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Report and Accounts 31 December 2025
0318
Cincinnati Global
Syndicate 0318
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Cincinnati Global Syndicate 0318 has traded at Lloyd’s for over forty years. In that
time the Syndicate has grown and evolved to meet the changing demands of its clients
and is well positioned to take advantage of the opportunities seen in today’s increasingly
volatile marketplace. Over time, the Syndicate has built up longstanding relationships
with, and offered continuity to, its brokers, clients and capital providers alike. The
combination of its experienced team of underwriting, claims and support personnel, and
the ability to make the best use of increasingly sophisticated statistical techniques in
support of its decisions, maximises the offering it presents to each of its counterparties.
2025 Annual accounts
1 Financial highlights
2 Directors and administration
3 Report of the directors of the managing agent
16 Statement of managing agent’s responsibilities
17 Independent auditor’s report
22 Statement of profit or loss and total comprehensive income
24 Balance sheet
26 Statement of changes in members’ balances
27 Statement of cash flows
28 Notes to the financial statements
2023 Underwriting year of account
73 Financial highlights
74 Managing agent’s report
77 Statement of managing agent’s responsibilities
78 Independent auditor’s report
82 Statement of profit or loss account
84 Balance sheet
86 Statement of changes in members’ balances
87 Statement of cash flows
88 Notes to the accounts
101 Seven year summary
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Cincinnati Global Syndicate 0318 1
Financial highlights
2025 calendar year
£316.0m(2024: £301.4m)
gross premiums written
£66.2m
(2024: £72.0m profit
for the year)
profit for year
79.4%(2024: 74.8%)
1
Combined ratio including Managing Agency fee
and profit commissions
£17.0m(2024: £14.9m)
annual investment return
£375m(2024: £375m)
2025 capacity
Note:
1
The combined ratio is net claims incurred (inclusive
of IBNR) and net operating expenses (excluding
profit/loss on exchange) expressed as a
percentage of net earned premiums.
Financial periods
Profit and loss Balance sheet
.....................................................................................................................................................................
Current period
1 January 2025 to 31 December 2025 1 January 2025 to 31 December 2025
Prior period 1 January 2024 to 31 December 2024 1 January 2024 to 31 December 2024
The periods covered in these financial statements are detailed above.
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2 Cincinnati Global Syndicate 0318
Directors and administration
MANAGING AGENCY:
DIRECTORS AND ADMINISTRATION
Syndicate 0318 and is authorised by the Prudential Regulation Authority and regulated by the
Financial Conduct Authority and the Prudential Regulation Authority.
Directors:
T.C. Cracas (non-executive)
D.C. Eales
M.A. Langston
R.A. Pexton (non-executive chairman)
G.M. Tuck
G.A.M. Bonvarlet (non-executive)
R.B. Scott (non-executive)
Company secretary
R. Allibone
The registered office of Cincinnati Global Underwriting Agency Limited is 51 Lime Street, London
EC3M 7DQ. The registered number of Cincinnati Global Underwriting Agency Limited is 4039137.
Syndicate
Active underwriter
N.M. Chalk
Bankers
Citibank, N.A.
Royal Bank of Canada
Lloyds Banking Group Plc
Investment manager
Amundi (UK) Ltd
Actuary
Deloitte MSC Limited
Independent auditor
Deloitte LLP
1 New Street Square
London, EC4A 3HQ
United Kingdom
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Cincinnati Global Syndicate 0318 3
Report of the directors of the managing agent
for the year ended 31 December 2025
Introduction
The directors of the Managing Agent present
their Managing Agent’s report for the year
ended 31 December 2025 .
This annual report is prepared using the annual
basis of accounting as required by Statutory
Instrument No 1950 of 2008, the Insurance
Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008.
However, since the Syndicate benefits from a
capital base that includes traditional names, as
well as corporate members, where possible and
appropriate, we have endeavoured to explain
the events of the calendar year in the context of
the applicable underlying years of account.
Managing Agents are also required to prepare a
Managing Agent’s report, financial statements
and related notes, and supporting disclosure for
members participating on the 2023 underwriting
year of account, which closed at 31 December
2025. These are incorporated into this
document on pages 73 to 100.
Result for the 2025 Calendar Year
For the year ended 31 December 2025,
Syndicate 0318 has generated an overall profit
of £66.2m compared to a profit of £72.0m in
2024, and a combined ratio of 79.4%
(2024: 74.8%).
An analysis of the contribution to the overall
result made by the individual underwriting years
of account is as follows:
2023
and Prior
Years of
Account
£000
2024
Year of
Account
£000
2025
Year of
Account
£000
2025
Calendar
Year
Combined
£000
2024
Calendar
Year
Combined
£000
.....................................................................................................................................................................
Gross Earned Premiums
24,028 121,513 151,041 296,582 272,935
Reinsurer’s Share (3,565) (9,183) (29,890) (42,638) (45,871)
Net Earned Premiums 20,463 112,330 121,151 253,944 227,063
Gross Claims Paid (46,248) (45,024) (8,204) (99,476) (92,473)
Reinsurer’s Share 6,833 1,785 818 9,436 21,777
Net Claims Paid (39,415) (43,239) (7,386) (90,040) (70,696)
Change in provision for gross claims 43,050 2,862 (49,938) (4,026) 14,984
Change in provision for reinsurer’s share (8,334) (37) 2,030 (6,341) (22,480)
Change in provision for net claims 34,716 2,825 (47,908) (10,367) (7,496)
Net Operating Expenses (10,729) (42,178) (48,274) (101,182) (91,606)
Balance on Technical Account 5,035 29,738 17,583 52,355 57,265
Net Investment Income 9,399 6,080 1,488 16,967 14,925
Profit on exchange (2,234) (627) (279) (3,139) (177)
Profit for the financial year 12,200 35,191 18,792 66,183 72,013
Other comprehensive income –
currency translation
(5,279) (1,290) (418) (6,987) 2,529
Total comprehensive income 6,921 33,901 18,374 59,196 74,542
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4 Cincinnati Global Syndicate 0318
Report of the directors of the managing agent
for the year ended 31 December 2025
continued
Principal Activities
The principal activity of Syndicate 0318 is the
transaction of general insurance and
reinsurance business written in the United
Kingdom at Lloyd’s. The Syndicate has a core
Property account which is complimented by
Specialty lines of business, which provide the
Syndicate with the opportunity for growth as well
as diversification within the portfolio. The
Property account covers worldwide risks with a
concentration of insureds’ domiciled in the US.
This account is subdivided into risks accepted
under direct and facultative policies, and
business written under binding authorities. The
Syndicate’s Specialty lines are Construction,
Contingency, Credit and Political Risk (CPRI),
International Treaty, Marine Cargo, Political
Violence, Specie, CSU Producer Resources Inc
(CSUPR), and Consortia.
The CSUPR initiative has been developed with
the Managing Agency’s ultimate parent company,
Cincinnati Financial Corporation “CFC”, and
allows the Syndicate to introduce business into
the Lloyd’s Market from CFC’s agency network.
The Consortia arrangements allow the Syndicate
to access lines of business where it doesn’t have
dedicated underwriting expertise.
Business review – financial
The business review provides a commentary on
the financial and non-financial performance of
the Syndicate in 2025. The review discusses the
business written and earned, as well as the
rating environment. We have also provided an
overview of the Syndicate’s claims experience,
including the performance and adequacy of
technical provisions. The effect of
non-underwriting transactions including
operating expenses, rate of exchange
movements, and returns from cash and
investments are also detailed. Where
appropriate, we have detailed the contribution to
the result of each individual underwriting year.
The Syndicate’s key performance indicators are
summarised in the table below:
KPI 2025 2024
...............................................................................
Gross premiums written
£316.0m £301.4m
Reinsurance premiums
ceded
£43.2m £47.9m
Profit for the year £66.2m £72.0m
Gross loss ratio
1
34.9% 24.8%
Net loss ratio
2
39.5% 34.4%
Operating expense ratio
3
39.8% 40.4%
Combined ratio 79.4% 74.8%
Annual investment return £17.0m £14.9m
Syndicate capacity £375m £375m
Notes:
1
Gross loss ratio expresses gross incurred claims
(including IBNR) as a percentage of gross earned
premiums.
2
Net loss ratio expresses net incurred claims
(including IBNR) as a percentage of net earned
premiums.
3
Operating expense ratio expresses net operating
expenses as a percentage of net earned
premiums.
Underwriting and reinsurance
The rating environment continued to be positive
in the year, although we saw a reduction in
rates from the peak of the cycle. Property risks
written on a direct and facultative basis came
under most pressure, both in terms of pricing
and competition. However, the rate reductions
were broadly in line with our expectations,
although, the competition for business was more
intense than we had anticipated. This was
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Cincinnati Global Syndicate 0318 5
particularly true in the early part of the year.
Across the other lines of business in the
portfolio, rates were marginally down overall
from 2024.
The Syndicate continued in its strategy to
diversify the portfolio and added a Marine Cargo
account during the year. The Construction and
International Treaty books of business which
commenced in 2024, also benefitted from a full
year of underwriting. The growth in Specialty
lines was the driver to the increase in gross
written premiums during the year.
After adjusting for effects of rates of exchange,
gross written premiums have increased by
£22.4m.
The effect of foreign exchange of the change in
the amount of premium written in the year,
compared the comparative period is shown in
the table below. The average rate of exchange
for US dollars, used to retranslate the profit and
loss account was 1.32 for the year ended 31
December 2025 compared to 1.28 for the
comparative period. The impact of the change in
average rate of Canadian dollars is immaterial.
£000s
...............................................................................
Gross premiums written 2024
301,406
(Decrease) in premium income
from rate of exchange
(7,786)
Increase in premiums in the year 22,367
Gross premiums written in 2025 315,987
Gross earned premiums for the year are
£296.6m, which is higher than £272.9m earned
in 2024. This is following a similar trend to the
increase in gross written premiums.
The composition of the account continues to be
weighted to Property lines but has become
more evenly spread as Direct and Facultative
business has seen an increase in competition
during the year. The Syndicate has benefited
from maturity in its Construction, and Treaty
Reinsurance lines of business, whilst there has
been expansion in Contingency and CPRI. The
Syndicate has also been able to add products to
its CSUPR and Consortia classes.
These factors have all contributed to the
increase in gross written premiums for Specialty
lines in the year.
Gross premiums written
2025
%
2024
%
...............................................................................
Property – Direct and
Facultative
33.9 45.8
Property – Binding
Authority
15.2 18.1
Consortia 10.0 8.0
Contingency 8.3 5.9
Credit and Political
Risk
7.5 5.4
Construction 5.9 3.1
Specie 5.7 5.8
CSUPR 4.8 3.7
Marine Cargo 3.5 –
Political Violence 3.0 3.7
Treaty Reinsurance 2.2 0.5
100% 100%
The reinsurance premiums ceded in the year
have decreased to £43.2m from £47.9m in
2024. The Syndicate was able to get better
value in the year on its main Property
programme.
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6 Cincinnati Global Syndicate 0318
Report of the directors of the managing agent
for the year ended 31 December 2025
continued
The reinsurance premium earned in the year of
£42.6m (£45.9m 2024) is marginally below the
reinsurance written. The main programme is
purchased to cover losses occurring during the
year, with earnings patterns weighted towards
the windstorm season, hence a large proportion
of the programme is earned at 31 December.
Technical Result
The calendar year technical result before
investment return comprises profits and losses
on the open and closing years of account. It has
been another very good year for the business,
with the Syndicate again reporting some of its
best returns. The Property account has
contributed a large proportion of the profit for
the year, and we have also had a positive
contribution from Specialty lines of business.
The claims experience has been very good for
the year across all loss types, and although the
Property book incurred losses from the
California Wildfires, and Hurricane Melissa,
catastrophe losses were lower than business
plan expectations.
The prior years reserves have proved robust
and provided a release in the period.
Contribution of 2025 year of account to the
calendar year result
The 2025 year of account has contributed a
£17.6m profit for the calendar year, before
investment income, and currency exchange
gains and losses. The year has benefitted from
a positive rating environment as well as low loss
experience over the period.
This has produced a relatively high technical
surplus at this stage of progression.
Major losses (including IBNR) in the calendar
year, affecting the 2025 year of account are
summarised in the table below.
Loss
Gross and net
£m
...............................................................................
Hurricane Melissa
5.7
5.7
The Syndicate continues to earn its acquisition
costs in line with gross earned premium, whilst
administrative expenses, and Names expenses
are earned as they are incurred. Managing
agents profit commissions are earned in line
with cumulative profits to a year of account,
after allowances for the potential impact of
deficit clauses within the Agency Agreement.
Net operating expenses are £48.3m, which is a
increase from the £38.9m charged to the 2024
underwriting year at the same stage. The
increase has been mostly driven by higher profit
commissions accrued, as well as higher
brokerage and commissions on the increase in
premiums written in the year.
The investment return for the year is £1.5m,
owing to positive yields.
Losses on exchange, and currency retranslation
losses in the year stands at an overall loss of
£0.7m for the 2025 underwriting year.
Members’ balances stand at a surplus of
£18.4m.
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Cincinnati Global Syndicate 0318 7
Contribution of 2024 year of account to the
calendar year result
The 2024 year of account has contributed a
£29.7m profit for the calendar year, before
investment income, and currency exchange
gains and losses. The year has had positive
releases from prior accident years as well as
positive loss experience from claims in the
current accident year, with moderate amounts of
exposure to natural catastrophe losses.
Major losses (including IBNR) in the calendar
year, affecting the 2024 year of account are
summarised in the table below:
Loss
Gross and net
£m
...............................................................................
California Wildfires
7.8
Hurricane Melissa 1.9
9.7
Net operating expenses are £42.2m, against a
comparative figure of £41.5m in calendar year
2024. The growth in Specialty lines on the 2024
underwriting year has resulted in higher
amounts of brokerage, although profit
commissions accrued are slightly lower than the
comparative period.
The investment return for the calendar year
attributable to the 2024 underwriting year of
account of £6.1m.
Losses on exchange, and currency retranslation
losses have produced an overall loss of £1.9m,
owing to a weakening of the US dollar since the
comparative period.
Members’ balances currently stand at an overall
surplus of £40.8m, after standard personal
expenses. We are forecasting a profit in the
range of 10.7 – 15.7% of Capacity upon closure
of the 2024 year of account.
Contribution of 2023 year of account to the
calendar year result
The 2023 year of account has contributed a
profit for the calendar year, before investment
income, and currency exchange of £5m. There
has been an improvement of £6.0m on closed
year reserves in the year.
Whilst the claims set at the previous year end
have developed favourably during the year, the
year incurred losses from the Californian
Wildfire losses in January 2025, which affected
the unexpired risks on Property Binders. The
loss to the year is estimated at £9.7m. A loss of
this size is extremely usual at this stage of
progression, but the Wildfires caused severe
damage in a geographical area where real
estate values can be high.
Net operating expenses are £10.7m. Most of
this movement is generated from brokerage on
premiums written under binding authorities
earned in the year and profit commissions
accrued.
The investment return for the year is £9.4m.
Losses on exchange, and currency retranslation
losses in the year have produced an overall loss
of £7.5m, owing to a weakening of the US dollar
since the comparative period.
The 2023 year of account has closed at a profit
of £74.5m, and a result to a traditional name of
24.9% of Capacity.
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8 Cincinnati Global Syndicate 0318
Report of the directors of the managing agent
for the year ended 31 December 2025
continued
Operating Expenses
2023
and Prior
Years of
Account
£000
2024
Year of
Account
£000
2025
Year of
Account
£000
2025
Calendar
Year
Combined
£000
2024
Calendar
Year
Combined
£000
.....................................................................................................................................................................
Acquisition Costs (Brokerage)
(8,136) (28,976) (22,576) (59,688) (51,976)
Acquisition Costs (Other) (628) (4,024) (10,597) (15,249) (11,959)
Administrative Expenses (234) (703) (3,749) (4,686) (3,853)
Standard Personal Expenses – – (6,759) (6,759) (5,182)
Managing Agents Profit Commissions (1,731) (8,475) (4,594) (14,800) (18,636)
Net Operating Expenses (10,729) (42,178) (48,275) (101,182) (91,606)
As in previous years, acquisition costs
(brokerage) represent the largest single
expense item in 2025. Other operating
expenses under the control of the Managing
Agency have increased in the year owing to
additional staff and resources required to
expand the business, as well as from general
inflationary increases. The increase Syndicate’s
premium income has also led to increases in
standard personal expenses.
The Syndicate has accrued profit commission
on the 2025, 2024, and 2023 years of account
in the calendar year. This is lower than the
comparative period, owing to a decrease in
profits in the current period.
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Cincinnati Global Syndicate 0318 9
Profit and loss on exchange and currency translation differences
The aggregate loss on exchange for the year is £10.1m, compared to a gain of £2.4m in 2024. This
has largely arisen from currency translation differences from conversion of the opening balances and
calendar year result from average to closing rates of exchange. The loss from retranslating from a
US functional currency to a Sterling presentational currency is detailed in currency translation
differences. The Syndicate has also realised profits and losses on exchange from transactions in the
year, as well as having open currency positions at the year end. The table below provides a
breakdown of the profit and loss on exchange during the year.
2023
and Prior
Years of
Account
£000
2024
Year of
Account
£000
2025
Year of
Account
£000
Total
£000
Profit and loss on exchange and currency translation
.....................................................................................................................................................................
Loss on currency translation of opening
balances and calendar year profits
(1,528) (204) (255) (1,987)
Loss on other transactions in the year (706) (423) (23) (1,152)
Other comprehensive income – currency translation (5,279) (1,290) (418) (6,987)
Loss on exchange and currency translation (7,513) (1,917) (696) (10,126)
Investment Performance
2025
’000 %
2024
’000 %
.....................................................................................................................................................................
Average Amount of Syndicate Funds
£356,011 £319,196
Investment Return (excluding investment
manager’s fees)
£17,299 4.86% £15,126 4.7%
By Currency:
Sterling: Average Funds
£11,445 £13,080
Investment Return* £2 0.02% £153 1.17%
US Dollar: Average Funds US$432,544 US$371,206
Investment Return US$21,757 5.03% US$17,901 4.82%
Canadian Dollar: Average Funds Can$£31,092 Can$28,193
Investment Return Can$887 2.85% Can$1,246 4.42%
*Includes investment manager’s fees of £331,718 (2024: £275,793).
Average amount of Syndicate Funds converted at average rates of exchange.
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10 Cincinnati Global Syndicate 0318
Report of the directors of the managing agent
for the year ended 31 December 2025
continued
Investment Policy
In 2025 Syndicate 318 delivered strong returns
across its three USD accounts, despite a
backdrop of persistent geopolitical tensions.
The portfolios are primarily invested in
investment grade fixed income securities which
benefitted from a starting point of historically
high yields, and from the Federal Reserve
cutting interest rates as the labour market
softened. In the second half of the year, the
Federal Reserve cut rates 3 times to a range of
3.5-3.75%. The FOMC took a “risk
management” approach as they assessed risks
to unemployment picking up, and less upside to
inflation which had been a key concern
post-Liberation day. US economic growth has
proved resilient, despite trade tensions and a
record government shutdown which ended in
November.
The largest allocation in the portfolios is
corporate bonds which benefitted from solid
fundamentals, together with a strong market
technical of yield-driven demand which led to
spreads tightening. Earlier in the year there was
a sell-off in corporate bond spreads after
“Liberation Day” tariffs were threatened, but
ultimately were implemented at a lower level
than anticipated. Spreads subsequently
tightened throughout the year back to
historically tight levels.
The past 3 years have seen the best investment
performance for the Syndicate in over a decade
and 2025 was the second highest over this
period. The aggregate portfolio returned 5.16%
(0.37% above benchmark), in gross terms. The
outlook remains strong for 2026 which is
expected to be carry driven again. Portfolios are
close to neutral duration versus liabilities and
defensively positioned within credit to allow
flexibility should spreads widen.
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Cincinnati Global Syndicate 0318 11
Business review – non-financial
In reviewing the performance of the business in the year, we have also assessed non-financial
metrics for underwriting, claims, human resources, and Solvency UK. We have identified the
following criteria as important measures of performance for these areas. These are detailed in the
section below.
Underwriting non-financial indicators
The Syndicate views the proportion of the business that it leads and renews as important
non-financial measurements of its performance. The amount of business that the Syndicate is the
lead underwriter on provides a useful measure of market position in relation to its peers, although for
some lines of business it is not practical for the Syndicate to be a lead market. The level of renewal
business by the Syndicate is a good indicator of the continuity of the respective books of business,
as well as retention of clients. These are detailed for 2025 in the table below:
Property –
Direct and
Facultative
Property –
Binding
Authorities CPRI
Political
violence Specie
Contin-
gency CSUPR Consortia
Construc-
tion Marine
.....................................................................................................................................................................
Proportion of business
written where the
Syndicate is the lead
underwriter
48% 26% 26% 1% 24% 50% 100% 13% 27% 14%
Proportion of business
written which is a renewal
to the Syndicate
82% 94% 12% 66% 81% 54% 93% 49% 4% –
The proportions of written business lead and renewed by the Syndicate are broadly consistent with
last year.
The Board values experience in its underwriters. The table below details the experience of the
Syndicate’s senior underwriters in terms of the numbers of years they have worked at the Syndicate
and the number of years they have been active in the Lloyd’s market.
Name Position
Years at
Syndicate
Years in the
Insurance
Market
.....................................................................................................................................................................
Nick Chalk Active Underwriter 26 30
Steve Anderson Head of Delegated Underwriting 17 37
Simon Pope Head of Property Underwriting – Direct and
Facultative 23 25
Francis Hernandez Head of Contingency 538
James Steele-Perkins Head of Credit & Political Risk 628
Ian Seakens Head of Specie 540
Tom Gardner Head of War, Terrorism and Political Violence 613
Alex Coulton Head of Construction 211
James Braddock Head of Treaty Reinsurance 240
James Hyett Head of Marine 125
Note – Years of service have been rounded to the nearest full year.
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12 Cincinnati Global Syndicate 0318
Report of the directors of the managing agent
for the year ended 31 December 2025
continued
Claims handling non-financial indicators
As part of the evaluation of the Syndicate’s
claims handling performance, various
measurements are monitored on a quarterly
basis. Management view responding to claims
notifications, adjusting and settling them on a
timely basis as key to the Syndicate’s servicing
of claims. It also places great importance on the
accuracy of its case reserving within a
prescribed range. The table below illustrates
some of the KPIs used by the Board.
Claims Measurement
Average score
in 2025
Average score
in 2024
...............................................................................
Percentage of claims
responded to within
target response time*
89.1% 86.9%
Reserving accuracy
percentage from first
advice to final
settlement
118.0% 95.0%
*Target response time is measured as within 4
workings days of ECF Presentation date.
Within the calendar year the Syndicate started
using internal metrics so comparative values
have been adjusted to reflect this.
Management are satisfied that the Syndicate
provides a comprehensive claims service to its
policyholders, but will endevour to improve the
performance against KPIs.
Human resources non-financial indicators
The Board view retention of staff, and vocational
training as key to the long term success of the
Syndicate. The staff turnover for the Syndicate
has been historically low, and the average
length of service for employees tends to be
longer than market sector average. Cincinnati
Global Underwriting Agency Limited (CGUAL)
also remains committed to staff training, with a
number of employees studying for professional
qualifications in disciplines including
accountancy, actuarial, insurance and law.
The health, safety, and welfare of our
employees, and the people they have contact
with, is of paramount importance to us. The
People and Culture Working Group has been
set up to ensure the continued wellbeing of our
employees.
Principle Risks and Uncertainties
The Syndicate is exposed to a variety of risks
when undertaking the activities associated with
the running of the business. The Board has
policies and procedures in place to identify and
manage the risks to the Syndicate. The key
risks to the Syndicate are: Insurance risk,
Concentration risk, Financial risk, Credit risk,
Liquidity risk, Market risk, Interest rate risk,
Currency risk, and Operational risk.
Definitions of these risks and further explanation
on how they affect the Syndicate are detailed in
Note 4 on page 39.
Corporate Governance and Risk Management
ReportingtotheBoardareanumberof
Committees each with written terms of
reference which consider, monitor and report on
aspects of the Managing Agency’s business.
The Board retains overall responsibility for the
Syndicate’s business.
The Managing Agency maintains a risk
framework for the identification, assessment,
management and monitoring of the risks to
which it is exposed across all aspects of its
day-to-day business operations, and it maintains
a risk register based on the output of this
framework. The risk framework encompasses all
core risk areas in the business. Various controls
operate in respect of these risk areas, and their
performance and continued suitability are
monitored via the Risk Function and are
overseen by the relevant sub-committee, or the
board and through the use of key risk and
control indicators.
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Cincinnati Global Syndicate 0318 13
Audit Committee
The Audit Committee has the delegated
authority of the Board to consider all aspects and
matters pertaining to the internal and external
audit of the Managing Agency and the managed
Syndicate. This includes an assessment of the
performance, effectiveness and suitability of
these functions. All members of this committee
are independent non-executive directors.
Risk and Compliance Committee
The Risk and Compliance Committee has the
delegated authority of the Board to consider all
aspects and matters pertaining to the
identification, assessment, monitoring and
mitigation of risk within the Managing Agency
and the managed Syndicate. This includes an
assessment of the performance, effectiveness
and suitability of the risk management function
and the risk framework. The Committee is
responsible for the consideration of operational
risk issues and maintains the Managing
Agency’s risk register, environmental, social and
governance issues as well as all compliance
matters affecting the Managing Agency, and the
Syndicate are also reviewed by the Committee.
Executive Committee
The Executive Committee has the delegated
authority of the Board to consider matters
defined by the Board or any matters that do not
require consideration by the full Board. In
general, the committee considers the more
day-to-day administrative and operational issues
relating to the Managing Agency and the
managed Syndicate.
Investment Committee
The Investment Committee has the delegated
authority of the Board to recommend, monitor
and oversee the appropriateness of the
investment policy, investment guidelines and
performance measures for the managed
Syndicate; for assessing the performance,
effectiveness and continued suitability of the
investment managers; and for ensuring
compliance with relevant rules and regulations.
The Investment Committee has specific
responsibility for the consideration of the market,
liquidity and concentration risk relating to the
investment of the managed Syndicate’s assets.
The Committee also assesses the suitability of
the portfolio from a prudent principle, and an
environmental, social, and governance
perspective.
Claims Committee
The Claims Committee has responsibility for
reviewing and monitoring all aspects of the
managed Syndicate’s claims performance and
claims service delivery.
Reserving Committee
The Reserving Committee assists the Board
in reviewing and approving the quarterly
reserves of the Syndicate for UK GAAP and
Solvency UK.
Underwriting Committee
The Underwriting Committee has the delegated
authority of the Board to consider, monitor and
review all aspects of the underwriting and
reinsurance strategy, management and
performance of the managed Syndicate. This
includes environmental, social, and governance
considerations, particularly around policies with
exposure to fossil fuels. The Underwriting
Committee considers insurance and reinsurance
risks.
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14 Cincinnati Global Syndicate 0318
Report of the directors of the managing agent
for the year ended 31 December 2025
continued
Remuneration Committee
The Remuneration Committee has the
delegated authority of the Board to support and
assist the Agency in its objective to determine
and oversee the appropriateness of the policy
and framework which can attract and retain the
right talents. As such, the Remuneration
Committee oversees the determination of the
remuneration, benefits and bonus
arrangements of the senior executives and
officers of the Managing Agency and the
managed Syndicate, for the review and
approval of the general level of remuneration
and benefits for other staff and for ensuring
that remuneration arrangements are consistent
with principles of sound risk management and
corporate governance.
Product Oversight and Governance Committee
The Product Oversight and Governance (POG)
committee has the delegated authority of the
Board to provide guidance and critical
assessment of conduct risk issues thereby
ensuring compliance with Lloyd’s and the FCA’s
principles concerning conduct, and to assist the
Board in this regard. As such, the POG
supports the Board in establishing a positive
corporate culture in respect of Conduct Risk
which ensures that customers are treated fairly
at all times.
People and Culture Working Group
The People and Culture Working Group reports
directly to the Board. Its goal is to promote the
development of our employees, and ensure
their continued wellbeing.
Future Developments
The Board is committed to growing and
developing the business profitability in the
coming year, whilst managing changes in the
market cycle. The Syndicate continues to be in
the market for high calibre teams and
individuals who can help the business grow and
expand profitability, and add to the culture of the
business.
Directors
The directors and officers of the Managing
Agent who held office up to the date of the
signing of the balance sheet were as follows:
Directors:
T.C. Cracas (non-executive)
D.C. Eales
M.A. Langston
R.A. Pexton (non-executive chairman)
G.M. Tuck
G.A.M. Bonvarlet (non-executive)
R.B. Scott (non-executive)
Company secretary
R. Allibone
Syndicate annual general meeting
As permitted under the Syndicate Meetings
(Amendment No.1) Byelaw (No.18 of 2000)
CGUAL does not propose holding a Syndicate
Annual General Meeting of the members of the
Syndicate. Members may object to this proposal
within 21 days of the issue of these accounts.
Any such objection should be addressed to G.
M. Tuck, Chief Finance Officer, at the registered
office of Cincinnati Global Underwriting Agency
Limited.
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0318
Cincinnati Global Syndicate 0318 15
Auditor
Deloitte LLP were appointed on the 31 July 2019.
Pursuant to Section 14(2) of Schedule 1 of the
Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts)
Regulations 2008, the auditor will be deemed
to be reappointed and Deloitte LLP will
therefore continue in office.
Statement as to disclosure of information to
auditors
The directors of the Managing Agent at the date
of this report have individually taken all the
necessary steps to make themselves aware, as
directors, of any relevant audit information and to
establish that the Syndicate auditors are aware
of that information. As far as the directors are
aware, there is no relevant audit information of
which the Syndicate auditors are unaware. The
directors are satisfied with the Syndicate’s ability
to continue being a going concern in the future.
G. M. Tuck
Chief Finance Officer
Cincinnati Global Underwriting Agency Limited
51 Lime Street
London EC3M 7DQ
Approved by the Board of Cincinnati Global
Underwriting Agency Limited on 17 February 2026
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16 Cincinnati Global Syndicate 0318
Statement of managing agent’s responsibilities
for the year ended 31 December 2025
The directors of the Managing Agent are
responsible for preparing the Syndicate annual
accounts in accordance with applicable law and
regulations.
The Insurance Accounts Directive Lloyd’s
Syndicate and Aggregate Accounts Regulations
2008 requires the directors of the managing
agent to prepare their Syndicates’ annual
accounts for each financial year. Under that law
they have elected to prepare the annual
accounts in accordance with UK Accounting
Standards and applicable law (UK Generally
Accepted Accounting Practice), including FRS
102 The Financial Reporting Standard
applicable in the UK and Republic of Ireland.
Under the Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts)
Regulations 2008 the directors of the managing
agent must not approve the annual accounts
unless they are satisfied that they give a true
and fair view of the state of affairs of the
Syndicate and of the profit or loss of the
Syndicate for that period. In preparing these
financial statements, the directors of the
managing agent are required to:
·
Select suitable accounting policies and then
apply them 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 annual accounts;
·
Assess the Syndicate’s ability to continue as
a going concern, disclosing, as applicable,
matters related to going concern; and
·
Use the going concern basis of accounting
unless they either intend to cease trading, or
have no realistic alternative but to do so.
The directors of the managing agent are
responsible for keeping adequate accounting
records that are sufficient to show and explain
the Syndicate’s transactions and disclose with
reasonable accuracy at any time the financial
position of the Syndicate and enable them to
ensure that the financial statements comply with
the Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations
2008. They are responsible for such internal
control as they determine is necessary to enable
the preparation of financial statements that are
free from material misstatement, whether due to
fraud or error, and have general responsibility for
taking such steps as are reasonably open to
them to safeguard the assets of the company
and to prevent and detect fraud and other
irregularities.
The directors of the managing agent are
responsible for the maintenance and integrity of
the Syndicate and financial information included
on the Syndicate’s website. Legislation in the
UK governing the preparation and dissemination
of financial statements may differ from
legislation in other jurisdictions.
The Directors of the managing agent are
responsible for the preparation and review of
the iXBRL tagging that has been applied to the
Syndicate Accounts in accordance with the
instructions issued by Lloyd’s, including
designing, implementing and maintaining
systems, processes and internal controls to
result in tagging that is free from material
non-compliance with the instructions issued by
Lloyd’s, whether due to fraud or error.
G. M. Tuck
Chief Finance Officer (on behalf of the board)
Cincinnati Global Underwriting Agency Limited
51 Lime Street
London EC3M 7DQ
Approved by the Board of Cincinnati Global
Underwriting Agency Limited on 17 February 2026
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Cincinnati Global Syndicate 0318 17
Independent auditor’s report to the Members of Syndicate 0318
Report on the audit of the syndicate annual
financial statements
Opinion
In our opinion the syndicate annual financial
statements of Syndicate 0318 (the ‘syndicate’):
·
give a true and fair view of the state of the
syndicate’s affairs as at 31 December 2025
and of its profit for the year then ended;
·
have been properly prepared in accordance
with United Kingdom Generally Accepted
Accounting Practice, including Financial
Reporting Standard 102 “The Financial
Reporting Standard applicable in the UK
and Republic of Ireland”; and
·
have been prepared in accordance with the
requirements of The Insurance Accounts
Directive (Lloyd’s Syndicate and Aggregate
Accounts) Regulations 2008 and sections 1
and 5 of the Syndicate Accounts Instructions
Version 3.1 as modified by the Frequently
Asked Questions Version 1.1 issued by
Lloyd’s (the “Lloyd’s Syndicate Accounts
Instructions”).
We have audited the syndicate annual
financial statements which comprise:
·
the statement of profit or loss and
comprehensive income;
·
the balance sheet;
·
the statement of changes in members’
balances;
·
the statement of cash flows; and
·
the related notes 1 to 26.
The financial reporting framework that has been
applied in their preparation is applicable law and
United Kingdom Accounting Standards,
including Financial Reporting Standard 102 “The
Financial Reporting Standard applicable in the
UK and Republic of Ireland” (United Kingdom
Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs
(UK)), applicable law and the Syndicate
Accounts Instructions. Our responsibilities under
those standards are further described in the
auditor's responsibilities for the audit of the
syndicate annual financial statements section of
our report.
We are independent of the syndicate in
accordance with the ethical requirements that
are relevant to our audit of the syndicate annual
financial statements in the UK, including the
Financial Reporting Council’s (the ‘FRC’s’)
Ethical Standard, and we have fulfilled our other
ethical responsibilities in accordance with these
requirements. We believe that the audit
evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have
concluded that the managing agent’s use of the
going concern basis of accounting in the
preparation of the financial statements is
appropriate.
Based on the work we have performed, we
have not identified any material uncertainties
relating to events or conditions that, individually
or collectively, may cast significant doubt on the
syndicate’s ability to continue in operations for a
period of at least twelve months from when the
syndicate financial statements are authorised for
issue.
Our responsibilities and the responsibilities of
the managing agent with respect to going
concern are described in the relevant sections
of this report.
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18 Cincinnati Global Syndicate 0318
Independent auditor’s report to the Members of Syndicate 0318 continued
Other information
The other information comprises the information
included in the annual report, other than the
syndicate annual financial statements and our
auditor’s report thereon. The managing agent is
responsible for the other information contained
within the annual report. Our opinion on the
syndicate annual financial statements does not
cover the other information and, except to the
extent otherwise explicitly stated in our report,
we do not express any form of assurance
conclusion thereon.
Our responsibility is to read the other
information and, in doing so, consider whether
the other information is materially inconsistent
with the syndicate annual financial statements
or our knowledge obtained in the course of the
audit, or otherwise appears to be materially
misstated. If we identify such material
inconsistencies or apparent material
misstatements, we are required to determine
whether this gives rise to a material
misstatement themselves. If, based on the work
we have performed, we conclude that there is a
material misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of managing agent
As explained more fully in the managing agent’s
responsibilities statement, the managing agent
is responsible for the preparation of the
syndicate annual financial statements and for
being satisfied that they give a true and fair
view, and for such internal control as the
managing agent determines is necessary to
enable the preparation of syndicate annual
financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the syndicate annual financial
statements, the managing agent is responsible
for assessing the syndicate’s ability to continue
in operation, disclosing, as applicable, matters
related to the syndicate’s ability to continue in
operation and to use the going concern basis of
accounting unless the managing agent intends
to cease the syndicate’s operations, or has no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
syndicate annual financial statements
Our objectives are to obtain reasonable
assurance about whether the syndicate annual
financial statements as a whole are free from
material misstatement, whether due to fraud or
error, and to issue an auditor's report that
includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement
when it exists. Misstatements can arise from
fraud or error and are considered material if,
individually or in the aggregate, they could
reasonably be expected to influence the
economic decisions of users taken on the basis
of these syndicate annual financial statements.
A further description of our responsibilities for
the audit of the syndicate annual financial
statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
Extent to which the audit was considered
capable of detecting irregularities, including
fraud
Irregularities, including fraud, are instances of
non-compliance with laws and regulations. We
design procedures in line with our
responsibilities, outlined above, to detect
material misstatements in respect of
irregularities, including fraud. The extent to
which our procedures are capable of detecting
irregularities, including fraud is detailed below.
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Cincinnati Global Syndicate 0318 19
We considered the nature of the syndicate and
its control environment, and reviewed the
syndicate’s documentation of their policies and
procedures relating to fraud and compliance
with laws and regulations. We also enquired of
management, internal audit and those charged
with governance about their own identification
and assessment of the risks of irregularities.
We obtained an understanding of the legal and
regulatory framework that the syndicate
operates in, and identified the key laws and
regulations that:
·
had a direct effect on the determination of
material amounts and disclosures in the
financial statements. These included the
Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts)
Regulations 2008 and the Lloyd’s Syndicate
Accounting Byelaw (no. 8 of 2005), the
Lloyd’s Syndicate Accounts Instructions; and
·
do not have a direct effect on the financial
statements but compliance with which may
be fundamental to the syndicate’s ability to
operate or to avoid a material penalty.
These included the requirements of
Solvency UK.
We discussed among the audit engagement
team including relevant internal specialists such
as actuarial and IT specialists regarding the
opportunities and incentives that may exist
within the organisation for fraud and how and
where fraud might occur in the financial
statements.
As a result of performing the above, we
identified the greatest potential for fraud or
non-compliance with laws and regulations in the
valuation of the gross claims incurred but not
reported (“IBNR”) balance, specifically around
assumptions for certain classes of business.
Our procedures performed to address it are
described below:
·
Evaluated the design and implementation of
internal controls around the reserving cycle.
We have tested the controls over data,
model, assumptions, methodology and
results as per ISA
540 (Revised);
·
Performedattributetestingonthedataused
in the IBNR calculations. We selected a
sample of items and traced selections to
underlying syndicate records to ensure the
data is complete and accurate;
·
Reviewed the margin on a year-on-year
basis to determine the consistency of the
margin;
·
Involved our actuarial specialists to develop
independent estimates of a portion of the
technical provisions.;
·
Performed benchmarking of the major
catastrophe events from across the industry
based on market data and compared
incurred to ultimate ratios by event using
data as at 31 December 2025;
·
Performed a sample test over the major
catastrophe events to test the the
appropriateness of the valuation of IBNR;
and
·
Performed a ‘stand back’ assessment to
consider all the evidence received from
audit procedures performed and conclude if
there is any evidence of overall
management bias.
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20 Cincinnati Global Syndicate 0318
Independent auditor’s report to the Members of Syndicate 0318 continued
In common with all audits under ISAs (UK), we
are also required to perform specific procedures
to respond to the risk of management override.
In addressing the risk of fraud through
management override of controls, we tested the
appropriateness of journal entries and other
adjustments; assessed whether the judgements
made in making accounting estimates are
indicative of a potential bias; and evaluated the
business rationale of any significant transactions
that are unusual or outside the normal course of
business.
In addition to the above, our procedures to
respond to the risks identified included the
following:
·
reviewing financial statement disclosures by
testing to supporting documentation to
assess compliance with provisions of
relevant laws and regulations described as
having a direct effect on the financial
statements;
·
performing analytical procedures to identify
any unusual or unexpected relationships
that may indicate risks of material
misstatement due to fraud;
·
enquiring of management and internal audit
concerning actual and potential litigation and
claims, and instances of non-compliance
with laws and regulations; and
·
reading minutes of meetings of those
charged with governance, reviewing internal
audit reports, and reviewing correspondence
with Lloyd’s, the FCA and the PRA.
Report on other legal and regulatory requirements
Opinions on other matters prescribed by The
Insurance Accounts Directive (Lloyd’s Syndicate
and Aggregate Accounts) Regulations 2008 and
the Lloyd’s Syndicate Accounts Instructions
In our opinion, based on the work undertaken in
the course of the audit:
·
the information given in the managing
agent’s report for the financial year for which
the financial statements are prepared is
consistent with the financial statements; and
·
the managing agent’s report has been
prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding
of the syndicate and its environment obtained in
the course of the audit, we have not identified
any material misstatements in the managing
agent’s report.
Matters on which we are required to report by
exception
Under The Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations
2008 we are required to report in respect of the
following matters if, in our opinion:
·
the managing agent in respect of the
syndicate has not kept adequate accounting
records; or
·
the syndicate annual financial statements
are not in agreement with the accounting
records; or
·
we have not received all the information and
explanations we require for our audit.
We have nothing to report in respect of these
matters.
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0318
Cincinnati Global Syndicate 0318 21
Use of our report
This report is made solely to the syndicate’s
members, as a body, in accordance with
regulation 10 of The Insurance Accounts
Directive (Lloyd’s Syndicate and Aggregate
Accounts) Regulations 2008. Our audit work
has been undertaken so that we might state to
the syndicate’s members those matters we are
required to state to them in an auditor’s report
and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume
responsibility to anyone other than the
syndicate’s members as a body, for our audit
work, for this report, or for the opinions we have
formed.
As required by the Syndicate Accounts
Instructions Version 3.1, these financial
statements will form part of the Electronic
Format Annual Syndicate Accounts filed with
the Council of Lloyd’s and published on the
Lloyd’s website. This auditors’ report provides
no assurance over whether the Electronic
Format Annual Syndicate Accounts have been
prepared in compliance with Section 2 of the
Syndicate Accounts Instructions Version 3.1.
We have been engaged to provide assurance
on whether the Electronic Format Annual
Syndicate Accounts has been prepared in
compliance with Section 2 of the Syndicate
Accounts Instructions Version 3.1 and will
privately report to the directors of the managing
agent and the Council of Lloyd’s on this.
Ben Newton, ACA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
19 February 2026
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22 Cincinnati Global Syndicate 0318
Statement of profit or loss and total comprehensive income
for the year ended 31 December 2025
Technical account – general business
£000
2025
£000 £000
2024
£000Note
.....................................................................................................................................................................
| Gross premiums written | 5 | ||||
| Outward reinsurance premiums | ( | ( | |||
| Premiums written, net of reinsurance | |||||
| Changes in unearned premium | 17 | ||||
| Change in the gross provision for unearned premiums | ( | ( | |||
| Change in the provision for unearned premiumsreinsurers’ share | |||||
| Net change in provisions for unearned premiums | ( | ( | |||
| Earned premiums, net of reinsurance | |||||
| Allocated investment return transferred fromthe non-technical account | 9 | ||||
| Other technical income, net of reinsurance | |||||
| Claims paid | 17 | ||||
| Gross amount | ( | ( | |||
| Reinsurers’ share | |||||
| Net claims paid | ( | ( | |||
| Change in the provision for claims | 17 | ||||
| Gross amount | ( | ||||
| Reinsurers’ share | ( | ( | |||
| Net change in provisions for claims | ( | ( | |||
| Claims incurred, net of reinsurance | ( | ( | |||
| Net operating expenses | 6 | ( | ( | ||
| Balance on the technical account – for general business | |||||
All items relate only to continuing operations.
The accompanying notes from pages 28 to 71 form an integral part of these financial statements.
Non-technical account
Note
2025
£000
2024
£000
| Balance on the technical account - general business | |||
| Investment income | 9 | ||
| Realised gains on investments | 9 | ||
| Unrealised gains/(losses) on investments | 9 | ( | |
| Investment expenses and charges | 9 | ( | ( |
| Total investment return | |||
| Allocated investment return transferred to general business technical account | ( | ( | |
| Loss on foreign exchange | ( | ( | |
| Profit for the financial year | |||
| Other comprehensive income | |||
| Currency translation (losses)/gains | ( | | |
| Total comprehensive income for the year |
The accompanying notes from pages 28 to 71 form an integral part of these financial statements.
Cincinnati Global Syndicate 0318 23
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24 Cincinnati Global Syndicate 0318
Balance sheet as at 31 December 2025
£000
2025
£000 £000
2024
£000Note
.....................................................................................................................................................................
Assets | |||||
| Financial investments | 11 | ||||
| Deposits with ceding undertakings | |||||
| Investments | |||||
| Provision for unearned premiums | |||||
| Claims outstanding | |||||
| Reinsurers’ share of technical provisions | 17 | ||||
| Debtors arising out of direct insurance operations | 12 | | |||
| Debtors arising out of reinsurance operations | 13 | | |||
| Other debtors | 14 | | |||
| Debtors | |||||
| Cash at bank and in hand | 21 | ||||
| Other assets | |||||
| Deferred acquisition costs | 15 | | |||
| Other prepayments and accrued income | |||||
| Prepayments and accrued income | |||||
| Total assets |
The accompanying notes from pages 28 to 71 form an integral part of these financial statements.
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£000
2025
£000 £000
2024
£000Note
.....................................................................................................................................................................
Liabilities | |||||
| Members’ balances | |||||
| Total capital and reserves | |||||
| Provision for unearned premiums | |||||
| Claims outstanding | |||||
| Technical provisions | 17 | ||||
| Creditors arising out of direct insurance operations | 18 | | |||
| Creditors arising out of reinsurance operations | 19 | | |||
| Other creditors including taxation and social security | 20 | | |||
| Creditors | |||||
| Accruals and deferred income | |||||
| Total liabilities | |||||
| Total liabilities, capital and reserves |
The financial statements on pages 22 to 71 were approved by the Board of Cincinnati Global
Underwriting Agency Limited on 17 February 2026 and were signed on its behalf by
D. C. Eales
Chief Executive Officer
G. M. Tuck
Chief Finance Officer
19 February 2026
The accompanying notes from pages 28 to 71 form an integral part of these financial statements.
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26 Cincinnati Global Syndicate 0318
Statement of changes in members’ balances
for the year ended 31 December 2025
2025
£000
2024
£000
.....................................................................................................................................................................
| Members’ balances brought forward at 1 January | | |
| Total comprehensive income for the year | | |
| Members’ agents fees | ( | ( |
| Payments of profits to members’ personal reserve fund | ( | ( |
| Members’ balances carried forward at 31 December | | |
Members participate on Syndicates by reference to years of account (YoA) and their ultimate result,
assets and liabilities are assessed with reference to policies incepting in that year of account in
respect of their membership of a particular year.
The accompanying notes from pages 28 to 71 form an integral part of these financial statements.
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Statement of cash flows for the year ended 31 December 2025
2025
£000
2024
£000Note
.....................................................................................................................................................................
Cash flows from operating activities
| Profit for the financial year | | ||
Adjustments: | |||
| Increase in gross technical provisions | | ||
| Decrease in reinsurers’ share of gross technical provisions | | ||
| (Increase) in debtors | ( | ( | |
| Increase/(decrease) in creditors | ( | ||
| Movement in other liabilities | | ||
| Investment return | ( | ( | |
| Foreign exchange (losses)/gains | ( | | |
| Other | ( | ||
| Net cash flows from operating activities | | ||
| Cash flows from investing activities | |||
| Purchase of equity and debt instruments | ( | ( | |
| Sale of equity and debt instruments | | ||
| Investment income received | | ||
| Net cash flows from investing activities | ( | ( | |
| Cash flows from financing activities | |||
| Distribution of profit | ( | ( | |
| Net cash flows from financing activities | ( | ( | |
| Net increase/(decrease) in cash and cash equivalents | ( | ||
| Cash and cash equivalents at the beginning of the year | 22 | | |
| Foreign exchange on cash and cash equivalents | | ||
| Cash and cash equivalents at the end of the year | 22 | |
The accompanying notes from pages 28 to 71 form an integral part of these financial statements.
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28 Cincinnati Global Syndicate 0318
Notes to the financial statements for the year ended 31 December 2025
1
(a) Basis of preparation
Syndicate 0318 (‘The Syndicate’) comprises a group of members of the Society of Lloyd's that
underwrites insurance business in the London Market. The address of the Syndicate’s Managing
Agent is Cincinnati Global Underwriting Agency Limited, 51 Lime Street, London EC3M 7DQ.
Cincinnati Global Underwriting Agency Limited is registered in England and Wales.
The financial statements have been prepared in accordance with the Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and applicable Accounting Standards
in the United Kingdom and the Republic of Ireland, including Financial Reporting Standard 102 (FRS
102). FRS 102 requires the application of Financial Reporting Standard 103 (FRS 103) in relation to
insurance contracts, and the Lloyd’s Syndicate Accounts Instructions Version 3.1 as modified by the
Frequently Asked Questions Version 1.0 issued by Lloyd’s.
The financial statements have been prepared on the historical cost basis, except for financial assets
at fair value through profit or loss and available for sale that are measured at fair value.
The financial statements are presented in Great British Pounds , the functional currency of the
Syndicate is US Dollars . The presentational currency is different from the functional currency of the
Syndicate because the Syndicate has elected to use a presentational currency aligned with the
presentational currency of its corporate member.
All amounts have been rounded to the nearest thousand, unless otherwise indicated.
(b) Going concern
The Syndicate has financial resources to meet its financial needs and manages its portfolio of
insurance risk. The directors have continued to review the business plans, liquidity and operational
resilience of the Syndicate and are satisfied that the Syndicate is well positioned to manage its
business risks in the current economic environment. The Syndicate 2026 year of account has
opened and the directors have concluded that the Syndicate has sufficient resources to, and a
reasonable expectation that it will, open a 2027 year of account. The Syndicate has sufficient capital
for each year of account in its Funds at Lloyd’s (FAL). There is no intention to cease underwriting or
cease the operations of the Syndicate.
Accordingly, the directors of the Managing Agent continue to adopt the going concern basis in
preparing the annual report and financial statements.
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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.
Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to estimates are recognised prospectively.
Critical accounting judgements
In the course of preparing the financial statements no judgements have been made in the process of
applying the Syndicate’s accounting policies, other than those involving estimations that have had a
significant effect on the amounts recognised in the financial statements.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the
balance sheet date, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year, are considered to be claims liabilities
and unearned premiums. Note 4 gives further sensitivity analysis into the impact of these risks.
Estimation of claims
The measurement of the provision for claims outstanding involves estimates and assumptions about
the future that have the most significant effect on the amounts recognised in the financial statements.
The provision for claims outstanding comprises the estimated cost of settling all claims incurred but
unpaid at the balance sheet date, whether reported or not. This is a complex area due to the
subjectivity inherent in estimating the impact of claims events that have occurred but for which the
eventual outcome remains uncertain. In particular, professional expertise is applied when estimating
the value of amounts that should be provided for claims that have been incurred at the reporting
date but have not yet been reported (IBNR) to the Syndicate.
The amount included in respect of IBNR is based on statistical techniques of estimation applied by
the Managing Agent’s in-house actuaries and reviewed by external consulting actuaries. These
techniques generally involve projecting from past experience the development of claims over time
given the likely ultimate claims to be experienced and for more recent underwriting, having regard to
variations in business accepted and the underlying terms and conditions. The provision for claims
also includes amounts in respect of internal and external claims handling costs. For the most recent
years, where a high degree of volatility arises from projections, estimates may be based in part on
output from rating, and other models of business accepted and assessments of underwriting
conditions.
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30 Cincinnati Global Syndicate 0318
Notes to the financial statements for the year ended 31 December 2025 continued
2 Use of judgments and estimates continued
In arriving at the level of claims provisions, a Board approved margin is applied over and above the
actuarial best estimate.
Further information about the risk that the provision for claims outstanding could be materially
different from the ultimate cost of claims settlement is included in note 4.
Estimation of premiums
The measurement of premiums written in the year involves estimates on the amounts of premiums
written but not signed to the Syndicate until after the balance sheet date.
The estimation of unearned premiums, includes estimates made on the allocation of premiums
between accounting periods based on the profile of the underlying risks associated with the policy,
and accordingly how the premium is recognised as earned.
3 Significant accounting policies
The following significant accounting policies have been applied consistently in dealing with items
which are considered material in relation to the Syndicate’s financial statements.
(a) Premiums written
Gross premiums written reflect direct and inwards reinsurance business written during the period,
gross of commission payable to intermediaries, and exclude any taxes or duties based on
premiums. Premiums written include estimates for ‘pipeline’ premiums representing amounts due to
the Syndicate and adjustments to estimates of premiums written in previous periods.
Estimated premium income in respect of facility contracts, for example binding authorities and line
slips, are deemed to be written in a manner that reflects the expected profile of the underlying
business which has been written. Outwards reinsurance premiums are accounted for in the same
accounting period 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.
(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 periods, computed separately for
each insurance contract using the daily pro rata method, adjusted if necessary to reflect any
variation in the incidence of risk during the period covered by the contract.
(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 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.
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3 Significant accounting policies continued
(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’ and ‘Quota Share’ 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. The
Syndicate does not discount its liability for outstanding claims nor the reinsurance share of
outstanding claims.
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, where a realistic estimate can be made
and there is certainty around the receipt. 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.
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Notes to the financial statements for the year ended 31 December 2025 continued
3 Significant accounting policies continued
(e) Claims provisions and related reinsurance recoveries continued
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 period in which the impairment loss is recognised.
A specific provision is made against amounts from reinsurers, by applying default rates to
recoveries. These default rates are based on credit ratings by accredited rating agencies.
(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 periods 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. Differences arising on translation from the
functional currency to the presentational currency are recognised in other comprehensive income.
(h) Financial assets and liabilities
In applying FRS 102, the Syndicate has chosen to apply the recognition and measurement
provisions of IAS 39 Financial Instruments: Recognition and Measurement (as adopted for use in the
UK)/Chapters 11 and 12 of FRS 102.
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.
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3 Significant accounting policies continued
(h) Financial assets and liabilities continued
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. Other
financial assets, principally certain debt and other fixed-income securities are classified as available
for sale.
The Syndicate does not hold any non-derivative financial assets or financial liabilities for trading.
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 any transaction costs that
are directly attributable to its acquisition or issue.
Financial assets are measured at fair value with fair value changes recognised immediately in profit
or loss.
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Notes to the financial statements for the year ended 31 December 2025 continued
3 Significant accounting policies continued
(h) Financial assets and liabilities continued
Financial assets classified as available for sale are initially recognised at fair value, which typically
equates to the cost, plus transaction costs directly attributable to its acquisition. After initial
measurement, these assets are subsequently measured at fair value. Interest earned whilst holding
available for sale financial assets is reported as interest income. Impairment losses and foreign
exchange gains or losses are reported in profit and loss for the financial year. Other fair value
changes are recognised in other comprehensive income.
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.
(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. The Syndicate does not have a legal right to set off any of the assets and liabilities
held in the balance sheet. Investment income comprises interest income and dividends receivable.
Dividend income is recognised when the right to receive income is established. Usually this is the
ex-dividend date for equity securities. For the purpose of separately presenting investment income
and unrealised gains and losses for financial assets at fair value through profit or loss, interest
income is calculated using the effective interest method excluding transaction costs that are
expensed when incurred. For investments at fair value through profit or loss, realised gains and
losses represent the difference between the net proceeds on disposal and the purchase price.
Unrealised investment gains and losses represent the difference between the fair value at the
balance sheet date and the fair value at the previous balance sheet date, or purchase price if
acquired during the year. Movements in unrealised investment gains and losses comprise the
increase/decrease in the reporting period in the value of the investments held at the reporting date
and the reversal of unrealised investment gains and losses recognised in earlier reporting periods in
respect of investment disposals of the current period.
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3 Significant accounting policies continued
(i) Investment return continued
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 fair value in the statement of financial position.
Bank overdrafts that are repayable on demand 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 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
Cincinnati Global Underwriting Agency Limited operates a defined contribution scheme. Pension
contributions relating to Managing agent staff who act on behalf of the Syndicate are charged to the
Syndicate as incurred and are included within net operating expenses.
(m) Profit commission
Profit commission is charged by the managing agent at a rate of 20% of the cumulative GAAP profit
for a year of account basis subject to the operation of a 2 year deficit clause. This is accrued by the
Syndicate as incurred but does not become payable until after the appropriate year of account
closes, normally at 36 months.
(n) 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 fair value in the balance sheet.
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Notes to the financial statements for the year ended 31 December 2025 continued
3 Significant accounting policies continued
(o) Other prepayment and accrued income
Prepayments are reported at fair value and are recognised in the financial statements when a
payment is made for goods and services in the current period, but the economic benefit will not be
derived by the Syndicate until future periods.
Accrued income is reported at fair value and is recognised in the financial statements when the
economic benefit from an asset has been derived by the Syndicate in the current period, but the
associated income will not be received until future periods.
(p) RITC and Portfolio Transfer Policy
Reinsurance to close premium received
The reinsurance to close premium received was closed into the 2023 year of account at
31 December 2025.
The reinsurance to close premium payable is determined by reference to the outstanding technical
provisions (including those for outstanding claims, unearned premiums, net of deferred acquisition
costs, and unexpired risks) relating to the closed year and all previous closed years reinsured
therein. Although this estimate of net outstanding liabilities is considered to be fair and reasonable, it
is implicit in the estimation procedure that the ultimate liabilities will be at variance from the premium
so determined. The reinsurance to close premium transfers the liability in respect of all claims,
reinsurance premiums, return premiums and other payments in respect of the closing year (and
previous closed years reinsured therein) to the members of the successor year of account and gives
them the benefit of refunds, recoveries, premiums due and other income in respect of those years in
so far as they have not been credited in these accounts.
The provision for claims comprises amounts set aside for claims notified and claims incurred but not
yet reported (“IBNR”).
The amount included in respect of IBNR is based on statistical techniques and underwriting
estimates applied by the Managing Agent’s management and reviewed by external consulting
actuaries. These techniques generally involve projecting from past experience of the development of
claims over time to form a view of the likely ultimate claims to be experienced for more recent
underwriting years, having regard to variations in the business accepted and the underlying terms
and conditions. The provision for claims also includes amounts in respect of internal and external
claims handling costs.
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. The Syndicate uses a number of statistical
techniques to assist in making these estimates.
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(p) RITC and Portfolio Transfer Policy continued
Reinsurance to close premium received continued
Accordingly, the most critical assumption as regards claims provisions is that the past is a
reasonable predictor of the likely level of claims development.
It is considered that the provisions for gross claims and related reinsurance recoveries are fairly
stated on the basis of the information currently available. However, the quantum of final settlements
will vary as a result of subsequent information and events, and this may result in significant
adjustments to the amounts provided. Adjustments to the amounts of claims provisions established
in prior years are reflected in the financial statements for the period in which the adjustments are
made. The methods used, and the estimates made, are reviewed regularly.
Reinsurance to close premium payable
The reinsurance to close premium paid was closed into the 2024 year of account at
31 December 2025.
The reinsurance to close premium is determined by reference to the outstanding technical provisions
(including those for outstanding claims, unearned premiums, net of deferred acquisition costs, and
unexpired risks) relating to the closed year and to all previous closed years reinsured therein.
Although this estimate of net outstanding liabilities is considered to be fair and reasonable, it is
implicit in the estimation procedure that the ultimate liabilities will be at variance from the premium so
determined. The reinsurance to close premium transfers the liability in respect of all claims,
reinsurance premiums, return premiums and other payments in respect of the closing year (and
previous closed years reinsured therein) to the members of the successor year of account and gives
them the benefit of refunds, recoveries, premiums due and other income in respect of those years in
so far as they have not been credited in these accounts.
The provision for claims comprises amounts set aside for claims notified and claims IBNR.
The amount included in respect of IBNR is based on statistical techniques and underwriting
estimates applied by the Managing Agent’s management and reviewed by external consulting
actuaries. These techniques generally involve projecting from past experience of the development of
claims over time to form a view of the likely ultimate claims to be experienced for more recent
underwriting years, having regard to variations in the business accepted and the underlying terms
and conditions. The provision for claims also includes amounts in respect of internal and external
claims handling costs.
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. The Syndicate uses a number of statistical
techniques to assist in making these estimates.
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Notes to the financial statements for the year ended 31 December 2025 continued
(p) RITC and Portfolio Transfer Policy continued
Reinsurance to close premium payable continued
Accordingly the most critical assumption as regards claims provisions is that the past is a
reasonable predictor of the likely level of claims development.
It is considered that the provisions for gross claims and related reinsurance recoveries are fairly
stated on the basis of the information currently available. However, ultimate liability will vary as a
result of subsequent information and events and this may result in significant adjustments to the
amounts provided. Adjustments to the amounts of claims provisions established in prior years are
reflected in the financial statements for the period in which the adjustments are made. The methods
used, and the estimates made, are reviewed regularly.
Portfolio Transfers
All portfolio transfers made to and from the Syndicatearetransactedonanarm’slengthbasis.The
use of judgements and estimates, and the application of accounting policies to the underlying assets
and liabilities in any portfolio transfer are consistent with those applied elsewhere in the Syndicate.
(q) 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.
(r) Operating expenses
Where expenses are incurred by the Managing Agent for the administration of the Syndicate, these
expenses are apportioned appropriately based on type of expense. Expenses that are incurred
jointly are apportioned between the Managing Agent and the Syndicate on bases depending on the
amount of work performed, resources used, and the volume of business transacted.
(s) 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.
(t) Debtors and creditors
Insurance debtors and creditors include amounts due to and from agents, brokers and insurance
contract holders. Insurance debtors and creditors are measured at fair value. The Syndicate does
not have any debtors directly with policyholders, all transactions occur via an intermediary.
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3 Significant accounting policies continued
(t) Debtors and creditors continued
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 premiums are measured at amortised cost
less any provision for impairments. Reinsurance creditors are stated at amortised cost. Reinsurance
debtor principally relates to claims recoveries where the underlying claim has been settled and the
recovery is due. Reinsurance creditors are primarily premiums payable for reinsurance contracts and
are recognised as an expense when due.
Other debtors principally consist of amounts due from members and sundry debtors and are carried
at fair value.
Other creditors principally consist of amounts due to other related entities, profit commissions
payable and other sundry payables. These are stated at fair value.
(u) 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 Syndicates written contracts and purchased reinsurance contracts
transfer significant insurance risk and therefore are recognised as insurance contracts.
(v) Operating lease rentals
Amounts recharged by the Managing Agent include costs arising from the use of assets in the
period. These rental costs are expensed in full in the period to which the charge relates.
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 and
Compliance Committee to oversee the operation of the Syndicate’s risk management framework
and to review and monitor the management of the risks to which the Syndicate is exposed. The
Risk and Compliance Committee has delegated oversight of the management of aspects of
financial risks to the Investment Committee, which is responsible for developing and monitoring
financial risk management policies. The Underwriting Committee monitors the Syndicate’s
premium income, pricing, and terms and conditions.
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Notes to the financial statements for the year ended 31 December 2025 continued
4 Risk and capital management continued
Risk management framework continued
The Risk and Compliance Committee, Underwriting Committee, Reserving Committee, Audit
Committee and the Investment Committee report regularly to the Board of Directors on their activities.
The risk management policies are established to identify and analyse the risks faced by the
Syndicate, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.
Insurance Risk
Management of insurance risk
A key component of the management of underwriting risk for the Syndicate is a disciplined
underwriting strategy that is focused on writing quality business and not writing for volume. Product
pricing is designed to incorporate appropriate premiums for each type of assumed risk. The
underwriting strategy includes underwriting limits on the Syndicate’s total exposure to specific risks
together with limits on geographical and industry exposures. The aim is to ensure a well diversified
book is maintained with no excessive exposure in any one geographical region.
Contracts can contain a number of features which help to manage the underwriting risk, such as the
use of deductibles, or capping the maximum permitted loss, or number of claims (subject to local
regulatory and legislative requirements).
The Syndicate makes use of reinsurance to mitigate the risk of incurring significant losses linked to
one event, including excess of loss and catastrophe reinsurance. Where an individual exposure is
deemed surplus to the Syndicate’s appetite, additional facultative reinsurance is also purchased. The
Syndicate also purchases quota share and excess of loss reinsurance at selected sub account
levels.
The Reserving Committee oversees the management of reserving risk. The use of proprietary and
standardised modelling techniques, internal and external benchmarking, and the review of claims
development are all instrumental in mitigating reserving risk.
The Managing Agent’s in-house actuaries perform a reserving analysis on a quarterly basis liaising
closely with underwriters, exposure managers, claims and reinsurance technicians. This exercise
aims 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 annually 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 Managing Agent’s Board of Directors of the claims provisions to be established.
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4 Risk and capital management continued
Concentration of insurance risk
The Syndicate’s exposure to insurance risk is fairly well diversified, although does have a
concentration in the US. The following table provides an analysis of the geographical breakdown of
its written premiums by class of business.
2025
Accident
and
Health
£000
Motor
£000
Marine,
aviation and
transport
£000
Fire and
other
damage
to property
£000
Credit and
suretyship
£000
Legal
expenses
£000
Third party
liability
£000
Total
£000
.....................................................................................................................................................................
UK
– – 740 5,138 13,769 13,268 2,977 35,892
US (125) (123) 6,803 164,607 16,781 – 3,210 191,153
Other Europe – – 1,426 9,026 10,152 – 8,716 29,320
Canada – – 1,025 12,227 650 – 4 13,906
Rest of World – – 4,018 32,202 9,342 – 154 45,716
Total (125) (123) 14,012 223,200 50,694 13,268 15,061 315,987
2024
Accident
and
Health
£000
Motor
£000
Marine,
aviation and
transport
£000
Fire and
other
damage
to property
£000
Credit and
suretyship
£000
Legal
expenses
£000
Third party
liability
£000
Total
£000
.....................................................................................................................................................................
UK
– – 128 5,951 6,761 8,905 3,962 25,707
US 1,489 (185) 586 186,455 13,552 – – 201,897
Other Europe – – 680 4,748 5,575 – 7,606 18,609
Canada – – 303 9,893 135 – – 10,331
Rest of World – – 1,377 35,778 7,658 – 49 44,862
Total 1,489 (185) 3,074 242,825 33,681 8,905 11,617 301,406
Sensitivity to insurance risk
The liabilities established could be significantly lower or higher than the ultimate cost of settling the
claims arising. For claims liabilities it can arise from developments in case reserving for large losses
and catastrophes, or from changes in estimates of claims incurred but not reported (IBNR). A five
percent increase or decrease in the ultimate cost of settling claims arising is considered to be not
unreasonable at the reporting date.
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42 Cincinnati Global Syndicate 0318
Notes to the financial statements for the year ended 31 December 2025 continued
4 Risk and capital management continued
The following table presents 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.
Sensitivity
5 percent
increase
£000
5 percent
decrease
£000
.....................................................................................................................................................................
| General insurance business sensitivities as at 31 December 2025 | ||
| Claims outstanding – gross of reinsurance | ( | |
| Claims outstanding – net of reinsurance | ( |
Sensitivity
5 percent
increase
£000
5 percent
decrease
£000
.....................................................................................................................................................................
| General insurance business sensitivities as at 31 December 2024 | ||
| Claims outstanding – gross of reinsurance | ( | |
| Claims outstanding – net of reinsurance | ( |
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, while ensuring that the
assets and liabilities are managed on a cash flow and duration basis.
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4 Risk and capital management continued
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 and derivative financial instruments;
·
reinsurers’ share of insurance liabilities;
·
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.
Management of credit risk
The Syndicate’s credit risk in respect of debt securities is managed by placing limits on its exposure
to a single counterparty, by reference to the credit rating of the counterparty. Financial assets are
graded according to current credit ratings issued by rating agencies such as Standard and Poor’s.
The Syndicate has a policy of investing mainly in higher graded securities. The performance of these
investments are reviewed regularly by the investment committee.
The Syndicate limits the amount of cash and cash equivalents that can be deposited with a single
counterparty, and maintains an authorised list of acceptable cash counterparties.
The Syndicate’s exposure to intermediaries and reinsurance counterparties is monitored by the
individual business units as part of their credit control processes.
All intermediaries must meet minimum requirements established by the Syndicate. The credit ratings
and payment histories of intermediaries are monitored regularly.
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.
Notes to the financial statements for the year ended 31 December 2025 continued
4
Risk and capital management continued
Exposure to credit risk
The carrying amount of financial assets and reinsurance assets represents the maximum credit risk
exposure. The Syndicate does not hold any collateral as security or purchase any credit
enhancements (such as guarantees, credit derivatives and netting arrangements that do not qualify
for offset).
The following table analyses the credit rating by investment grade of financial investments,
reinsurers’ share of technical provisions, debtors arising out of direct insurance and reinsurance
operations, cash at bank and in hand, and other debtors that are neither past due, nor impaired.
2025
AAA
£000
AA
£000
A
£000
BBB
£000
Other
£000
Not rated
£000
Total
£000
Debt securities and other fixed income securities | |||||||
Shares and other variable yield securities and units in unit trusts | | | |||||
| Deposits with ceding undertakings | | | | ||||
Syndicate loans to central fund | | | | ||||
Reinsurers’ share claims outstanding | | | |||||
Debtors arising out of direct insurance operations | | | | | |||
Debtors arising out of reinsurance operations | | | |||||
Other debtors and accrued interest | | | | | |||
| Cash at bank and in hand | | | | ||||
| Other investments | | | | | |||
Total | | |
Please note debtors arising out of direct insurance operations only includes current debtors not past
due nor impaired.
44 Cincinnati Global Syndicate 0318
0318
4
Risk and capital management continued
2024 AAA
£000
AA
£000
A
£000
BBB
£000
Other
£000
Not rated
£000
Total
£000
| Debt securities and other fixedincome securities | | | |||||
| Shares and other variable yieldsecurities and units in unit trusts | | | | ||||
| Deposits with ceding undertakings | | | |||||
| Syndicate loans to central fund | | | | ||||
| Reinsurers’ share claims outstanding | | ( | | ||||
| Debtors arising out of directinsurance operations | | | | ||||
| Debtors arising out of reinsurance operations | | ||||||
| Other debtors and accrued interest | | | | ||||
| Cash at bank and in hand | | | | ||||
| Other investments | | | | | |||
| Total | |
Please note debtors arising out of direct insurance operations only includes current debtors not past
due nor impaired.
Cincinnati Global Syndicate 0318 45
Notes to the financial statements for the year ended 31 December 2025 continued
4
Risk and capital management continued
Financial assets that are past due or impaired
The Syndicate has debtors arising from direct insurance and reinsurance operations that are past
due but not impaired at the reporting date. The Syndicate does not consider these debtors to be
impaired on the basis of stage of
collection of amounts owed to the Syndicate.
An analysis of the carrying amounts of past due or impaired debtors is presented in the table below.
2025
Neither past Gross
due nor Past due but value of
impaired not impaired impaired
Impairment
assets assets assets allowance Total
£000 £000 £000 £000 £000
| Debt securities | | | | | |
Deposits with cediting undertakings | | ||||
Shares and other variable yield securities and units in unit trusts | | ||||
| Reinsurer’ share of claims outstanding | |||||
Debtors arising out of direct insurance operations | |||||
Debtors arising out of reinsurance operations | | | |||
Other debtors and accrued interest | |||||
| Cash at bank and in hand | | | |||
| Other investments | | ||||
| Total | |||||
46 Cincinnati Global Syndicate 0318
0318
4
Risk and capital management continued
2024 Neither past
due nor
impaired
assets
£000
Past due but
not impaired
assets
£000
Gross
value of
impaired
assets
£000
Impairment
allowance
£000
Total
£000
Debt securities
Deposits with cediting undertakings
Shares and other variable yield
securities and units in unit trusts
Reinsurer’ share of
claims
outstanding
Debtors arising out of direct
insurance operations
Debtors arising out of reinsurance
operations 9,566
Other debtors and accrued interest
Cash at bank and in hand 2,702
Other investments
Total 439,526
Cincinnati Global Syndicate 0318 47
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Notes to the financial statements for the year ended 31 December 2025 continued
4 Risk and capital management continued
The table below sets out the age analysis of financial assets that are past due but not impaired at
the balance sheet date.
2025 0-3
months
£000
3-6
months
£000
6-12
months
£000
>12
months
£000
Total
£000
.....................................................................................................................................................................
Debtors arising out of direct
insurance operations
2024 0-3
months
£000
3-6
months
£000
6-12
months
£000
>12
months
£000
Total
£000
.....................................................................................................................................................................
Debtors arising out of direct
insurance operations
Liquidity risk
Liquidity risk is the risk that the Syndicate will encounter difficulty in meeting obligations arising from
its insurance contracts and financial liabilities. The Syndicate is exposed to daily calls on its available
cash resources mainly from claims arising from insurance contracts.
The nature of the Syndicate’s exposures to liquidity risk and its objectives, policies and processes for
managing liquidity risk have not changed significantly from the prior year.
Management of liquidity risk
The Syndicate’s approach to managing liquidity risk is to ensure, as far as possible, that it will always
have sufficient liquidity to meet its liabilities when they fall due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage to the Syndicate’s reputation.
The Syndicate’s approach to managing its liquidity risk is as follows:
·
Forecasts are prepared and revised regularly to predict cash outflows from insurance contracts
over the short, medium and long term;
·
The Syndicate purchases assets with aggregate 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.
0318
4
Risk and capital management continued
The maturity analysis presented in the table below shows the remaining contractual maturities for
the Syndicate’s insurance contracts and financial instruments. For insurance contracts, the
contractual maturity date is the estimated date when the gross undiscounted contractually required
cash flows will occur. For financial assets and 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.
2025
No maturity
stated
£000
0-1 yr
£000
1-3 yrs
£000
3-5 yrs
£000
>
5
yrs
£000
Total
£000
| Claims oustanding | | |||||
| Creditors | | | ||||
Total | |
2024
No maturity
stated
£000
0-1 yr
£000
1-3 yrs
£000
3-5 yrs
£000
>
5
yrs
£000
Total
£000
| Claims oustanding |