with the
instructions issued by Lloyd’s, whether due to fraud or error.
The Managing Agent is responsible for keeping proper accounting records which disclose with reasonable
accuracy at any time the financial position of the Syndicate and enable it to ensure that the Syndicate annual
report and accounts comply with the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008. It is also responsible for safeguarding the assets of the Syndicate and hence for taking
reasonable steps for prevention and detection of fraud and other irregularities.
The Managing Agent is responsible for the maintenance and integrity of the corporate and financial information
included on the business’ web site. Legislation in the United Kingdom governing the preparation and
dissemination of 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
G H J Nokes
Director
17 February 2026
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Registered office: Polo Managing Agency, registered in England & Wales Registration no.
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Independent Auditor’s Report to the Member of Syndicate
1254
Opinion
We have audited the syndicate annual accounts of Syndicate 1254 (the “Syndicate”) for the year ended 31
December 2025 which comprise the Statement of profit or loss and other comprehensive income, the Balance
Sheet, the Statement of changes in members’ balances, Statement of cash flows and notes to the syndicate
annual accounts, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom
Accounting Standards, including The Syndicate accounts instructions Version 3.1 as modified by the Frequently
Asked Questions Version 1.1 issued by Lloyd’s (the “Lloyd’s Syndicate Accounts Instructions”),
FRS 102 “The
Financial Reporting Standard applicable in the UK and Republic of Ireland” and FRS 103 “Insurance Contracts”
(“United Kingdom Generally Accepted Accounting Practice”).
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 loss for
the year then ended;
•
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice; and
•
have been prepared in accordance with the requirements of The Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 and the requirements within Lloyd’s Syndicate
Accounts Instructions.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”), The Insurance
Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, the Lloyd’s Syndicate
Accounts Instructions and other applicable law. Our responsibilities under those standards are further described
in the “Auditor’s responsibilities for the audit of the syndicate annual accounts” section of our report. We are
independent of the Syndicate in accordance with the ethical requirements that are relevant to our audit of the
syndicate annual accounts in the UK, including the FRC’s Ethical Standard as applied to other entities of public
interest, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other matter – iXBRL tagging
In forming our opinion on the syndicate annual accounts, which is not modified, we draw attention to the fact that
this report may be included within a document to which iXBRL tagging has been applied. This auditors’ report
provides no assurance over whether the iXBRL tagging has been applied in accordance with Lloyd’s Syndicate
Accounts Instructions.
Conclusions relating to going concern
In auditing the syndicate annual accounts, we have concluded that the directors of the Managing Agent’s use of
the going concern basis of accounting in the preparation of the syndicate annual accounts is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Syndicate's ability to continue as a
going concern for a period of at least twelve months from when the syndicate annual accounts are authorised for
issue.
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Our responsibilities and the responsibilities of the Managing Agent with respect to going concern are described
in the relevant sections of this report.
Other information
The other information comprises the information included in the Syndicate Annual Report and Accounts, other
than the syndicate annual accounts and our auditor’s report thereon. The Managing Agent is responsible for the
other information. Our opinion on the syndicate annual accounts does not cover the other information and, except
to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the syndicate annual accounts or our knowledge obtained in the course of the audit
or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a material misstatement in the syndicate
annual accounts. If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by The Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the Managing Agent’s Report for the financial year for which the syndicate annual
accounts are prepared is consistent with the syndicate annual accounts; and
•
the Managing Agent’s Report has been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the Syndicate and its environment obtained in the course of the
audit, we have not identified material misstatements in the Managing Agent’s Report.
We have nothing to report in respect of the following matters in relation to which The Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 requires us to report to you, if in our opinion:
•
the Managing Agent in respect of the Syndicate has not kept adequate accounting records; or
•
the syndicate annual accounts are not in agreement with the accounting records; or
•
certain disclosures of the Managing Agent’s remuneration specified by law are not made; or
•
we have not received all the information and explanations we require for our audit.
Responsibilities of the Managing Agent
As explained more fully in the Statement of Managing Agent’s Responsibilities
set out on page 7 , the Managing
Agent is responsible for the preparation of the syndicate annual accounts and for being satisfied that they give a
true and fair view, and for such internal control as the Managing Agent determines is necessary to enable the
preparation of the syndicate annual accounts that are free from material misstatement, whether due to fraud or
error.
In preparing the syndicate annual accounts, the Managing Agent is responsible for assessing the Syndicate’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Managing Agent either intends for the Syndicate to cease
operations, or has no realistic alternative but to do so.
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Auditor’s responsibilities for the audit of the syndicate annual accounts
Our objectives are to obtain reasonable assurance about whether the syndicate annual accounts as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit
conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of the syndicate annual accounts.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures
in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities,
including fraud.
Based on our understanding of the Syndicate and its industry, we considered that non-compliance with the
following laws and regulations might have a material effect on the syndicate annual accounts: permissions and
supervisory requirements of the Prudential Regulation Authority (‘PRA’) and the Financial Conduct Authority
(“FCA”), and regulations set by the Council of Lloyd’s.
To help us identify instances of non-compliance with these laws and regulations, and in identifying and assessing
the risks of material misstatement in respect to non-compliance, our procedures included, but were not limited to:
•
Gaining an understanding of the legal and regulatory framework applicable to the Syndicate and the
industry in which it operates, and considering the risk of acts by the Syndicate which were contrary to the
applicable laws and regulations, including fraud;
•
Inquiring of directors and management of the Managing Agent and the Syndicate’s management as to
whether the Syndicate is in compliance with laws and regulations, and discussing their policies and
procedures regarding compliance with laws and regulations;
•
Inspecting correspondence, if any, with relevant licensing or regulatory authorities including the PRA,
FCA and the Council of Lloyd’s;
•
Reviewing minutes of meetings of the Managing Agent in the year and up to the date of this report; and
•
Discussing amongst the engagement team the laws and regulations listed above, and remaining alert to
any indications of non-compliance.
We also considered those laws and regulations that have a direct effect on the preparation of the syndicate annual
accounts such as United Kingdom Generally Accepted Accounting Practice, The Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, and the Lloyd’s Syndicate Accounts Instructions.
In addition, we evaluated the directors’ and management of the Managing Agent’s and the Syndicate
management’s incentives and opportunities for fraudulent manipulation of the syndicate annual accounts,
including the risk of management override of controls and determined that the principal risks related to posting
manual journal entries to manipulate financial performance, management bias through judgements and
assumptions in significant accounting estimates, in particular in relation to the valuation of the provisions for the
settlement of future claims, and significant one-off or unusual transactions.
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Our audit procedures in relation to fraud included but were not limited to:
•
Making enquiries of the directors and management of the Managing Agent and Syndicate management
on whether they had knowledge of any actual, suspected or alleged fraud;
•
Gaining an understanding of the internal controls established to mitigate risks related to fraud;
•
Discussing amongst the engagement team the risks of fraud;
•
Addressing the risks of fraud through management override of controls by performing journal entry
testing;
•
Reviewing the accounting estimate in relation to valuation of insurance liabilities for evidence of
management bias;
•
Designing audit procedures to incorporate unpredictability around nature, timing or extent of our testing;
and
•
Considering significant transactions outside the normal course of business. Our approach included
reviewing Board minutes, review of correspondence with the PRA, FCA and Lloyd’s, and substantively
testing the transactions and related disclosures where considered material.
The primary responsibility for the prevention and detection of irregularities, including fraud, rests with both those
charged with governance and management. As with any audit, there remained a risk of non-detection of
irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of
internal controls.
A further description of our responsibilities is available on the Financial Reporting Council’s website at
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of the audit report
This report is made solely to the Syndicate’s members as a body in accordance with The Insurance Accounts
Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008. Our audit work has been undertaken
so that we might state to the Syndicate’s members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the Syndicate and the Syndicate’s members, as a body, for our audit work, for this report,
or for the opinions we have formed.
Andrew Jones (Senior Statutory Auditor)
for and on behalf of Forvis Mazars LLP
Chartered Accountants and Statutory Auditor
30 Old Bailey
London
EC4M 7AU
17 February 2026
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Registered office: Polo Managing Agency, registered in England & Wales Registration no.
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Statement of profit or loss and other comprehensive income
Technical account – General business/long-term business
For the year ended 31 December 2025
Note
Year ended
31 Dec 2025
$000
Year ended
31 Dec 2024
(restated)*
$000
Gross premiums written
5
Outwards reinsurance premiums
(482 )
Premiums written, net of reinsurance
Changes in unearned premium
Change in the gross provision for unearned premiums
Net change in provisions for unearned premiums
Earned premiums, net of reinsurance
Allocated investment return transferred from the
non-technical account
9
(1,023 )
Claims paid
15
Gross amount
(72,306 )
(25,367 )
Reinsurers’ share
Net claims paid
(44,202 )
(21,426 )
Change in the provision for claims
15
Gross amount
Reinsurers’ share
(5,867 )
(13,313 )
Net change in provisions for claims
Claims incurred, net of reinsurance
(26,684 )
Net operating expenses
6
(1,825 )
(1,899 )
Balance on the technical account – general business/long-
term business
(16,207 )
*: Balances were previously presented in GBP (refer note 29)
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Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
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Statement of profit or loss and other comprehensive income (cont.)
Non-technical account – General business/long-term business
For the year ended 31 December 2025
The accompanying notes from page 18 to 49 form an integral part of these financial statements.
*: Balances were previously presented in GBP (refer note 29)
Note
Year ended
31 Dec 2025
$000
Year ended
31 Dec 2024
(restated)*
$000
Balance on the technical account – general business/long-
term business
(16,207 )
Investment income
9
Realised gains on investments
9
Unrealised gains/(losses) on investments
9
(7,853 )
Investment expenses and charges
9
(205 )
(166 )
Total investment return
(1,023 )
Allocated investment return transferred to the general business
technical account
(10,407 )
Gain/(loss) on foreign exchange
(428 )
Other income
Other expenses
(7,134 )
(Loss)/Profit for the financial year
(20,770 )
Other comprehensive income
Total comprehensive (loss)/profit for the year
(20,770 )
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Balance sheet – Assets
As at 31 December 2025
31 Dec 2025
31 Dec 2024
(restated)*
Note
$000
$000
Financial investments
11
Deposits with ceding undertakings
Investments
Provision for unearned premiums
Claims outstanding
Reinsurers’ share of technical provisions
15
Debtors arising out of reinsurance operations
12
Other debtors
13
Debtors
Cash at bank and in hand
20
Other
Other assets
Other prepayments and accrued income
Prepayments and accrued income
Total assets
*: Balances were previously presented in GBP (refer note 29)
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Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
www.polo.works
Balance sheet (cont’d) – Liabilities
As at 31 December 2025
31 Dec 2025
31 Dec 2024
(restated)*
Note
$000
$000
Member’s balances
(2,713 )
Total capital and reserves
(2,713 )
Provision for unearned premiums
Claims outstanding
Technical provisions
15
Deposits received from reinsurers**
Creditors arising out of direct insurance operations
17
Creditors arising out of reinsurance operations**
18
Other creditors including taxation and social security
19
Creditors
Accruals and deferred income
Total liabilities
Total liabilities, capital and reserves
The Syndicate financial statements on pages 12 to 49 were approved by the board of
Polo Managing Agency
Limited
on 16 February 2026 and were signed on its behalf by:
G H J Nokes
Director
17 February 2026
*: Balances were previously presented in GBP (refer note 29)
**: $56.3m (£44.9m) was reclassified from creditors arising out of reinsurance operations to deposits received
from reinsurers (refer note 29).
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Registered office: Polo Managing Agency, registered in England & Wales Registration no.
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Statement of changes in Member’s balances
For the year ended 31 December 2025
Year ended
31 Dec 2025
Year ended
31 Dec 2024
(restated)*
$000
$000
Member’s balances brought forward at 1 January
Total comprehensive (loss)/gain for the year
(20,770 )
Losses collected in relation to distribution on closure of underwriting year
Open year profit release
(10,450 )
Other
(132 )
Member’s balances carried forward at 31 December
(2,713 )
*: Balances were previously presented in GBP (refer note 29)
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Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
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Statement of cash flows
For the year ended 31 December 2025
Year ended
31 Dec 2025
Year ended
31 Dec 2024
(restated)*
Note
$000
$000
Cash flows from operating activities
(Loss)/Profit for the financial year
(20,770 )
Adjustments:
Decrease in gross technical provisions
(24,309 )
(40,873 )
Decrease in reinsurers’ share of gross
technical provisions
Decrease in debtors
Increase/(decrease) in creditors
(4,843 )
Movement in other assets/liabilities
Investment return
(10,407 )
Foreign exchange
(2,012 )
Other
(248 )
Net cash flows from operating activities
(12,001 )
(23,151 )
Cash flows from investing activities
Purchase of equity and debt instruments
(168,973 )
(45,958 )
Sale of equity and debt instruments
Investment income received
Other
(205 )
(19 )
Net cash flows from investing activities
Cash flows from financing activities
Open year profit release
(10,450 )
Collection of losses
Net cash flows from financing activities
Net increase in cash and cash equivalents
(5,016 )
Cash and cash equivalents at the beginning of the year
Foreign exchange on cash and cash equivalents
Cash and cash equivalents at the end of the year
20
*: Balances were previously presented in GBP (refer note 29)
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Notes to the financial statements – (forming part of the financial
statements)
1. Basis of preparation
Syndicate
1254 (‘the Syndicate’) comprises a member of the Society of Lloyd's that underwrites insurance
business in the London Market. The address of the Syndicate’s managing agent is Grange Park, Bishop's Cleeve,
Cheltenham, England, GL52 8YQ.
The financial statements have been prepared in accordance with the Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008, United Kingdom Accounting Standards including FRS
102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” and FRS 103 “Insurance
Contracts” (United Kingdom Generally Accepted Accounting Practice), and the Lloyd’s Syndicate Accounts
Instructions Version 3.1 as modified by the Frequently Asked Questions Version 1.1 issued by Lloyd’s (the
Syndicate Accounts Instructions).
The financial statements have been prepared on the historical cost basis, except for financial assets at fair value
through profit or loss and available for sale that are measured at fair value.
The financial statements are presented in US Dollars, which is also the Syndicate’s functional currency.
All amounts have been rounded to the nearest thousand, unless otherwise indicated.
Prior year adjustment
During 2024, Lloyd's introduced changes to the syndicate accounts and returns process to rationalise and
standardise financial reporting across the market. As part of this change Syndicates are able to present certain
Lloyd’s returns in their currency of choice. Previously Lloyd’s returns were presented in Pounds Sterling and the
Syndicate presented its report and accounts in Pounds Sterling so as to be aligned. With this no longer being the
case the Syndicate has decided to present its report and accounts in its functional currency of US dollars, so as
to be aligned with its functional currency and the reporting currency of its ultimate parent. This has resulted in the
comparative balances in the financial statements being restated in US dollars. The impact of this change is shown
in note 29.
In addition, $56.3m (£44.9m) was reclassified from creditors arising out of reinsurance operations to deposits
received from reinsurers. The amounts reclassified represent funds withheld from reinsurers and the restated
disclosure better reflects the nature of the amounts.
Going concern
These financial statements are prepared on a going concern basis.
The Syndicate’s business activities, together with the factors likely to affect its future development, are set out in
the business review contained within the Managing Agent's report. In addition, the risk management section
provides details of the financial risks the Syndicate is exposed to and how those risks are managed.
The Directors consider it appropriate to adopt the going concern basis of accounting in preparing these financial
statements as the Syndicate has adequate resources to meet its obligations as they fall due for a period of at
least 12 months from the date of these financial statements, in addition to Funds at Lloyd’s of the member
supporting the Syndicate.
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2.
Use of judgements and estimates
In preparing these financial statements, the Directors of the Managing Agent have made judgements, estimates
and assumptions that affect the application of the Syndicate’s accounting policies and the reported amounts of
assets, liabilities, income and expenses.
The following critical judgements have been made in applying the Syndicate’s accounting policies:
The Syndicate makes estimates and assumptions concerning the future. The resulting estimates will, by definition,
seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed
below.
Insurance contract technical provisions
For insurance contracts, estimates of the claim provisions (referred to as Claims Outstanding in the accounts)
comprise the expected cost of claims incurred and reported at the valuation date (outstanding claims), further
development of these claims (incurred but not enough reported or “IBNER”) and those claims that have been
incurred but not yet reported (“IBNR”) at the valuation date. IBNR and IBNER are commonly referred to collectively
as IBNR. It can take a significant period of time before the ultimate claims cost can be established with a high
degree of certainty and for some types of policies, IBNR claims form the majority of the liability in the statement
of financial position.
The IBNR provisions are estimated by using a range of standard actuarial claims projection techniques. The main
assumption underlying these techniques is that historical claims development patterns can be used to project
future claims development and hence ultimate claims costs. Where this assumption is not believed to hold,
judgement has been applied to estimate the expected future claims costs based on the latest available information.
Standard actuarial methods for non-life business usually assume that the development of claims, i.e. reporting,
processing, and settlement of claims, is consistent with previous experience. Accumulation of experience over
many underwriting years helps to moderate the effect of short-term random variation. The Syndicate's own
experience is limited, for example the inwards RITC portfolio was originally underwritten over a period of three
years commencing in 2017. For this reason, the Syndicate has placed greater reliance on market data that covers
a longer period, a greater volume of business, and is more credible as a result.
Liabilities for settled and potential PPOs, assume that historic rates of wage inflation, mortality, and improvements
in longevity are a guide to the future, after allowing for the recent surge in inflation. Due to their long duration,
discounted settled and potential PPO claim estimates are very sensitive to the choice of discount.
The provision for outstanding claims is assessed on an individual case basis and is based on the estimated
ultimate cost of all claims notified but not settled by the balance sheet date and where appropriate the provision
for related claims handling costs.
Investment valuations
All investments are shown at their fair value. Most investments are Government securities or investment-grade
corporate bonds and regularly traded on major stock exchanges hence any risks in their valuations are reduced.
The Syndicate also invests in a level 3 senior secured credit fund, which is measured at fair value, based on the
net asset value of investee funds. Determination of the net asset value of the underlying fund includes certain
inputs (e.g. valuation of assets and liabilities of the fund) that are unobservable, these are considered for
materiality at each reporting date and, if required, further assessment carried out prior to valuation finalisation.
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3. Significant accounting policies
The following significant accounting policies have been applied consistently in dealing with items which are
considered material in relation to the Syndicate’s interim financial statements.
A. Premiums written
Gross premiums written reflect direct and inwards reinsurance business written during the year, gross of
commission payable to intermediaries, and exclude any taxes or duties based on premiums.
Outwards reinsurance premiums are accounted for in the same accounting year as the premiums for the related
direct or inwards business being reinsured. The earned proportion of premiums is recognised as income.
Premiums are earned from the date of attachment of risk over the indemnity period based on the pattern of the
risks underwritten.
Additional or return premiums are treated as a re-measurement of the initial premium and are recognised when
advised.
Inwards RITC premiums are not included in premiums written as the net value of assets and liabilities transferred
to the Syndicate is nil.
B. Unearned premiums
The provision for unearned premiums comprises the proportion of gross premiums written which is estimated to
be earned in the following or subsequent financial years, 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.
C. Acquisition costs
Costs incurred in acquiring general insurance contracts are deferred. Acquisition costs include direct costs such
as brokerage and commission, and indirect costs such as administrative expenses connected with the processing
of proposals and the issuing of policies. The deferred acquisition cost asset represents the proportion of
acquisition costs which corresponds to the proportion of gross premiums written that is unearned at the balance
sheet date.
D. Reinsurance
The Syndicate assumes and cedes reinsurance in the normal course of business. Premiums and claims on
reinsurance assumed are recognised in the technical account along the same basis as direct business, taking
into account the product classification. Reinsurance premiums ceded and reinsurance recoveries on claims
incurred are included in the respective expense and income accounts. Premiums ceded and claims reimbursed
are presented on a gross basis in the technical account and statement of financial position as appropriate.
Reinsurance outwards premiums are earned according to the nature of the cover. ‘Losses occurring during’
policies are earned evenly over the policy period. ‘Risks attaching’ policies are expensed on the same basis as
the inwards business being protected.
Reinstatement premiums on both inwards and outwards business are accreted to the technical account on a pro-
rata basis over the term of the original policy to which they relate.
E.
Claims provisions and related reinsurance 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.
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The Syndicate does discount its liability for outstanding claims and the reinsurance share of outstanding claims
where the liabilities have a long-term nature. The liabilities discounted relate to bodily injury claims where many
claims are settled as Periodic Payment Orders that are payable over many years. The selected discount rate is
linked to a long-term view of inflation and long-term Sterling yields
including taking account of the assets that the
Syndicate has invested in to back these liabilities.
Outstanding claims include an allowance for the cost of claims incurred by the balance sheet date but not reported
until after the year end (IBNR). Salvage and subrogation and other recoveries are deducted from the provision
for outstanding claims. The liability for outstanding claims is estimated using the input of assessments for
individual cases reported to the Syndicate and widely accepted actuarial techniques for the claims incurred but
not reported (IBNR). The techniques generally use projections, based on past experience of the development of
claims over time, to form a view on the likely ultimate claims to be experienced and an estimate of the expected
ultimate cost of more complex claims that may be affected by external factors, for example, court decisions.
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.
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 in profit or loss in the year in
which the impairment loss is recognised.
F. Unexpired risks provision
Provision is made for unexpired risks arising from general insurance contracts where the expected value of claims
and expenses attributable to the unexpired years of policies in force at the balance sheet date exceeds the
unearned premiums provision in relation to such policies (after the deduction of any deferred acquisition costs).
The provision for unexpired risks is calculated by reference to classes of business which are managed together.
G. Foreign currencies
Transactions in foreign currencies are translated to the functional currency using the exchange rates at the date
of the transactions. The Syndicate’s monetary assets and liabilities denominated in foreign currencies are
translated into the functional currency at the rates of exchange at the balance sheet date. Non-monetary assets
and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional
currency at the exchange rate at the date that 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 the transaction. For the purposes of foreign currency translation, unearned premiums
and deferred acquisition costs are treated as if they are monetary items.
Differences arising on translation of foreign currency amounts relating to the insurance operations of the
Syndicate are included in the non-technical account.
H. Financial assets and liabilities
In applying FRS 102, the Syndicate has chosen to apply the recognition and measurement provisions of Chapters
11 and 12 of FRS 102.
Overseas deposits, which are lodged as a condition of underwriting business in certain countries, are included
within other investments.
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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.
The initial classification of a financial instrument shall take into account contractual terms including those relating
to future variations. Once the classification of a financial instrument is determined at initial recognition,
re-assessment is only required subsequently when there has been a modification of contractual terms that is
relevant to an assessment of the classification.
Financial assets and financial liabilities at fair value through profit and loss comprise financial assets and financial
liabilities held for trading and those designated as such on initial recognition. Investments in shares and other
variable yield securities, units in unit trusts, and debt and other fixed income securities are designated as at fair
value through profit or loss on initial recognition, as they are managed on a fair value basis in accordance with
the Syndicate’s investment strategy.
The Syndicate does not hold any non-derivative or derivative financial assets or financial liabilities for trading
purposes.
Deposits with credit institutions, debtors, and accrued interest are classified as loans and receivables.
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 expired.
Regular way purchases and sales of financial assets are recognised and derecognised, as applicable, on the
trade date, i.e., the date that the Syndicate commits itself to purchase or sell the asset.
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 or loss, transaction costs that are directly attributable to its acquisition or issue.
Financial assets at fair value through profit or loss are measured at fair value with fair value changes recognised
immediately in profit or loss.
Loans and receivables and non-derivative financial liabilities are measured at amortised cost using the effective
interest method, except Syndicate Loans to the Central Fund, which are measured at fair value through profit or
loss.
iv. Identification and measurement of impairment
At each reporting date the Syndicate assesses whether there is objective evidence that financial assets not 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.
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Impairment losses on available for sale financial assets are recognised by reclassifying the losses accumulated
in other comprehensive income to profit or loss. The net cumulative loss that is reclassified from other
comprehensive income to profit or loss is the difference between the acquisition cost, net of any principal
repayment, and the current fair value, less any impairment loss recognised previously in profit or loss. If, in a
subsequent year, the fair value of an impaired available for sale debt security increases and the increase can be
related objectively to an event occurring after the impairment loss was recognised, the impairment loss is reversed
through profit or loss. Otherwise it is reversed through the statement of comprehensive income.
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 on an amortised cost asset 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. Off-setting
Financial assets and financial liabilities are offset, and the net amount presented in the balance sheet when, and
only when, the Syndicate 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.
I.
Investment return
Investment return comprises investment income and movements in unrealised gains and losses on financial
instruments at fair value through profit or loss, less investment management expenses, interest expense, realised
losses and impairment losses. Investment income comprises interest income, dividends receivable and realised
investment gains.
Interest income on financial assets measured at amortised cost is recognised using the effective interest method.
For the purpose of separately presenting investment income and unrealised gains and losses for financial assets
at fair value through profit or loss, interest income is calculated using the effective interest method excluding
transaction costs that are expensed when incurred. For investments at fair value through profit or loss, realised
gains and losses represent the difference between the net proceeds on disposal and the purchase price. 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 investment gains and losses represent the difference between the fair value at the balance sheet date
and the fair value at the previous balance sheet date, or purchase price if acquired during the year. Movements
in unrealised investment gains and losses comprise the increase/decrease in the reporting year in the value of
the investments held at the reporting date and the reversal of unrealised investment gains and losses recognised
in earlier reporting years in respect of investment disposals of the current year.
Investment return is initially recorded in the non-technical account. The return is transferred in full to the general
business technical account to reflect the investment return on funds supporting underwriting business.
J.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from
the acquisition date that are subject to an insignificant risk of changes in fair value and are used by the Syndicate
in the management of its short-term commitments.
Cash and cash equivalents are carried at amortised cost in the statement of financial position.
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Bank overdrafts that are repayable on demand and form an integral part of the Syndicate’s cash management
are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
K. 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 25%) 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 United States Federal Income Tax payable on underwriting results or
investment earnings. Any payments on account made by the Syndicate during the year have been included in
the balance sheet under the heading ‘other debtors’.
No provision has been made for any other overseas tax payable by members on underwriting results.
L. Pension costs
Polo Managing Agency Limited
operates a defined contribution scheme. No charge is made for pension
contributions relating to Managing Agent staff who act on behalf of the Syndicate.
M. Deposits with ceding undertakings
Deposits with ceding undertakings are funds held by Lloyd’s Europe on behalf of the Syndicate to settle Part VII
claims. These funds are held at amortised cost in the balance sheet.
N. RITC Policy
In the Syndicate's view, an RITC contract of insurance transfers all known and unknown liabilities relating to a
year (or years) of account from the ceding Lloyd’s syndicate to the reinsuring syndicate. The use of the term
reinsurance is misleading as, for practical purposes, the contract extinguishes the liabilities of the transferor
syndicate. Following the RITC, the transferor is released from its obligations to account for and to report on the
transferring liabilities. This is unlike a conventional reinsurance contract which reinsures the cedant, but does not
transfer the cedant's primary responsibility for the liabilities. The Syndicate understands that there are differing
approaches to the accounting treatment of RITC contracts; however, the Syndicate considers that its accounting
policy is appropriate and that it assists the users of the accounts to understand both the transaction and
subsequent performance.
Where an external RITC occurs, the RITC premium is the cost to the transferor of transferring the liabilities to the
transferee. The RITC does not transfer intangible assets, such as a brand or future policy renewal rights. For an
arm's-length transaction, it provides an objective assessment of the fair value of the liabilities. Therefore, the net
value of the assets and liabilities transferring to the reinsuring syndicate is nil, and they are not recognised through
profit or loss. Subsequent revenues, expenses and revaluation of assets and liabilities are included in the
statement of profit or loss, or other comprehensive income as appropriate. Any RITC premiums received in the
year are disclosed as a note to the annual financial statements.
O. Deposits received from reinsurers
Deposits received from reinsurers includes other amounts received in advance from reinsurers against future
claims under the Syndicate's reinsurance arrangements. These funds are held at amortised cost in the balance
sheet.
P. Operating expenses
Operating expenses are taken into account on an accrual basis. Employee costs include the cost of all employee
benefits to which employees have become entitled as a result of service rendered to the entity during the reporting
year, which the Managing Agent considers to be attributable to this Syndicate. The Syndicate has no employees.
Also included are any commission amounts, both inwards and outwards.
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Q. Reinsurers’ commission and profit participation
Reinsurers’ commissions and profit participations, which include reinsurance profit commission and overriding
commission, are treated as a contribution to expenses.
R. Debtors and creditors
Insurance debtors and creditors include amounts due to and from agents, brokers and insurance contract holders.
These are classified as debt instruments as they are non-derivative financial assets with fixed or determinable
payments that are not quoted on an active market. Insurance debtors are measured at amortised cost less any
provision for impairments. Insurance creditors are stated at amortised cost. The Syndicate does not have any
debtors directly with policyholders, all transactions occur via an intermediary.
Reinsurance debtors and creditors include amounts due to and from reinsurers. These are classified as debt
instruments as they are non-derivative financial assets with fixed or determinable payments that are not quoted
on an active market. Reinsurance debtors are measured at amortised cost less any provision for impairments.
Reinsurance creditors are stated at amortised cost. Reinsurance debtors principally relate to claims recoveries
where the underlying claim has been settled and the recovery is due. Reinsurance creditors are primarily
premiums payable for reinsurance contracts and are recognised as an expense when due.
Other debtors principally consist of amounts due from members and sundry debtors and are carried at amortised
cost less any impairment losses.
Other creditors principally consist of amounts due to related syndicates and other related entities, profit
commissions payable and other sundry payables. These are stated at amortised cost determined using the
effective interest rate method.
S.
Classification of insurance and reinsurance contracts
Insurance and reinsurance contracts are classified as insurance contracts where they transfer significant
insurance risk. If a contract does not transfer significant insurance risk it is classified as a financial instrument. All
of the Syndicate’s written contracts and purchased reinsurance contracts transfer significant insurance risk and
therefore are recognised as insurance contract.
4.
Risk and capital management
Introduction and overview
This note presents information about the nature and extent of insurance and financial risks to which the Syndicate
is exposed, the Managing Agent’s objectives, policies and processes for measuring and managing insurance and
financial risks, and for managing the Syndicate’s capital.
Risk management framework
The Board of Directors of the Managing Agent has overall responsibility for the establishment and oversight of
the Syndicate’s risk management framework. The Board has established a Risk 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 Committee has delegated oversight of the management of aspects
of insurance risks to the Reserving Committee, which is responsible for developing and monitoring insurance risk
management policies, and the management of aspects of financial risks to the Syndicate Management
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.
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A. 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.
i.
Underwriting 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.
ii.
Reserve risk
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.
iii.
Management of insurance risk
Underwriting and pricing for inwards legacy reinsurance contracts is on a case by case basis and is the
responsibility of the Marco Group, which provides the Syndicate’s capital.
The managing agent is responsible for
approving all inwards legacy reinsurance contracts, including that sufficient and effective due diligence has been
undertaken on behalf of the Syndicate before approving any transactions.
The Syndicate makes use of reinsurance to mitigate the risk of incurring significant losses linked to one event,
including excess of loss and quota share reinsurance. Where an individual exposure is deemed surplus to the
Syndicate’s appetite additional facultative reinsurance is also purchased.
Where considered appropriate, and in limited circumstances, the Syndicate may adopt a pro-active approach to
early settling long tail latent disease claims with the contract holder, although each settlement is assessed on a
case-by-case basis to ensure the contract holder is not disadvantaged by such an approach.
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 Syndicate Managing Agent’s actuaries perform a reserving analysis on a quarterly basis liaising closely with
claims and reinsurance technicians. 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 reviewed by external consulting actuaries. The Reserving Committee performs a comprehensive
review of the projections, both gross and net of reinsurance. Following this review the Reserving Committee
makes recommendations to the Audit Committee, which is responsible for approving Syndicate reserves
quarterly, as delegated by the PMA Board, of the claims provisions to be established.
The claims development table in note number 14 shows the actual claims incurred compared to previous
estimates for the last 10 years.
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Registered office: Polo Managing Agency, registered in England & Wales Registration no.
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iv.
Sensitivity to insurance risk
The liabilities established could be significantly lower or higher than the ultimate cost of settling the claims arising.
This level of uncertainty varies between the classes of business and the nature of the risk being underwritten and
can arise from developments in case reserving for large losses and catastrophes, or from changes in estimates
of claims IBNR.
The following table presents the profit and loss impact of the sensitivity of the value of insurance liabilities
disclosed in the accounts to potential movements in the assumptions applied within the technical provisions.
Given the nature of the business underwritten by the Syndicate, the approach to calculating the technical
provisions for each class can vary and as a result the sensitivity performed is to apply a beneficial and adverse
risk margin to the total insurance liability. The amount disclosed in the table represents the profit or loss impact
of an increase or decrease in the insurance liability as a result of applying the sensitivity. The amount disclosed
for the impact on claims outstanding – net of reinsurance represents the impact on both the profit and loss for the
year and member balance.
General insurance business sensitivities as at 31 December 2025
Sensitivity
+5.0%
$000
-5.0%
$000
+10.0%
$000
-10.0%
$000
Claims outstanding – gross of reinsurance
(10,010 )
20,020
(20,020)
Claims outstanding – net of reinsurance
(2,955 )
5,911
(5,911)
General insurance business sensitivities as at 31 December 2024 (restated)
Sensitivity
+5.0%
$000
-5.0%
$000
Claims outstanding – gross of reinsurance
(3,288 )
Claims outstanding – net of reinsurance
(2,056 )
The sensitivity applied above encompasses all outstanding reserves, whereas prior year financial statements
applied the sensitivity only to the incurred but not reported element.
B. 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 matching basis.
a. 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 claims outstanding.
•
Amounts due from intermediaries.
•
Amounts due from reinsurers in respect of settled claims.
•
Cash and cash equivalents; and
•
Other debtors and accrued interest.
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.
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Registered office: Polo Managing Agency, registered in England & Wales Registration no.
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i.
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 also limits the aggregate amount of a type of debt security that may be held.
The Syndicate’s exposure to intermediaries and reinsurance counterparties is monitored as part of the credit
control processes.
The Syndicate assesses the creditworthiness of all reinsurers by reviewing public rating information and by
internal investigations. The impact of reinsurer default is regularly assessed and managed accordingly.
ii.
Exposure to credit risk
The carrying amount of financial assets and reinsurance assets represents the maximum credit risk exposure.
The following table analyses the credit rating by investment grade of financial investments and debt securities,
reinsurers’ share of claims outstanding, amount due from intermediaries, amounts due from reinsurers in respect
of settled claims, cash and cash equivalents, and other debtors and accrued interest.
Year 2025
AAA
$000
AA
$000
A
$000
BBB
$000
Other
$000
Not
rated
$000
Total
$000
Shares and other variable yield securities and
units in unit trusts
Debt securities and other fixed income
securities
Other investments
Deposits with ceding undertakings
Reinsurers’ share of claims outstanding
Debtors arising out of reinsurance operations
Cash at bank and in hand
Other debtors and accrued interest
Total
Year 2024 (restated)
AAA
$000
AA
$000
A
$000
BBB
$000
Other
$000
Not
rated
$000
Total
$000
Shares and other variable yield securities and
units in unit trusts
Debt securities and other fixed income
securities
Other investments
Deposits with ceding undertakings
Reinsurers’ share of claims outstanding
Debtors arising out of reinsurance operations
-
Cash at bank and in hand
Other debtors and accrued interest
Total
Docusign Envelope ID: A61610C8-C791-49E8-9D8E-D6D2620CCA9A
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Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
www.polo.works
iii.
Financial assets that are past due or impaired
An analysis of the carrying amounts of past due debtors is presented in the table below:
Neither
past due
nor
impaired
assets
Past due
but not
impaired
assets
Gross
value of
impaired
assets
Impairment
allowance
Total
Year 2025
$000
$000
$000
$000
$000
Shares and other variable yield securities and units in unit
trusts
Debt securities and other fixed income securities
Loans and deposits with credit institutions
Other investments
Deposits with ceding undertakings
Reinsurers’ share of claims outstanding
Debtors arising out of reinsurance operations
Cash at bank and in hand
Other debtors and accrued interest
Total
Neither
past due
nor
impaired
assets
Past due
but not
impaired
assets
Gross
value of
impaired
assets
Impairment
allowance
Total
Year 2024 (restated)
$000
$000
$000
$000
$000
Shares and other variable yield securities and units in unit
trusts
Debt securities and other fixed income securities
Other investments
Deposits with ceding undertakings
Reinsurers’ share of claims outstanding
Debtors arising out of reinsurance operations
Cash at bank and in hand
Other debtors and accrued interest
Total
The table below sets out the age analysis of financial assets that are past due but not impaired at the balance
sheet date:
Past due but not impaired
Year 2025
0-3 months
past due
$000
3-6 months
past due
$000
6-12
months
past due
$000
6-12
months
past due
$000
31 Dec
$000
Debtors arising out of reinsurance operations
Total
Docusign Envelope ID: A61610C8-C791-49E8-9D8E-D6D2620CCA9A
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Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
www.polo.works
Past due but not impaired
0-3 months
past due
3-6 months
past due
6-12
months
past due
Greater
than 1 year
past due
31 Dec
Year 2024 (restated)
$000
$000
$000
$000
$000
Other debtors and accrued interest
Total
b. 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.
i.
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.
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.
ii.
Maturity analysis of Syndicate liabilities
The maturity analysis presented in the table below shows the remaining contractual maturities for the Syndicate’s
insurance contracts and financial instruments. For insurance and reinsurance contracts, the contractual maturity
is the estimated date when the gross undiscounted contractually required cash flows will occur. For financial
liabilities, it is the earliest date on which the gross undiscounted cash flows (including contractual interest
payments) could be paid assuming conditions are consistent with those at the reporting date.
Undiscounted net cash flows
Year 2025
No
maturity
stated
$000
0-1 yrs
$000
1-3 yrs
$000
3-5 yrs
$000
>5 yrs
$000
Total
$000
Claims outstanding
Deposit received from reinsurers
Creditors
Other creditor balances
Total
Docusign Envelope ID: A61610C8-C791-49E8-9D8E-D6D2620CCA9A
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Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
www.polo.works
Undiscounted net cash flows
No
maturity
stated
0-1 yrs
1-3 yrs
3-5 yrs
>5 yrs
Total
Year 2024 (restated)
$000
$000
$000
$000
$000
$000
Claims outstanding
Deposit received from reinsurers
Creditors
Total
c. Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument or insurance contract will
fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk,
currency risk and equity 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.
i.
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 major
risk and the exposure of the Syndicate at the reporting date to each major risk are addressed below.
ii.
Interest rate risk
Interest rate risk is the risk that the fair value and/or future cash flows of a financial instrument will fluctuate
because of changes in interest rates.
The Syndicate is exposed to interest rate risk through its investment portfolio.
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 Syndicate Management Committee monitors the duration of
these assets on a regular basis, targeting an investment portfolio duration that, in the event of changes in interest
rates, always maintains the internal capital requirements.
iii. Currency risk
The Syndicate wrote business primarily in Sterling, US dollar, Euro, Canadian dollar, Australian dollar and
Japanese Yen and is therefore exposed to currency risk arising from fluctuations in these exchange rates.
The foreign exchange policy is to maintain assets in the currency in which the cash flows from liabilities are to be
settled in order to hedge the currency risk inherent in these contracts.
Docusign Envelope ID: A61610C8-C791-49E8-9D8E-D6D2620CCA9A
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Registered office: Polo Managing Agency, registered in England & Wales Registration no.
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The table below summarises the carrying value of the Syndicate’s assets and liabilities, at the reporting date:
Sterling
US dollar
Euro
Canadian
dollar
Australian
dollar
Japanese
Yen
Total
2025
$000
$000
$000
$000
$000
$000
$000
Investments
Reinsurers' share of
technical provisions
Debtors
(777 )
Other assets
Prepayments and accrued
Income
Total assets
Technical provisions
(69,982 )
(118,685 )
(3,662 )
(6,995 )
(805 )
(67 )
(200,196 )
Deposits received from
reinsurers
(48,898 )
(85,809 )
(4,502 )
(527 )
(139,242 )
Creditors
(27 )
(39 )
(66 )
Accruals and deferred
income
(548 )
(22 )
(11 )
(581 )
Total liabilities
(119,455 )
(204,555 )
(3,179 )
(11,497 )
(1,332 )
(67 )
(340,085 )
Total capital and
reserves
(26,055 )
(242 )
(12 )
Sterling
US dollar
Euro
Canadian
dollar
Australian
dollar
Japanese
Yen
Total
2024 (restated)
$000
$000
$000
$000
$000
$000
$000
Investments
Reinsurers' share of
technical provisions
Debtors
Other assets
Prepayments and accrued
Income
Total assets
Technical provisions
(59,356 )
(40,925 )
(675 )
(95 )
(3 )
(35 )
(101,089 )
Deposits received from
reinsurers
(56,323 )
(56,323 )
Creditors
(157 )
(205 )
(362 )
Accruals and deferred
income
(548 )
(3 )
(6 )
(557 )
Total liabilities
(116,384 )
(41,133 )
(681 )
(95 )
(3 )
(35 )
(158,331 )
Total capital and
reserves
(27,601 )
(12 )
(22 )
(18,189 )
Docusign Envelope ID: A61610C8-C791-49E8-9D8E-D6D2620CCA9A
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Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
www.polo.works
iv. Equity price risk
Equity price risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market
prices (other than those arising from interest rate risk or currency risk), principally investment securities, whether
those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting
all similar financial instruments traded in the market.
The Syndicate holds a limited portfolio of equities which are subject to equity price risk. This exposure benefits
members through the enhanced longer-term returns on equities compared with debt securities.
Equity price risks are managed by setting and monitoring objectives and constraints on investments,
diversification plans and limits on investments. The Management ensures that the Syndicate’s internal capital
requirements are met at all times, as well as those mandated by the Syndicate’s external regulators.
v.
Sensitivity analysis to market risks
The analysis below is performed for reasonably possible movements in market indices on financial instruments
with all other variables held constant, showing the impact on the result before tax due to changes in fair value of
financial assets and liabilities (whose fair values are recorded in the profit and loss account) and members’
balances.
2025
Impact on
results
before tax
$000
2025
Impact on
Member’s
balances
$000
2024
Impact on
results
before tax
(restated)
$000
2024
Impact on
Member’s
Balances
(restated)
$000
Interest rate risk
+ 50 basis points shift in yield curves
(239 )
(239 )
(2,843 )
(2,843 )
- 50 basis points shift in yield curves
Currency risk
10% weakening of Sterling against other currencies
(2,371)
(2,371)
2,758
2,758
10% strengthening of Sterling against other currencies
2,897
2,897
(2,758)
(2,758)
Equity price risk
5 percent increase in equity prices
5 percent decrease in equity prices
(267 )
(267 )
(204 )
(204 )
A 10% increase (or decrease) in exchange rates, 5% increase (or decrease) in equity prices and a 50 basis point
increase (or decrease) in yield curves have been selected on the basis that these are considered to be reasonably
possible changes in these risk variables over the following year.
The sensitivity analysis demonstrates the effect of a change in a key variable while other assumptions remain
unchanged. However, the occurrence of a change in a single market factor may lead to changes in other market
factors as a result of correlations.
The sensitivity analyses do not take into consideration that the Syndicate’s financial investments are actively
managed. Additionally, the sensitivity analysis is based on the Syndicate’s financial position at the reporting date
and may vary at the time that any actual market movement occurs. As investment markets move past
pre-determined trigger points, action would be taken which would alter the Syndicate’s position.
Docusign Envelope ID: A61610C8-C791-49E8-9D8E-D6D2620CCA9A
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Registered office: Polo Managing Agency, registered in England & Wales Registration no.
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C. Capital management
i.
Capital framework at Lloyd’s
The Society of Lloyd’s (“Lloyd’s”) is a regulated undertaking and subject to supervision by the Prudential
Regulatory Authority (“PRA”) under the Financial Services and Markets Act 2000, and in accordance with the
Solvency UK Framework.
Within this supervisory framework, Lloyd’s applies capital requirements at member level and centrally to ensure
that Lloyd’s would comply with the Solvency UK requirements, and beyond that to meet its own financial strength,
licence and ratings objectives.
Although, as described below, Lloyd’s capital setting processes use a capital requirement set at syndicate level
as a starting point, the requirement to meet Solvency UK and Lloyd’s capital requirements apply at overall and
member level only respectively, not at syndicate level. Accordingly, the capital requirement in respect of Syndicate
1254 is not disclosed in these financial statements.
ii.
Lloyd’s capital setting process
In order to meet Lloyd’s requirements, each syndicate is required to calculate its Solvency Capital Requirement
(“SCR”) for the prospective underwriting year. This amount must be sufficient to cover a 1 in 200 year loss,
reflecting uncertainty in the ultimate run-off of underwriting liabilities (SCR ‘to ultimate’). The Syndicate must also
calculate its SCR at the same confidence level but reflecting uncertainty over a one year time horizon (one year
SCR) for Lloyd’s to use in meeting Solvency II requirements. The SCRs of each Syndicate are subject to review
by Lloyd’s and approval by the Lloyd’s Capital and Planning Group.
A syndicate may be comprised of one or more underwriting members of Lloyd’s. Each member is liable for its
own share of underwriting liabilities on the syndicates on which it is participating but not other members’ shares.
Accordingly, the capital requirements that Lloyd’s sets for each member operates on a similar basis.
Each member’s SCR shall thus be determined by the sum of the member’s share of the syndicate SCR ‘to
ultimate’. Where a member participates on more than one syndicate, a credit for diversification is provided to
reflect the spread of risk, but consistent with determining an SCR which reflects the capital requirement to cover
a 1 in 200 loss ‘to ultimate’ for that member. Over and above this, Lloyd’s applies a capital uplift to the member’s
capital requirement, known as the Economic Capital Assessment (“ECA”). The purpose of this uplift, which is a
Lloyd’s not a Solvency II requirement, is to meet Lloyd’s financial strength, licence and ratings objectives. The
capital uplift applied for 2025 was 35% (2024: 35%) of the member’s SCR ‘to ultimate’.
iii.
Provision of capital by members
Each member may provide capital to meet its ECA either by assets held in trust by Lloyd’s specifically for that
member (Funds at Lloyd’s, or “FAL”), assets held and managed within a syndicate (Funds in Syndicate, or “FIS”),
or as the member’s share of the members’ balances on each syndicate on which it participates.
Accordingly, all of the assets less liabilities of the Syndicate, as represented in the member’s balances reported
on the balance sheet on page 14 and 15, represent resources available to meet member’s and Lloyd’s capital
requirements.
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Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
www.polo.works
5.
Analysis of underwriting result
An analysis of the technical account balance before investment return is set out below:
Year ended
31 Dec 2025
Gross
premiums
written
$000
Gross
premiums
earned
$000
Gross
claims
incurred
$000
Gross
operating
expenses
$000
Reinsurance
balance
$000
Underwriting
Result
$000
Third party liability
(19,825 )
(1,537 )
Total direct insurance
(19,825 )
(1,537 )
Reinsurance acceptances
(29,096 )
(2,396 )
(26,614 )
Total
(48,921 )
(3,933 )
(26,614 )
Year ended
31 Dec 2024 (restated)
Gross
premiums
written
$000
Gross
premiums
earned
$000
Gross claims
incurred
$000
Gross
operating
expenses
$000
Reinsurance
Balance
$000
Underwriting
Result
$000
Direct insurance
Third party liability
Total direct insurance
Reinsurance acceptances
(1,899 )
(9,372 )
Total
(1,899 )
(9,372 )
The gross premiums written for direct insurance by underwriting location of risk is presented in the table below:
2025
$000
2024
(restated)
$000
United Kingdom
Total gross premiums written
6. Net operating expenses
Year Ended
31 Dec 2025
$000
Year ended
31 Dec 2024
(restated)
$000
Acquisition costs
Administrative expenses
Member’s standard personal expenses
Reinsurance commissions and profit participation
(2,108 )
Net operating expenses
Docusign Envelope ID: A61610C8-C791-49E8-9D8E-D6D2620CCA9A
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Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
www.polo.works
Total commissions for direct insurance business for the year amounted to:
2025
$000
2024
(restated)
$000
Total commission for direct insurance business
Administrative expenses include:
2025
$000
2024
(restated)
$000
Auditors’ remuneration:
fees payable to the Syndicate’s auditor for the audit of these financial statements
fees payable to the Syndicate’s auditor and its associates in respect of other services
pursuant to legislation
7.
Key management personnel compensation
No emoluments of the Directors of PMA were charged to the Syndicate and consequently no meaningful
disclosure can be made.
8.
Staff numbers and costs
All staff are employed by a related company of the managing agent, Polo Commercial Insurance Services Limited
(“PCIS”), having transferred from the managing agent on 1 January 2025.
9. Investment return
2025
$000
2024
(restated)
$000
Interest and similar income
From financial instruments designated at fair value through profit or loss
Interest and similar income
Other income from investments
From financial instruments designated at fair value through profit or loss
Gains on the realisation of investments
Losses on the realisation of investments
(58 )
(213 )
Unrealised gains on investments
Unrealised losses on the investments
(299 )
(7,906 )
Investment management expenses
(205 )
(166 )
Total investment return
(1,023 )
Transferred to the technical account from the non-technical account
(1,023 )
The investment return was wholly allocated to the technical account.
Docusign Envelope ID: A61610C8-C791-49E8-9D8E-D6D2620CCA9A
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Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
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10. Distribution and open years of account
The loss on the closed year 2023 Year of Account (“YOA”) will lead to a collection of losses from the member of
$2.6m (2024: cash call on 2022 YOA $10,450k).
11. Financial investments
Carrying value
Cost
2025
$000
2024
(restated)
$000
2025
$000
2024
(restated)
$000
Shares and other variable yield securities and units in unit trusts
Debt securities and other fixed income securities
Syndicate loans to central fund
Other investments
Total financial investments
The amount ascribable to listed investments is $5,334k (2024: $4,076k).
Other investments comprise overseas deposits which are lodged as a condition of underwriting business in certain
countries.
The table below presents an analysis of financial investments by their measurement classification.
2025
2024
(restated)
$000
$000
Financial assets measured at fair value through profit or loss
Total financial investments
During the year, the Syndicate has not held or purchased any derivative contracts.
As the Syndicate is fully aligned, the Syndicate may hold some of the capital supporting their underwriting in their
Syndicate’s premium trust funds. These funds are known as Funds In Syndicate (“FIS”) and can only contain Tier
1 Assets. At 31 December 2025 there were no FIS (2024: $nil).
Docusign Envelope ID: A61610C8-C791-49E8-9D8E-D6D2620CCA9A
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Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
www.polo.works
The Syndicate classifies its financial instruments held at fair value in its balance sheet using a fair value hierarchy
based on the inputs used in the valuation techniques as follows:
•
Level 1
– financial assets that are measured by reference to published quotes in an active market. A financial
instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from
an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent
actual and regularly occurring market transactions on an arm’s length basis.
•
Level 2
– financial assets measured using a valuation technique based on assumptions that are supported
by prices from observable current market transactions. For example, assets for which pricing is obtained via
pricing services but where prices have not been determined in an active market, financial assets with fair
values based on broker quotes, investments in private equity funds with fair values obtained via fund
managers and assets that are valued using the Syndicate’s own models whereby the significant inputs into
the assumptions are market observable.
•
Level 3
– financial assets measured using a valuation technique (model) based on assumptions that are
neither supported by prices from observable current market transactions in the same instrument nor are they
based on available market data. Therefore, unobservable inputs reflect the Syndicate's own assumptions
about the assumptions that market participants would use in pricing the asset or liability (including
assumptions about risk). These inputs are developed based on the best information available, which might
include the Syndicate’s own data.
The table below analyses financial instruments held at fair value in the Syndicate’s balance sheet at the reporting
date by its level in the fair value hierarchy.
Level 1
Level 2
Level 3
$000
Total
2025
$000
$000
$000
Shares and other variable yield securities and units in unit
trusts
Debt securities and other fixed income securities
Syndicate loans to central fund
Other investments
Total
Level 1
Level 2
Level 3
$000
Total
2024 (restated)
$000
$000
$000
Shares and other variable yield securities and units in unit
trusts
Debt securities and other fixed income securities
Syndicate loans to central fund
Other investments
Total
Information on the methods and assumptions used to determine fair values for each major category of financial
instrument measured at fair value is provided below.
Docusign Envelope ID: A61610C8-C791-49E8-9D8E-D6D2620CCA9A
39
Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
www.polo.works
Equity instruments listed on a recognised exchange are valued using prices sourced from the primary exchange
on which they are listed. Units in unit trusts and OEICs are valued using the latest unit price or share price provided
by the unit trust or OEIC managers. Shares and other variable securities and units in unit trusts are generally
categorised as level 1 in the fair value hierarchy except where they are not actively traded, in which case they are
generally measured at prices of recent transactions in the same instrument. The Syndicate has no exposure to
hedge funds.
Debt securities are generally valued using prices provided by external pricing vendors. Pricing vendors will often
determine prices by consolidating prices of recent trades for identical or similar securities obtained from a panel
of market makers into a composite price. The pricing service may make adjustments for the elapsed time from a
trade date to the valuation date to take into account available market information. Lacking recently reported
trades, pricing vendors will use modelling techniques to determine a security price.
Some government and supranational securities are listed on recognised exchanges and are generally classified
as level 1 in the fair value hierarchy. Those that are not listed on a recognised exchange are generally based on
composite prices of recent trades in the same instrument and are generally classified as level 2 in the fair value
hierarchy.
Corporate bonds, including asset backed securities, that are not listed on a recognised exchange or are traded
in an established over-the-counter market are also mainly valued using composite prices. Where prices are based
on multiple quotes and those quotes are based on actual recent transactions in the same instrument the securities
are classified as level 2, otherwise they are classified as level 3 in the fair value hierarchy.
At the reporting date Level 1 and Level 2 financial assets and liabilities were valued using valuation techniques
based on observable market data. All of the investments categorised as Level 3 are fair valued based on the
inputs to the valuation technique used. The Syndicate also invests in a level 3 senior secured credit fund, which
is measured at fair value, based on the net asset value of investee funds.
12. Debtors arising out of reinsurance operations
2025
$000
2024
(restated)
$000
Due within one year
Total
13. Other debtors
2025
2024
(restated)
$000
$000
Other
Total
14. Claims development
The following tables illustrate the development of the estimates of earned ultimate cumulative claims incurred,
including claims notified and IBNR, for each successive underwriting year, illustrating how amounts estimated
have changed from the first estimates made.
Docusign Envelope ID: A61610C8-C791-49E8-9D8E-D6D2620CCA9A
40
Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
www.polo.works
As these tables are on an underwriting year basis, there is an apparent large increase from amounts reported for
the end of the underwriting year to one year later as a large proportion of premiums are earned in the year of
account’s second year of development.
Balances have been translated at prevailing exchange rates at 31 December 2025 in all cases.
Gross
:
Pure underwriting
year
2017
2018
2019
2020
2021
2022
2023
Total
$000
$000
$000
$000
$000
$000
$000
$000
Estimate of gross
claims
at end of underwriting
year
one year later
two years later
three years later
four years later
five years later
six years later
seven years later
eight years later
nine years later
Estimate of gross
claims reserve
Provision in respect of
prior years
Less gross claims
paid
(81,406 )
(176,906 )
(118,789 )
(14,000 )
(25,199 )
(13,025 )
(23,408 )
(452,733 )
Gross claims reserve
Net:
Pure underwriting
year
2017
2018
2019
2020
2021
2022
2023
Total
$000
$000
$000
$000
$000
$000
$000
$000
Estimate of net claims
at end of underwriting
year
one year later
two years later
three years later
four years later
five years later
six years later
seven years later
eight years later
nine years later
Estimate of net claims
reserves
Provision in respect of
prior years
Less net claims paid
(81,406 )
(152,918 )
(103,693 )
(1,329 )
(40 )
(4 )
(11,704 )
(351,094 )
Net claims reserve
Docusign Envelope ID: A61610C8-C791-49E8-9D8E-D6D2620CCA9A
41
Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
www.polo.works
15. Technical provisions
The table below shows changes in the insurance contract liabilities and assets from the beginning of the period
to the end of the period.
2025
2024
(restated)
Gross
provisions
$000
Reinsurance
assets
$000
Net
$000
Gross
provisions
$000
Reinsurance
assets
$000
Net
$000
Claims
outstanding
Balance at 1
January
(29,489 )
(43,243 )
Claims paid during
the year
(72,306 )
(44,202 )
(25,367 )
(21,426 )
Change in
estimates of prior
year provisions
(23,320 )
(6,513 )
(1,639 )
Discount unwind
(2,167 )
(1,084 )
(8,559 )
(4,061 )
Foreign exchange
movements
(3,791 )
(949 )
(508 )
Other
(113,674 )
Balance at 31
December
(141,087 )
(29,489 )
The unwind of discounting has been included within the statement of profit or loss – technical account – claims
incurred.
2025
2024
(restated)
Gross
provisions
$000
Reinsurance
assets
$000
Net
$000
Gross
provisions
$000
Reinsurance
assets
$000
Net
$000
Unearned premiums
Balance at 1 January
Premiums written during the
year
(482 )
Premiums earned during the
year
(2,377 )
(1,895 )
(1,709 )
(1,709 )
Foreign exchange
movements
Balance at 31 December
Refer to Note 4 for the sensitivity analysis performed over the value of insurance liabilities, disclosed in the
accounts, to potential movements in the assumptions applied within the technical provisions.
Docusign Envelope ID: A61610C8-C791-49E8-9D8E-D6D2620CCA9A
42
Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
www.polo.works
16.
Discounted claims
Discounting may be applied to claims provisions where there are individual claims with structured settlements
that have annuity like characteristics, or for books of business with mean term payment greater than four years
from the accounting date.
The claims have been discounted as follows:
Average discounted rates
Average mean term of liabilities
2025
2024
2025
2024
Class of business
Motor (third party liability)
If the discount rate decreased by 0.5% the gross reserves would increase by $4.3m (net $2.2m) and decrease
by $3.8m (net $1.9m) if the discount rate increased by 0.5%.
The period that will elapse before claims are settled is determined using adjusted mortality tables. The claims
provision before and after discounting are as follows:
Undiscounted claims
Effect of discounting
After discounting
2025
2024
(restated)
2025
2024
(restated)
2025
2024
(restated)
$000
$000
$000
$000
$000
$000
Gross claims
provisions
(74,571 )
(71,519 )
Reinsurers share
of total claims
(178,373 )
(65,248 )
(141,087 )
(29,489 )
Net claims
provisions
(37,285 )
(35,760 )
17. Creditors arising out of direct insurance operations
2025
$000
2024
(restated)
$000
Due within one year
Total
18. Creditors arising out of reinsurance operations
2025
$000
2024
(restated)
$000
Due within one year
Total
$56.3m (£44.9m) was reclassified from creditors arising out of reinsurance operations to deposits received from
reinsurers. The amounts reclassified represent funds withheld from reinsurers and the restated disclosure better
reflects the nature of the amounts.
Docusign Envelope ID: A61610C8-C791-49E8-9D8E-D6D2620CCA9A
43
Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
www.polo.works
19. Other creditors
2025
2024
(restated)
$000
$000
Other related party balances (non-syndicate)
Other liabilities
Total
20. Cash and cash equivalents
2025
$000
2024
(restated)
$000
Cash at bank and in hand
Deposits with credit institutions
Total cash and cash equivalents
Only deposits with credit institutions with maturities of three months or less that are used by the Syndicate in the
management of its short-term commitments are included in cash and cash equivalents.
Included within cash and cash equivalents are the following amounts which are not available for use by the
Syndicate because they are held in regulated bank accounts in overseas jurisdictions.
2025
$000
2024
(restated)
$000
Cash at bank and in hand
Short term debt instruments presented within other financial investments
Total cash and cash equivalents not available for use by the Syndicate
21. Analysis of net debt
2025
1 Jan
Cash Flows
Fair value
and
Exchange
Movement
31 Dec
$000
$000
$000
$000
Cash and cash equivalents
Total
2024 (restated)
1 Jan
Cash Flows
Fair value
and
Exchange
Movement
31 Dec
$000
$000
$000
$000
Cash and cash equivalents
(5,016 )
Total
(5,016 )
Docusign Envelope ID: A61610C8-C791-49E8-9D8E-D6D2620CCA9A
44
Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
www.polo.works
22. Related parties
These disclosure requirements are in addition to the requirement to disclose key management personnel
compensation. This disclosure is given in note 7
.
Syndicate
The Syndicate has a quota share reinsurance agreement with intragroup companies. Funds withheld
balances are $47.3m (Dec 2024: $56.3m) on the 2023 year of account.
Managing Agent
Polo Managing Agency Limited’s immediate parent undertaking is Marco Capital Holdings (UK) Limited, a
company incorporated in England and Wales. Registered address is 4
th
Floor, 24 Monument Street, London EC3R
8AJ. During the year Polo Managing Agency Limited recharged $nil (2024: $0.6m) in respect of Managing Agent’s
fee. A separate operational fee of $3.0m (2024: $nil) was paid by the Syndicate to PMA.
The Managing Agent’s ultimate parent undertaking is Marco Capital Holdings Limited, a company incorporated in
Malta. Registered address is 171 Old Bakery Street, Valletta, VLT1455, Malta.
The Managing Agent’s ultimate controlling party is Brookfield Oaktree Holdings, LLC (formerly known as
Oaktree Capital Group, LLC).
23. Off-balance sheet items
The Syndicate has not been party to any arrangement, which is not reflected in its balance sheet, where material
risks and benefits arise for the Syndicate.
24. Post balance sheet events
The Syndicate has entered into an agreement with Wakam to take on the RITC of Syndicate 1347 2023
YOA. This will take effect from 1 January 2026.
25.
Contingencies and commitments
There are no contingencies or commitments.
26. Foreign exchange rates
The following currency exchange rates have been used for principal foreign currency transactions:
2025
2024 (restated)
Start of year
rate
Year-end rate
Average rate
Start of
Year rate
Year-end rate
Average
rate
Sterling
Euro
US dollar
Canadian dollar
Australian dollar
Japanese Yen
Docusign Envelope ID: A61610C8-C791-49E8-9D8E-D6D2620CCA9A
45
Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
www.polo.works
27. Funds at Lloyd’s
Every member is required to hold capital at Lloyd’s which is held in trust and known as FAL. These funds are
intended primarily to cover circumstances where syndicate assets prove insufficient to meet participating
members’ underwriting liabilities. The level of FAL that Lloyd’s requires a member to maintain is determined by
Lloyd’s based on Prudential Regulatory Authority requirements and resource criteria. The determination of FAL
has regard to a number of factors including the nature and amount of risk to be underwritten by the member and
the assessment of the reserving risk in respect of business that has been underwritten. Since FAL is not under
the management of the Managing Agent, no amount has been shown in these Financial Statements by way of
such capital resources. However, the Managing Agent is able to make a call on the Member’s FAL to meet liquidity
requirements or to settle losses.
28. Syndicate 1975 RITC
Syndicate 1975 reinsured to close (“RITC”) into the 2025 year of account of the Syndicate, effective 1st January
2025. The Syndicate received a premium of $3.3m for assuming these liabilities with a consequent transfer of
liabilities to the same value. The premium was deemed to be the fair value of the liabilities transferring.
The RITC premium was settled with the following assets and liabilities. Other financial investments were valued
to fair value. All other amounts were valued at amortised cost.
$000
Other Financial investments
66,923
Debtors arising out of direct insurance operations
951
Debtors arising out of reinsurance operations
138
Other debtors
11,121
Cash at bank and in hand
34,991
Accrued interest and rent
538
Creditors arising out of reinsurance operations
(81,226)
Other creditors including taxation and social security
(28,550)
Accruals and deferred income
(1,550)
Total RITC premium
3,336
The liabilities assumed were as follows:
$000
Technical provisions – claims outstanding
117,010
Reinsurers’ share of technical provisions- claims outstanding
(113,674)
Total net liabilities
3,336
Docusign Envelope ID: A61610C8-C791-49E8-9D8E-D6D2620CCA9A
46
Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
www.polo.works
29. Restatement of balances in the financial statements
During 2024, Lloyd's introduced changes to the syndicate accounts and returns process to rationalise and
standardise financial reporting across the market. As part of this change syndicates are able to present certain
Lloyd’s returns in their currency of choice. Previously Lloyd’s returns were presented in Pounds Sterling, and the
Syndicate presented its report and accounts in Pounds Sterling so as to be aligned. With this no longer being the
case the Syndicate has decided to present its report and accounts in its functional currency of US dollars, so as
to be aligned with its functional currency and the reporting currency of its ultimate parent. This has resulted in the
comparative balances in the financial statements being restated in US dollars.
In addition $56.3m (£44.9m) was reclassified from creditors arising out of reinsurance operations to deposits
received from reinsurers. The amounts reclassified represent funds withheld from reinsurers and the restated
disclosure better reflects the nature of the amounts.
Docusign Envelope ID: A61610C8-C791-49E8-9D8E-D6D2620CCA9A
47
Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
www.polo.works
i.
Statement of profit or loss and other comprehensive income
2024
(restated)
$000
2024
(reported)
£000
Gross premiums written
1,624
1,269
Premiums written, net of reinsurance
1,624
1,269
Changes in unearned premium
Change in the gross provision for unearned premiums
85
66
Net change in provisions for unearned premiums
85
66
Earned premiums, net of reinsurance
1,709
1,335
Allocated investment return transferred from the non-technical
account
(1,023)
(799)
Claims paid
Gross amount
(25,367)
(19,818)
Reinsurers’ share
3,941
3,079
Net claims paid
(21,426)
(16,739)
Change in the provision for claims
Gross amount
40,439
31,593
Reinsurers’ share
(13,313)
(10,401)
Net change in provisions for claims
27,126
21,192
Claims incurred, net of reinsurance
5,700
4,453
Net operating expenses
(1,899)
(1,483)
Balance on the technical account – general business/long-term
business
4,487
3,506
Investment income
6,524
5,097
Realised gains on investments
472
369
Unrealised losses on investments
(7,853)
(6,135)
Investment expenses and charges
(166)
(130)
Total investment return
(1,023)
(799)
Allocated investment return transferred to the general business
technical account
1,023
799
Loss on foreign exchange
(428)
(335)
Other expenses
1,032
806
Profit for the financial year
5,091
3,977
Currency translation gain
-
244
Total comprehensive profit for the year
5,091
4,221
Docusign Envelope ID: A61610C8-C791-49E8-9D8E-D6D2620CCA9A
48
Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
www.polo.works
ii.
Balance sheet
2024
(restated)
2024
(reported)
$000
£000
Financial investments
126,707
101,067
Deposits with ceding undertakings
26
21
Investments
126,733
101,088
Claims outstanding
29,489
23,522
Reinsurers’ share of technical provisions
29,489
23,522
Debtors arising out of reinsurance operations
17,306
13,804
Other debtors
115
92
Debtors
17,421
13,896
Cash at bank and in hand
1,038
828
Other assets
1,038
828
Other prepayments and accrued income
1,839
1,466
Prepayments and accrued income
1,839
1,466
Total assets
176,520
140,800
Member’s balances
18,189
14,508
Total capital and reserves
18,189
14,508
Provision for unearned premiums
498
397
Claims outstanding
100,591
80,236
Technical provisions
101,089
80,633
Deposits received from reinsurers**
56,323
-
Creditors arising out of reinsurance operations**
205
45,089
Other creditors including taxation and social security
157
125
Creditors
362
45,214
Accruals and deferred income
557
445
Total liabilities
158,331
126,292
Total liabilities, capital and reserves
176,520
140,800
iii.
–
iv.
** $56.3m (£44.9m) was reclassified from creditors arising out of reinsurance operations to deposits
received from reinsurers.
Docusign Envelope ID: A61610C8-C791-49E8-9D8E-D6D2620CCA9A
49
Registered office: Polo Managing Agency, registered in England & Wales Registration no.
03935227
www.polo.works
iii.
Statement of changes in Member’s balances
2024
(restated)
$000
2024
(reported)
£000
Member’s balances brought forward at 1 January
13,098
10,287
Total comprehensive gain for the year
5,091
4,221
Member’s balances carried forward at 31 December
18,189
14,508
iv.
Statement of cash flows
2024
(restated)
$000
2024
(reported)
£000
Cash flows from operating activities
Loss for the financial year
5,091
3,977
Adjustments:
Decrease in gross technical provisions
(40,873)
(31,932)
Increase in reinsurers’ share of gross
technical provisions
13,364
10,441
Increase in debtors
2,680
2,094
Decrease in creditors
(4,843)
(3,784)
Movement in other assets/liabilities
343
268
Investment return
1,023
799
Foreign exchange
312
244
Other
(248)
(193)
Net cash flows from operating activities
(23,151)
(18,086)
Cash flows from investing activities
Purchase of equity and debt instruments
(45,958)
(35,905)
Sale of equity and debt instruments
57,754
45,120
Investment income received
6,358
4,967
Other
(19)
(15)
Net cash flows from investing activities
18,135
14,167
Net increase in cash and cash equivalents
(5,016)
(3,919)
Cash and cash equivalents at the beginning of the year
6,329
4,971
Foreign exchange on cash and cash equivalents
(13)
6
Cash and cash equivalents at the end of the year
1,326
1,058
Docusign Envelope ID: A61610C8-C791-49E8-9D8E-D6D2620CCA9A