Syndicate Accounts

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Lloyd’s Syndicate 2478

Talbot Underwriting Limited

Annual Report and Accounts for the year ended

31 December 2025

Contents

Directors and Administration4

Report of the Directors of the Managing Agent5

Statement of Managing Agent’s Responsibilities10

Independent auditor’s report to the members of Syndicate 247811

Statement of profit or loss and other comprehensive income15

Balance sheet – Assets17

Balance sheet – Liabilities18

Statement of changes in member’s balances19

Statement of cash flows20

Notes to the financial statements21

Directors and Administration

Managing Agent

Managing Agent’s registered number

Talbot Underwriting Ltd

58 Fenchurch Street

London

EC3M 4AB

2202362

Directors

EL Woolley

JG Ross

RE Bean

RD Cowling

ME Hind

DJ Batchelor

KA Coates

P Bergamaschi

CJ Flatt

JL Hancock

Chief Executive Officer

Chief Risk Officer

Chief Underwriting Officer

Chief Financial Officer

Independent Non-executive

Non-executive

Company secretary

Active underwriter

K Guérin

G Goodey

Bankers

Investment managers

Blackstone ISG-I Advisors L.L.C

345 Park Avenue

New York

NY10154

Citibank NA

Royal Bank of Canada

Barclays plc

Lloyd’s Treasury Services

One Lime Street

London

EC3M 7HA

Independent auditor

Ernst & Young LLP

25 Churchill Place

Canary Wharf

London

E14 5EY

Report of the Directors of the Managing Agent

The Directors of the Managing Agent, Talbot Underwriting Ltd (TUL), present the annual report and audited accounts of Syndicate 2478 (the Syndicate) for the year ended 31 December 2025. The annual report is prepared using the annual basis of accounting as required by Regulation 5 of the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008.

The comments below refer to both information prepared on an annual accounting basis and information derived from a Lloyd’s underwriting year of account basis. The latter is included where it is used to manage the business.

Principal activity

The principal activity of the Syndicate is to build a balanced reinsurance portfolio across classes of business and geographies, exclusively from taking select shares on AIG outwards reinsurance treaties. The Syndicate commenced underwriting on 1 January 2025 and is supported by third-party capital from funds managed by Blackstone through the Lloyd’s London Bridge 2 PCC structure. Blackstone is the investment manager for the Syndicate’s investment portfolio.

Results for the financial year

The result for the year was a profit of $211.0m. The Syndicate’s key financial performance indicators during the year were as follows:

2025

Gross premiums written

714.1

Net premiums written

714.1

Net earned premiums

418.9

Underwriting result

208.9

Investment return

1.9

Profit/(loss) for the financial year

211.0

Net claims ratio (%)1

42.2%

Net expense ratio (%)2

7.9%

Combined ratio (%)3

50.1%

1 The ratio of net claims incurred to net earned premiums.

2 The ratio of net operating expenses (both net acquisition costs and administrative expenses) to net earned premiums.

3 The total of net claims incurred and net operating expenses as a percentage of net earned premiums.

Report of the Directors of the Managing Agent (continued)

Review of the business

Underwriting

Gross premiums written for the Syndicate’s first year were $714.1m, with an underwriting result of $208.9m and a combined ratio of 50.1%.

The Syndicate commenced underwriting on 1 January 2025 and writes business with an inception date of either 1 January or 1 June. Settlement of premium follows the receipt of a half yearly bordereau, with the first settlement to the Syndicate received in the second half of 2025 following the processing of the 30 June 2025 bordereau.

Gross premiums written

Gross premiums written by class of business for the calendar year were as follows:

2025

Casualty

197.5

Financial lines

125.1

Property

268.0

Specialty

123.5

Total gross premiums written

714.1

Net claims

The net claims ratio for the year was 42.2%. Net claims incurred as a percentage of net earned premiums were as follows:

2025

Current year claims ratio – attritional (%)

36.1%

Current year claims ratio – catastrophe (%)

6.1%

Change in prior years’ net claims ratio (%)

Net claims ratio (%)

42.2%

The current year attritional loss ratio of 36.1% reflects favourable experience on shorter tail business.

Catastrophe losses in the year contributed 6.1% to the net claims ratio. Overall catastrophe losses have been favourable to expectation.

Report of the Directors of the Managing Agent (continued)

Net operating expenses

Net operating expenses for the year are set out below:

2025

Net acquisition costs ($m)

24.0

Administrative expenses ($m)

9.0

Net operating expenses ($m)

33.0

As % of net earned premiums

Net acquisition expense ratio (%)

5.7

Administrative expense ratio (%)

2.2

Net expense ratio (%)

7.9

Administrative expenses comprise Lloyd’s costs and managing agency fees.

Investment return

The return on Syndicate funds is shown below:

2025

Average Syndicate funds available for investment ($m)1

215.0

Annualised calendar year investment return (%)2

4.6%

Deployment and investment of funds, managed by Blackstone, commenced during the fourth quarter of 2025. Net investment return was a profit of $1.9m, including income from investments of $2.5m net of investment expenses of $0.6m. The annualised investment return, exclusive of investment expenses, was 4.6%. Refer to note 9 for further details of investment income and expenses.

Financial position

The Syndicate’s member’s balance was $211.0m at 31 December 2025. The main components of the balance sheet are financial investments and technical provisions.

Reinsurance debtors reflect amounts due from AIG in accordance with the timing of bordereau settlements into the Syndicate. At 31 December 2025, debtors arising out of reinsurance operations were $443.6m and are not yet due. At 31 December 2025, the fair value of financial investments was $234.2m. The portfolio composition, as well as further details on valuation methodology, is included in note 10.

Technical provisions include a provision for claims outstanding of $176.8m and a provision for unearned premiums of $295.2m. Refer to note 2 for further details on the reserving methodologies used for claims provisions and the judgements and uncertainties involved.

1 Average funds available for investment represents the average investment balances held during the fourth quarter of 2025.

2 Investment return for the year represents an annualised return, exclusive of investment expenses.

Report of the Directors of the Managing Agent (continued)

Capital

An internal capital model is used to set the Syndicate’s capital. The Syndicate is managed by TUL and complies with Lloyd’s capital setting processes, which are described in more detail in note 4H.

Lloyd’s unique capital structure is designed to provide financial security to policyholders and capital efficiency for members. Lloyd’s is A+ rated by A.M. Best, AA- by Fitch Ratings, AA- by Kroll Bond Rating Agency and AA- by Standard & Poor’s. This chain of security provides the financial strength that ultimately backs the insurance written through Lloyd’s.

Key components of the Lloyd’s capital structure are as follows:

•All premiums received by Syndicates are held in trust;

•Every member is required to hold capital at Lloyd’s known as Funds at Lloyd’s (FAL); and

•Central assets are available at the discretion of the Council of Lloyd’s to meet any valid claim that cannot be met from the resources of any member.

Both the 2025 and 2026 underwriting years of account plans are fully capitalised.

Future developments and outlook

Following the Syndicate launch at the start of 2025, a program of work has been completed in order to operationalise the Syndicate. This has been overseen by the TUL Board of Directors and the Syndicate’s Steering Committee. This committee is responsible for providing overall strategic direction, governance oversight and decision-making support in relation to the Syndicate’s operations and performance.

The Syndicate has entered its second year of operation following the renewal of its reinsurance agreement with AIG on 1 January 2026.

Principal risks and uncertainties

The principal risks and uncertainties to the Syndicate are insurance, financial, operational and climate risks. A description of these principal risks and uncertainties, as well as details around TUL’s wider risk management framework is set out in note 4 to the financial statements (risk and capital management).

TUL is the managing agent for the Syndicate and the Syndicate’s risk processes follow the established processes set up and used elsewhere across TUL.

Report of the Directors of the Managing Agent (continued)

Directors

The Directors of the Managing Agent during the period from 1 January 2025 to the date of this report were as follows:

EL Woolley

(Chief Executive Officer, appointed 26 May 2025)

JG Ross

(Chief Risk Officer)

RE Bean

(Chief Underwriting Officer)

RD Cowling

(Chief Financial Officer)

ME Hind

(Independent Non-executive)

DJ Batchelor

(Independent Non-executive)

P Bergamaschi

KA Coates

(Independent Non-executive, appointed 20 October 2025)

(Independent Non-executive)

JL Hancock

(Non-executive, shareholder representative)

CJ Flatt

(Non-executive, shareholder representative, appointed 11 September 2025)

Former Directors who served during the period from 1 January 2025 to the date of this report were as follows:

CJR Rash

(Chief Executive Officer, resigned 26 May 2025)

Active Underwriter

RE Bean(Resigned 18 November 2025)

G Goodey(Appointed 18 November 2025)

Company Secretary

JP Middleton(Resigned 11 September 2025)

A Akisanya(Appointed 11 September 2025, resigned 31 December 2025)

K Guérin(Appointed 31 December 2025)

Statutory Information

Disclosure of information to auditors

The Directors of the Managing Agent who held office at the date of approval of this report confirm that, so far as they are each aware, there is no relevant audit information of which the Syndicate’s auditors are unaware; and each Director has taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Syndicate’s auditors are aware of that information.

Statement of Managing Agent’s Responsibilities

The Directors of the Managing Agent are required by the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 to prepare Syndicate annual accounts at 31 December each year, which 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 year. The Directors have elected to prepare the Syndicate annual accounts in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 “The Financial Reporting Standard Applicable in the UK and Republic of Ireland” (FRS 102), Financial Reporting Standard 103 “Insurance Contracts” (FRS 103) and the Lloyd’s Syndicate Accounts Instructions version 3.1 as modified by the Frequently Asked Questions version 1.1 issued by Lloyd’s.

The Directors must not approve the 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 accounts, the Directors 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, including FRS 102 and FRS 103, have been followed, subject to any material departures disclosed and explained in the Syndicate annual accounts; and

•prepare the Syndicate annual accounts on the basis that the Syndicate will continue to write business unless it is inappropriate to presume that the Syndicate will do so.

The Directors of the Managing Agent confirm that they have complied with the above requirements in preparing the Syndicate annual accounts.

The Directors of the Managing Agent are responsible for;

•keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Syndicate and enable them to ensure that its accounts comply with the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008;

•safeguarding the assets of the Syndicate and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities; and

•the preparation and review of the iXBRL tagging that has been applied to the Syndicate annual 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.

We confirm that to the best of our knowledge the Syndicate annual accounts, including the iXBRL tagging applied to these accounts, comply with the requirements of the Lloyd’s Syndicate Accounts Instructions version 3.1 as modified by the Frequently Asked Questions version 1.1 issued by Lloyd’s.

Approved by the Board of Directors and signed on behalf of the Board.

RD Cowling, Chief Financial Officer

20 February 2026

Independent auditor’s report to the members of

Syndicate 2478

Opinion

We have audited the syndicate annual accounts of syndicate 2478 (‘the syndicate’) for the year ended 31 December 2025 which comprise the Statement of profit or loss and other comprehensive income, the Balance sheet, the Statement of Members’ Balances, the Statement of cash flows and the related notes 1 to 18, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law including The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, United Kingdom Accounting Standards including FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ and FRS 103 ‘Insurance Contracts’ (‘United Kingdom Generally Accepted Accounting Practice’), and Section 1 of the Lloyd’s Syndicate Accounts Instructions V3.1 as modified by the Frequently Asked Questions Version 1.1 issued by Lloyd’s (‘the Syndicate Accounts Instructions’).

In our opinion, the syndicate annual accounts:

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

•have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

•have been prepared in accordance with the requirements of The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the Syndicate Accounts Instructions.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)), The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, the Syndicate Accounts Instructions, and other applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the syndicate annual accounts section of our report. We are independent of the syndicate in accordance with the ethical requirements that are relevant to our audit of the syndicate annual accounts in the UK, including the FRC’s Ethical Standard as applied to other entities of public interest, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the syndicate’s ability to continue as a going concern for a period of 12 months from when the syndicate annual accounts are authorised for issue.

Our responsibilities and the responsibilities of the directors of the managing agent with respect to going concern are described in the relevant sections of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the syndicate’s ability to continue as a going concern.

Independent auditor’s report to the members of Syndicate 2478 (continued)

Other information

The other information comprises the information included in the annual report and accounts, other than the syndicate annual accounts and our auditor’s report thereon. The directors of the managing agent are responsible for the other information contained within the annual report and accounts

Our opinion on the syndicate annual accounts does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the syndicate annual accounts or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the syndicate annual accounts themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008

In our opinion, based on the work undertaken in the course of the audit:

•the information given in the managing agent’s report for the financial year in which the syndicate annual accounts are prepared is consistent with the syndicate annual accounts; and

•the managing agent’s report has been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the syndicate and its environment obtained in the course of the audit, we have not identified material misstatements in the managing agent’s report.

We have nothing to report in respect of the following matters where The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 requires us to report to you, if in our opinion:

•the managing agent in respect of the syndicate has not kept adequate accounting records; or

•the syndicate annual accounts are not in agreement with the accounting records; or

•certain disclosures of the managing agent’s emoluments specified by law are not made; or

•we have not received all the information and explanations we require for our audit.

Responsibilities of the directors of the managing agent

As explained more fully in the Statement of Managing Agent’s Responsibilities set out on page 10, the directors of the managing agent are responsible for the preparation of the syndicate annual accounts and for being satisfied that they give a true and fair view, and for such internal control as they determine is necessary to enable the preparation of the syndicate annual accounts that are free from material misstatement, whether due to fraud or error.

In preparing the syndicate annual accounts, the directors of the managing agent are responsible for assessing the syndicate’s ability to continue in operation, disclosing, as applicable, matters related to its ability to continue in operation and using the going concern basis of accounting unless the directors

Independent auditor’s report to the members of Syndicate 2478 (continued)

of the managing agent either intends to cease to operate the syndicate, or has no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the syndicate annual accounts

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

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the managing agent and management.

Our approach was as follows:

•We obtained a general understanding of the legal and regulatory frameworks that are applicable to the syndicate and determined that the most significant are direct laws and regulations related to elements of Lloyd’s Byelaws and Regulations, and the financial reporting framework (UK United Kingdom Generally Accepted Accounting Practice), and requirements referred to by Lloyd’s in the Syndicate Accounts instructions. Our considerations of other laws and regulations that may have a material effect on the syndicate annual accounts included permissions and supervisory requirements of Lloyd’s of London, the Prudential Regulation Authority (‘PRA’) and the Financial Conduct Authority (‘FCA’).

•We obtained a general understanding of how the syndicate is complying with those frameworks by making enquiries of management, internal audit, and those responsible for legal and compliance matters of the syndicate. In assessing the effectiveness of the control environment, we also reviewed significant correspondence between the syndicate, Lloyd’s of London and other UK regulatory bodies; reviewed minutes of the Board and Committees of the managing agent; and gained an understanding of the managing agent’s approach to governance.

•For direct laws and regulations, we considered the extent of compliance with those laws and regulations as part of our procedures on the related syndicate annual accounts’ items.

•For both direct and other laws and regulations, our procedures involved: making enquiries of the directors of the managing agent and senior management for their awareness of any non-compliance of laws or regulations, enquiring about the policies that have been established to prevent non-compliance with laws and regulations by officers and employees, enquiring about the managing agent’s methods of enforcing and monitoring compliance with such policies, and inspecting significant correspondence with Lloyd’s, the PRA and the FCA.

Independent auditor’s report to the members of Syndicate 2478 (continued)

•The syndicate operates in the insurance industry which is a highly regulated environment. As such the Senior Statutory Auditor considered the experience and expertise of the engagement team to ensure that the team had the appropriate competence and capabilities, which included the use of specialists where appropriate.

•We assessed the susceptibility of the syndicate’s annual accounts to material misstatement, including how fraud might occur by considering the controls that the directors of the managing agent have established to address risks identified by them, or that otherwise seek to prevent, deter or detect fraud. We also considered areas of significant judgement, complex transactions, performance targets, economic or external pressures and the impact these have on the control environment. Where this risk was considered to be higher, we performed audit procedures to address each identified fraud risk. These procedures included testing manual journals and were designed to provide reasonable assurance that the syndicate annual accounts were free from fraud or error.

A further description of our responsibilities for the audit of the annual accounts is located on the Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Other matter

Our opinion on the syndicate annual accounts does not cover the iXBRL tagging included within these syndicate annual accounts, and we do not express any form of assurance conclusion thereon.

Use of our report

This report is made solely to the syndicate’s members, as a body, in accordance with The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008. Our audit work has been undertaken so that we might state to the syndicate’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the syndicate and the syndicate’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Michael Purrington (Senior statutory auditor)

for and on behalf of Ernst & Young LLP, Statutory Auditor

London

20 February 2026

Statement of profit or loss and other comprehensive income

Technical account – General business

For the year ended 31 December 2025

Note

2025

$000

Gross premiums written

714,093

Outwards reinsurance premiums

Premiums written, net of reinsurance

714,093

Changes in unearned premium

Change in the gross provision for unearned premiums

(295,192)

Change in the provision for unearned premiums, reinsurers’ share

Net change in provisions for unearned premiums

(295,192)

Earned premiums, net of reinsurance

418,901

Allocated investment return transferred from the non-technical account

1,932

Claims paid

Gross amount

(142)

Reinsurers’ share

Net claims paid

(142)

Change in the provision for claims

Gross amount

(176,817)

Reinsurers’ share

Net change in provisions for claims

(176,817)

Claims incurred, net of reinsurance

(176,959)

Net operating expenses

(33,009)

Balance on the technical account – general business

210,865

Statement of profit or loss and other comprehensive income

Non-technical account – General business

For the year ended 31 December 2025

There was no other comprehensive income or expense in the current year.

The accompanying notes from page 21 to 44 form an integral part of these financial statements.

Note

2025$000

Balance on the technical account – general business

210,865

Investment income

2,489

Realised gains/(losses) on investments

Unrealised gains/(losses) on investments

Investment expenses and charges

(557)

Total investment return

1,932

Allocated investment return transferred to the general business technical account

(1,932)

Gain/(loss) on foreign exchange

105

Profit/(loss) for the financial year

210,970

Total comprehensive income/(loss) for the year

210,970

Balance sheet – Assets

As at 31 December 2025

Note

2025$000

Investments

Financial investments

234,247

Total Investments

234,247

Debtors

Debtors arising out of reinsurance operations

443,624

Other debtors

Total Debtors

443,654

Other Assets

Cash at bank and in hand

592

Total Other assets

592

Prepayments and accrued income

Accrued interest and rent

Deferred acquisition costs

6,667

Total Prepayments and accrued income

6,667

Total assets

685,160

Talbot Underwriting Ltd | Lloyd’s Syndicate 2478Annual Report and Accounts for the year ended 31 December 2025

Balance sheet – Liabilities

As at 31 December 2025

Note

2025$000

Capital and reserves

Member’s balances

210,970

Total capital and reserves

210,970

Technical provisions

Provision for unearned premiums

295,192

Claims outstanding

176,817

Total Technical provisions

472,009

Creditors

Other Creditors

Total Creditors

Accruals and deferred income

Accruals

2,181

Total liabilities

474,190

Total liabilities, capital and reserves

685,160

The accompanying notes from page 21 to 44 form an integral part of these financial statements.

The financial statements on pages 15 to 44 were approved by the Board of Directors on 13 February 2026 and were signed on its behalf by;

RD Cowling, Chief Financial Officer

20 February 2026

Statement of changes in member’s balances

For the year ended 31 December 2025

2025$000

Member’s balances brought forward at 1 January

Total profit for the year

210,970

Member’s balances carried forward at 31 December

210,970

The member participates on the Syndicate by reference to underwriting year of account.

Statement of cash flows

For the year ended 31 December 2025

Note

2025$000

Cash flows from operating activities

Profit for the financial year

210,970

Adjustments:

Increase/(decrease) in gross technical provisions

472,009

(Increase)/decrease in debtors

(443,654)

Increase/(decrease) in creditors

Movement in other assets/liabilities

(4,486)

Investment return

(1,932)

Other

(106)

Net cash flows from operating activities

232,801

Cash flows from investing activities

Purchase of equity and debt instruments

(207,580)

Sale of equity and debt instruments

Investment income received

164

Other

(1,264)

Net cash flows from investing activities

(208,680)

Net increase/(decrease) in cash and cash equivalents

24,121

Cash and cash equivalents at the beginning of the year

Foreign exchange on cash and cash equivalents

(448)

Cash and cash equivalents at the end of the year

23,673

Notes to the financial statements

1.Basis of preparation

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

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

Going concern

The Syndicate has financial resources to meet its financial needs and manage its portfolio of insurance risk. The directors have continued to review the business plans, ability to meet obligations as they fall due 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 underwriting 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. 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. The going concern period under assessment extends until 12 months from the date the financial statements are approved and signed by the directors.

2.Use of judgements and estimates

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

The Syndicate makes critical judgements, estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

Premium estimates

Significant estimates include premium written and the earning pattern to recognise premium over the life of the policy.

The Syndicate writes annually incepting quota share and excess of loss reinsurance contracts. Premium written is initially based on estimated premium income (EPI) recognised in full at inception based on what will be ultimately written under the contract. EPI, and therefore written premium, is then adjusted as the underwriting year develops and as new information becomes available. A source of uncertainty arises from the fact that, at any given point in time, the EPI could be different to final signed premium, thereby leading to an adjustment that could be material in aggregate at a whole account level. Any over or under estimation is reflected through increases or decreases in the period as and when signed premiums are received.

Notes to the financial statements (continued)

The majority of premium estimation arises from the annually incepting quota share business, where the premium amounts are dependent on the volume of policies that attach over the coverage period.

For losses occurring during policies, premiums typically are earned on a straight-line basis over the life of each policy. For risks attaching during policies, premiums are earned evenly over the policy period from the point those underlying risks attach to the contract. At a whole account level this is considered to provide a reasonable estimate for the full year of the pattern of risk over the coverage period.

Claims provisions

Significant estimates include the estimate for insurance losses incurred but not reported (IBNR), which is included in claims outstanding in the balance sheet. If this estimation were to prove inadequate, then a loss would arise in future years. The total gross IBNR at 31 December 2025 is $175,201k.

The process for estimating claims provisions considers key sources of uncertainty around the following:

•Future development of inward claims, both reported but unsettled, and ultimate IBNR;

•Estimates of claims liabilities for catastrophe events;

•The splits of future claim liabilities between earned and unearned exposures.

These significant estimates are made using data, assumptions, models and expert judgement by actuarial, claims and underwriting personnel and adopted only after suitable discussion and challenge from management, through the Reserve Committee and the Audit Committee. The Syndicate also receives broker modelling of the in-force programme. The data and analysis used includes annual detailed reviews of actuarial assumptions used in the reserving model, including discussion of the impact of any material changes in the business mix, rate movements, underwriting strategies etc., on these assumptions.

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.Gross premiums written

Gross premiums written reflect inwards reinsurance business written during the period, gross of commission payable to intermediaries, and exclude any taxes or duties based on premiums.

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 reinsurance contract.

C.Acquisition costs

Certain costs incurred in acquiring general insurance contracts are deferred. Acquisition costs include direct costs such as brokerage. The deferred acquisition cost asset represents the proportion of acquisition costs which corresponds to the proportion of gross premiums written that is unearned at the balance sheet date.

D.Claims provisions

Claims incurred comprise claims 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.

Notes to the financial statements (continued)

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). 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.

E.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 at the whole account level and by underwriting year of account, after taking into account relevant investment return. There are no unexpired risk provisions to be reported at 31 December 2025.

F.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.

G.Financial assets and liabilities

In applying FRS 102, the Syndicate has chosen to apply the recognition and measurement provisions of Chapters 11 and 12 of FRS 102.

i.Classification

The accounting classification of financial assets and liabilities determines the way in which they are measured and changes in those values are presented in the statement of profit or loss and other comprehensive income. Financial assets and liabilities are classified on their initial recognition.

The initial classification of a financial instrument shall take into account contractual terms including those relating to future variations. Once the classification of a financial instrument is determined at initial recognition, re-assessment is only required subsequently when there has been a modification of contractual terms that is relevant to an assessment of the classification.

Financial assets and financial liabilities at fair value through profit and loss comprise financial assets and financial liabilities held for trading and those designated as such on initial recognition. Investments in debt and other fixed income securities are designated as at fair value through profit or loss on initial recognition, as they are managed on a fair value basis in accordance with the Syndicate’s investment strategy.

Deposits with credit institutions, debtors, and accrued interest are classified as loans and receivables.

Notes to the financial statements (continued)

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.

Purchases and sales of financial assets are recognised and derecognised, as applicable, on the trade date, i.e. the date that the Syndicate commits itself to purchase or sell the asset.

iii.Measurement

A financial asset or financial liability is measured initially at fair value plus, for a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue.

Financial assets at fair value through profit or loss are measured at fair value with fair value changes recognised immediately in profit or loss. Net gains or net losses on financial assets measured at fair value through profit or loss include foreign exchange gains/losses arising on their translation to the functional currency but exclude interest and dividend income.

Loans and receivables and financial liabilities are measured at amortised cost.

Note 10 to the financial statements contains further details on the nature of the investments as well as the fair value hierarchy levelling of the investment portfolio.

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 of 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.

Impairment losses on available for sale financial assets are recognised by reclassifying the losses accumulated in other comprehensive income to profit or loss. The net cumulative loss that is reclassified from other comprehensive income to profit or loss is the difference between the acquisition cost, net of any principal repayment, and the current fair value, less any impairment loss recognised previously in profit or loss. If, in a subsequent period, the fair value of an impaired available for sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised, the impairment loss is reversed through profit or loss. Otherwise, it is reversed through the statement of comprehensive income.

v.Off-setting

Financial assets and financial liabilities are offset, and the net amount presented in the balance sheet when, and only when, the Syndicate has a legal right to set off the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

H.Investment return

Investment return comprises investment income and movements in unrealised gains and losses on financial instruments at fair value through profit or loss, less investment management expenses, interest expense, realised losses and impairment losses. Investment income comprises interest income, dividends receivable and realised investment gains.

Notes to the financial statements (continued)

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.

Investment return is initially recorded in the non-technical account. The return is typically transferred in full to the general business technical account to reflect the investment return on funds supporting underwriting business.

I.Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in fair value and are used by the Syndicate in the management of its short-term commitments.

Cash and cash equivalents are carried at amortised cost in the balance sheet.

Bank overdrafts that are repayable on demand and form an integral part of the Syndicate’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

J.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 other overseas tax payable by the member on underwriting results.

K.Operating expenses

As this is the first year of the Syndicate operating, all expenses are allocated to the 2025 year of account. Expenses are recognised on an accruals basis.

L.Debtors and creditors

Reinsurance debtors and creditors include amounts due to and from brokers and contract holders. These are classified as reinsurance debtors and creditors as they are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market.

Other debtors principally consist of sundry debtors and are carried at amortised cost.

Other creditors principally consist of amounts due to related entities and other sundry payables. These are stated at amortised cost.

Notes to the financial statements (continued)

M.Classification of reinsurance contracts

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 transfer significant insurance risk and therefore are recognised as insurance contracts.

4.Risk and capital management

A.Introduction and overview

This note presents information about the nature and extent of insurance, financial, operational and climate change 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.

B.Risk governance

The Managing Agent for the Syndicate, TUL, is responsible for the management of risk at the Syndicate level. The Board has overall responsibility for the establishment and oversight of the Syndicate’s risk management framework. Risk management policies and procedures are established to identify and analyse the risks faced by the Syndicate, to set appropriate risk appetite, limits and controls, and to monitor risks and adherence to limits. 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.

Risk oversight by the Board Risk and Compliance Committee is supplemented by specific risk oversight from two other Board sub-committees: the Audit Committee for reserving, financial reporting, market, credit and liquidity risks; and the People and Remuneration Committee for people risks.

All material risks are recorded on a comprehensive risk register for the Syndicate and TUL and are managed by the business in line with the established set of risk appetite limits, risk policies and procedures, monitoring and mitigations, enabling new risks to be identified and new controls to be put in place as necessary either to reduce the likelihood of a risk event or to mitigate its impact once it has happened.

Executive oversight of the risk management framework is delegated to the Chief Executive Officer, who is responsible for ensuring that risk management is embedded as part of TUL’s culture and that risks are properly managed and mitigated through appropriate controls, operating effectively.

The Chief Executive Officer has formed an Executive Committee to support the discharge of the duties delegated from the Board. The Executive Committee oversees the management of the key risks with regard to strategy and relationships with key stakeholders and has established a number of management committees that support oversight of how risk is managed by the business including the following:

•Syndicate 2478 Steering Committee (responsible for general oversight of the Syndicate);

•Insurance Management Committee (responsible for overseeing underwriting operational risks);

•Reserve Committee (responsible for overseeing reserve risk);

•Aggregation Risk Committee (responsible for overseeing systemic risk);

•Finance Committee (responsible for overseeing credit risk (excluding investments), liquidity risk, currency matching risk and financial reporting and process risk);

Notes to the financial statements (continued)

•Sustainability Committee (responsible for developing and embedding the framework for overseeing climate change risk);

•Investment Committee (responsible for overseeing market risk and credit risk with regard to investments);

•Operational Risk Committee (responsible for overseeing operational risks); and

•Internal Model Governance Committee (responsible for overseeing the Internal Model).

C.Insurance risk

Insurance risk is defined as the risk of actual claims experience and/or policyholder behaviour being materially different than initially expected at the inception of an insurance contract or at the latest valuation. Uncertainties related to insurance risk can lead to deviations in magnitude and/or time of prospective cash flows associated with the Syndicate’s liabilities compared to what is expected.

Insurance risk can be categorised into underwriting risk and reserve risk.

a.Underwriting risk

Underwriting risk is the risk that in aggregate insurance premiums will not be sufficient to cover future insurance claims and associated expenses. This might arise because premiums are set too low for the cover provided, or because the actual timing, frequency, severity or aggregation of claims events is higher than was expected during the underwriting process.

i.Management of underwriting risk

Underwriting risk arises from differences in timing, frequency and severity of insured events, relative to expectations at the time of underwriting, as well as inappropriate pricing, selection and approval of insurance risks. Underwriting strategy is established by management and agreed by the Board through the annual Syndicate business planning process. The annual Syndicate business plan is submitted to Lloyd’s for approval each year. Underwriting is aligned with the Syndicate’s strategy, agreed business plan and underwriting policy. TUL oversees that the risks bound under the quota share reinsurance agreement are in accordance with agreed reinsurance guidelines and contractual terms.

The nature of the business exposes the Syndicate to various kinds of natural disaster, such as hurricanes, windstorms, hailstorms, flooding, earthquakes, wildfires, and other catastrophes, in which multiple losses can occur and affect multiple lines of business in any given year. TUL’s Risk Appetite Framework establishes and maintains appropriate limits on the material risks identified. A significant proportion of the natural catastrophe-related risks that are underwritten are renewed on an annual basis. Third-party risk models are used to help better understand the frequency and severity of natural catastrophe risk. For weather perils, models are used for the following natural catastrophe perils: (1) cyclones, typhoons and hurricanes; (2) storm surge; (3) earthquakes; (4) flooding; (5) wildfires; (6) severe convective storms; and (7) extratropical storms. TUL incorporates catastrophe risk in the Internal Model and this includes validation and governance around model selection, model peril evaluation, model use, and model change.

b.Reserve risk

Reserve risk is the risk that the reserves established in respect of insurance claims and claim expenses incurred at the balance sheet date, whether reported or incurred but not reported (IBNR), are insufficient to settle those claims and associated expenses in full. The level of uncertainty in the reserves set can vary significantly across lines of business. It can arise from inadequate reserving data and processes or from the naturally uncertain progress of insurance events.

Notes to the financial statements (continued)

i.Management of reserve risk

Reserving analysis is carried out at least annually to estimate the mean of the distribution of all possible outcomes, which should lie within a range of reasonable best estimates. These projections include an analysis of claims development compared to the previous best estimate projections.

The reserving exercise considers non-catastrophe and catastrophe claims separately. Aggregate IBNR for non-catastrophe claims is generally estimated using standard actuarial projection methodologies across the quota share and excess of loss treaties, incorporating reported experience to date. For major catastrophe losses, ultimate loss estimates are based on exposure modelling, cedant updates, broker input and other publicly available information. Benchmarking is also carried out where appropriate to validate the reserve estimates.

The Syndicate’s reserves are reviewed and approved, quarterly, by the TUL Reserve Committee, reporting to the Executive Committee, and overseen by the Audit Committee. The Reserve Committee and Audit Committee are responsible for setting, overseeing and challenging the level of reserves held in the Syndicate. The work of the actuarial team is carried out in compliance with the relevant principles, guidance and rules published by Lloyd’s, with the formal Actuarial Professional Standards published by the Institute and Faculty of Actuaries, and with the Technical Actuarial Standards published by the Financial Reporting Council (FRC).

Note 2 contains additional details around the key judgements and uncertainties involved in the estimate for claims provisions as well as how these are managed and overseen. Note 14 includes further detail on claims provisions and claims development triangles.

ii.Sensitivity to reserve risk

The reserves established could ultimately prove to be significantly lower or higher than the actual cost of settling the claims arising. This level of uncertainty varies between classes of business and the nature of the risk being underwritten and can arise from developments in case reserving for large losses and catastrophes, or from changes in estimates of claims IBNR.

The following table illustrates the sensitivity of the insurance reserves disclosed in the accounts to movements in the assumptions applied within the reserving process. Given the nature of the business underwritten by the Syndicate, the approach to calculating the reserves 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.

General insurance business sensitivities as at 31 December 2025

Sensitivity

+5.0%$000

-5.0%$000

Claims outstanding – gross of reinsurance

(35,705)

35,705

Claims outstanding – net of reinsurance

(35,705)

35,705

Notes to the financial statements (continued)

D.Financial risk

The focus of financial risk management for the Syndicate is ensuring that the proceeds from its financial assets are sufficient to fund the obligations arising from its insurance contracts. The goal of the investment management process is to optimise the risk-adjusted investment income and risk-adjusted total return by investing in a diversified portfolio of securities, whilst ensuring that the syndicate can meet its liabilities as they fall due.

a.Credit risk

Credit risk is defined as the risk that the Syndicate’s policyholders or counterparties are unable or unwilling to repay their contractual obligations when they become due. Credit risk may also result from a downgrade of a counterparty’s credit ratings or a widening of its credit spreads.

The Syndicate is primarily exposed to credit risk across its investment portfolio.

i.Management of credit risk

Investment counterparties

The Syndicate manages the levels of credit risk it accepts by placing limits on its exposure to a single counterparty, or groups of counterparties, and monitoring its exposure to regions, countries and industries. Such risks are subject to regular review.

Credit exposures are calculated regularly and compared with authorised limits to ensure adherence to ratings and issuer limits set out in the investment guidelines. Credit risk within the investment funds is managed through the credit research carried out by the investment managers. The investment guidelines are designed to mitigate credit risk by setting minimum credit worthiness of investments and ensuring diversification of the holdings.

Broker and coverholder counterparties

The business underwritten is entirely placed through Aon plc, which has a credit rating of A-.

The reinsuring counterparties are group entities of AIG, which is A rated by A.M. Best and AA- by Fitch Ratings and Standard & Poor’s.

The Syndicate has no premiums receivable that are past due at the reporting date.

ii.Exposure to credit risk

The carrying amount of financial assets represents the maximum credit risk exposure.

The following table analyses the credit rating by investment grade of the Syndicate’s following assets:2025

AAA$000

AA$000

A$000

BBB$000

Other$000

Not rated$000

Total$000

Shares and other variable yield securities and units in unit trusts

23,081

122,218

2,471

85,216

232,986

Lloyd’s overseas deposits

822

256

125

1,261

Debtors arising out of reinsurance operations

443,624

Cash at bank and in hand

592

Other debtors

Total

23,903

122,276

446,943

125

85,246

678,493

Notes to the financial statements (continued)

iii.Financial assets that are past due or impaired

There are no assets that are past due at the reporting date.

Neither past due nor impaired assets

Total

2025

$000

Shares and other variable yield securities and units in unit trusts

232,986

Lloyd’s overseas deposits

1,261

Debtors arising out of reinsurance operations

443,624

Cash at bank and in hand

592

Other debtors

Total

678,493

b.Liquidity risk

Liquidity risk is defined as the risk that the Syndicate's financial condition will be adversely affected by the inability or perceived inability to meet its short-term cash, collateral or other financial obligations as they fall.

The Syndicate settles its claims via a half yearly bordereau settlement for which claims are netted against premiums received. In addition, liquid assets are held to be available to satisfy liabilities that would require settlement in cash.

i.Management of liquidity risk

The Syndicate’s approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when they fall due, under both normal and stressed conditions.

The Syndicate’s approach to managing its liquidity risk is as follows:

•Forecasts are prepared and reviewed on a regular basis to predict cash outflows from half yearly settlements, based on underlying reinsurance treaty contracts over the short, medium and long term, in both normal and stressed circumstances;

•Claims payments are netted off from premium before this is received;

•The Syndicate regularly reviews stress tests to ensure that adequate financial resources are in place to meet obligations as they fall due in the event of reasonably foreseeable abnormal circumstances.

•The Syndicate retains an amount of liquid resources to ensure it can cover forecast liabilities that would require settlement in cash over the foreseeable future.

•Assets can be transferred from the investment portfolio to the Syndicate to fund liabilities as needed.

•Syndicate cash flow forecasts are reviewed periodically by the Investment Committee.

•Liquidity is monitored by the Investment Committee to ensure adherence to the liquid asset allocation within the investment guidelines.

TUL reviews current and forecast liquidity requirements and is satisfied the Syndicate can meet all obligations for at least the next 12 months. All modelled stress scenarios remain within appetite.

Notes to the financial statements (continued)

ii.Maturity analysis of syndicate liabilities

The maturity analysis presented in the table below shows the remaining contractual maturities for the Syndicate’s insurance contracts and financial instruments. For insurance and reinsurance contracts, the contractual maturity is taken to be the estimated date when the final gross undiscounted contractually required cash flows will occur. For financial liabilities, it is taken to be 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.

At 31 December 2025, the average duration of Syndicate funds to maturity was 2.7 years compared to 4.3 years for Syndicate claims outstanding.

Undiscounted net cash flows

2025

No maturity stated$000

0-1 yrs$000

1-3 yrs$000

3-5 yrs$000

>5 yrs$000

Total$000

Claims outstanding

28,056

61,004

43,253

44,504

176,817

Creditors

Total

28,056

61,004

43,253

44,504

176,817

c.Market risk

Market risk is defined as the risk of adverse impact due to systemic movements in one or more of the following market risk drivers: equity and commodity prices, residential and commercial real estate values, interest rates, credit spreads, foreign exchange, inflation, and their respective levels of uncertainty. Market risk can also be influenced by political turmoil, natural disasters, and terrorist attacks.

The objective of market risk management is to manage and control market risk exposure within the Board’s risk appetite, while optimising the return on risk subject to preserving capital.

i.Management of market risks

For each of the major components of market risk the Syndicate has policies and procedures in place which detail how each risk should be managed and monitored. The management of each of these major components of major risk and the exposure of the Syndicate at the reporting date to each major risk are outlined below.

Interest rate risk

This is the risk that an increase in interest rates or volatility in the fixed income markets could result in significant unrealised or realised losses in the market value of the investment portfolio. The Syndicate is exposed to interest rate risk arising on interest bearing assets. Assets with floating interest rates expose the Syndicate to cash flow interest rate risk. Fixed interest rate assets expose the Syndicate to fair value risk. The investment portfolios are actively managed to achieve a balance between cash flow interest rate risk and fair value interest rate risk.

Currency risk

This is the risk that foreign exchange rate movements could impact the valuation of assets and liabilities in the Syndicate’s reporting currency. The Syndicate’s results are reported in US dollars and assets and liabilities are held primarily in US dollars. Therefore, there is minimal risk that fluctuations in exchange rates would have a significant effect on the Syndicates results and net assets.

Notes to the financial statements (continued)

The profile of the assets and liabilities, categorised by currency at their translated carrying amounts is as follows:

Sterling

US dollar

Euro

Canadian dollar

Total

2025

$000

Financial Investments

224,544

9,703

234,247

Debtors

443,624

443,654

Other assets

233

294

592

Prepayments and accrued income

6,667

Total assets

263

675,129

9,768

685,160

Technical provisions

(472,009)

Creditors

Accruals and deferred income

(412)

(1,769)

(2,181)

Total liabilities

(412)

(473,778)

(474,190)

Total capital and reserves

149

(201,351)

(9,768)

(210,970)

ii.Sensitivity analysis to market risks

The analysis below considers reasonably possible movements in market indices on financial instruments with all other variables held constant, showing the impact on the profit or loss and on the members’ balance due to the ensuing changes in fair value of financial assets and liabilities (whose fair values are recorded in the profit and loss account).

2025Impact on results before tax$000

2025Impact on

members’

balances$000

Interest rate risk

+ 50 basis points shift in yield curves

(3,120)

- 50 basis points shift in yield curves

3,120

Equity price risk

5 percent increase in equity prices

2,687

Currency risk

10 percent increase in US dollar/Sterling

exchange rate

(15)

10 percent decrease in US dollar/Sterling exchange rate

10 percent increase in US dollar/Canadian dollar exchange rate

958

10 percent decrease in US dollar/Canadian dollar exchange rate

(958)

Notes to the financial statements (continued)

A 10% increase (or decrease) in exchange rates, a 50 basis point increase (or decrease) in yield curves and a 5% increase (or decrease) in equity prices have been selected on the basis that these are considered to be reasonably possible changes in these risk variables over the following year.

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

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

E.Operational risk

Operational risk is defined as the risk of loss, or other adverse consequences, resulting from inadequate or failed internal processes, people, systems, or from external events. Operational risk includes legal, regulatory, technology, compliance, third-party and business continuity risks, but excludes business and strategy risks.

Operational risks are managed by TUL, reported and reviewed quarterly at the Operational Risk Committee, reporting to the Executive Committee, and overseen by the Board’s Risk and Compliance Committee.

During the year, particular attention continued to be focused by TUL on: operationalising the Syndicate following its launch; transformation risk regarding the migration of IT infrastructure and support functions to TUL’s parent, AIG; and operational resilience to maintain ongoing compliance with regulations.

Operationalising the Syndicate

Following the Syndicate launch at the start of 2025, a program of work has been completed in order to operationalise the Syndicate. This has been overseen by the Syndicate 2478 Steering Committee.

The Syndicate underwrites reinsurance treaties from AIG group entities and as such the operating model relies upon information from these entities (as with any typical reinsurance relationship) given the Syndicate reinsures these entities.

Transformation risk

The sale of Validus Re by AIG necessitated an acceleration in the separation of TUL from Validus’ IT infrastructure and support functions and migration to AIG’s. This process involves material transformation risk, which is being carefully managed. Once complete it will facilitate closer strategic and operational alignment of TUL with AIG, including full IT connectivity between TUL and AIG with greater efficiency and reduced duplication of systems, applications and tools. TUL will have reliance on the same third parties as AIG and will benefit from a managed IT infrastructure service, while retaining high-level oversight of the IT environment and overall accountability for the IT infrastructure services provided to TUL by AIG.

Notes to the financial statements (continued)

To effect the transformation, TUL established detailed implementation plans for this work in late 2023 and early 2024, and subsequently began to execute the plans during 2024. The business has put in place dedicated governance, oversight and mitigations for the work and the associated risks, including contingency plans to roll changes back to a prior state if necessary. The work is subject to regular senior management and Board scrutiny and oversight. Execution against the plans has continued successfully throughout 2025 and at the end of the year, all users, data and substantially all applications have been migrated. Three final applications remain in the legacy IT environment and will be migrated in early 2026. The legacy IT environment is anticipated to be decommissioned in the first quarter of 2026.

Operational resilience

A key element of TUL’s operational risk management is to maintain ongoing compliance with operational resilience regulations. TUL achieves this with well-established business continuity and disaster recovery plans in place and an Incident Management team, reporting to the Operational Risk Committee, to oversee execution of these plans and compliance with the PRA’s operational resilience regulations. TUL has maintained these plans as it transitions from locally operated IT services to AIG IT provided services, incorporating resilience by design and extensive testing of applications as it has worked through migrations. TUL has continued to engage with Lloyd’s and the LMA on operational resilience, participating in market tests, and ensuring that TUL complies with Lloyd’s Principles in this area, including ongoing scenario testing and third-party resilience.

F.Climate change risk

The Syndicate is exposed to climate risk through its reinsurance of AIG select treaties across classes of business and geographies.

TUL recognises the material risk that climate change poses to its business and is committed to embedding climate change considerations within its risk management and decision making.

TUL has committed to reaching net zero greenhouse gas (GHG) emissions across its underwriting and investment portfolios by 2050, or sooner, aligned to the commitments of its parent, AIG. TUL’s investment guidelines include having no direct exposure to companies that derive 30 percent or more of their revenues from new thermal coal-fired power plants, thermal coal mines, oil sands or new Arctic energy exploration activities.

TUL has also committed to reducing its own GHG emissions by reviewing energy efficiencies in its facilities, business travel, printing and procurement areas. This is aligned to AIG’s Net Zero Commitments and Climate Transition Plan, published in its 2024 Sustainability Report.

Risks associated with climate change are commonly grouped under physical risks, transitional risks and liability risks.

Physical risks from climate change arise from changing frequency, magnitude and location of severe weather events (e.g. windstorms, floods and wildfires) and longer-term shifts in the climate (e.g. sea level rise, increases in average temperatures and greater variability in weather events).

Physical climate change risks may have financial impacts on the Syndicate, for example through AIG’s ability to underwrite, model and price catastrophe risk effectively, particularly allowing for change over time in the frequency and severity of catastrophe events. AIG manages these physical risks through its underwriting governance, including risk appetite limits, and underwriting by using risk models. The business regularly reassesses the increasing frequency and severity of claims that may stem from climate change impacts, as well as claims from emerging risks such as previously un-modelled catastrophes. Physical climate change risks may also have an operational impact, for example on individual facilities and office locations. AIG also assesses and manages these as part of its regular management of operational resilience.

Notes to the financial statements (continued)

Transitional risks from climate change arise from the adjustment of countries around the world to a low-carbon economy (e.g. climate-related developments in policy and regulation, and the emergence of new, possibly disruptive, technology and business models).

Investment transitional risks may arise if financial markets begin fundamentally to reassess the value of carbon-intensive assets and the businesses that rely on them, leading to material change in their valuation and ongoing viability. The changes to the investment policy guidelines described above are designed to mitigate this risk in the short term.

Liability risks may arise from parties who have suffered loss or damage attributable to physical or transitional climate change risks and who seek to recover them from those they hold responsible. TUL monitors climate change litigation trends to assess the potential impact of any developments on the business and overall risk mitigation strategies.

G.Corporate and social responsibilities

TUL is committed both to making lasting, positive change to the communities in which we operate and to our employees.

TUL values Culture and Inclusion and seeks to embed this with a motivated and committed workforce, equipped with the skills required to deliver the strategy and perform at their best. TUL is committed to equitable pay and also identifies skill requirements and delivers these through training and recruitment designed to attract, develop and retain diverse talent.

TUL works with a number of charities to raise funds and promote their cause, as well as supporting our communities, either by financial charitable contributions or by donating time to a range of volunteering initiatives. There are also a number of partnerships with non-profit initiatives, such as mentoring, to extend our charitable reach.

H.Capital management

i.Lloyd’s capital framework

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

Within this supervisory framework, Lloyd’s applies capital requirements at member level, supported by mutualised, centrally-held assets, to ensure that Lloyd’s can comply with the Solvency UK requirements, and beyond that to meet its own financial strength, licencing and ratings objectives.

During 2025, TUL undertook an Internal Model Approval Process (IMAP) with Lloyd’s for the Syndicate capital model, building upon the model used for initial analysis of the capital requirements for setting up the Syndicate to transform it into an approved Internal Model used for capital setting. This process involved development of areas of the model, production of documentation and full model validation to meet both Lloyd’s and Solvency UK requirements. The IMAP was submitted in June 2025, subsequently approved by Lloyd’s and then used to set the capital for the 2026 business plan.

ii.Lloyd’s capital setting process

Lloyd’s capital setting process, as outlined below, uses capital requirements assessed at syndicate level as a starting point, from which it agrees capital requirements for each member at Lloyd’s, this being the level at which underwriting at Lloyd’s is capitalised. For this reason, the capital requirement in respect of the Syndicate is not disclosed in these financial statements.

Notes to the financial statements (continued)

In order to meet Lloyd’s requirements, each Syndicate must calculate its Lloyd’s Solvency Capital Requirement (SCR) for the prospective underwriting year. This amount must be sufficient to cover a 1-in-200 year loss, reflecting uncertainty in the ultimate run-off of underwriting liabilities (referred to as the ultimate SCR or uSCR). The Syndicate must also calculate its regulatory SCR at the same confidence level but reflecting uncertainty over a one-year time horizon (referred to as the one-year SCR or SCR1) for Lloyd’s to use in meeting Solvency UK requirements. The SCRs of each Syndicate are subject to review by Lloyd’s and approval by the Lloyd’s Capital and Planning Group (CPG).

A syndicate may be comprised of one or more underwriting members of Lloyd’s. Each member is liable for its own share of underwriting liabilities on the Syndicates on which it is participating but not other members’ shares. Accordingly, the capital requirements that Lloyd’s sets for each member operates on a similar basis.

Each member’s SCR shall thus be determined by the sum of the member’s share of the Syndicate SCR ‘to ultimate’. Where a member participates on more than one syndicate, a credit for diversification is provided to reflect the spread of risk, but consistent with determining an SCR which reflects the capital requirement to cover a 1 in 200 loss ‘to ultimate’ for that member. Over and above this, Lloyd’s applies a capital uplift to the members’ capital requirement, known as the Economic Capital Assessment (ECA). The purpose of this uplift, which is a Lloyd’s not a Solvency UK requirement, is to meet Lloyd’s financial strength, licence and ratings objectives. The capital uplift applied for 2025 was 35% of the members’ SCR ‘to ultimate’.

iii.Provision of capital by members

Each member may provide capital to meet its ECA either by assets held in trust by Lloyd’s specifically for that member, known as Funds at Lloyd’s (FAL), assets held and managed within a syndicate, known as Funds in Syndicate (FIS), or as the members’ share of the members’ balances on each syndicate on which it participates. See below for further details on FAL.

All of the assets less liabilities of the Syndicate, as represented in the members’ balances reported on the balance sheet on page 18, represent resources available to meet the member’s Lloyd’s capital requirements.

An additional level of security is the Central Fund to which all Syndicates contribute, based on their premium income, for every underwriting year of account. In the event that a member’s resources are exhausted, outstanding claims may be paid out of the Central Fund if approved by the Council of Lloyd’s.

iv.Funds at Lloyd’s

Every member is required to hold capital at Lloyd’s, which is held in trust as FAL. These funds are intended primarily to cover circumstances where syndicate assets prove insufficient to meet participating members’ underwriting liabilities from the syndicate. The level of FAL that Lloyd’s requires a member to maintain is determined by Lloyd’s based on Prudential Regulatory Authority requirements. The determination of FAL has regard to a number of factors including the nature and amount of risk to be underwritten by the member and an assessment of the reserving risk in respect of business that has been underwritten, both of which are reflected in the SCR. Since FAL is not under the management of the Managing Agent, no FAL amount has been included in these financial statements. However, the Managing Agent is able to make a call on the members’ FAL to meet liquidity requirements or to settle losses.

Notes to the financial statements (continued)

5.Analysis of underwriting result

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

2025

Gross premiums written$000

Gross premiums earned$000

Gross claims incurred$000

Gross operating expenses$000

Reinsurance balance$000

Underwriting result$000

Reinsurance acceptances

714,093

418,901

(176,959)

)

(33,009)

208,933

Total

714,093

418,901

(176,959)

)

(33,009)

208,933

All business written by the syndicate is reinsurance.

6.Movement in prior year’s provision for claims outstanding

There are no movements in prior year’s provision for claims outstanding as the year ended 31 December 2025 is the first year the Syndicate has been in operation.

7.Net operating expenses

2025$000

Acquisition costs (brokerage and commission)

30,654

Change in deferred acquisition costs

(6,667)

Administrative expenses

644

Members’ standard personal expenses

8,378

Net operating expenses

33,009

An analysis of the amounts paid to the Syndicate’s auditor is given below. Refer to note 17 for further details of the management fee.

2025$000

Auditors’ remuneration:

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

250

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

244

Other services pursuant to legislation relate to the audit and review of Lloyd’s regulatory returns, the provision of iXBRL tagging assurance, as well as the provision of the statement of actuarial opinion as required by Lloyd’s Byelaws.

Notes to the financial statements (continued)

8.Key management personnel compensation

The Syndicate has no direct employees. The staff and key management personnel who provide services to the Syndicate are employed by various group companies, which are responsible for paying their remuneration. This includes amounts related to the services provided by the executive and non-executive directors of the managing agent. Key management personnel includes TUL Directors and the active underwriter. As disclosed in note 17, the Managing Agent charges the Syndicate a Managing Agent’s fee based on gross written premium for services provided to the Syndicate. Therefore, other than the Syndicate’s active underwriter, staff costs and numbers are not separately identified. Although not separately charged to the Syndicate, the estimated aggregate emoluments of the active underwriter are as follows:

9.Investment return

2025$000

Interest and similar income

From financial assets designated at fair value through profit or loss

Interest and similar income

2,489

Other income from investments

From financial assets designated at fair value through profit or loss

Gains on the realisation of investments

Losses on the realisation of investments

Unrealised gains on investments

Unrealised losses on the investments

Investment management expenses

(557)

Total investment return

1,932

Transferred to the technical account from the non-technical account

1,932

2025$000

Active Underwriter emoluments

750

Notes to the financial statements (continued)

10.Financial investments

Carrying value

Cost

2025$000

Shares and other variable yield securities and units in unit trusts

232,986

230,661

Lloyd’s overseas deposits

1,261

1,180

Total financial investments

234,247

231,841

All financial investments are measured at fair value through profit or loss.

The Syndicate classifies its financial instruments held at fair value in its balance sheet using a fair value hierarchy based on the inputs used in the valuation techniques as follows:

•Level 1 – financial assets that are measured by reference to published quotes in an active market. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s length basis.

•Level 2 – financial assets measured using a valuation technique based on assumptions that are supported by prices from observable current market transactions. For example, assets for which pricing is obtained via pricing services but where prices have not been determined in an active market, financial assets with fair values based on broker quotes, investments in private equity funds with fair values obtained via fund managers and assets that are valued using the Syndicate’s own models whereby the significant inputs into the assumptions are market observable.

•Level 3 – financial assets measured using a valuation technique (model) based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. Therefore, unobservable inputs reflect the Syndicate's own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). These inputs are developed based on the best information available, which might include the Syndicate’s own data and the investment manager’s data. Significant increases or decreases in any of those inputs in isolation could result in a significantly different fair value measurement.

The table below analyses financial instruments held at fair value in the Syndicate’s balance sheet at the reporting date by its level in the fair value hierarchy.

2025

Level 1$000

Level 2$000

Level 3$000

Assets held at amortised cost

Total$000

Shares and other variable yield securities and units in unit trusts

23,081

209,905

232,986

Lloyd’s overseas deposits

1,261

Total

23,081

1,261

209,905

234,247

Notes to the financial statements (continued)

Information on the methods and assumptions used to determine fair values for each major category of financial instrument measured at fair value is provided below.

Shares and other variable securities and units in unit trusts:

The level 1 investments comprise money market funds, which are categorised as level 1 in the fair value hierarchy except where they are not actively traded, in which case they are generally measured at prices of recent transactions in the same instrument.

The level 3 investments comprise the Syndicate’s investment in a fund, managed by Blackstone, for which the source of valuation are net asset value (NAV) statements. TUL contributes capital to the fund and, in turn, the investment manager will utilise this capital by purchasing a portfolio in accordance with investment guidelines. At 31 December 2025, the majority of this fund was invested in United States Treasuries.

The NAV calculation utilises methodologies which measure assets with reference to published quotes in an active market, as well as using valuation techniques. Because these fair value calculations will involve judgement in the application of both observable and unobservable attributes, the calculated fair value may differ from their actual realisable value or future fair value. The underlying assets of the fund that utilise valuation techniques include private debt and equity. The investments in private debt are valued by the investment manager using their valuation models and point estimates, with coordination with an independent valuation provider. For private equity, NAV statements are the primary source of the valuations. Valuations are subject to formal governance and controls of the investment manager.

Lloyd’s overseas deposits: The Syndicate is required to lodge overseas deposits with Lloyd’s as a condition of conducting underwriting business in Canada. These funds are recognised as level 2 investments and are managed by Lloyd’s Treasury Services.

Notes to the financial statements (continued)

11.Debtors arising out of reinsurance operations

2025$000

Due within one year

443,624

Total

443,624

12.Other debtors

2025$000

Other receivables

Total

13.Deferred acquisition costs

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

2025

Gross$000

Net$000

Balance at 1 January

Incurred deferred acquisition costs

30,654

Amortised deferred acquisition costs

(23,987)

Foreign exchange movements

Balance at 31 December

6,667

Notes to the financial statements (continued)

14.Claims development

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

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

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

Gross:

2025

Total

Pure underwriting year

$000

Estimate of gross claims

at end of underwriting year

176,959

Estimate of gross claims reserve

176,959

Less gross claims paid

(142)

Gross claims reserve

176,817

Net:

2025

Total

Pure underwriting year

$000

Estimate of net claims

at end of underwriting year

176,959

Estimate of net claims reserves

176,959

Less net claims paid

(142)

Net claims reserve

176,817

Some business is not off-risk after the first 12 months, therefore it would be anticipated that cumulative claims will increase in the second year as this business is earned.

Notes to the financial statements (continued)

15.Technical provisions

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

2025

Gross provisions$000

Net$000

Claims outstanding

Balance at 1 January

Claims paid during the year

(142)

Expected cost of current year claims

176,959

Foreign exchange movements

Balance at 31 December

176,817

2025

Gross provisions$000

Net$000

Unearned premiums

Balance at 1 January

Premiums written during the year

714,093

Premiums earned during the year

(418,901)

Foreign exchange movements

Balance at 31 December

295,192

Refer to Note 4C(ii) for the sensitivity analysis performed over the value of insurance liabilities, disclosed in the accounts, to potential movements in the assumptions applied within the technical provisions.

16.Cash and cash equivalents

2025$000

Cash at bank and in hand

592

Short term debt instruments presented within other financial investments

23,081

Bank overdrafts

Total cash and cash equivalents

23,673

Notes to the financial statements (continued)

17.Related parties

Parent Companies

The immediate parent company of Talbot Underwriting Ltd is Talbot Underwriting Holdings Ltd, a company registered in England and Wales.

The ultimate parent and controlling party of TUL is American International Group, Inc. (AIG). The head office of which is 1271 Avenue of the Americas, New York, NY 10020, United States of America. AIG is listed on the New York Stock Exchange.

Directors’ interests

JL Hancock and CJ Flatt held a senior management position and executive directorship within the AIG group of companies during the year. P Bergamaschi previously held a position on the AIG Board of Directors as an independent director and was paid fees accordingly.

Reinsurance

The Syndicate reinsures all its business from a number of AIG group entities, which are related parties of TUL. The outstanding amounts due from AIG group entities at 31 December 2025 are disclosed on the Balance Sheet.

Corporate member

The Corporate Member for the Syndicate is CM 2478 Limited and the registered address is 5 Churchill Place, 10th Floor, London, United Kingdom, E14 5HU.

Managing agent

Talbot Underwriting Ltd (TUL) is the Managing Agent of the Syndicate and the registered address is the AIG Building, 58 Fenchurch Street, London, EC3M 4AB.

TUL charges the Syndicate an annual management fee. The annual fee for 2025 was $4,189k and is payable by the Syndicate to TUL at 31 December 2025.

18.Foreign exchange rates

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

2025

Start of period rate

End of period

rate

Average

rate

Sterling

0.80

0.74

0.76

Euro

0.97

0.85

0.89

US dollar

1.00

Canadian dollar

1.44

1.37

1.40