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Syndicate
Annual Report and Accounts for the year ended
3
Contents
Directors and Administration
..................................................................................................
4
Managing agent's report
.........................................................................................................
5
Statement of Managing Agent's Responsibilities
...................................................................
13
Independent Auditor's Report to the Member of Syndicate 4000
............................................
14
Statement of profit or loss and other comprehensive income
................................................
18
Balance sheet - Assets
.........................................................................................................
20
Balance sheet - Liabilities
.....................................................................................................
21
Statement of changes in member’s balances
........................................................................
22
Statement of cash flows
.......................................................................................................
23
Notes to the financial statements
.........................................................................................
24
4
Directors and Administration
Managing Agent
Registered Office
Level 3, 8 Fenchurch Place, London, EC3M 4AJ
Registered Number
05832065
Directors
A. J. Baker
Executive
P. Billingham
Independent Non-Executive
K. Forte
Independent Non-Executive
D. Lehane (appointed 1 November 2025)
Independent Non-Executive
M. Thiam (appointed 1 November 2025)
Executive
M. W. S. Li (appointed 19 January 2026)
Executive
A. J. Daws (resigned 29 August 2025)
Executive
R. S. Vetch (resigned 26 September 2025)
Executive
P. C. F. Haynes (resigned 31 December 2025)
Independent Non-Executive
Company Secretary
M. Thiam
Syndicate
Active Underwriter
S. Cormican
Bankers
Barclays plc
Citibank N.A.
Royal Bank of Canada
Investment Manager
Conning Asset Management Limited
Auditor
Ernst & Young LLP
25 Churchill Place
London, E14 5EY
5
Managing agent's report
The Directors of Hamilton Managing Agency Limited (“HMA”) present the Managing Agent’s Report for
Syndicate 4000 (“the Syndicate”) for the year ended 31 December 2025.
Principal Activity
The principal activity of the Syndicate continues to be the underwriting of general insurance and
reinsurance business at Lloyd’s.
The Syndicate’s allocated capacity for the 2025 year of account was $800.1m (2024 year of account:
$698.5m). The capacity for the 2026 year of account is $900.1m.
Capital to support the underwriting of the
Syndicate is provided by Hamilton Corporate Member Limited (“HCM”). Both HCM and HMA are ultimately
owned by Hamilton Insurance Group, Ltd (collectively with its subsidiaries, “the Hamilton Group”).
Effective 1 January 2021, the 2018 year of account of the Syndicate was reinsured to close into Syndicate
3500. Effective 1 January 2022, the Syndicate accepted the reinsurance to close of the 2019 year of
account of Syndicate 3334 (a syndicate also capitalised by HCM). The results of the Syndicate therefore
comprise movements on the closed/open years of the Syndicate from 2019 onwards and Syndicate 3334’s
closed years of 2015 to 2019.
Business of the Syndicate
The Syndicate continues to be a provider of specialist insurance and reinsurance products and aims to
write a low volatility portfolio of niche Specialty, Casualty and Property classes of business. The portfolio
is built around business which has a high technical barrier to entry. The underwriting risk selection process
is supported by robust premium rating models.
During the 2025 financial year gross written premium by product area was as follows:
2025
2024
$000
$000
(restated)*
Specialty
463,398
374,434
Casualty
390,893
330,718
Property
99,846
87,510
Total
954,137
792,662
*The restatement represents a change in presentational currency from pounds sterling to US dollars. This
is explained further in Note 1 to the financial statements.
Speciality
This product area consists of:
•
Accident & Health which includes individual and group accidental death and disability, worldwide
excess of loss, medical expenses.
•
Kidnap & Ransom which provides cover for corporate, family and marine piracy risks against
extortion, kidnap and ransom, illegal detention and hijack insured events. Cover provided is
generally worldwide but with a focus in the UK, Europe, US and Latin America.
6
MANAGING AGENT’S REPORT
(continued)
Business of the Syndicate (continued)
Specialty (continued)
•
Marine Cargo which includes excess stock, excess transits, selected pharmaceuticals, storage,
stock throughput, and Cargo War (subject to rate adequacy). Primarily open market via Lloyd’s
brokers, with selective delegated contracts as needed.
•
Marine Liability which includes both traditional marine liability and energy liability (predominantly
offshore).
This product area includes an international onshore & offshore energy book.
•
Marine Hull consist mainly of brown water (as opposed to blue water) risks domiciled in the US.
Other coverages include marine war, limited builders’ risks and mortgagees impairment cover.
•
Political Risks / Political Violence which includes cover for confiscation and contract frustration,
trade credit and war & terrorism. The account is written on a worldwide basis.
•
Space which provides asset cover for satellites during their launch into orbit and then the
subsequent life of the satellite once it has been placed into orbit. The range of insured missions
can include large geostationary satellites, navigation constellations and satellites in lower orbits.
•
Specie & Fine Art / High Value Cargo written via a selective number of specialist partners and also
through Hamilton’s consortium, where capacity is required.
•
Specialty Treaty, being a combination of war & terror, energy (both onshore and offshore but
excluding Gulf of Mexico) and marine treaty. The focus is on short-tail lines supported by detailed
analysis and catastrophe modelling.
In addition to underwriters located in the UK, underlying policies are also distributed by the Hamilton
Group owned coverholder (Hamilton Americas) based in the US.
Casualty
This product area consists of:
•
Cyber which has developed a diverse portfolio of exposure by geography and sector,
predominantly on an excess basis.
•
Environmental which offers custom risk management solutions on predominantly US business.
Cover is mainly in respect of pollution and land reclamation but there is also an element of other
Casualty coverages.
•
Mergers & Acquisitions which predominantly comprises non-US based deals in Europe and the
UK.
•
Professional Lines and Financial Institutions accounts - these are diverse portfolios, designed to
minimise economic correlation between the two accounts. The accounts comprise crime,
professional indemnity, directors’ & officers’ liability and medical malpractice products. The
Financial Institutions account targets institutional facing business rather than retail exposure.
Property
•
The Property book has global exposures, written on both a Direct and Facultative basis as well as
through a specialist Property Binders division. The underwriting strategy of the book is to minimise
catastrophe exposure. Risks written include retail risks, office blocks and government buildings.
•
Transportation covers physical damage to trucks and trailers as well as third party cargo cover for
transport companies within the US and Canada.
7
MANAGING AGENT’S REPORT (continued)
Strategic Partnerships
An HMA Strategic Partnership Team was set up to form and develop Special Purpose Arrangements and
syndicates supported by third-party capital. During the year and up to 30 June 2025, HMA managed one
third-party syndicate, Syndicate 1947. Effective 1 July 2025, management of Syndicate 1947 was novated
from HMA to Asta Managing Agency Ltd. No capital was provided by the Hamilton Group to support the
underwriting of this syndicate. HMA now solely manages Syndicate 4000.
Review of Financial Performance
The Syndicate’s key financial indicators are as follows:
2025
2024
$000
$000
(restated)
Syndicate capacity
800,100
698,500
Gross written premium
954,137
792,662
Profit for the financial year
110,426
57,264
Net loss ratio
51.5%
57.4%
Net expense ratio
38.6%
36.2%
Combined ratio (being total of net loss ratio and net expense ratio)
90.1%
93.6%
Investments, cash and deposits
1,119,385
859,143
The Syndicate reports a profit for the year of $110.4m (2024: $57.3m). This comprises an underwriting profit
of $54.8m (2024: $29.8m) and other income of $55.6m (2024: $27.5m), which is mainly a return on
investment.
Year of Account Development
The history for each of the Syndicate’s underwriting years of account is set out below. This includes the
impact of closed years (excluding movements in funds in syndicate) on the underwriting year into which
they have been closed.
Year of
account
2019
2020
2021
2022
2023
2024
2025
Three-
year
funded
adj.
Profit /
(loss) to
member
$000
$000
$000
$000
$000
$000
$000
$000
$000
2019
(33,552)
6,753
(1,916)
627
(28,088)
2020
(28,997)
23,883
(5,308)
6,061
(4,361)
2021
(10,588)
34,010
29,998
(918)
52,502
2022
(2,599)
31,214
20,085
2,255
50,955
2023
(1,432)
58,067
52,822
1,375
110,832
2024
(20,888)
59,717
38,829
2025
(2,113)
(2,113)
Financial
year result
(33,552)
(22,244)
11,379
26,103
59,780
57,264
110,426
8
MANAGING AGENT’S REPORT (continued)
Review of Financial Performance (continued)
Gross Written Premiums
The Syndicate reports gross written premiums for the financial year of $954.1m (2024: $792.7m),
representing an increase of 20.4% on the prior year. This increase is mainly due to additional writing
capacity obtained for the 2025 underwriting year with targeted growth and disciplined underwriting in all
three divisions of Speciality, Casualty and Property.
Claims Incurred
The net loss ratio of 51.5% is lower than the 2024 ratio of 57.4%. The main contributory factors are a benign
catastrophe season and higher prior year reserve releases year on year. Net catastrophe losses of $16.2m
were $7.3m lower than the prior year (2024: $23.5m). The key event during the 2025 calendar year was the
California Wildfires (net estimated loss of $16.1m). Continued focus on portfolio management, pricing and
terms has ensured the attritional loss ratio remains within expectations.
Net Operating Expenses
Net operating expenses in 2025 were $213.9m (2024: $169.7m), with the increase to support the business
growth. The net expense ratio is 38.6% compared to 36.2% in 2024, with this increase mainly driven by net
acquisition costs which include profit commissions recognised on profitable classes of business.
Investment Return
Investment return in 2025 was a profit of $54.1m (2024: $29.7m). The variance was driven by a combination
of favourable rates, causing the portfolio’s average yield to exceed benchmark, and strong operating cash
flow, allowing the continued investment of surplus funds.
Assets under management increased by $260.2m during the year. Fixed income portfolios are
denominated in US dollars, pounds sterling, euros, Canadian dollars, and Australian dollars.
Balance Sheet
Syndicate assets have increased by $492.2m to $2,515.1m (2024: $2,022.9m) and the total liabilities have
increased by $430.5m to $2,369.0m (2024: $1,938.5m), reflecting profitability of the syndicate and
continued business growth.
The member’s balance is a surplus of $146.2m (31 December 2024: a surplus of $84.4m). See note 25 post
balance sheet events for details of the forthcoming profit distribution to the member post year end.
Future Prospects
The stamp capacity has increased by $100.0m (or 12.5%) to $900.1m for 2026.
Despite inflation stabilising nearer to central bank targets, future uncertainty remains elevated due to a
wide range of geopolitical risks, which management considers as part of its overall risk framework.
HMA’s focus remains on disciplined cycle management of its diverse portfolio.
9
MANAGING AGENT’S REPORT (continued)
Research and Development
The Syndicate has not participated in any research and development activity during the period.
Staff Matters
Recognising that attracting, retaining, and engaging talent is critical to achieving the Hamilton Group's (and
by extension HMA’s) strategy and long-term success, being a 'magnet for talent' is one of its core business
imperatives. A pivotal part of that goal is an ongoing focus on a positive workplace culture, where employee
wellbeing, engagement, and a sense of purpose are prioritised, alongside a safe, legally compliant
workplace and environment.
Hamilton regularly measures key aspects of culture. For example, the average scores from HMA's
engagement surveys conducted during 2025 include an 80% response rate, with 88% of respondents
feeling Hamilton is a great place to work. Positive responses were also reported on a Diversity, Equity, &
Inclusivity (DE&I) question, with 85% of respondents indicating that HMA's culture is inclusive regardless
of differences.
Hamilton remains dedicated to building a diverse workforce and believes in the benefits of doing so in
cultural terms across decision-making, innovation, and profitability, with the company's diversity
statement encapsulating this approach: 'Open Minds Open Doors'. Hamilton believes that by welcoming
and respecting differences, the business will continue to attract, retain, and engage the best talent in the
market. This approach is supported by an executive-sponsored DE&I group led by the DE&I Steering
Committee and supported by local DE&I Forums focusing on localised DE&I initiatives. Building on
feedback from a staff survey on priority topics and initiatives, the London DE&I Forum continues to support
DE&I activities, including International Women's Day and staff participation in the Dive In Festival. Further
initiatives are also being developed to organise events celebrating the cultural diversity of our people.
Hamilton's commitment to DE&I is reflected in the most recent Lloyd's 2025 Market Policies and Practices
(MP&P) report. Women represent a steady 39% of leadership positions, placing Hamilton in the second
quartile for women in leadership among peer firms in the market. Women also make up 40% of the overall
workforce, an increase of three percentage points, and accounted for 54% of all new hires in 2025. Ethnic
diversity across the organisation remains strong, with 19% of the workforce and new hires identifying as
ethnically diverse, and leadership representation increasing to 15%, all of which are above market
benchmarks.
Hamilton appreciates the importance of employees' physical and mental wellbeing and has support
mechanisms in place across both areas, providing employees with:
•
Specialised confidential external support via the Employee Assistance Programme
•
Access to a leading online workplace mental health platform
•
A monthly Wellness Update with information on wellness webinars and in-person events in
partnership with our workplace mental health platform and Wellbeing at Lloyd's
•
Bi-annual health assessments
•
Private medical insurance
•
A cycle-to-work scheme
•
A gym subsidy to support the ongoing physical health of employees
Hamilton's Crisis Management Team supports the safety and continuity of business operations. There
have been no significant workplace injuries to staff during the year, nor have regulatory bodies taken any
significant actions regarding staff matters.
10
MANAGING AGENT’S REPORT (continued)
Staff matters (continued)
Hamilton's "Magnet for Talent" business imperative promotes employee learning and development to
support HMA's talent pipeline and succession plans. Annual talent and performance reviews track
performance and potential, supported by in-house training in software, leadership, management,
essential skills, and technical expertise. In addition, we support the development and retention of talent
through mentoring, leadership coaching, and parental transition coaching, alongside professional
development opportunities such as CII and CPCU qualifications and access to the Lloyd's and LMA
curriculum. Management and Leadership Pathway training is also available to support colleagues new to
management and leadership roles, and we continue to offer our Global Internship Programme.
Regular employee communication remains key to Hamilton's approach to employee engagement. Current
initiatives include quarterly group and local town halls where leadership teams provide employee-focused
updates on financial results and Hamilton's strategic progress. An innovative email management platform
offers real-time engagement data and analytics, and has enhanced the focus, quality, and effectiveness
of email communications, our primary communication channel.
Human Resources' key performance metrics are periodically reviewed by committees of the Board, and all
such indicators align with the Directors' expectations
Environmental Matters
HMA is aligned with the strategy of the Hamilton Group, which strives to be a responsible (re)insurer in all
aspects of its operations and business practices by considering and recognising the impact to society and
communities, the environment and climate change for current and future generations and for all its
stakeholders. Cognisant of the uncertainty abundant in these areas, each are embedded in HMA’s risk
management framework.
Oversight of HMA’s approach to environmental matters is provided on a local level by HMA’s Board, with
additional governance coming from the Hamilton Group ESG Working Group. Further information on the
overall Group strategy can be found on the Hamilton Group website.
Business Relationships
HMA is committed to being a conscientious business and doing the right thing for its customers and
business partners. The Board recognises that relationships with stakeholders are key to the delivery of the
strategy. As such, HMA looks to conduct business with like-minded firms by undertaking the appropriate
due diligence to ensure they have good prospects for future and longevity in the market.
HMA ensures compliance with all applicable laws and has in place various internal policies, processes
and procedures covering all aspects of the business to ensure outcomes of business practice achieve
consistently high business and ethical standards. These policies, procedures and processes are reviewed
and renewed, where applicable, regularly.
Suppliers
HMA recognises that its impact on society and ability to operate in a sustainable manner extends beyond
its direct business practices to the practices of all parties in its value chain. As such, it is cognisant of the
need for appropriate methods of engaging with and monitoring suppliers. Supplier interactions are led by
the Procurement/Finance function with processes for managing supplier relationships dictated by the
Hamilton Group Procurement & Outsourcing Policy, which mandates a risk-based approach for all
supplier engagement and subsequent due diligence.
11
MANAGING AGENT’S REPORT (continued)
Suppliers (continued)
Oversight for the procurement processes, supplier selection, compliance with the Policy, and supplier
performance is provided by the Hamilton Group Vendor Management Working Group, which reports to
local boards and ultimately to the Hamilton Group Board.
Business Conduct
The Board recognises that a commitment to a high standard of business conduct is critical to the delivery
of the strategy and aspires to complete honesty and transparency in all its selling practices, product
labelling and other dealings. In addition to this, it is mindful of the fact that the insurance industry offers
unique risk to the financial system on account of its complexity and intercorrelation. Among key
documents reviewed and approved by the Board annually are the Conduct Management Framework,
Whistleblowing Policy, Financial Crime Prevention Policy, and the Code of Conduct & Ethics. The Board
further monitors conduct management at each meeting and is committed to maintaining high ethical
standards.
Regulators
HMA has transparent communication with its key regulators which is facilitated through the compliance
team. Any significant regulatory engagements are reported to the Board of HMA. The Company is aware
that legislation relating to climate and sustainability-related matters is becoming increasingly pertinent
and monitors the regulatory landscape closely.
Principal Risks and Uncertainties
The Board sets risk appetite annually as part of the Syndicate’s business planning and capacity setting
process. HMA has established a Risk Committee which meets at least quarterly to review and to monitor
performance against risk appetite using a series of key risk indicators. An Own Risk and Solvency
Assessment (“ORSA”) report is completed annually. The ORSA is used to identify the key risks to the
Syndicate and to ensure the Syndicate meets its current and future capital requirements.
The principal risks and uncertainties facing the Syndicate are set out in note 4 to the Annual Report.
Directors and Officers Serving During the Year
The Directors who served during the year ended 31 December 2025 and up to the date of this report (and
the current Company Secretary) are detailed on page 4.
Going Concern Basis
These financial statements are prepared on a going concern basis. Further details on this are set out in
note 1 to the Annual Report.
Annual General Meeting
The Directors do not propose to hold an annual general meeting for the Syndicate.
Auditor
Ernst & Young LLP has signified its willingness to continue in office as auditor.
12
MANAGING AGENT’S REPORT (continued)
Disclosure of Information to the Auditor
The Directors who held office at the date of the approval of this Managing Agent’s Report confirm that, so
far as they are individually aware, there is no relevant audit information of which the Syndicate’s auditor is
unaware and each director has taken all the steps that they ought to have taken as director to make them
aware of any relevant audit information and to establish that the Syndicate’s auditor is aware of that
information.
Board Approval
Approved by order of the Board of Hamilton Managing Agency Limited on 12 February 2026 and signed on
its behalf by:
A. J. Baker
Chief Executive Officer
19 February 2026
13
Statement of Managing Agent's Responsibilities
The managing agent is responsible for preparing the Syndicate Annual Accounts in accordance with
applicable law and regulations.
The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 (the 2008
Regulations) and the Syndicate Accounts Instructions require the managing agent to prepare Syndicate
Annual Accounts at 31 December each year in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and applicable law). The Syndicate annual
accounts are required by law to give a true and fair view of the state of affairs of the Syndicate as at that
date and of its profit or loss for that year.
In preparing the Syndicate Annual Accounts, the managing agent is required to:
•
select suitable accounting policies and then apply them consistently;
•
make judgements and estimates that are reasonable and prudent;
•
state whether applicable UK Accounting Standards have been followed, subject to any material
departures disclosed and explained in the notes to the Syndicate accounts; and
•
prepare the Syndicate accounts on the basis that the Syndicate will continue to write future business
unless it is inappropriate to presume the Syndicate will do so.
The managing agent is responsible for keeping adequate accounting records which disclose with
reasonable accuracy at any time the financial position of the Syndicate and enable it to comply with the
2008 Regulations. It is also responsible for safeguarding the assets of the Syndicate and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
The managing agent is responsible for the maintenance and integrity of the corporate and financial
information included on the business’s website. Legislation in the United Kingdom governing the
preparation and dissemination of annual accounts may differ from legislation in other jurisdictions.
We confirm that to the best of our knowledge the syndicate accounts, including the iXBRL tagging applied
to these accounts, comply with the requirements of the Lloyd’s Syndicate Accounts Instructions version
3.1 as modified by the Frequently Asked Questions version 1.1 issued by Lloyd’s.
A. J. Baker
Chief Executive Officer
19 February 2026
14
Independent Auditor's Report to the Member of
Syndicate 4000
Opinion
We have audited the syndicate annual accounts of syndicate 4000 (‘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 Member’s Balances, the Statement of Cash Flows and
the related notes
1 to 27, 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.
15
INDEPENDENT AUDITOR’S REPORT TO THE MEMBER OF SYNDICATE 4000 (continued)
Our responsibilities and the responsibilities of the directors of the managing agent with respect to going
concern are described in the relevant sections of this report. However, because not all future events or
conditions can be predicted, this statement is not a guarantee as to the syndicate’s ability to continue as a
going concern.
Other information
The other information comprises the information included in the annual report, other than the syndicate
annual accounts and our auditor’s report thereon. The directors of the managing agent are responsible for
the other information contained within the annual report.
Our opinion on the syndicate annual accounts does not cover the other information and, except to the
extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information
is materially inconsistent with the syndicate annual accounts or our knowledge obtained in the course of
the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the syndicate annual accounts themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by The Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the managing agent’s report for the financial year in which the syndicate
annual accounts are prepared is consistent with the syndicate annual accounts; and
•
the managing agent’s report has been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the syndicate and its environment obtained in the course
of the audit, we have not identified material misstatements in the managing agent’s report.
We have nothing to report in respect of the following matters where The Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 requires us to report to you, if in our opinion:
•
the managing agent in respect of the syndicate has not kept adequate accounting records; or
•
the syndicate annual accounts are not in agreement with the accounting records; or
•
certain disclosures of the managing agent’s emoluments specified by law are not made; or
•
we have not received all the information and explanations we require for our audit.
Responsibilities of the directors of the managing agent
As explained more fully in the Statement of Managing Agent’s Responsibilities set out on page 13, 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.
16
INDEPENDENT AUDITOR’S REPORT TO THE MEMBER OF SYNDICATE 4000 (continued)
In preparing the syndicate annual accounts, the directors of the managing agent are responsible for
assessing the syndicate’s ability to continue in operation, disclosing, as applicable, matters related to its
ability to continue in operation and using the going concern basis of accounting unless the directors of the
managing agent either intends to cease to operate the syndicate, or has no realistic alternative but to do
so.
Auditor’s responsibilities for the audit of the syndicate annual accounts
Our objectives are to obtain reasonable assurance about whether the syndicate annual accounts as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of
these syndicate annual accounts.
Explanation as to what extent the audit was considered capable of detecting irregularities, including
fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The
risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed
below. However, the primary responsibility for the prevention and detection of fraud rests with both those
charged with governance of the managing agent and management.
Our approach was as follows:
•
We obtained a general understanding of the legal and regulatory frameworks that are applicable to
the syndicate and determined that the most significant are direct laws and regulations related to
elements of Lloyd’s Byelaws and Regulations, and the financial reporting framework (UK United
Kingdom Generally Accepted Accounting Practice), and requirements referred to by Lloyd’s in the
Syndicate Accounts instructions. Our considerations of other laws and regulations that may have a
material
effect
on
the
syndicate
annual
accounts
included
permissions
and
supervisory
requirements of Lloyd’s of London, the Prudential Regulation Authority (‘PRA’) and the Financial
Conduct Authority (‘FCA’).
•
We obtained a general understanding of how the syndicate is complying with those frameworks by
making enquiries of management, internal audit, and those responsible for legal and compliance
matters of the syndicate. In assessing the effectiveness of the control environment, we also reviewed
significant correspondence between the syndicate, Lloyd’s of London and other UK regulatory bodies;
reviewed minutes of the Board and Risk Committee of the managing agent; and gained an
understanding of the managing agent’s approach to governance.
•
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.
17
INDEPENDENT AUDITOR’S REPORT TO THE MEMBER OF SYNDICATE 4000 (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, including complex transactions,
performance targets, economic or external pressures and the impact these have on the control
environment. The risk of fraud was considered to be higher in respect of inadequate reserving for gross
and net claims incurred but not reported (‘IBNR’) and improper revenue recognition in relation to
estimated premium income. Our audit procedures include:
•
Reviewing accounting estimates for evidence of management bias. Supported by our
actuarial professionals we assessed if there were any indicators of management bias in the
valuation of gross and net IBNR reserves and the recognition of estimated premium income;
•
Evaluating the business rationale for significant and/or unusual transactions;
•
Testing the appropriateness of journal entries recorded in the general ledger, particularly in
respect of judgemental areas including gross and net IBNR reserves and estimated premium
income.
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.
Joseph Warrender
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
19 February 2026
18
Statement of profit or loss and other
comprehensive income
Technical account - General business
For the year ended 31 December 2025
Note
2025
2024
$000
$000
(restated)*
Gross premiums written
5
Outwards reinsurance premiums
(359,476 )
(290,464 )
Premiums written, net of reinsurance
Changes in unearned premium
Change in the gross provision for unearned premiums
(76,172 )
(56,873 )
Change in the gross provision for unearned premiums reinsurers' share
Net change in provisions for unearned premiums
16
(41,124 )
(33,760 )
Earned premiums, net of reinsurance
Allocated investment return transferred from the non-technical
account
9
Claims paid
16
Gross amount
(260,002 )
(250,754 )
Reinsurers’ share
Net claims paid
(152,078 )
(140,676 )
Change in the provision for claims
16
Gross amount
(232,110 )
(187,313 )
Reinsurers’ share
Net change in provisions for claims
(132,763 )
(128,288 )
Claims incurred, net of reinsurance
(284,841 )
(268,964 )
Net operating expenses
6
(213,885 )
(169,719 )
Balance on the technical account – general business
All amounts above are in respect of continuing operations.
*The 2024 comparatives have been restated. Refer to Note 1 - Basis of Preparation for further details.
19
Statement of profit or loss and other
comprehensive income: (continued)
Non-technical account - General business
For the year ended 31 December 2025
Note
2025
2024
$000
$000
(restated)*
Balance on the technical account – general business
Investment income
9
Realised gains/(losses) on investments
9
Unrealised gains/(losses) on investments
9
(1,697 )
Investment expenses and charges
9
(847 )
(655 )
Total investment return
Allocated investment return transferred to the general business
technical account
(54,053 )
(29,733 )
Gain/(loss) on foreign exchange
(2,224 )
Profit for the financial year
Total comprehensive income for the year
The accompanying notes from page 24 to 58 form an integral part of these financial statements.
*The 2024 comparatives have been restated. Refer to Note 1- Basis of Preparation for further details.
20
Balance sheet - Assets
As at 31 December 2025
*The 2024 comparatives have been restated. Refer to Note 1- Basis of Preparation for further details.
Note
2025
2024
$000
$000
(restated)*
Financial investments
Deposits with ceding undertakings
Investments
10
Provision for unearned premiums
Claims outstanding
Reinsurers’ share of technical provisions
16
Debtors arising out of direct insurance operations
11
Debtors arising out of reinsurance operations
12
Other debtors
13
Debtors
Cash at bank and in hand
21
Other assets
Deferred acquisition costs
14
Other prepayments and accrued income
Prepayments and accrued income
Total assets
21
Balance sheet - Liabilities
As at 31 December 2025
Note
2025
2024
$000
$000
(restated)*
Member’s balances
Total capital and reserves
Provision for unearned premiums
Claims outstanding
Technical Provisions
16
Creditors arising out of direct insurance operations
17
Creditors arising out of reinsurance operations
18
Other creditors including taxation and social security
19
Creditors
Accruals & deferred income
20
Total liabilities
Total liabilities, capital and reserves
*The 2024 comparatives have been restated. Refer to Note 1- Basis of Preparation for further details.
The Syndicate financial statements on pages 18 to 58 were approved by the board of Hamilton Managing
Agency Limited on 12 February 2026 and were signed on its behalf by:
A. J. Baker
Chief Executive Officer
19 February 2026
22
Statement of changes in member’s balances
For the year ended 31 December 2025
2025
2024
$000
$000
(restated)*
Member’s balances brought forward at 1 January
Total comprehensive income for the year
Payments of profit to member’s personal reserve funds
(50,955 )
(52,502 )
Other
(918 )
Member’s balances carried forward at 31 December
*The 2024 comparatives have been restated. Refer to Note 1- Basis of Preparation for further details.
23
Statement of cash flows
For the year ended 31 December 2025
*The 2024 comparatives have been restated. Refer to Note 1- Basis of Preparation for further details.
Note
2025
2024
$000
$000
(restated)*
Cash flows from operating activities
Profit for the financial year
Adjustments:
Increase in gross technical provisions
Increase in reinsurers’ share of gross technical provisions
(129,925 )
(58,836 )
Increase in debtors
(80,718 )
(32,070 )
Increase in creditors
Movement in other assets/liabilities
(5,593 )
Investment return
(54,053 )
(29,733 )
Foreign exchange movements
(1,180 )
Net cash flows from operating activities
Cash flows from investing activities
Purchase of equity and debt instruments
(770,890 )
(614,349 )
Sale of equity and debt instruments
Investment income received
Other
Net cash flows from investing activities
(247,454 )
(173,372 )
Cash flows from financing activities
Distribution of profit
(50,955 )
(52,502 )
Other
(918 )
Net cash flows from financing activities
(48,700 )
(53,420 )
Net decrease in cash and cash equivalents
(42,445 )
(2,499 )
Cash and cash equivalents at the beginning of the year
Foreign exchange on cash and cash equivalents
(1,047 )
Cash and cash equivalents at the end of the year
22
24
Notes to the financial statements
1.
Basis of preparation
General Information
The Syndicate underwrites insurance and reinsurance business in the London market at the Society of
Lloyd’s on behalf of its corporate member. The Syndicate’s corporate member is detailed on page 5. The
registered address of the managing agent is Level 3, 8 Fenchurch Place, London, EC3M 4AJ.
Compliance with Accounting Standards
The financial statements have been prepared in accordance with the Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, applicable Accounting Standards in the
United Kingdom and the Republic of Ireland, including Financial Reporting Standard 102 (FRS 102),
Financial Reporting Standard 103 (FRS 103) in relation to insurance contracts, and the Lloyd’s Syndicate
Accounts Instructions Version 3.1 as modified by the Frequently Asked Questions Version 1.1 issued by
Lloyd’s.
Basis of Preparation
The financial statements have been prepared on a historical cost basis, except for certain financial
instruments which are measured at fair value.
The financial statements are presented in US dollars, which is also the Syndicate’s functional currency,
reflecting the underlying business of the Syndicate. All amounts have been rounded to the nearest
thousand, unless otherwise indicated.
As permitted by FRS 103, the Syndicate continues to apply the existing accounting policies that were
applied prior to this standard for its insurance contracts.
Change in presentational currency
Previously, the annual report and accounts for the year ended 31 December 2024 and prior years were
presented in pounds sterling. The Syndicate has elected to change its presentational currency in order to
align reporting with its functional currency. This is expected to benefit the users of the financial statements
by removing potential volatility in its reported results that could arise due to the gains or losses recognised
upon the translation to a different presentational currency, and also to ensure consistency with the
financial reporting of other entities within the Hamilton Group.
In accordance with FRS 102, the election is a change in accounting policy and has been applied
retrospectively, with the comparative information for the prior year restated in US dollars. Previously, for
reporting in pounds sterling, the following translation principles were followed:
•
Assets and liabilities were translated at the closing exchange rate applicable to at the relevant balance
sheet date.
•
Income and expenses were translated at the monthly exchange rate for the respective period.
With the Syndicate now presenting its accounts in US dollars, aligning with its presentational currency, the
above translation is reversed and the balances are reported as they exist in the accounting ledger in
functional currency.
25
NOTES TO THE FINANCIAL STATEMENTS
1.
Basis of Preparation (continued)
Change in presentational currency (continued)
The change in presentational currency does not affect the reported results or financial position of the
Syndicate. Since the Syndicate’s functional currency is US dollars and due to the fact that the Syndicate
holds no equity items at historic exchange rates, no exchange differences have arisen on the restatement
of prior year results. The rates of exchange used to translate foreign currency transactions and balances
US dollars – in accordance with the Syndicate’s foreign currency policy disclosed in note 3 – are listed in
note 26.
In restating the prior year comparatives, the Syndicate’s calendar year 2024 net combined ratio (disclosed
in the managing agent’s report) changed from 94.1%, as reported in the prior year statutory accounts, to
93.6%. A breakdown on the change in the net combined ratio is presented below:
2024
2024
Presented in USD
Presented in GBP
Net loss ratio
57.4%
57.8%
Net expense ratio
36.2%
36.3%
Combined ratio (being total of net loss ratio and net expense ratio)
93.6%
94.1%
Going Concern Basis
These financial statements are prepared on a going concern basis. Syndicates by their nature only
underwrite for single underwriting years on behalf of their supporting members. However, this is within a
context of not finalising results until after 36 months so that typically there are three underwriting years in
progress at any given time. In addition, syndicates will normally expect to continue to trade for more
underwriting years into the future.
The Syndicate has capacity for the 2026 year of account and is continuing to underwrite. The Syndicate’s
business activities, together with the factors likely to affect its future development are set out in the
Business Review contained within the Managing Agent’s Report. In addition, note 4 to the Annual Report
provides details of the financial risks the Syndicate is exposed to and how those risks are managed.
The Syndicate has considerable financial resources together with long term relationships with a number
of brokers and policyholders across different classes of business and geographical areas. As a
consequence, the Directors believe that the Syndicate is well placed to manage its business risks
successfully despite the current uncertain economic outlook.
The Directors have a reasonable expectation that the Syndicate has adequate resources including the
Funds at Lloyd’s of the members supporting the Syndicate (as detailed in note 27) to continue in
operational existence for the foreseeable future and for at least 12 months from the date of authorising
these accounts for issuance.
2.
Use of judgements and estimates
In preparing these financial statements, the Directors of the managing agent have made judgements,
estimates and assumptions that affect the application of the Syndicate’s accounting policies and the
reported amounts of assets, liabilities, income and expenses. Actual results may differ from these
estimates. Estimates and underlying assumptions are reviewed on an ongoing basis.
26
NOTES TO THE FINANCIAL STATEMENTS
2.
Use of judgements and estimates (continued)
Provision for Claims Outstanding
The measurement of the provision for claims outstanding involves judgements and assumptions about the
future that have the most significant effect on the amounts recognised in the financial statements. The
provision for claims outstanding comprises the estimated cost of settling all claims incurred but unpaid at
the balance sheet date, whether reported or not. This is a judgemental and complex area due to the
subjectivity inherent in estimating the impact of claims events that have occurred but for which the
eventual outcome remains uncertain. In particular, judgement is applied when estimating the value of
amounts that should be provided for claims that have been incurred at the reporting date but have not yet
been reported (“IBNR”) to the Syndicate.
The amount included in respect of IBNR is based on statistical techniques of estimation applied by the
Syndicate managing agent’s actuaries and reviewed by external consulting actuaries. These techniques
generally involve projecting from past experience the development of claims over time in view of the likely
ultimate claims to be experienced and for more recent underwriting, having regard to variations in business
accepted and the underlying terms and conditions. The provision for claims also includes amounts in
respect of internal and external claims handling costs. For the most recent years, where a high degree of
volatility arises from projections, estimates may be based in part on output from rating and other models
of business accepted and assessments of underwriting conditions.
Further information about the risk that the provision for claims outstanding could be materially different
from the ultimate cost of claims settlement is included in note 4.
Estimated Premium Income
For certain insurance contracts, premium is initially recognised based on an estimate. Where premium is
sourced through delegated underwriting, the premium estimate is pro-rated across the facility period. This
is calculated on a straight-line basis unless the underlying writing pattern is understood to differ materially
from this. Underwriters adjust the premium estimates as the year of account matures and after a set
period, the premiums are adjusted to match the signed premium where information has become available.
These estimates are judgemental and could result in revisions in future accounting periods. The use of
expert judgements and historical development patterns are the principle means by which the potential for
revisions is minimised.
3.
Significant accounting policies
Basis of Accounting
The underwriting results are determined on an annual basis of accounting. Under the annual basis of
accounting, the incurred cost of claims, commission and related expenses are charged against the earned
proportion of premiums, net of reinsurance. The significant accounting policies are detailed below.
27
NOTES TO THE FINANCIAL STATEMENTS
3.
Significant accounting policies (continued)
A.
Premiums written
Premiums written comprise direct and inwards reinsurance premiums on contracts incepted during the
financial year. Premiums are shown gross of brokerage payable to intermediaries and exclude taxes and
duties levied on them. Estimates are made for pipeline premiums, representing amounts due to the
Syndicate not yet notified. These estimates are subsequently updated based on underwriting experience
and contract performance.
B.
Unearned premiums
Written premiums are recognised as earned according to the risk profile of the policy. Unearned premiums
represent the proportion of premiums written that relate to unexpired claims exposure from policies in
force at the balance sheet date, calculated on the basis of established earnings patterns or time
apportionment as appropriate.
C.
Acquisition costs
Acquisition costs include direct costs such as brokerage and commission, and indirect costs such as
administrative expenses connected with the processing of proposals and the issuing of policies. The
deferred acquisition cost asset represents the proportion of acquisition costs which corresponds to the
proportion of gross premiums written that is unearned at the balance sheet date; this is then earned in
future periods in line with the associated premium income.
D.
Reinsurance
Outwards reinsurance premiums are accounted for and earned in the same accounting period as the
premiums for the related direct or inwards business being reinsured.
E.
Claims provisions and related reinsurance recoveries
Gross claims incurred comprise the estimated cost of all claims occurring during the year, whether
reported or not, including related direct and indirect claims handling costs.
The provision for claims outstanding is assessed on an individual case by case basis and is based on the
estimated ultimate cost of all claims notified but not settled by the balance sheet date, together with the
provision for related claims handling costs. The provision also includes the estimated IBNR at the balance
sheet date based on statistical methods.
These methods generally involve projecting from past experience the development of claims over time to
form a view of the likely ultimate claims to be experienced for more recent underwriting, having regard to
variations in the business accepted and the underlying terms and conditions. For the most recent years,
where a high degree of volatility arises from projections, estimates may be based in part on output from
rating and other models of the business accepted and assessments of underwriting conditions. The
amount of salvage and subrogation recoveries is separately identified and, where material, reported as an
asset.
28
NOTES TO THE FINANCIAL STATEMENTS
3.
Significant accounting policies (continued)
E.
Claims provisions and related reinsurance recoveries (continued)
The reinsurers’ share of provisions for claims is based on the amounts of outstanding claims and
projections for IBNR, net of estimated irrecoverable amounts, having regard to the reinsurance programme
in place for the class of business, the claims experience for the year and the current security rating of the
reinsurance companies involved. A number of statistical methods are used to assist in making these
estimates.
The two most critical assumptions as regards claims provisions are that the past is a reasonable predictor
of the likely level of claims development and the rating and other models used for current business are fair
reflections of the likely level of ultimate claims to be incurred. To the extent we do not believe this to be
true in specific areas, adjustments are made by the actuarial team.
The Directors consider that the provisions for gross claims and related reinsurance recoveries are fairly
stated on the basis of the information currently available to them. However, the ultimate liability will vary
as a result of subsequent information and events, and this may result in significant adjustments to the
amounts provided. The methods used, and the estimates made, are reviewed regularly.
F.
Unexpired risks provision
A provision for unexpired risks is made where claims and related expenses arising after the end of the
financial period in respect of contracts concluded before that date are expected to exceed the unearned
premiums and premiums receivable under these contracts, after the deduction of any acquisition cost
deferred. The provision for unexpired risks is calculated by reference to classes of business which are
managed together, after taking into account relevant investment return. As at 31 December 2025 and 31
December 2024, the Syndicate did not have an unexpired risks provision.
G.
Foreign currencies
The Syndicate’s functional currency is US dollars, which is also the Syndicate’s reporting currency.
Transactions in pounds sterling, Canadian dollars, Australian dollars and euros are translated at the
monthly rate of exchange for the period (which approximates the actual rate of exchange at the transaction
date). Transactions denominated in other foreign currencies are included at the rate of exchange ruling at
the date the transaction is processed.
Monetary assets and liabilities (which include all assets and liabilities arising from insurance contracts
including unearned premiums and deferred acquisitions costs) denominated in foreign currencies are
translated at the rate of exchange at the balance sheet date.
Exchange differences arising on the retranslation of opening balance sheet items at the closing balance
sheet rate and the retranslation of the profit and loss account for the year are recorded in the non-technical
account.
The rates of exchange used to translate foreign currency monetary balances at year end to US dollars are
listed in note 26.
29
NOTES TO THE FINANCIAL STATEMENTS
3.
Significant accounting policies (continued)
H.
Financial assets and liabilities
In applying FRS 102, the Syndicate has chosen to apply the recognition and measurement provisions of IAS
39 Financial Instruments: Recognition and Measurement (as adopted for use in the UK) as per chapters 11
and 12 of FRS 102.
The Syndicate classifies its financial investments as financial assets at fair value through profit or loss
(“FVPL”).
FVPL assets comprise two sub-categories: financial assets held for trading and those designated as FVPL
at inception.
Investments typically bought with the intention to sell in the near future are classified as held
for trading. For investments designated as FVPL, the following criteria must be met:
•
The designation eliminates or significantly reduces the inconsistent treatment that would otherwise
arise from measuring the assets or liabilities or recognising gains or losses on a different basis; or
•
The assets and liabilities are part of a group of financial assets which are managed and their
performance evaluated on a fair value basis, in accordance with a documented risk management
or investment strategy.
These investments are initially recorded at fair value. Subsequent to initial recognition, these investments
are re-measured at fair value at each reporting date. Fair value adjustments and realised gains and losses
are recognised in the income statement.
i.
Classification
The accounting classification of financial assets and liabilities determines the way in which they are
measured and changes in those values are presented in the statement of profit or loss and other
comprehensive income. Financial assets and liabilities are classified on their initial recognition.
The initial classification of a financial instrument shall take into account contractual terms including those
relating to future variations.
Once the classification of a financial instrument is determined at initial recognition, re-assessment is only
required subsequently when there has been a modification of contractual terms that is relevant to an
assessment of the classification.
Financial assets and financial liabilities at fair value through profit and loss comprise financial assets and
financial liabilities held for trading and those designated as such on initial recognition. Investments in
shares and other variable yield securities, units in unit trusts, and debt and other fixed income securities
are designated as at fair value through profit or loss on initial recognition, as they are managed on a fair
value basis in accordance with the Syndicate's investment strategy. Other financial assets, principally
certain debt and other fixed-income securities are classified as available for sale.
The Syndicate does not hold any non-derivative financial assets or financial liabilities for trading purposes
although derivatives (assets or liabilities) held by the Syndicate are categorised as held for trading.
Deposits with credit institutions, debtors, and accrued interest are classified as loans and receivables.
30
NOTES TO THE FINANCIAL STATEMENTS
3.
Significant accounting policies (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.
Regular way purchases and sales of financial assets are recognised and derecognised, as applicable, on
the trade date, i.e., the date that the Syndicate commits itself to purchase or sell the asset.
When the Syndicate has transferred its right to receive cash flows from an asset or has entered into a pass-
through arrangement and has neither transferred nor retained substantially all the risks and rewards nor
transferred control of the asset, the asset is recognised to the extent of the Syndicate’s continuing
involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred
asset is measured at the lower of the original carrying amount of the asset and the maximum amount of
consideration that the Syndicate could be required to repay. In that case, the Syndicate also recognises an
associated liability.
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 includes foreign exchange gains/losses arising on their
translation to the functional currency but excludes interest and dividend income. Financial assets
classified as available for sale are initially recognised at fair value, which typically equates to the cost, plus
transaction costs directly attributable to its acquisition. After initial measurement, these assets are
subsequently measured at fair value. Interest earned whilst holding available for sale financial assets is
reported as interest income. Impairment losses and foreign exchange gains or losses are reported in profit
or loss. Other fair value changes are recognised in other comprehensive income. Any gain or loss
recognised in Other comprehensive income (“OCI”) will be recycled to profit and loss on derecognition of
the asset.
Loans and receivables and non-derivative financial liabilities are measured at amortised cost using the
effective interest method, except Syndicate Loans to the Central Fund which are measured at fair value
through profit or loss.
iv.
Identification and measurement of impairment
At each reporting date the Syndicate assesses whether there is objective evidence that financial assets
not at fair value through profit or loss are impaired. Financial assets are impaired when objective evidence
demonstrates that a loss event has occurred after the initial recognition of an asset, and that the loss event
has an impact on the future cash flows on the asset that can be estimated reliably.
Objective evidence that financial assets are impaired includes observable data that comes to the attention
of the Syndicate about any significant financial difficulty of the issuer, or significant changes in the
technological, market, economic or legal environment in which the issuer operates.
Impairment losses on available for sale financial assets are recognised by reclassifying the losses
accumulated in other comprehensive income to profit or loss.
31
NOTES TO THE FINANCIAL STATEMENTS
3.
Significant accounting policies (continued)
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.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the
difference between its carrying amount, and the present value of the estimated future cash flows
discounted at the asset's original effective interest rate. Individually significant financial assets are tested
for impairment on an individual basis. The remaining financial assets are assessed collectively in groups
that share similar credit risk characteristics.
An impairment loss recognised on an amortised cost asset reduces directly the carrying amount of the
impaired asset. All impairment losses are recognised in profit or loss. An impairment loss is reversed if the
reversal can be related objectively to an event occurring after the impairment loss was recognised. For
financial assets measured at amortised cost the reversal is recognised in profit or loss.
v.
Off-setting
Financial assets and financial liabilities are offset, and the net amount presented in the balance sheet
when, and only when, the Syndicate currently has a legal right to set off the amounts and intends either to
settle on a net basis or to realise the asset and settle the liability simultaneously.
I.
Investment return
Investment return comprises all investment income, realised investment gains and losses and movements
in unrealised gains and losses, net of investment expenses, charges and interest recognised in the income
statement. Investment return is initially recorded in the non-technical account. A transfer is made from the
non-technical account to the general business technical account. Investment return has been wholly
allocated to the technical account as all investments are held to support underwriting liabilities.
Realised gains and losses on investments carried at market value are calculated as the difference between
sale proceeds and carrying value. Unrealised gains and losses on investments represent the difference
between the valuation at the balance sheet date and their valuation at the previous balance sheet date, or
purchase price, if acquired during the year, together with the reversal of unrealised gains and losses
recognised in earlier accounting periods in respect of investment disposals in the current period.
Unrealised and realised gains and losses in financial investments are recognised based on the appropriate
classification of financial investments and are covered under the accounting policy for financial
investments.
J.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or
less from the acquisition date that are subject to an insignificant risk of changes in fair value and are used
by the Syndicate in the management of its short-term commitments.
Cash and cash equivalents are carried at amortised cost in the balance sheet.
32
NOTES TO THE FINANCIAL STATEMENTS
3.
Significant accounting policies (continued)
K.
Taxation
Under Schedule 19 of the Finance Act 1993, managing agents are not required to deduct basic rate income
tax from trading income. In addition, all UK basic rate income tax deducted from syndicate investment
income is recoverable by managing agents and consequently the distribution made to members is gross
of tax.
No provision has been made for any United States Federal Income Tax payable on underwriting results or
investment earnings. Any payments on account made by the Syndicate are included in the balance sheet
under the heading members’ balances. No provision has been made for any overseas tax payable by
members on underwriting results.
L.
Pension costs
Hamilton Managing Agency operates a defined contribution scheme. Pension contributions relating to
managing agent staff who act on behalf of the Syndicate are charged to the Syndicate as incurred and are
included within net operating expenses.
M.
Profit commission
Profit commission payable to Lloyd’s coverholders or producing brokers has been provided for on all years
of account and recognised within acquisition costs in the income statement. Profit commission accruals
are calculated based on the expected profit or loss of qualifying premium and are included within creditors
on the balance sheet. Profit commissions are calculated at the minimum value of underwriting profits
whilst there is uncertainty over the amounts due. As such this is an estimation based on the level of
information available at a point in time.
N.
Direct Insurance and Reinsurance Receivables
Direct insurance and reinsurance receivables are recognised when due and measured on initial
recognition at the fair value of the consideration received or receivable. The carrying value of these
receivables is reviewed for impairment whenever events or circumstances indicate that the carrying
amount may not be recoverable, with the impairment loss recorded in the income statement. Debtors
arising out of direct insurance and reinsurance operations are therefore stated net of specific provisions
against doubtful debts which are made on the basis of reviews conducted by management on pipeline
premium balances, which form part of the direct insurance receivables. Insurance receivables are
derecognised when the derecognition criteria for financial assets have been met.
O.
Direct Insurance and Reinsurance Payables
Direct insurance and reinsurance payables are recognised when due and measured on initial recognition
at the fair value of the consideration received less directly attributable transaction costs.
These liabilities
are derecognised when the obligation under the liability is settled, cancelled or expired.
A financial asset or, when applicable, a part of a financial asset is derecognised when:
•
The rights to the cash flows from the asset have expired; or
•
The Syndicate retains the right to receive cash flows from the asset or has assumed an obligation to
pay the received cash flows in full without material delay to a third party under a ‘pass through’
arrangement and either (a) the Syndicate has transferred substantially all the risks and rewards of
the asset; or (b) the Syndicate has neither transferred nor retained substantially all the risks and
rewards of the asset, but has transferred control of the asset.
33
NOTES TO THE FINANCIAL STATEMENTS
3.
Significant accounting policies (continued)
P.
Deposits with Ceded Undertakings
Deposits with ceding undertakings are funds held by Lloyd’s Europe on behalf of the Syndicate to settle
Part VII claims.
Q.
Operating expenses
Where expenses are incurred by the Managing Agent and Service Company for the administration of the
Syndicate, these expenses are apportioned appropriately based on type of expense. Expenses that are
incurred jointly are apportioned between the Managing Agent, Service Company and the Syndicate on
bases depending on the amount of work performed, resources used, and the volume of business
transacted.
R.
Reinsurers’ commission and profit participation
Reinsurers’ commissions and profit participations, which include reinsurance profit commission and
overriding commission, are treated as a contribution to operating expenses.
S.
RITC and Portfolio Transfer Policy
The Syndicate accepted a reinsurance to close of Syndicate 3334 effective 1 January 2022. It recorded the
assets and liabilities transferred at the fair value on the date the RITC agreement was effective. The
Syndicate had net losses on closure of its 2019 underwriting year of account. The members’ balances
including funds in syndicate were also transferred, and the closing losses for the 2019 were discharged to
Syndicate 4000 in June 2022. Thus, the RITC transaction had no impact on the Syndicate’s profit or net
assets at the time that it was first recorded.
4.
Risk and capital management
Introduction and overview
This note presents information about the nature and extent of insurance and financial risks to which the
Syndicate is exposed, the Managing Agent's objectives, policies and processes for measuring and
managing insurance and financial risks, and for managing the Syndicate's capital.
Risk management framework
The main goal of the Syndicate’s Risk Management Framework is to protect its capital providers from
adverse events that might impede the achievement of sustainable financial performance, lead to erosion
of capital, or cause missed opportunities. The Board recognises the critical importance of having efficient
and effective risk management systems in place to identify, measure, mitigate, monitor, and report on key
risks.
HMA has an established risk management function for the Syndicate with a clear remit from the Board.
This is supplemented with a clear organisational structure with documented delegated authorities and
responsibilities from the Board. Hamilton leverages the ‘three lines of defence’ model, in which the risk
management function is part of the second line of defence. The ongoing communication and collaboration
across the three lines of defence ensures that HMA identifies and manages risks effectively.
The Risk Committee and the Board approve the risk management policies, including the Risk Appetite
Framework, and meet regularly to approve any commercial, regulatory and organisational requirements of
such policies. Significant emphasis is placed on the continuous monitoring, assessment and
documentation of existing and emerging risks and controls.
34
NOTES TO THE FINANCIAL STATEMENTS
A.
Insurance risk
Insurance Risk is a core aspect of the Syndicate’s business model, and it is recognised that uncertainty
associated with the frequency and severity of claims is inherent to general insurance. The Syndicate
therefore seeks a measured amount of this risk in exchange for underwriting profit, provided that the nature
of these risks are adequately assessed, evaluated and priced, based on both internal strategy, approach
and business planning processes, as well as considering the standards and expectations set by regulators
and rating agencies.
The Syndicate is risk averse to subcategories of insurance risk, which, upon materialisation, may impede
or disrupt the aforementioned assessment and evaluation process, such as inadequate reserving, pricing,
catastrophe risk, reinsurance, over-concentration, inadequate claims handling or poor oversight and
governance of underwriting processes (including delegated underwriting).
HMA’s Board approves the risk appetite statement and risk tolerance limit, considering the relativity
between willingness to lose and potential forecast profitability for each year of account. The risk appetite
will therefore reflect the view of the business plan, utilising the Syndicate’s latest approved business plan
assumptions.
The principal risk the Syndicate faces under insurance contracts is that the actual claims and payments or
the timing thereof, differ from expectations. This is influenced by the frequency of claims, severity of
claims, and the development of long-term claims liabilities. The objective of the Syndicate is to ensure that
sufficient reserves are available to cover these liabilities. Management consider that this risk is heightened
in the current environment given uncertainty around inflation in particular and the impact of climate
change on the frequency and severity of natural catastrophes.
The risk exposure is mitigated by diversification across a large portfolio of insurance contracts and
geographical segments. The variability of risks is also improved by careful selection and implementation
of underwriting strategy guidelines, as well as the use of reinsurance arrangements. In light of the current
inflationary environment, specific premium rates have been increased based on inflation projections, with
input from across HMA’s functions and utilising market benchmarks.
The below sets out key sub risk categories of Insurance Risk:
i.
Underwriting risk
Underwriting risk is the risk that the insurance premium will not be sufficient to cover future insurance
losses and associated expenses. This includes the risks that the premium is set at an inadequate level,
inappropriate levels of cover are provided relative to appetite, or that the actual frequency or severity of
claims events will be significantly higher than was expected during the underwriting process.
Insurance
Risk is a core aspect of the Syndicate’s business model, and it is recognised that uncertainty associated
with the frequency and severity of claims is inherent to general insurance. The Syndicate accepts a
measured amount of this risk in exchange for underwriting profit, relying on the skills and experience of our
underwriters and a robust control framework to reduce the likelihood and impact of this risk as far as is
practicable and without unreasonable expense.
HMA has implemented underwriting controls and guidelines which include a review of the underlying risk,
making use of industry data, historical claims experience, actuarial modelling and benchmark pricing.
These controls and guidelines seek to achieve and maintain premium income that supports sustainable
profitability, and ensure the impact of insurance losses is well understood and analysed.
35
NOTES TO THE FINANCIAL STATEMENTS
4.
Risk and capital management (continued)
A.
Insurance Risk (continued)
ii.
Reinsurance
Reinsurance allows the Syndicate to manage capital exposure to both frequency and severity of claims.
This includes the management of any systemic issues impacting a particular area of the account, as well
as catastrophic losses across all business areas. Purchasing of reinsurance is underpinned by extensive
financial modelling and actuarial analysis to optimise the cost and risk management benefits of these
arrangements.
Reinsurance credit risk is mitigated by placement only with providers who meet the Syndicate’s
counterparty security requirements, as well as ongoing and continuous monitoring of recoverable
balances.
ii.
Underwriting Committee
The Syndicate organises underwriting through product areas. The Underwriting Committee provides direct
oversight for each underwriting unit and ultimately reports to the HMA Board via the Chief Underwriting
Officer Reports. Underwriting authorities, underwriting peer reviews, independent review procedures, and
the audit and review of delegated arrangements all contribute to the strength of the underwriting control
environment. Therefore any breaches or issues identified in these areas are therefore escalated to the
Underwriting Committee as necessary.
iii.
Diversification
Risks usually cover twelve months’ duration, with longer duration risks of up to ten years written in selected
accounts such as Political Risks and Mergers & Acquisitions. Risks from insurance contracts are selected
to emanate from a diverse range of sources. The variability of risks and loss experience is mitigated by
careful selection and implementation of underwriting strategies, which are designed to ensure that risks
are diversified in terms of type of risk and level of insured benefits. This is largely achieved through
diversification across industry sectors and geographical segmentation.
iv.
Exposure Management
The Syndicate monitors exposures through a combination of deterministic modelling as part of the
Realistic Disaster Scenarios Framework and stochastic modelling as part of Lloyd’s catastrophe model
reporting requirements. In addition, HMA records and monitors individual risk exposures to region-perils
and on class of business basis to ensure they remain within the policies and guidelines set. Diversification
between region-perils and class of business is considered in Capital Modelling and Exposure Management
modelling processes.
v.
Reserving Risk
HMA’s reserving policy seeks to ensure appropriate allowance for reserving risk and consistency in
reserving from year to year. Booked reserves represent the level of reserves booked at syndicate level and
provide the basis for the syndicate results and forecasts. Actuarial best estimate reserves are intended to
be true best estimates, i.e. estimates of ultimate value claims reserves. These are the basis for internal
reporting and the derivation of expected loss ratios for business planning.
The liabilities established could be significantly lower or higher than the ultimate cost of settling the claims
arising.
36
NOTES TO THE FINANCIAL STATEMENTS
4.
Risk and capital management (continued)
A.
Insurance Risk (continued)
This level of uncertainty varies between the classes of business and the nature of the risk being
underwritten and can arise from developments in case reserving for large losses and catastrophes, or from
changes in estimates of claims IBNR.
vi.
Mitigation
Reserving risk is controlled by the robust application of actuarial methodologies, stepped sign-off
procedures, quarterly tracking of projected ultimate loss ratios, reassessment of methodologies where
appropriate, regular dialogue between actuaries and practitioners, and access to historical loss data. The
use of independent external reserve assessments by professional services firms provides additional risk
mitigation.
Management has considered the effects of the continued heightened inflation environment on claims
reserves and has made appropriate allowance in the reserving analysis and results. Specific
considerations were made around current economic circumstances, social inflation trends and the
potential impact to business portfolio mix when setting reserving assumptions. In addition, the case
reserves are being reviewed regularly to make sure they adequately allow for the latest inflation trends.
HMA is also mindful that there is a risk that climate change may adversely affect reserving requirements
and monitors its climate-related exposure closely, assessing current and future climate change risk in a
variety of ways, including stress and scenario testing, over short- and long-term time horizons.
vii.
Sensitivity to insurance risk
The liabilities established could be significantly lower or higher than the ultimate cost of settling the claims
arising. This level of uncertainty varies between the classes of business and the nature of the risk being
underwritten and can arise from developments in case reserving for large losses and catastrophes, or from
changes in estimates of claims IBNR.
The following table presents the profit and loss impact of the sensitivity of the value of insurance liabilities
disclosed in the accounts to potential movements in the assumptions applied within the technical
provisions. Given the nature of the business underwritten by the Syndicate, the approach to calculating
the technical provisions for each class can vary and as a result the sensitivity performed is to apply a
beneficial and adverse risk margin to the total insurance liability. The amount disclosed in the table
represents the profit or loss impact of an increase or decrease in the insurance liability as a result of
applying the sensitivity.
The amount disclosed for the impact on claims outstanding – net of reinsurance
represents the impact on both the profit and loss for the year and member balance.
General insurance business sensitivities as at 31 December 2025
Sensitivity
5.0%
-5.0%
$000
$000
Claims outstanding – gross of reinsurance
(71,651 )
Claims outstanding – net of reinsurance
(43,406 )
General insurance business sensitivities as at 31 December 2024
(restated)
Sensitivity
5.0%
-5.0%
$000
$000
Claims outstanding – gross of reinsurance
(58,752 )
Claims outstanding – net of reinsurance
(35,014 )
37
NOTES TO THE FINANCIAL STATEMENTS
4.
Risk and capital management (continued)
B.
Financial risk
The focus of financial risk management for the Syndicate is ensuring that the proceeds from its financial
assets are sufficient to fund the obligations arising from its insurance contracts. The goal of the investment
management process is to optimise the risk-adjusted investment income and risk-adjusted total return by
investing in a diversified portfolio of securities, whilst ensuring that the assets and liabilities are managed
on a cash flow and duration matching basis.
a.
Credit risk
Credit risk is the risk that one party to a financial relationship or contract will cause a financial loss to the
other party by failing to discharge an obligation. HMA and the Syndicate has a risk averse appetite to credit
risk arising from dealings and interactions with counterparties. The key aspect of credit risk is the risk of
default by a reinsurer, insurance intermediary or debt holder.
The table below provides information regarding the credit risk exposure of the Syndicate at 31 December
2025 by classifying assets according to Standard & Poor’s credit ratings (or equivalents from other
agencies) of the counterparties for assets not yet due. AAA is the highest possible rating. Assets that fall
outside the range of AAA to BBB and below are classified as speculative grade and have not been rated.
2025
AAA
AA
A
BBB
Other
Not
rated
Total
$000
$000
$000
$000
$000
$000
$000
Debt securities and other fixed income
securities
Syndicate loans to central fund
Other investments
Deposits with ceding undertakings
Reinsurers’ share of claims outstanding
Debtors arising out of direct insurance
operations
Debtors arising out of reinsurance operations
Cash at bank and in hand
Other debtors and accrued interest
Total
2024 (restated)
AAA
AA
A
BBB
Other
Not
rated
Total
$000
$000
$000
$000
$000
$000
$000
Debt securities and other fixed income
securities
Syndicate loans to central fund
Other investments
Deposits with ceding undertakings
Reinsurers’ share of claims outstanding
Debtors arising out of direct insurance
operations
Debtors arising out of reinsurance operations
Cash at bank and in hand
Other debtors and accrued interest
Total
38
NOTES TO THE FINANCIAL STATEMENTS
4.
Risk and capital management (continued)
B.
Financial risk (continued)
a.
Credit risk (continued)
The HMA Ceded Reinsurance Working Group monitors all reinsurer counterparties with whom the
Syndicate conducts business and sets credit limits for the recoveries due from individual reinsurers. This
includes an analysis of the financial strength of the reinsurer, its payment performance record and
standing in the market. Thereafter, with the assistance of outside expertise, management of reinsurer
credit risk follows active and regular review of credit ratings and financial exposure to all approved
reinsurers. Receivables due or expected from coverholders and brokers are monitored on an ongoing
basis, with an established escalation process pertaining to aged debt.
Investment credit risk is managed through investment management guidelines and monitored by the
Investments Working Group.
The tables below show the maximum exposure to credit risk (including an analysis of financial assets
exposed to credit risk) for the components of the balance sheet. The maximum exposure is shown gross,
before the effect of any mitigation arrangements.
i.
Financial assets that are past due or impaired
The Syndicate has debtors arising from direct insurance and reinsurance operations that are past due but
not impaired at the reporting date.
These debtors have been individually assessed for impairment by considering information such as the
occurrence of significant changes in the counterparty's financial position, patterns of historical payment
information and disputes with counterparties, if any.
An analysis of the carrying amounts of past due or impaired debtors is presented in the table below.
2025
Neither
past due
nor
impaired
assets
Past due
but not
impaired
assets
Gross
value of
impaired
assets
Impairment
allowance
Total
$000
$000
$000
$000
$000
Debt securities and other fixed income
securities
Other investments
Deposits with ceded undertakings
Reinsurers' share of claims outstanding
Debtors arising out of direct insurance
operations
Debtors arising out of reinsurance
operations
Other debtors and accrued interest
Cash at bank and in hand
Total
39
NOTES TO THE FINANCIAL STATEMENTS
4.
Risk and capital management (continued)
B.
Financial risk (continued)
a.
Credit risk (continued)
i.
Financial assets that are past due or impaired (continued)
2024 (restated)
Neither
past due
nor
impaired
assets
Past due
but not
impaired
assets
Gross
value of
impaired
assets
Impairment
allowance
Total
$000
$000
$000
$000
$000
Debt securities and other fixed income
securities
Syndicate loans to central fund
Other investments
Deposits with ceded undertakings
Reinsurers' share of claims outstanding
Debtors arising out of direct insurance
operations
Debtors arising out of reinsurance
operations
Other debtors and accrued interest
Cash at bank and in hand
Total
The table below sets out the age analysis of financial assets that are past due but not impaired at the
balance sheet date:
Past due but not impaired
2025
0-3
months
past due
3-6
months
past due
6-12
months
past due
Greater
than 1
year
past due
Total
$000
$000
$000
$000
$000
Debtors arising out of direct insurance operations
Debtors arising out of reinsurance operations
Total
Past due but not impaired
2024 (restated)
0-3
months
past due
3-6
months
past due
6-12
months
past due
Greater
than 1
year
past due
Total
$000
$000
$000
$000
$000
Debtors arising out of direct insurance operations
Debtors arising out of reinsurance operations
Total
40
NOTES TO THE FINANCIAL STATEMENTS
4.
Risk and capital management (continued)
B.
Financial risk (continued)
b.
Liquidity risk
Liquidity Risk is the risk that the Syndicate, although solvent, either does not have available sufficient
financial resources to enable it to meet its obligations as they fall due or can secure such resources only
at excessive cost. In respect of catastrophic events there may also be a liquidity risk associated with the
timing differences between gross cash outflows and expected reinsurance recoveries.
i.
Management of liquidity risk
The Syndicate is subject to calls on cash resources, mainly in respect of claims on insurance business, on
a daily basis.
HMA operates and maintains procedures designed to ensure that cash is available to settle
liabilities and other obligations when due without excessive cost to the business. The procedures set limits
for cash required to meet expected cash flows. Contingency arrangements exist to meet liquidity
requirements in extreme circumstances.
The Syndicate’s approach to managing its liquidity risk is as follows:
•
Forecasts are prepared and revised on a regular basis to predict cash outflows from insurance
contracts over the short, medium and long term;
•
The Syndicate purchases assets with durations not greater than its estimated insurance contract
outflows;
•
Assets purchased by the Syndicate are required to satisfy specified marketability requirements;
•
The Syndicate maintains cash and liquid assets to meet daily calls on its insurance contracts; and
•
The Syndicate regularly updates its contingency funding plans to ensure that adequate liquid
financial resources are in place to meet obligations as they fall due in the event of reasonably
foreseeable abnormal circumstances.
•
HMA’s Risk & Actuarial team perform annual stress testing of liquidity risk, considering the impact
of extreme catastrophe losses to liquidity availability.
ii.
Maturity analysis of liabilities
The table below summarises the maturity profile of the Syndicate’s financial liabilities based on remaining
undiscounted contractual obligations, including interest payable, and outstanding claim liabilities based
on the estimated timing of claim payments resulting from recognised insurance liabilities. Repayments
which are subject to notice are treated as if notice were to be given immediately.
2025
No
maturity
stated
0-1 Years
1-3 Years
3-5 Years
> 5 Years
Total
$000
$000
$000
$000
$000
$000
Claims outstanding
Creditors
Total
41
NOTES TO THE FINANCIAL STATEMENTS
4.
Risk and capital management (continued)
B.
Financial risk (continued)
b.
Liquidity risk (continued)
ii.
Maturity analysis of liabilities (continued)
2024 (restated)
No maturity
stated
0-1 Years
1-3 Years
3-5 Years
> 5 Years
Total
$000
$000
$000
$000
$000
$000
Claims outstanding
Creditors
Total
C.
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument or insurance contract
will fluctuate because of changes in market prices.
The objective of market risk management is to manage and control market risk exposures within
acceptable parameters, while optimising the return on risk. The nature of the Syndicate exposures to
market risk and its objectives, policies and processes for managing market risk have not changed
significantly from the prior year. The Syndicate’s investment strategy is in line with the prudent person
principle, with investments held in quoted debt securities and government bonds that are rated investment
grade (BBB or better).
The value of the investments may fluctuate as a result of changes in market prices,
changes in central bank base interest rates, changes in credit spreads, or changes in foreign currency in
which investments are denominated.
The investment policy has been set by the Board and management of the Company’s investments is
outsourced to an external investment manager. An investment management agreement has been agreed
with the external investment manager which includes guidelines setting out risk appetite towards duration,
credit quality, foreign exchange risk, diversification, and ESG benchmarks. The investment strategy and
guidelines prioritise preservation of capital to support underwriting, as well as ensuring appropriate asset
duration to match liabilities.
i.
Management of market risks
For each of the major components of market risk the Syndicate has policies and procedures in place which
detail how each risk should be managed and monitored. The management of each of these major
components of major risk and the exposure of the Syndicate at the reporting date to each major risk are
addressed below.
ii.
Interest rate risk
Interest rate risk is the risk that the fair value and/or future cash flows of a financial instrument will
fluctuate because of changes in interest rates.
The Syndicate is exposed to interest rate risk through its investment portfolio, borrowings and cash and
cash equivalents.
42
NOTES TO THE FINANCIAL STATEMENTS
4.
Risk and capital management (continued)
C.
Market risk (continued)
ii.
Interest rate risk (continued)
The risk of changes in the fair value of these assets is managed by primarily investing in short-duration
financial investments (in order to match the average duration of insurance liabilities) and cash and cash
equivalents. The Investments Working Group monitors the duration of these assets – through the provision
of quarterly reports from the external investment manager – targeting an investment portfolio duration that,
in the event of changes in interest rates, always maintains the internal capital requirements.
iii.
Currency risk
The Syndicate writes business primarily in US dollars, pounds sterling, euros, Canadian dollars and
Australian dollars and is therefore exposed to currency risk arising from fluctuations in these exchange
rates.
The foreign exchange policy is to maintain assets in the currency in which the cash flows from liabilities
are to be settled in order to hedge the currency risk inherent in these contracts. The table below
summarises the carrying value of the Syndicate's assets and liabilities, at the reporting date:
2025
AUD
CAD
EUR
GBP
USD
Total
$000
$000
$000
$000
$000
$000
Investments
Reinsurers' share of technical provisions
Debtors
Other assets
Prepayments and accrued income
Total assets
Technical provisions
(73,249 )
(91,017 )
(136,770 )
(269,175 )
(1,364,101 )
(1,934,312 )
Creditors
(1,307 )
(1,887 )
(16,389 )
(16,750 )
(338,646 )
(374,979 )
Accruals and deferred income
(78 )
(99 )
(3,271 )
(3,080 )
(53,137 )
(59,665 )
Total liabilities
(74,634 )
(93,003 )
(156,430 )
(289,005 )
(1,755,884 )
(2,368,956 )
Total capital and reserves
(11,436 )
(11,465 )
(9,541 )
(121,897 )
(146,174 )
2024 (restated)
AUD
CAD
EUR
GBP
USD
Total
$000
$000
$000
$000
$000
$000
Investments
Reinsurers' share of technical provisions
Debtors
Other assets
Prepayments and accrued income
Total assets
Technical provisions
(45,563 )
(66,493 )
(99,826 )
(222,212 )
(1,153,835 )
(1,587,929 )
Creditors
(974 )
(9,535 )
(14,710 )
(285,851 )
(309,747 )
Accruals and deferred income
(55 )
(120 )
(1,999 )
(1,493 )
(37,151 )
(40,818 )
Total liabilities
(46,592 )
(65,290 )
(111,360 )
(238,415 )
(1,476,837 )
(1,938,494 )
Total capital and reserves
(11,249 )
(11,014 )
(5,545 )
(66,751 )
(84,448 )
43
NOTES TO THE FINANCIAL STATEMENTS
4.
Risk and capital management (continued)
C.
Market risk (continued)
iv.
Sensitivity analysis to market risks
The analysis below is performed for reasonably possible movements in market indices on financial
instruments with all other variables held constant, showing the impact on the result before tax due to
changes in fair value of financial assets and liabilities (whose fair values are recorded in the profit and loss
account) and member’s balances.
2025
Impact on
results
2025
Impact on
member’s
balances
2024
Impact on
results
(restated)
2024
Impact on
member’s
balances
(restated)
$000
$000
$000
$000
Interest rate risk
Impact of 50 basis point increase on result
(19,123 )
(9,742 )
Impact of 50 basis point decrease on result
(14,423 )
(9,816 )
A 50-basis point increase (or decrease) in yield curves has been selected on the basis that these are
considered to be reasonably possible changes over the following year.
The sensitivity analysis demonstrates the effect of a change in a key variable while other assumptions
remain unchanged. However, the occurrence of a change in a single market factor may lead to changes in
other market factors as a result of correlations.
The sensitivity analyses do not take into consideration that the Syndicate's financial investments are
actively managed. Additionally, the sensitivity analysis is based on the Syndicate's financial position at the
reporting date and may vary at the time that any actual market movement occurs. As investment markets
move past pre-determined trigger points, action would be taken which would alter the Syndicate's
position.
D.
Capital management
i.
Capital framework at Lloyd's
The Society of Lloyd's (Lloyd's) is a regulated undertaking and subject to supervision by the Prudential
Regulatory Authority (PRA) under the Financial Services and Markets Act 2000, and in accordance with the
Solvency II Framework (“Solvency II”).
Within this supervisory framework, Lloyd's applies capital requirements at member level and centrally to
ensure that Lloyd's would comply with the Solvency II requirements, and beyond that to meet its own
financial strength, licence and ratings objectives.
Although, as described below, Lloyd's capital setting processes use a capital requirement set at syndicate
level as a starting point, the requirement to meet Solvency II and Lloyd's capital requirements apply at
overall and member level only respectively, not at syndicate level. Accordingly, the capital requirement in
respect of Syndicate 4000 is not disclosed in these financial statements.
ii.
Lloyd’s capital setting process
To meet Lloyd's requirements, each Syndicate is required to calculate its Solvency Capital Requirement
(SCR) for the prospective underwriting year. This amount must be sufficient to cover a 1 in 200-year loss,
reflecting uncertainty in the ultimate run-off of underwriting liabilities (SCR ‘to ultimate').
44
NOTES TO THE FINANCIAL STATEMENTS
4.
Risk and capital management (continued)
D.
Capital Management (continued)
iii.
Lloyd’s capital setting process (continued)
Each Syndicate must also calculate its SCR at the same confidence level but reflecting uncertainty over a
one-year time horizon (one year SCR) for Lloyd's to use in meeting Solvency II requirements. The SCRs of
each Syndicate are subject to review by Lloyd's and approval by the Lloyd's Capital and Planning Group.
A syndicate may be comprised of one or more underwriting members of Lloyd's. Each member is liable for
its own share of underwriting liabilities on the Syndicates on which it is participating but not other members'
shares. Accordingly, the capital requirements that Lloyd's sets for each member operates on a similar basis.
Each member's SCR shall thus be determined by the sum of the member's share of the Syndicate SCR ‘to
ultimate'.
Where a member participates on more than one syndicate, a credit for diversification is provided to reflect
the spread of risk, but consistent with determining an SCR which reflects the capital requirement to cover a
1 in 200 loss ‘to ultimate' for that member.
Over and above this, Lloyd's applies a capital uplift to the member's capital requirement, known as the
Economic Capital Assessment (ECA). The purpose of this uplift, which is a Lloyd's not a Solvency II
requirement, is to meet Lloyd's financial strength, licence and ratings objectives. The capital uplift applied
for 2025 was 35% (2024: 35%) of the member's SCR ‘to ultimate'.
iv.
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 (FAL), assets held and managed within a syndicate (FIS), or as the member's share of the members'
balances on each syndicate on which it participates.
Accordingly, all of the assets less liabilities of the Syndicate, as represented in the member’s balances
reported on the balance sheet on page 21, represent resources available to meet members' and Lloyd's
capital requirements.
E.
Regulatory Risk
HMA and the Syndicate has a risk averse appetite towards all forms of non-compliance with laws and
regulations. There is particularly averse appetite towards non-compliance with laws and regulations arising
from the conduct of business, conduct towards our customers, regulatory oversight and approvals of our
business model and structure.
HMA is required to comply with the requirements of the Prudential Regulation Authority, the Financial
Conduct Authority and Lloyd’s.
Lloyd’s requirements include those imposed on the Lloyd’s market by
overseas regulators. Regulatory risk is the risk of loss owing to a breach of regulatory requirements or failure
to respond to regulatory change. HMA has a Compliance Officer, who monitors regulatory developments and
assesses the impact on HMA policy. HMA also carries out a compliance-monitoring programme as
documented in the Compliance Framework. Additional consideration has been given to compliance with
climate and sustainability-related legislation, with monitoring of the regulatory landscape ongoing.
F.
Operational Risk
The Syndicate is potentially exposed to direct or indirect losses resulting from inadequate or failed internal
processes, systems, or people, or from external events. HMA and the Syndicate has a risk averse appetite to
operational risk.
45
NOTES TO THE FINANCIAL STATEMENTS
4.
Risk and capital management (continued)
G.
Operational Risk (continued)
HMA seeks to manage this risk with detailed procedure manuals and policies set out standards and
expectations for operational activities. The structured programme of testing of processes and systems by
internal audit also aims to determine adequate levels of operational continuity and resilience.
H.
Climate Risk
HMA’s Board is responsible for understanding and assessing the financial risks from climate change that
affect the syndicate. The Board manages these risks through governance and review of HMA’s activities led
by the Risk Committee.
HMA’s risk management framework provides a consistent approach to the identification, measurement,
mitigation, monitoring and reporting of all risks (both known and emerging), including the various impacts of
climate risk on the Syndicate’s risk profile. HMA does not believe that these financial statements are subject
to material uncertainty arising from climate change risk.
46
NOTES TO THE FINANCIAL STATEMENTS
5.
Analysis of underwriting result
An analysis of the underwriting result before investment return is presented in the table below:
2025
Gross
premiums
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
result
$000
$000
$000
$000
$000
$000
Direct insurance
Accident and health
(47,886 )
(39,920 )
(6,261 )
(2,174 )
Motor (other classes)
(2,674 )
(1,539 )
(861 )
(713 )
Marine, aviation, and
transport
(28,162 )
(15,427 )
Fire and other damage to
property
(64,644 )
(46,292 )
(30,267 )
(2,325 )
Third party liability
(172,872 )
(99,495 )
(14,328 )
Credit and suretyship
(21,586 )
(6,421 )
(3,529 )
Total Direct Business
(337,824 )
(209,094 )
(34,022 )
Reinsurance acceptances
(154,288 )
(66,753 )
(21,173 )
Total Reinsurance
accepted
261,621
251,999
(154,288)
(66,753)
(21,173)
9,785
Total
(492,112 )
(275,847 )
(55,195 )
The below is an additional disclosure for Lloyd’s reporting purposes and is included to facilitate the
classification of the above segments into the Lloyd’s aggregate classes of business:
2025
Gross
premiums
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
result
$000
$000
$000
$000
$000
$000
Additional analysis
Fire and damage to property of which is:
Specialities
(7,484 )
(12,788 )
(23,393 )
(17,016 )
Energy
(1,907 )
(1,898 )
(5,468 )
Third party liability of which
is:
Energy
(847 )
(450 )
(983 )
(568 )
47
NOTES TO THE FINANCIAL STATEMENTS
5.
Analysis of underwriting result (continued)
2024 (restated)
Gross
premiums
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
result
$000
$000
$000
$000
$000
$000
Direct insurance
Accident and health
(40,974 )
(28,013 )
(3,189 )
Motor (other classes)
(319 )
(105 )
(28 )
(75 )
Marine, aviation, and
transport
(24,732 )
(13,120 )
(4,941 )
Fire and other damage to
property
(43,446 )
(36,310 )
(26,837 )
Third party liability
(176,049 )
(75,350 )
(11,469 )
Credit and suretyship
(2,968 )
(5,775 )
(2,336 )
Miscellaneous
(10,872 )
(2,617 )
(1,386 )
Total Direct Business
(299,360 )
(161,290 )
(47,496 )
Reinsurance acceptances
(138,707 )
(59,106 )
(75 )
Total Reinsurance
accepted
222,448
204,675
(138,707)
(59,106)
(75)
6,787
Total
(438,067 )
(220,396 )
(47,571 )
2024 (restated)
Gross
premiums
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
result
$000
$000
$000
$000
$000
$000
Additional analysis
Fire and damage to property of which is:
Specialities
(7,006 )
(10,981 )
(4,730 )
Energy
(6 )
(6 )
(1 )
Third party liability of which is:
Energy
The reinsurance balance is the aggregate total of all those items in the technical account which relate to
outwards reinsurance transactions including items recorded as reinsurance commission and profit
participations. All premiums were concluded in the UK.
The gross premiums written for direct insurance by location (where the contracts were concluded) is
presented in the table below:
2025
2024
$000
$000
(restated)
United Kingdom
European Union Member States
US
Rest of the world
Total gross premiums written
48
NOTES TO THE FINANCIAL STATEMENTS
6.
Net operating expenses
2025
2024
$000
$000
(restated)
Acquisition costs
Change in deferred acquisition costs
(15,390 )
(19,636 )
Administrative expenses
Members’ standard personal expenses
Reinsurance commissions and profit participation
(61,962 )
(50,677 )
Net operating expenses
Total commissions for direct insurance business for the year amounted to:
2025
2024
$000
$000
(restated)
Total commission for direct insurance business
Administrative expenses include:
2025
2024
$000
$000
(restated)
Auditors’ remuneration:
fees payable to the Syndicate's auditor for the audit of these financial statements
fees payable to the Syndicate's auditor and its associates in respect of other
services pursuant to legislation
7.
Key management personnel compensation
The directors of Hamilton Managing Agency Limited received the following aggregate remuneration charged
to the Syndicate and included within net operating expenses:
2025
2024
$000
$000
(restated)
Directors' Emoluments
Total
1,496
1,011
This excludes a number of deferred awards which vested during the year, which would have been partially
charged to the Syndicate (in this and prior years). No other director related compensation or amounts
considered to represent key management personnel compensation was charged to the Syndicate.
The active underwriter received the following aggregate remuneration charged to the Syndicate.
2025
2024
$000
$000
(restated)
Emoluments
Total
716
865
49
NOTES TO THE FINANCIAL STATEMENTS
8.
Staff numbers and costs
All staff in the UK were employed by Hamilton UK Services Limited. The average number of employees
employed by the UK service company in the UK but working for the Syndicate during the year was as follows:
2025
2024
Number
Number
Administration and finance
Underwriting
Claims
Compliance
41
34
Other
55
49
Total
The following amounts were recharged to the Syndicate in respect of salary costs:
2025
2024
$000
$000
(restated)
Wages and salaries
Social security costs
Other pension costs
Other
Total
In addition, staff costs of $4.5m were recharged to the Syndicate from other Group locations (2024: $4.0m).
9.
Investment return
2025
2024
$000
$000
(restated)
£0
Interest and similar income
From financial instruments designated at fair value through profit or loss
Interest and similar income
Interest on cash at bank
Other income from investments
From financial instruments designated at fair value through profit or loss
Gains on the realisation of investments
Losses on the realisation of investments
(739 )
(573 )
Unrealised gains on investments
Unrealised losses on the investments
(2,185 )
(3,716 )
Investment management expenses
(847 )
(655 )
Total investment return
Transferred to the technical account from the non-technical account
50
NOTES TO THE FINANCIAL STATEMENTS
10.
Financial investments
Carrying value
Cost
2025
2024
2025
2024
$000
$000
(restated)
$000
$000
(restated)
Shares and other variable yield securities and units in
unit trusts
Debt securities and other fixed income securities
Syndicate
loans t
o central fund
Other investments
Total financial investments
The table below presents an analysis of financial investments by their measurement classification.
2025
2024
$000
$000
(restated)
Financial assets 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
- Included in the level 1 category are 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
- Included in the level 2 category are 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
- Included in the level 3 category are 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. These inputs are developed based on the best information
available, which might include the Syndicate’s own data.
The table below analyses financial instruments held at fair value in the Syndicate's balance sheet at the
reporting date by its level in the fair value hierarchy.
51
NOTES TO THE FINANCIAL STATEMENTS
10.
Financial investments (continued)
2025
Level 1
Level 2
Level 3
Assets
held at
amortised
cost
Total
$000
$000
$000
$000
$000
Shares and other variable yield securities and
units in unit trusts
Debt securities and other fixed income
securities
Syndicate loans to central fund
Other investments
Total financial Investments
2024 (restated)
Level 1
Level 2
Level 3
Assets
held at
amortised
cost
Total
$000
$000
$000
$000
$000
Shares and other variable yield securities and
units in unit trusts
Debt securities and other fixed income
securities
Syndicate loans to central fund
Other investments
Total financial Investments
Other investments comprise overseas deposits which are lodged as a condition of conducting underwriting
business in certain countries.
The level 3 assets are loans provided by the Syndicate to the Lloyd’s Central Fund and are carried at fair
value using information provided by Lloyd’s. These instruments are not tradeable, and their valuation
includes significant unobservable inputs. The receivable balance at 31 December 2024 was repaid in full
during 2025.
Information on the methods and assumptions used to determine fair values for each major category of
financial instrument measured at fair value is provided below.
Debt securities are generally valued using prices provided by external pricing vendors. Pricing vendors will
often determine prices by consolidating prices of recent trades for identical or similar securities obtained
from a panel of market makers into a composite price.
The pricing service may make adjustments for the elapsed time from a trade date to the valuation date to
take into account available market information. Lacking recently reported trades, pricing vendors will use
modelling techniques to determine a security price.
Some government and supranational securities are listed on recognised exchanges and are generally
classified as level 1 in the fair value hierarchy.
52
NOTES TO THE FINANCIAL STATEMENTS
10.
Financial investments (continued)
Those that are not listed on a recognised exchange are generally based on composite prices of recent trades
in the same instrument and are generally classified as level 2 in the fair value hierarchy.
Corporate bonds, including asset backed securities, that are not listed on a recognised exchange or are
traded in an established over-the-counter market are also mainly valued using composite prices. Where
prices are based on multiple quotes and those quotes are based on actual recent transactions in the same
instrument the securities are classified as level 2, otherwise they are classified as level 3 in the fair value
hierarchy.
At the reporting date Level 1 and Level 2 financial assets and liabilities were valued using valuation
techniques based on observable market data. All of the investments categorised as Level 3 are fair valued
based on the inputs to the valuation technique used.
11.
Debtors arising out of direct insurance operations
2025
2024
$000
$000
(restated)
Due within one year
Due after one year
Total
12.
Debtors arising out of reinsurance operations
2025
2024
$000
$000
(restated)
Due within one year
Due after one year
Total
13.
Other debtors
2025
2024
$000
$000
(restated)
Other
Total
Other above is comprised of:
2025
2024
$000
$000
(restated)
Consortia fees receivable
5,720
5,885
Undistributed profits
8,025
5,772
Overseas taxes
686
3,275
Sundry
607
14
Total
15,038
14,946
53
NOTES TO THE FINANCIAL STATEMENTS
14.
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
2024 (restated)
Gross
Reinsurance
Net
Gross
Reinsurance
Net
$000
$000
$000
$000
$000
$000
Balance at 1 January
(33,251 )
(28,854 )
Incurred deferred acquisition
costs
(69,730 )
(55,364 )
Amortised deferred acquisition
costs
(228,325 )
(166,363 )
(182,424 )
(131,747 )
Foreign exchange movements
(471 )
(1,325 )
(1,035 )
Total
(41,490 )
(33,251 )
15.
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. The table illustrates the most recent ten underwriting
years. This includes the full history for Syndicate S3334’s 2018 & 2019 underwriting years of accounts.
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 claims development:
Pure underwriting
year
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Total at 31
December
2025
$000
$000
$000
$000
$000
$000
$000
$000
$000
$000
$000
Estimate of gross
claims at the end of
the underwriting year
one year later
two years later
three years later
four years later
five years later
six years later
seven years later
eight years later
nine years later
Estimate of gross
claims reserve
Provision in respect of
prior years
Less: gross claims
paid
(75,883 )
(172,783 )
(163,070 )
(299,564 )
(221,047 )
(162,796 )
(171,417 )
(112,257 )
(68,131 )
(5,223 )
(1,452,171 )
Gross claims reserve
54
NOTES TO THE FINANCIAL STATEMENTS
15.
Claims development (continued)
Net Claims Development
Pure underwriting
year
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Total at 31
December
2025
$000
$000
$000
$000
$000
$000
$000
$000
$000
$000
$000
Estimate of net claims
at the end of the
underwriting year
one year later
two years later
three years later
four years later
five years later
six years later
seven years later
eight years later
nine years later
Estimate of net
claims reserve
Provision in respect of
prior years
Less: net claims paid
(50,959 )
(96,695 )
(88,239 )
(192,693 )
(131,261 )
(104,040 )
(104,968 )
(77,114 )
(51,566 )
(4,031 )
(901,566 )
Net claims reserve
16.
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.
Loss Reserves
2025
2024 (restated)
Gross
provisions
Reinsurance
assets
Net
Gross
provisions
Reinsurance
assets
Net
$000
$000
$000
$000
$000
$000
Balance at 1 January
(474,762 )
(437,537 )
Claims paid during the year
(260,002 )
(152,078 )
(250,754 )
(140,676 )
Expected cost of current year
claims
(168,622 )
(170,962 )
Change in estimates of prior
year provisions
(64,681 )
(38,649 )
(103,330 )
(4,279 )
(2,420 )
Foreign exchange movements
(6,657 )
(12,467 )
(4,482 )
Other
Closing balance
(564,910 )
(474,762 )
Other relates to the settlement of intra-group quota share arrangements.
55
NOTES TO THE FINANCIAL STATEMENTS
16.
Technical provisions (continued)
Unearned Premiums
2025
2024 (restated)
Gross
provisions
Reinsurance
assets
Net
Gross
provisions
Reinsurance
assets
Net
$000
$000
$000
$000
$000
$000
Balance at 1 January
(163,058 )
(141,446 )
Premiums written during
the year
(359,476 )
(290,464 )
Premiums earned during
the year
(877,965 )
(553,537 )
(735,789 )
(468,438 )
Foreign exchange
movements
(4,729 )
(5,164 )
(3,663 )
Closing balance
(202,835 )
(163,058 )
Refer to Note 4 for the sensitivity analysis performed over the value of insurance liabilities, disclosed in the
accounts, to potential movements in the assumptions applied within the technical provisions.
17.
Creditors arising out of direct insurance operations
2025
2024
$000
$000
(restated)
Due within one year
Total
18.
Creditors arising out of reinsurance operations
2025
2024
$000
$000
(restated)
Due within one year
Due after one year
Total
19.
Other creditors
2025
2024
$000
$000
(restated)
Other related party balances (non-syndicates)
Other liabilities
Total
Other liabilities above is comprised of:
2025
2024
$000
$000
(restated)
Funds withheld balances
3,389
6,310
Other sundry
75
434
Total
3,464
6,744
56
NOTES TO THE FINANCIAL STATEMENTS
20.
Accruals & deferred income
2025
2024
$000
$000
(restated)
Reinsurance ceded commissions
41,490
33,251
Other accruals & deferred income
18,175
7,567
Total accruals and deferred income
59,665
40,818
21.
Cash and cash equivalents
2025
2024
$000
$000
(restated)
Cash at bank and in hand
Short term debt instruments presented within other financial investments
Total cash and cash equivalents
Only deposits with credit institutions with maturities of three months or less that are used by the Syndicate
in the management of its short-term commitments are included in cash and cash equivalents.
Of the total cash and cash equivalents, the following amount was held in regulated bank accounts in
overseas jurisdictions:
2025
2024
$000
$000
(restated)
Cash and cash equivalents held in regulated accounts
22.
Analysis of net debt
2025
At 1 January
2025
Cash flows
Fair value and
exchange
movements
At 31
December
2025
$000
$000
$000
$000
Cash and cash equivalents
(4,223 )
Other
(38,222 )
Total
(42,445 )
2024 (restated)
At 1 January
2024
Cash flows
Fair value and
exchange
movements
At 31
December
2024
$000
$000
$000
$000
Cash and cash equivalents
(9,355 )
(1,047 )
Other
Total
(2,499 )
(1,047 )
57
NOTES TO THE FINANCIAL STATEMENTS
23.
Related parties
Hamilton Group
The Syndicate is managed by Hamilton Managing Agency Limited (“HMA”). The immediate parent company
of HMA is Hamilton UK Holdings Limited (“HUK”) and the ultimate parent company is Hamilton Insurance
Group, Ltd. (“Hamilton Group”).
Capital to support the underwriting of the Syndicate is provided by Hamilton
Corporate Member Limited.
The managing agency fee charged by HMA to the Syndicate in 2025 was $4.8m (2024: $7.0m) with no balance
outstanding at year end (2024: nil).
The Hamilton Group has structured itself such that all entities, including HMA, has services provided to them
through an intragroup services company structure. During 2025, Hamilton UK Services Ltd (“HUKS”), a fellow
associate of HMA, recharged administrative expenses of $66.3m (2024: $59.3m) direct to the Syndicate. This
is under the terms of the applicable services agreement where HUKS provides required services to HMA,
including staff, where all staff are employed by HUKS. The balance payable to HUKS at year end by the
Syndicate was $10.6m (2024: $9.7m).
The Syndicate has engaged in transactions, including entering into (re)insurance contracts, with other
entities within the Hamilton Group. All transactions are subject to HMA’s internal controls, ensuring that
these are compliant with Lloyd’s Related Party Byelaw provisions and are conducted on an arm’s length
basis. A summary of the material transactions is provided below:
•
Hamilton Re, Ltd (“HRE”), a registered Class 4 insurer incorporated in Bermuda – the Syndicate is
party to a quota share arrangement with HRE to reinsure its underwriting business. The agreement
covers the 2017 to 2019 years of account of Syndicate 3334, as well as the 2020 to 2025 years of
account of Syndicate 4000. During the year, the Syndicate ceded premium of $149.1m as part of this
arrangement (2024: $125.0m). The net balance payable to HRE in respect of this reinsurance
agreement at the balance sheet date was $34.0m (2024: $24.5m).
•
Hamilton Managing General Agency Americas LLC (“HMGAA”) – HMGAA is a US licensed insurance
intermediary and has been granted delegated underwriting authority to source and write insurance
business on behalf of the Syndicate. In consideration of the service that HMGAA provides, it charges
a commission to offset the expenses it incurs on behalf of the Syndicate. During the year, the total
charged to the Syndicate was $11.4m (2024: $10.5m). At the year end, the balance payable to
HMGAA by the Syndicate was $2.3m (2024: $1.0m).
These disclosure requirements are in addition to the requirement to disclose the compensation of key
management personnel. This disclosure is given in note 7.
Syndicate 1947
The Syndicate manages Space consortia whose partners include Syndicate 1947, which was also managed
by HMA up until 30 June 2025. The management fees charged to Syndicate 1947 during the year were $0.1m
(2024: $0.2m), with no balances outstanding at year end (2024: nil).
58
NOTES TO THE FINANCIAL STATEMENTS
23.
Related parties (continued)
Ada Re, Ltd
In 2020, the Hamilton Group established Ada Capital Management Limited, an insurance agent incorporated
and regulated in Bermuda, which is authorised to underwrite on behalf of Ada Re, Ltd. Ada Re, Ltd is a special
purpose insurer funded by third party investors and formed to provide fully collateralised reinsurance and
retrocession to both the Hamilton Group and third party cedents. Business ceded between Ada Re and the
Syndicate during the year was a credit of $0.1m (2024: debit of $0.2m)
24.
Off-balance sheet items
The Syndicate has not been a party to any arrangements which are not reflected in its balance sheet, where
material risks and benefits arise to the Syndicate.
25.
Post balance sheet events
The 2023 year of account closed with a profit of $110.8m. In line with the closed year process in the Lloyd’s
market this profit will be settled to the corporate member in April 2026.
26.
Foreign exchange rates
The following currency exchange rates have been used for principal foreign currency transactions:
2025
2024
Start of period
rate
End of period
rate
Average rate
Start of period
rate
End of period
rate
Average rate
AUD
CAD
EUR
GBP
USD
27.
Funds at Lloyd's
Every member is required to hold capital at Lloyd's which is held in trust and known as Funds at Lloyd's
(‘FAL'). These funds are intended primarily to cover circumstances where Syndicate assets prove insufficient
to meet participating members' underwriting liabilities. The level of FAL that Lloyd's requires a member to
maintain is determined by Lloyd's based on Prudential Regulatory Authority requirements and resource
criteria. The determination of FAL has regard to a number of factors including the nature and amount of risk
to be underwritten by the member and the assessment of the reserving risk in respect of business that has
been underwritten. Since FAL is not under the management of the Managing Agent, no amount has been
shown in these Financial Statements by way of such capital resources. However, the Managing Agent is able
to make a call on the Member's FAL to meet liquidity requirements or to settle losses.