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Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
Lloyd’s Syndicate 1183
Talbot Underwriting Ltd
Annual Report and Accounts for the year ended
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
3
Contents
Contents ......................................................................................................... 3
Directors and Administration – Syndicate 1183 ............................................. 4
Report of the Directors of the Managing Agent .............................................. 5
Statement of Managing Agent’s responsibilities .......................................... 11
Independent auditors’ report to the member of Syndicate 1183 .................. 12
Statement of profit or loss and other comprehensive income ...................... 16
Balance sheet – Assets ................................................................................ 18
Balance sheet – Liabilities ............................................................................ 19
Statement of changes in member’s balances .............................................. 20
Statement of cash flows ............................................................................... 21
Notes to the financial statements ................................................................. 22
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
4
Directors and Administration – Syndicate 1183
Managing Agent Managing Agent’s registered number
The AIG Building
58 Fenchurch Street
London
EC3M 4AB
2202362
Directors
E Woolley
JG Ross
RE Bean
RD Cowling
ME Hind
DJ Batchelor
KA Coates
P Bergamaschi
JL Hancock
CJ Flatt
Chief Executive Officer
Chief Risk Officer
Chief Underwriting Officer
Chief Financial Officer
Independent Non-executive
Independent Non-executive
Independent Non-executive
Independent Non-executive
Non-executive
Non-executive
Company secretary Active underwriter
K Guérin M Ladbrook
Bankers Investment managers
Lloyds Bank plc
Citibank NA
Royal Bank of Canada
Barclays plc
JP Morgan Chase NA
BlackRock Investment Management (UK) Limited
12 Throgmorton Avenue
London
EC2N 2DL
Lloyd’s Treasury Services
One Lime Street
London
EC3M 7HA
Independent auditors
PricewaterhouseCoopers LLP
7 More London
Riverside
London
SE1 2RT
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
5
Report of the Directors of the Managing Agent
The Directors of the Managing Agent, Talbot Underwriting Ltd (TUL), present the annual report and
audited accounts of Syndicate 1183 (the Syndicate) for the year ended 31 December 2025. The annual
report is prepared using the annual basis of accounting as required by Regulation 5 of the Insurance
Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008.
The comments below refer to both information prepared on an annual accounting basis and information
derived from a Lloyd’s underwriting year of account basis. The latter is included where it is used to
manage the business.
Principal activity
The principal activity of the Syndicate is the underwriting of general insurance and reinsurance business
in the Lloyd’s market. The Syndicate trades through Lloyd’s worldwide licences and benefits from AM
Best financial strength rating (FSR) A+.
The Syndicate writes a diversified portfolio including Marine, Cargo, Fine Art & Specie, Cyber, Energy,
Political Risk, Political Violence, Crisis Management, Financial Lines and Property classes of business.
Since 2018, TUL has been an AIG Company, with offices located in London, Singapore and New York.
Results for the financial year
The result for the year was a profit of $231.7m (2024: profit of $77.2m). The Syndicate’s key financial
performance indicators during the year were as follows:
2025
$m
2024
$m
2023
$m
2022
$m
2021
$m
Gross premiums written 1,351.1
1,320.6
1,414.7
1,285.8
1,271.6
Net premiums written 936.8
956.9
974.3
918.4
975.0
Net earned premiums 930.1
967.0
946.2
907.5
902.8
Underwriting result 123.8
29.3
147.4
107.5
153.7
Investment return 90.6
69.0
74.4
(28.6)
5.6
Profit/(loss) for the financial year 231.7
77.2
220.6
77.9
155.1
Net claims ratio (%)
1
51.0
64.3
49.2
53.2
47.3
Net expense ratio (%)
2
35.7
32.7
35.2
35.0
35.7
Combined ratio (%)
3
86.7
97.0
84.4
88.2
83.0
1
The ratio of net claims incurred to net earned premiums.
2
The ratio of net operating expenses (both net acquisition costs and administrative expenses) to net earned premiums.
3
The total of net claims incurred and net operating expenses as a percentage of net earned premiums.
Report of the Directors of the Managing Agent (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
6
Review of the business
Underwriting
In 2025, the Syndicate delivered an underwriting profit of $123.8m (2024: $29.3m) with a combined ratio
of 86.7% (2024: 97.0%). The current accident year combined ratio was 91.9% (2024: 84.0%), higher
compared to prior year reflecting catastrophe losses and higher Managing Agency profit commission
due to the favourable run-off. The result benefitted from favourable prior year claims development of
$48.3m (5.2%).
Gross Premiums Written
Gross premiums written by class of business for the calendar year were as follows:
2025
$m
2024
$m
2023
$m
2022
$m
2021
$m
Marine 309.0
301.2
292.9
246.4
248.1
Political Risk and Crisis Management 150.1
148.0
128.7
115.2
119.5
Political Violence and War 139.3
125.7
149.7
149.1
148.4
Property 597.0
580.1
507.8
410.1
365.9
Speciality 150.0
165.2
191.0
245.7
276.7
Treaty 5.7
0.4
144.6
119.3
113.0
Total gross premiums written 1,351.1
1,320.6
1,414.7
1,285.8
1,271.6
Gross written premiums increased by $30.5m (2.3%) in 2025. The reported growth reflects exposure
growth in classes such as Property offset by pricing reduction compared to the prior year. The exposure
growth was supported by 19% growth in new business.
Syndicate coverholder operations are primarily located in Singapore and New York and contributed
15.0% (2024: 16.0%) of gross premiums written.
Outwards Reinsurance Written
The Syndicate purchases outwards reinsurance principally to limit the impact of catastrophes or multiple
large losses. Reinsurance is purchased on both an excess of loss and proportional basis. Reinsurance
premiums for the calendar year were $414.2m (2024: $363.7m), an increase of $50.5m (13.9%) mainly
due to increased quota share and facilitative reinsurance. The Syndicate benefits from being part of the
AIG group’s reinsurance programme which includes global catastrophe programmes and shared group
coverages. The 2025 programme was placed with coverage in line with the Syndicate’s plan and risk
appetite.
Report of the Directors of the Managing Agent (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
7
Net claims
The net claims ratio for the year was 51.0% (2024: 64.3%). Net claims incurred as a percentage of net
earned premiums were as follows:
202
5
202
4
Current year claims ratio – attritional (%) 44.7 41.3
Current year claims ratio – catastrophe (%) 11.5 10.0
Change in prior years’ net claims ratio (%) (5.2) 13.0
Net claims ratio (%)
5
1.0
64.3
The net claims ratio includes current year attritional claims experience in line with expectations although
above the previous year, at 44.7% (2024: 41.3%).
Catastrophe losses in the year contributed 11.5% to the net claims ratio (2024: 10.0%). The overall
catastrophe losses were above expectation, and major losses in 2025 included the California Wildfires,
Hurricane Melissa in Jamaica as well as the Taiwan Earthquake.
The net claims ratio benefitted from prior year reserve releases of 5.2% (2024: prior year reserve
strengthening of 13.0%) mainly due to favourable run-off from the 2023 and 2024 underwriting years of
account. Refer to note 6 for further details.
Net operating expenses
Net operating expenses for the year are set out below:
2025
$m
2024
$m
Movement
$m
Net acquisition costs 189.8 197.6 (7.8)
Administrative expenses 142.2 118.5 23.7
Net operating expenses 332.0 316.1 15.9
As % of net earned premiums % %
Net acquisition expense ratio (%) 20.4 20.4 -
Administrative expense ratio (%) 15.3 12.3 3.1
Net expense ratio (%) 35.7 32.7 3.1
The net expense ratio was 35.7% (2024: 32.7%). The net expense ratio includes the impact from foreign
exchange, as administrative expenses are primarily incurred in Sterling and premium income is mainly
in US dollars. Administrative expenses include $36.2m (2024: $14.6m) of accrued profit commission
payable by the Syndicate to TUL. After excluding the managing agency profit commissions, and
comparing at constant exchange rates, the net expense ratio increased compared to prior year to 31.8%
(2024: 29.8%). In addition to increases in profit commission, the increase in the administrative expense
ratio reflects interest costs in the period.
Report of the Directors of the Managing Agent (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
8
Investment return
The return on Syndicate funds is shown below:
2025
$m
2024
$m
Average Syndicate funds available for investment 1,266.4 1,743.9
Investment return for the year 90.6 69.0
Calendar year investment return (%) 7.2% 4.0%
Net investment return for 2025 was a profit of $90.6m (2024: profit $69.0m) equating to a return of 7.2%
(2024: return of 4.0%). Investment return includes net realised and unrealised gains of $28.2m (2024:
$6.5m) and income from investments net of expenses of $62.4m (2024: $62.5m). The investment
portfolio largely comprises investment grade fixed income securities with an average rating of AA-, which
was consistent during the period. Refer to note 10 for further details of investment income, expenses
and charges.
Financial position
The Syndicate’s member’s balance was $354.1m at 31 December 2025 (2024: $157.3m). The main
components of the balance sheet are financial investments and technical provisions.
Financial investments consist primarily of debt securities, issued by governments, government
agencies, or high-grade corporate entities and comprise 82.4% of the investment portfolio (2024:
82.4%). All investments are traded within liquid markets except for private debt funds, which comprise
1.4% of the investment portfolio (2024: 1.6%). The fair value of investments is determined predominantly
by TUL’s investment managers, using data from a number of sources including index providers,
commercial valuation providers and broker-dealers. Private debt fund investments are valued by the
debt fund providers using their proprietary models. At 31 December 2025, the fair value of investments
was $1,498.6m (2024: $1,606.2m) and the portfolio composition, as well as further details on valuation
methodology, is shown in note 12.
Technical provisions include a provision for claims outstanding of $1,883.2m (2024: $2,187.2m) and a
provision for unearned premiums of $786.6m (2024: $741.6m). The reinsurers’ share of technical
provisions is $930.5m (2024: $884.1m) in respect of outstanding claims and $176.3m (2024: $148.6m)
for reinsurers’ share of unearned premiums. Refer to note 2 for further details on the reserving
methodologies used for claims provisions and the judgements and uncertainties involved.
Capital
An internal capital model is used to set the Syndicate’s capital. The Syndicate is managed by TUL and
complies with Lloyd’s capital setting processes, which are described in more detail in note 4H.
Lloyd’s unique capital structure is designed to provide financial security to policyholders and capital
efficiency for members. Lloyd’s is A+ rated by A.M. Best, AA- by Fitch Ratings, AA- by Kroll Bond Rating
Agency and AA- by Standard & Poor’s. This chain of security provides the financial strength that
ultimately backs the insurance written through Lloyd’s managed syndicates.
Report of the Directors of the Managing Agent (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
9
Key components of the Lloyd’s capital structure are as follows:
ï‚· All premiums received by Syndicates are held in trust;
ï‚· Every member is required to hold capital at Lloyd’s known as Funds at Lloyd’s (FAL); and
ï‚· Central assets are available at the discretion of the Council of Lloyd’s to meet any valid claim
that cannot be met from the resources of any member.
The Syndicate is wholly aligned to one member, Talbot 2002 Underwriting Capital Ltd, which is part of
the group of companies parented by AIG. The capital and solvency position of the Syndicate remains
strong following its performance in 2025 and continued support from AIG, as evidenced by its
commitment of capital support for the 2026 Syndicate Business Plan which has been approved by the
Council of Lloyd’s, and the renewal of the member level reinsurance agreement for 2026 with AIG group
entities. The Syndicate’s 2026 underwriting plan is fully capitalised with FAL that is entirely provided by
AIG, which is A rated by A.M. Best and by Fitch Ratings and AA- by Standard & Poor’s. The Syndicate
has available resources, including those through its wholly aligned member’s reinsurance, to mitigate
all modelled stress scenarios.
Future developments and outlook
The Syndicate capacity for the 2026 underwriting year of account has increased to £1,000m (2025
underwriting year of account: £970m).
TUL is currently finalising the transition to the AIG IT infrastructure and moving systems away from the
legacy infrastructure. This will be finalised in 2026. Further detail is included within the Operational Risk
disclosure in note 4E.
TUL provides the group with access to the Lloyd’s market and the Syndicate is AIG’s centre of
excellence at Lloyd’s and a key part of its UK franchise. TUL leads in select specialty lines and has set
out strategic initiatives to develop its underwriting and operational capabilities, and further strengthen
its partnership with AIG.
The continued focus on rate adequacy, particularly in a softening insurance cycle, as well as a
reinsurance programme that leverages AIG’s relationships means that the Syndicate is well positioned
moving into 2026. TUL will continue to respond, as required through its risk management framework, to
the changes in the global, political and economic environment.
Principal risks and uncertainties
The principal risks and uncertainties to the Syndicate are insurance, financial, operational and climate
risks. A description of these principal risks and uncertainties as well as details around TUL’s wider risk
management framework is set out in note 4 to the financial statements (risk management).
Geopolitical uncertainty remains elevated due to various conflicts across the globe and in recent years
we have seen global natural catastrophe losses above long-term trends. TUL has established robust
exposure management capabilities and a risk management framework to manage risks arising from the
ongoing geopolitical uncertainties and heightened natural catastrophes in recent years. Where
appropriate key judgements have been made, refer to note 2 to the financial statements for further
details.
TUL oversees its exposure management through its Aggregation Risk Committee, and manages
emerging risks in line with its risk management framework.
Report of the Directors of the Managing Agent (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
10
Directors
The Directors of the Managing Agent during the period from 1 January 2025 to the date of this report
were as follows:
EL Woolley (Chief Executive Officer, appointed 26 May 2025)
JG Ross (Chief Risk Officer)
RE Bean (Chief Underwriting Officer)
RD Cowling (Chief Financial Officer)
ME Hind (Independent non-executive)
DJ Batchelor (Independent non-executive)
KA Coates (Independent non-executive)
P Bergamaschi (Independent non-executive, appointed 20 October 2025)
JL Hancock (Non-executive, shareholder representative)
CJ Flatt (Non-executive, shareholder representative, appointed 11 September 2025)
Former Directors who served during the period from 1 January 2025 to the date of this report were as
follows:
CJ Rash (Chief Executive Officer, resigned 26 May 2025)
Active Underwriter
TL Hunt (Resigned 8 July 2025)
RE Bean (Appointed 8 July 2025, resigned 2 February 2026)
M Ladbrook (Appointed 2 February 2026)
Company Secretary
JP Middleton (Resigned 11 September 2025)
A Akisanya (Appointed 11 September 2025, resigned 31 December 2025)
K Guérin (Appointed 31 December 2025)
Statutory Information
Disclosure of information to auditors
The Directors of the Managing Agent who held office at the date of approval of this report confirm that,
so far as they are each aware, there is no relevant audit information of which the Syndicate’s auditors
are unaware; and each Director has taken all the steps that they ought to have taken as a Director to
make themselves aware of any relevant audit information and to establish that the Syndicate’s auditors
are aware of that information.
Independent auditors
The Syndicate auditors, PricewaterhouseCoopers LLP, have indicated their willingness to continue in
office and will be reappointed.
Annual General Meeting
Subject to the consent of the Council of Lloyd’s, it is not intended to hold a Syndicate Annual General
Meeting in 2026.
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
11
Statement of Managing Agent’s responsibilities
The Directors of the Managing Agent are required by the Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 to prepare Syndicate annual accounts at 31
December each year which give a true and fair view of the state of affairs of the Syndicate and of the
profit or loss of the Syndicate for that year. The Directors have elected to prepare the Syndicate annual
accounts in accordance with applicable law and United Kingdom Accounting Standards (United
Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 “The
Financial Reporting Standard Applicable in the UK and Republic of Ireland” (FRS 102), Financial
Reporting Standard 103 “Insurance Contracts” (FRS 103) and the Lloyd’s Syndicate Accounts
Instructions version 3.1 as modified by the Frequently Asked Questions version 1.1 issued by Lloyd’s.
The Directors must not approve the accounts unless they are satisfied that they give a true and fair view
of the state of affairs of the Syndicate and of the profit or loss of the Syndicate for that period. In preparing
these accounts, the Directors are required to:
ï‚· select suitable accounting policies and then apply them consistently;
ï‚· make judgements and estimates that are reasonable and prudent;
ï‚· state whether applicable UK Accounting Standards, including FRS 102, have been followed, subject
to any material departures disclosed and explained in the Syndicate annual accounts; and
ï‚· prepare the Syndicate annual accounts on the basis that the Syndicate will continue to write
business unless it is inappropriate to presume that the Syndicate will do so.
The Directors of the Managing Agent confirm that they have complied with the above requirements in
preparing the Syndicate annual accounts.
The Directors of the Managing Agent are responsible for;
ï‚· keeping proper accounting records that disclose with reasonable accuracy at any time the financial
position of the Syndicate and enable them to ensure that its accounts comply with the Insurance
Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008;
ï‚· safeguarding the assets of the Syndicate and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities; and
ï‚· the preparation and review of the iXBRL tagging that has been applied to the Syndicate annual
accounts in accordance with the instructions issued by Lloyd’s, including designing, implementing
and maintaining systems, processes and internal controls to result in tagging that is free from
material non-compliance with the instructions issued by Lloyd’s, whether due to fraud or error.
We confirm that to the best of our knowledge the Syndicate annual accounts, including the iXBRL
tagging applied to these accounts, comply with the requirements of the Lloyd’s Syndicate Accounts
Instructions version 3.1 as modified by the Frequently Asked Questions version 1.1 issued by Lloyd’s.
Approved by the Board of Directors and signed on behalf of the Board.
RD Cowling, Chief Financial Officer
19 February 2026
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
12
Independent auditors’ report to the member
of Syndicate 1183
Report on the audit of the syndicate annual accounts
Opinion
In our opinion, 1183’s syndicate annual accounts:
ï‚· give a true and fair view of the state of the syndicate’s affairs as at 31 December 2025 and of its
profit and cash flows for the year then ended;
ï‚· have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting
Standard applicable in the UK and Republic of Ireland”, and applicable law); and
ï‚· have been prepared in accordance with the requirements of The Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the requirements within the
Lloyd’s Syndicate Accounts Instructions version 3.1 as modified by the Frequently Asked Questions
issued by Lloyd’s version 1.1 (“the Lloyd’s Syndicate Instructions”).
We have audited the syndicate annual accounts included within the Annual Report and Accounts (the
“Annual Report”), which comprise: the balance sheet as at 31 December 2025; the statement of profit
or loss and other comprehensive income, the statement of cash flows, and the statement of changes in
member’s balances for the year then ended; and the notes to the syndicate annual accounts, which
include a description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”), The
Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, the
Lloyd’s Syndicate Instructions and applicable law. Our responsibilities under ISAs (UK) are further
described in the Auditors’ responsibilities for the audit of the syndicate annual accounts section of our
report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Independence
We remained independent of the syndicate in accordance with the ethical requirements that are relevant
to our audit of the syndicate annual accounts in the UK, which includes the FRC’s Ethical Standard, as
applicable to other entities of public interest, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s
Ethical Standard were not provided.
Other than those disclosed in note 7, we have provided no non-audit services to the syndicate in the
period under audit.
Conclusions relating to going concern
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the syndicate’s ability
to continue as a going concern for a period of at least twelve months from when the syndicate annual
accounts are authorised for issue.
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.
Independent auditor’s report to the member of Syndicate 1183 (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
13
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee
as to the syndicate's ability to continue as a going concern.
Our responsibilities and the responsibilities of the Managing Agent with respect to going concern are
described in the relevant sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the syndicate
annual accounts and our auditors’ report thereon. The Managing Agent is responsible for the other
information. Our opinion on the syndicate annual accounts does not cover the other information and,
accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in
this report, any form of assurance thereon.
In connection with our audit of the syndicate annual accounts, 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 audit, or otherwise appears to be materially
misstated. If we identify an apparent material inconsistency or material misstatement, we are required
to perform procedures to conclude whether there is a material misstatement of the syndicate annual
accounts or a material misstatement of the other information. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report
that fact. We have nothing to report based on these responsibilities.
With respect to the Report of the Directors of the Managing Agent (the “Managing Agent’s Report”), we
also considered whether the disclosures required by The Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 have been included.
Based on our work undertaken in the course of the audit, The Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 requires us also to report certain opinions and
matters as described below.
Managing Agent’s Report
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 year ended 31 December 2025 is consistent with the syndicate annual
accounts and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the syndicate and its environment obtained in the course
of the audit, we did not identify any material misstatements in the Managing Agent’s Report.
Responsibilities for the syndicate annual accounts and the audit
Responsibilities of the Managing Agent for the syndicate annual accounts
As explained more fully in the Statement of Managing Agent’s responsibilities, the Managing Agent is
responsible for the preparation of the syndicate annual accounts in accordance with the applicable
framework and for being satisfied that they give a true and fair view. The Managing Agent is also
responsible for such internal control as they determine is necessary to enable the preparation of
syndicate annual accounts that are free from material misstatement, whether due to fraud or error.
In preparing the syndicate annual accounts, the Managing Agent is responsible for assessing the
syndicate’s ability to continue as a going concern, disclosing as applicable, matters related to going
concern and using the going concern basis of accounting unless it is intended for the syndicate to cease
operations, or it has no realistic alternative but to do so.
Independent auditor’s report to the member of Syndicate 1183 (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
14
Auditors’ 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 auditors’ 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect
of irregularities, including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud, is detailed below.
Based on our understanding of the syndicate and industry, we identified that the principal risks of non-
compliance with laws and regulations related to breaches of regulatory principles, such as those
governed by the Prudential Regulation Authority and the Financial Conduct Authority, and those
regulations set by the Council of Lloyd’s, and we considered the extent to which non-compliance might
have a material effect on the syndicate annual accounts. We also considered those laws and regulations
that have a direct impact on the syndicate annual accounts such as The Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the Lloyd’s Syndicate Instructions.
We evaluated management’s incentives and opportunities for fraudulent manipulation of the syndicate
annual accounts (including the risk of override of controls), and determined that the principal risks were
related to management override of controls.
Audit procedures performed by the engagement team included:
ï‚· Discussions with management, the Board, the compliance function and the Internal Audit Group of
the Managing Agent, including consideration of known or suspected instances of non-compliance
with laws and regulations, and fraud;
ï‚· Assessment of matters reported on the Managing Agent’s whistleblowing helpline relevant to the
syndicate and the results of investigations of such matters;
ï‚· Reviewing relevant meeting minutes and correspondence with regulatory authorities;
ï‚· Testing and challenging where appropriate the assumptions and judgements made in establishing
significant accounting estimates;
ï‚· Identifying and testing journal entries based on risk criteria; and
ï‚· Designing audit procedures to incorporate unpredictability around the nature, timing and extent of
testing.
There are inherent limitations in the audit procedures described above. We are less likely to become
aware of instances of non-compliance with laws and regulations that are not closely related to events
and transactions reflected in the syndicate annual accounts. Also, 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.
A further description of our responsibilities for the audit of the syndicate annual accounts is located on
the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’
report.
Independent auditor’s report to the member of Syndicate 1183 (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
15
Use of this report
This report, including the opinions, has been prepared for and only for the syndicate’s member in
accordance with part 2 of The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate
Accounts) Regulations 2008 and for no other purpose. We do not, in giving these opinions, accept or
assume responsibility for any other purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior consent in writing.
Other required reporting
Under The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008
we are required to report to you if, in our opinion:
ï‚· we have not obtained all the information and explanations we require for our audit; or
ï‚· adequate accounting records have not been kept by the Managing Agent in respect of the syndicate;
or
ï‚· certain disclosures of Managing Agent remuneration specified by law are not made; or
ï‚· the syndicate annual accounts are not in agreement with the accounting records.
We have no exceptions to report arising from this responsibility.
Other matter
We draw attention to the fact that this report may be included within a document to which iXBRL tagging
has been applied. This auditors’ report provides no assurance over whether the iXBRL tagging has been
applied in accordance with section 2 of the Lloyd’s Syndicate Instructions version 3.1.
Paul Pannell (Senior statutory auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
19 February 2026
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
16
Statement of profit or loss and other
comprehensive income
Technical account – General business
For the year ended 31 December 2025
Note | 2025 $000 | 2024 $000 | |
| Gross premiums written | 5 | ||
| Outwards reinsurance premiums | ( | ( | |
Premiums written, net of reinsurance | |||
Changes in unearned premium | 18 | ||
| Change in the gross provision for unearned premiums | ( | ||
| Change in the provision for unearned premiums reinsurers’ share | | ||
Net change in provisions for unearned premiums | ( | ||
Earned premiums, net of reinsurance | |||
Allocated investment return transferred from the non-technical account | 10 | | |
Claims paid | |||
| Gross amount | ( | ( | |
| Reinsurers’ share | | ||
Net claims paid | ( | ( | |
| Change in the provision for claims | 18 | ||
| Gross amount | | ( | |
| Reinsurers’ share | | ||
Net change in provisions for claims | ( | ||
Claims incurred, net of reinsurance | ( | ( | |
| Net operating expenses | 7 | ( | ( |
Balance on the technical account – general business |
Statement of profit or loss and other comprehensive income (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
17
Non-technical account – General business
For the year ended 31 December 2025
There was no other comprehensive income or expense in the current or prior year.
The accompanying notes from page 22 to 58 form an integral part of these financial statements.
Note | 2025 $000 | 2024 $000 | |
Balance on the technical account – general business | |||
| Investment income | 10 | | |
| Realised gains/(losses) on investments | 10 | | ( |
| Unrealised gains/(losses) on investments | 10 | | |
| Investment expenses and charges | 10 | ( | ( |
Total investment return | |||
Allocated investment return transferred to the general business technical account | ( | ( | |
| Gain/(loss) on foreign exchange | ( | ||
Profit/(loss) for the financial year |
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
18
Balance sheet – Assets
As at 31 December 2025
Note | 2025 $000 | 2024 $000 | |
Investments | |||
| Financial investments | 12 | ||
| Deposits with ceding undertakings | | ||
Total investments | |||
| Reinsurers’ share of technical provisions | 18 | ||
| Provision for unearned premiums | | ||
| Claims outstanding | | ||
Total reinsurers’ share of technical provisions | |||
| Debtors | |||
| Debtors arising out of direct insurance operations | 13 | ||
| Debtors arising out of reinsurance operations | 14 | | |
| Other debtors | 15 | | |
Total debtors | |||
| Other assets | |||
| Cash at bank and in hand | 22 | ||
Total other assets | |||
| Prepayments and accrued income | |||
| Accrued interest | | ||
| Deferred acquisition costs | 16 | | |
Total prepayments and accrued income | |||
Total assets |
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
19
Balance sheet – Liabilities
As at 31 December 2025
Note | 2025 $000 | 2024 $000 | |
| Capital and reserves | |||
| Member’s balances | |||
Total c apital and reserves | |||
| Technical provisions | 18 | ||
| Provision for unearned premiums | |||
| Claims outstanding | |||
Total technical provisions | |||
| Creditors | |||
Creditors arising out of direct insurance Operations | 19 | | |
| Creditors arising out of reinsurance operations | 20 | | |
| Other creditors | 21 | | |
Total creditors | |||
Accruals and deferred income | |||
Accruals | 3,860 | 4,542 | |
| Reinsurers’ share of deferred acquisition costs | 16 | 48,471 | 32,477 |
Total accruals and deferred income | |||
Total liabilities | |||
Total liabilities, c apital and reserves |
The accompanying notes from page 22 to 58 form an integral part of these financial statements.
The financial statements on pages 16 to 58 were approved by the Board of Directors on 13 February
2026 and were signed on its behalf by:
RD Cowling, Chief Financial Officer
19 February 2026
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
20
Statement of changes in member’s balances
For the year ended 31 December 2025
2025 $000 | 2024 $000 | |
| Member’s balances brought forward at 1 January | ||
| Total profit/(loss) for the year | ||
| Payments of profit to member’s reserve funds | ( | ( |
Member ’ s balances carried forward at 31 December |
The member participates on the Syndicate by reference to underwriting year of account.
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
21
Statement of cash flows
For the year ended 31 December 2025
Note | 2025 $ 000 | 2024 $ 000 | |
Cash flows from operating activities | |||
| Profit/(loss) for the financial year | |||
Adjustments: | |||
| Increase/(decrease) in gross technical provisions | ( | ||
Increase/(decrease) in reinsurers’ share of gross technical provisions | ( | ( | |
| Increase/(decrease) in debtors | ( | ||
| Increase/(decrease) in creditors | ( | ||
| Movement in other assets/liabilities | | ||
| Investment return | ( | ( | |
| Foreign exchange | ( | ||
| Other | | ||
Net cash flows from operating activities | ( | ||
Cash flows from investing activities | |||
| Purchase of equity and debt instruments | ( | ( | |
| Sale of equity and debt instruments | |||
| Investment income received | | ||
| Other | | ||
Net cash flows from investing activities | ( | ||
Cash flows from financing activities | |||
| Distribution of profit | ( | ( | |
| Capital contributions/open year cash calls made | | ||
| Funds in Syndicate released to members | | ||
Net cash flows from financing activities | ( | ( ) | |
Net increase/(decrease) in cash and cash equivalents | ( | ||
| Cash and cash equivalents at the beginning of the year | |||
| Foreign exchange on cash and cash equivalents | | ( | |
Cash and cash equivalents at end of year | 22 |
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
22
Notes to the financial statements
1. Basis of preparation
The financial statements of Syndicate 1183 have been prepared in accordance with the Insurance
Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and applicable
Accounting Standards in the United Kingdom and the Republic of Ireland, including Financial Reporting
Standard 102 (FRS 102). FRS 102 requires the application of Financial Reporting Standard 103 (FRS
103) in relation to insurance contracts and the Lloyd’s Syndicate Accounts Instructions Version 3.1 as
modified by the Frequently Asked Questions Version 1.1 issued by Lloyd’s.
The financial statements have been prepared on the historical cost basis, except for financial assets at
fair value through profit or loss and available for sale that are measured at fair value.
The financial statements are presented in US dollars
All amounts have been rounded to the nearest thousand, unless otherwise indicated.
Going concern
The Syndicate has financial resources to meet its financial needs and manage its portfolio of insurance
risk. The directors have continued to review the business plans, liquidity and operational resilience of
the Syndicate and are satisfied that the Syndicate is well positioned to manage its business risks in the
current economic environment. The Syndicate 2026 year of account has opened and the directors have
concluded that the Syndicate has sufficient resources to, and a reasonable expectation that it will, open
a 2027 year of account. The Syndicate has sufficient capital for each year of account in its Funds at
Lloyd’s (FAL) and there is additional capital available in the corporate member. There is no intention to
cease underwriting or cease the operations of the Syndicate.
Accordingly, the directors of the Managing Agent continue to adopt the going concern basis in preparing
the annual report and financial statements.
2. Use of judgements and estimates
In preparing these financial statements, the directors of the Managing Agent have made judgements,
estimates and assumptions that affect the application of the Syndicate’s accounting policies and the
reported amounts of assets, liabilities, income and expenses.
The Syndicate makes critical judgements, estimates and assumptions concerning the future. The
resulting accounting estimates will, by definition, seldom equal the related actual results. The
judgements, estimates and assumptions that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year are addressed below.
Premium estimates
Significant estimates include premium estimates and the earning pattern of recognising premium over
the life of a policy. The Syndicate initially recognises premium based on underwriter estimates. These
ultimate premium estimates are written and earned.
Premium estimates for binders and lineslips tend to be more subjective as the premium amounts are
dependent on the volume of policies that attach to the binder/lineslip over the coverage period. Where
premium is sourced through binders and lineslips, the binder premium estimate is assumed to attach
evenly over the period of the binder and it is therefore accounted for evenly over this period.
In regards to the underwriter estimates, the coverage can be variable and the amount of premium
received can be subject to uncertainty or be adjusted as the underwriting year of account develops or
as new information becomes available. The premium received (i.e. signed) may differ from the amounts
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
23
initially estimated in the financial statements. In order to manage this risk, premium estimates are
reviewed regularly and as new information becomes available the recorded premiums are adjusted as
necessary. These adjustments can lead to an increase or decrease in expected premiums. Adjustments
to gross written premiums if any are recorded in the period in which they become known.
An allowance is also made for pipeline premium (i.e. premium received either at the very end of the
period, or entered into underwriting systems after the period cut-off but relating to policies incepting in
the current period). This allowance is subject to management back test to assess accuracy.
Written premiums are typically earned on a straight-line basis over the life of each policy. At a whole
account level this is considered to provide a reasonable estimate for the full year of the pattern of risk
over the coverage period.
Claims provisions
Significant estimates include the estimate for insurance losses incurred but not reported (IBNR), which
is included in claims outstanding and reinsurers’ share of outstanding claims in the balance sheet. If this
estimation were to prove inadequate then a loss would arise in future years. The total estimate for IBNR,
gross of reinsurers’ share at 31 December 2025 is $1,145,878k (2024: $1,393,777k). The total estimate
for IBNR, net of reinsurers’ share at 31 December 2025 is $363,414k (2024: $721,080k).
The process for estimating claims provisions considers key sources of uncertainty around the following:
ï‚· Future development of inward claims, both reported but unsettled, and IBNR;
ï‚· Corresponding reinsurance recoveries, including reinsurance specific considerations such as the
basis of aggregation for the application of retentions and limits; and
ï‚· The splits of future claim liabilities between earned and unearned exposures.
These significant estimates are made using data, assumptions, models and expert judgement by in-
house actuarial, claims and underwriting personnel and adopted only after suitable discussion and
challenge from management, through the Reserve Committee, and the Audit Committee. The data and
analysis used includes:
ï‚· Monthly and quarterly claims and premium data, both gross and net of reinsurance, with the claims
data being both paid and reported and being segmented by the Syndicate’s classes of business
and between attritional, large and catastrophe losses;
ï‚· Quarterly underwriter updates on expected premium volumes and rating levels in light of business
written and prevailing market conditions;
ï‚· Ongoing monitoring of actual emerging claims experience relative to that expected from the
reserving model, with quarterly monitoring of the ongoing suitability of the actuarial reserving
assumptions in light of the emerging experience; and
ï‚· Annual detailed reviews of actuarial assumptions used in the reserving model, including discussion
of the impact of any material changes in the business mix, rate movements, underwriting strategies,
reinsurance protection, etc., on these assumptions.
The reserving model utilises standard actuarial projection techniques (e.g. Chain Ladder, Bornhuetter-
Ferguson, Initial Expected Loss Ratio, and Generalised Cape Cod) to estimate ultimate attritional losses.
Exposure-based approaches supported by claim-specific information are used for known large risk and
catastrophe losses, with greater weight being placed on claim-specific information for large risk losses
and for large catastrophe losses as the loss in question matures and develops.
Allowance is made for future loss adjustment expenses, which are also subject to estimation.
Consideration is given to the level of loss adjustment expenses incurred annually, with estimates of loss
adjustment expenses considered as a proportion of gross claims reserves.
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
24
The assumptions and expert judgements are applied in line with the Syndicate’s reserving philosophy,
and are intended to state the claims provisions on an undiscounted earned best estimate basis. This
includes a management reserve margin, which is applied over and above the actuarial best estimate to
allow for the inherent uncertainty (gross and net) by considering:
ï‚· specific uncertainties and potential reserve deteriorations;
ï‚· general uncertainties impacting certain classes where the potential exists for adverse claims
activity beyond that experienced historically; and
ï‚· a quantitative adjustment to establish a final position aligned with the Board’s agreed reserving
risk appetite.
Establishing management adjustments using these criteria typically results in estimates being reduced
as uncertainties reduce, or become reflected in the actuarial central estimate. Similarly, estimates may
increase if new uncertainties emerge, which are reflected if deemed appropriate.
Specific reserving uncertainties as at 31 December 2025 include the ultimate claims arising from the
Russia-Ukraine conflict. Further details are included below.
Russia-Ukraine conflict
Aviation claims arising out of the conflict present a set of circumstances, which vary between individual
claims, making exposure or coverage analysis complex. During 2025, the UK court judged that the
insureds’ loss was caused by a War peril and the coverage defences advanced by the War insurers
were unsuccessful. A significant portion of the estimated gross exposure related to the Contingent &
Possessed (C&P) coverage has now been settled, therefore reducing some of the uncertainty.
Management have updated loss estimates to reflect the UK ruling as well as these settlements.
TUL has reviewed its remaining potential exposures and has projected an estimate of the gross loss to
C&P losses based on information available to TUL. Actual experience may differ depending on the
specific circumstances of each case and outcomes of the current legal proceedings relating to the
remaining exposures. TUL’s analysis has given consideration to the potential loss from both a top-down
assessment, based on market loss estimates, and a ground up assessment based on settlement and
exposure data.
The reinsurance programme, including those AIG group reinsurances under which TUL has coverage,
has been reviewed with input from expert opinion and management has taken into consideration all
aspects of the reinsurance contractual terms in evaluating the net loss. Management has reviewed the
reinsurance programme, available limit and potential recovery aligned to the gross claim. The
Syndicate’s outwards reinsurance is with counterparties with an A rating or higher. Recoveries mainly
relate to the 2021 underwriting year and are expected to begin to be paid during 2026.
In addition, the Syndicate’s wholly aligned corporate member benefits from reinsurance from AIG group,
which responds in the event of a major loss. Whilst the final net outcome is uncertain, modelled stress
scenarios remain within the Syndicate’s appetite.
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
25
3. Significant accounting policies
The following significant accounting policies have been applied consistently in dealing with items which
are considered material in relation to the Syndicate’s financial statements.
A. Gross premiums written
Gross premiums written reflect direct and inwards reinsurance business written during the period, gross
of commission payable to intermediaries, and exclude any taxes or duties based on premiums.
Premiums written include estimates including for ‘pipeline’ premiums representing amounts due to the
Syndicate not yet notified and adjustments to estimates of premiums written in previous periods.
Estimated premium income in respect of facility contracts, for example binding authorities and lineslips,
are deemed to be written in a manner that reflects the expected profile of the underlying business which
has been written. The earned proportion of premiums is recognised as income. Premiums are earned
from the date of attachment of risk over the indemnity period based on the pattern of the risks
underwritten.
Outwards reinsurance premiums are accounted for in the same accounting period as the premiums for
the related direct or inwards business being reinsured.
B. Unearned premiums
The provision for unearned premiums comprises the proportion of gross premiums written which is
estimated to be earned in the following or subsequent financial years, computed separately for each
insurance contract using the daily pro rata method, adjusted if necessary to reflect any variation in the
incidence of risk during the period covered by the contract.
C. Acquisition costs
Costs incurred in acquiring general insurance contracts are deferred. Acquisition costs include direct
costs such as brokerage and commission, and indirect costs such as administrative expenses
connected with the processing of proposals and the issuing of policies. The deferred acquisition cost
asset represents the proportion of acquisition costs which corresponds to the proportion of gross
premiums written that is unearned at the balance sheet date.
D. Reinsurance
The Syndicate assumes and cedes reinsurance in the normal course of business. Premiums and claims
on facultative reinsurance assumed are recognised in the technical account on the same basis as direct
business, taking into account the product classification. Reinsurance premiums ceded and reinsurance
recoveries on claims incurred are included in the respective expenditure and income accounts.
Premiums ceded and claims reimbursed are presented on a gross basis in the technical account and
balance sheet as appropriate.
Reinsurance outwards premiums are earned according to the nature of the cover. ‘Losses occurring
during’ policies are earned evenly over the policy period. ‘Risks attaching’ policies are expensed on the
same basis as the inwards business being protected.
Reinstatement premiums on both inwards and outwards business are accreted to the technical account
on a pro-rata basis over the term of the original policy to which they relate.
E. Claims provisions and related reinsurance recoveries
Claims incurred comprise claims and claims handling expenses (both internal and external) paid in the
year and the movement in provision for outstanding claims and settlement expenses. The Syndicate
does not discount its liability for outstanding claims nor the reinsurance share of outstanding claims.
Outstanding claims include an allowance for the cost of claims incurred by the balance sheet date but
not reported until after the year end. Salvage and subrogation and other recoveries are deducted from
the provision for outstanding claims. The liability for outstanding claims is estimated using the input of
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
26
assessments for individual cases reported to the Syndicate and widely accepted actuarial techniques
for the IBNR. The techniques generally use projections, based on past experience of the development
of claims over time, to form a view on the likely ultimate claims to be experienced and an estimate of
the expected ultimate cost of more complex claims that may be affected by external factors, for example,
court decisions
The reinsurers’ share of provisions for claims is based on calculated amounts of outstanding claims and
projections for IBNR, net of estimated irrecoverable amounts, having regard to the reinsurance
programme in place for the class of business, the claims experience for the year and the current security
rating of the reinsurance companies involved.
Reinsurance assets are assessed for impairment at each balance sheet date. A reinsurance asset is
deemed impaired if there is objective evidence, as a result of an event that occurred after its initial
recognition, that the Syndicate may not recover all amounts due, and that event has a reliably
measurable impact on the amount that the Syndicate will receive from the reinsurer. Impairment losses
are recognised in profit or loss in the period in which the impairment loss is recognised.
F. Unexpired risks provision
Provision is made for unexpired risks arising from general insurance contracts where the expected value
of claims and expenses attributable to the unexpired periods of policies in force at the balance sheet
date exceeds the unearned premiums provision in relation to such policies (after the deduction of any
deferred acquisition costs). The provision for unexpired risks is calculated at the whole account level
and by underwriting year of account, after taking into account relevant investment return. There are no
unexpired risk provisions to be reported in the current or prior year.
G. Foreign currencies
Transactions in foreign currencies are translated to the functional currency using the exchange rates at
the date of the transactions. The Syndicate’s monetary assets and liabilities denominated in foreign
currencies are translated into the functional currency at the rates of exchange at the balance sheet date.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value
are retranslated to the functional currency at the exchange rate at the date that the fair value was
determined. Non-monetary items denominated in foreign currencies that are measured at historical cost
are translated to the functional currency using the exchange rate at the date of the transaction. For the
purposes of foreign currency translation, unearned premiums and deferred acquisition costs are treated
as if they are monetary items.
Differences arising on translation of foreign currency amounts relating to the insurance operations of the
Syndicate are included in the non-technical account. Differences arising on translation from the
functional currency to the presentational currency are recognised in other comprehensive income.
H. Financial assets and liabilities
In applying FRS 102, the Syndicate has chosen to apply the recognition and measurement provisions
of Chapters 11 and 12 of FRS 102.
i. Classification
The accounting classification of financial assets and liabilities determines the way in which they are
measured and changes in those values are presented in the statement of profit or loss and other
comprehensive income. Financial assets and liabilities are classified on their initial recognition.
The initial classification of a financial instrument shall take into account contractual terms including those
relating to future variations. Once the classification of a financial instrument is determined at initial
recognition, re-assessment is only required subsequently when there has been a modification of
contractual terms that is relevant to an assessment of the classification.
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
27
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 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.
Deposits with credit institutions, debtors, and accrued interest are classified as loans and receivables.
ii. Recognition
Financial instruments are recognised when the Syndicate becomes a party to the contractual provisions
of the instrument. Financial assets are derecognised if the Syndicate’s contractual rights to the cash
flows from the financial assets expire or if the Syndicate transfers the financial asset to another party
without retaining control of substantially all risks and rewards of the asset. A financial liability is
derecognised when its contractual obligations are discharged, cancelled or expired.
Purchases and sales of financial assets are recognised and derecognised, as applicable, on the trade
date, i.e., the date that the Syndicate commits itself to purchase or sell the asset.
iii. Measurement
A financial asset or financial liability is measured initially at fair value plus, for a financial asset or financial
liability not at fair value through profit or loss, transaction costs that are directly attributable to its
acquisition or issue.
Financial assets at fair value through profit or loss are measured at fair value with fair value changes
recognised immediately in profit or loss. Net gains or net losses on financial assets measured at fair
value through profit or loss includes foreign exchange gains/losses arising on their translation to the
functional currency but excludes interest and dividend income.
Loans and receivables and financial liabilities are measured at amortised cost, 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 of the asset that can be estimated reliably.
Objective evidence that financial assets are impaired includes observable data that comes to the
attention of the Syndicate about any significant financial difficulty of the issuer, or significant changes in
the technological, market, economic or legal environment in which the issuer operates.
Impairment losses on available for sale financial assets are recognised by reclassifying the losses
accumulated in other comprehensive income to profit or loss. The net cumulative loss that is reclassified
from other comprehensive income to profit or loss is the difference between the acquisition cost, net of
any principal repayment, and the current fair value, less any impairment loss recognised previously in
profit or loss. If, in a subsequent period, the fair value of an impaired available for sale debt security
increases and the increase can be related objectively to an event occurring after the impairment loss
was recognised, the impairment loss is reversed through the profit or loss account. Otherwise it is
reversed through the statement of comprehensive income.
v. Off-setting
Financial assets and financial liabilities are offset, and the net amount presented in the balance sheet
when, and only when, the Syndicate has a legal right to set off the amounts and intends either to settle
on a net basis or to realise the asset and settle the liability simultaneously.
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
28
I. Investment return
Investment return comprises investment income and movements in unrealised gains and losses on
financial instruments at fair value through profit or loss, less investment management expenses, interest
expense, realised losses and impairment losses. Investment income comprises interest income,
dividends receivable and realised investment gains.
For the purpose of separately presenting investment income and unrealised gains and losses for
financial assets at fair value through profit or loss, interest income is calculated using the effective
interest method excluding transaction costs that are expensed when incurred. For investments at fair
value through profit or loss, realised gains and losses represent the difference between the net proceeds
on disposal and the purchase price.
Unrealised investment gains and losses represent the difference between the fair value at the balance
sheet date and the fair value at the previous balance sheet date, or purchase price if acquired during
the year. Movements in unrealised investment gains and losses comprise the increase/decrease in the
reporting period in the value of the investments held at the reporting date and the reversal of unrealised
investment gains and losses recognised in earlier reporting periods in respect of investment disposals
of the current period.
Investment return is initially recorded in the non-technical account. The return is typically transferred in
full to the general business technical account to reflect the investment return on funds supporting
underwriting business.
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.
Bank overdrafts that are repayable on demand and form an integral part of the Syndicate’s cash
management are included as a component of cash and cash equivalents for the purpose of the
statement of cash flows.
K. Taxation
Under Schedule 19 of the Finance Act 1993, Managing Agents are not required to deduct basic rate
income tax from trading income. In addition, all UK basic rate income tax deducted from Syndicate
investment income is recoverable by managing agents and consequently the distribution made to
members or their member’s agents is gross of tax. Capital appreciation falls within trading income and
is also distributed gross of tax.
No provision has been made for any United States Federal Income Tax payable on underwriting results
or investment earnings. Any payments on account made by the Syndicate during the year have been
included in the balance sheet under the heading ‘other debtors’.
No provision has been made for any other overseas tax payable by members on underwriting results.
L. Pension costs
TUL operates a defined contribution scheme. Pension contributions relating to Managing Agent staff
who act on behalf of the Syndicate are charged to the Syndicate as incurred and are included within net
operating expenses.
M. Profit commission
Profit commission is charged by the Managing Agent at a rate of 15% of the profit on a year of account
basis subject to the operation of a 2-year deficit clause. This is charged to the Syndicate as incurred
and is recognised on the two oldest underwriting years of account, but does not become payable until
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
29
after the appropriate year of account closes, normally at 36 months. Profit commission is only calculated
for the two oldest underwriting years of account as the youngest underwriting year of account is
considered too immature in its first 12 months.
N. Operating expenses
Where expenses are incurred by the Managing Agent for the administration of the Syndicate, these
expenses are apportioned appropriately based on type of expense. Expenses that are incurred jointly
are apportioned between the Managing Agent and the Syndicate on bases depending on the amount of
work performed, resources used, and the volume of business transacted.
O. Reinsurers’ commission and profit participation
Reinsurers’ commissions and profit participations, which include reinsurance profit commission and
overriding commission, are treated as a contribution to expenses.
P. Debtors and creditors
Insurance debtors and creditors include amounts due to and from agents, brokers and insurance
contract holders. These are classified as debt instruments as they are non-derivative financial assets
with fixed or determinable payments that are not quoted on an active market. Insurance debtors are
measured at amortised cost less any provision for impairments. Insurance creditors are stated at
amortised cost. The Syndicate does not have any debtors directly with policyholders, all transactions
occur via an intermediary.
Reinsurance debtors and creditors include amounts due to and from reinsurers. These are classified as
debt instruments as they are non-derivative financial assets with fixed or determinable payments that
are not quoted on an active market. Reinsurance debtors are measured at amortised cost less any
provision for impairments. Reinsurance creditors are stated at amortised cost. Reinsurance debtor
principally relates to claims recoveries where the underlying claim has been settled and the recovery is
due. Reinsurance creditors are primarily premiums payable for reinsurance contracts and are
recognised as an expense when due.
Other debtors principally consist of sundry debtors and are carried at amortised cost.
Other creditors principally consist of amounts due to related entities, profit commissions payable and
other sundry payables. These are stated at amortised cost.
Q. Classification of insurance and reinsurance contracts
Insurance and reinsurance contracts are classified as insurance contracts where they transfer significant
insurance risk. If a contract does not transfer significant insurance risk it is classified as a financial
instrument. All of the Syndicates written contracts and purchased reinsurance contracts transfer
significant insurance risk and therefore are recognised as insurance contracts.
R. Comparative disclosure
Certain comparative balances for the year ended 31 December 2024 have been represented.
Note 4Da(ii) exposure to credit risk has been updated to remove past due assets from the disclosure,
as these are presented separately in note 4Da(iii).
Note 4Dc(ii) has been represented to align the currency risk impact equally for both the impact on the
results as well as the impact on member’s balances.
Note 9 has been restated due to a currency conversion error identified in 2024.
There are other disclosures where the signage has been corrected, or to fulfil the Society of Lloyd’s
XBRL tagging requirements. These changes are not considered material.
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
30
4. Risk and capital management
A. Introduction and overview
This note presents information about the nature and extent of insurance, financial, operational and
climate change risks to which the Syndicate is exposed, the Managing Agent’s objectives, policies and
processes for measuring and managing insurance and financial risks, and for managing the Syndicate’s
capital.
B. Risk governance
The Managing Agent for the Syndicate, TUL, is responsible for the management of risk at the Syndicate
level. The Board has overall responsibility for the establishment and oversight of the Syndicate’s risk
management framework. Risk management policies and procedures are established to identify and
analyse the risks faced by the Syndicate, to set appropriate risk appetite, limits and controls, and to
monitor risks and adherence to limits. The Board has established a Risk and Compliance Committee to
oversee the operation of the Syndicate’s risk management framework and to review and monitor the
management of the risks to which the Syndicate is exposed.
Risk oversight by the Board Risk and Compliance Committee is supplemented by specific risk oversight
from two other Board sub-committees: the Audit Committee for reserving, financial reporting, market,
credit and liquidity risks; and the People and Remuneration Committee for people risks.
All material risks are recorded on a comprehensive risk register for the Syndicate and TUL, and are
managed by the business in line with the established set of risk appetite limits, risk policies and
procedures, monitoring and mitigations, enabling new risks to be identified and new controls to be put
in place as necessary either to reduce the likelihood of a risk event or to mitigate its impact once it has
happened.
Executive oversight of the risk management framework is delegated to the Chief Executive Officer, who
is responsible for ensuring that risk management is embedded as part of TUL’s culture and that risks
are properly managed and mitigated through appropriate controls, operating effectively.
The Chief Executive Officer has formed an Executive Committee to support the discharge of the duties
delegated from the Board. The Executive Committee oversees the management of the key risks with
regard to strategy and relationships with key stakeholders and has established a number of
management committees that support oversight of how risk is managed by the business including the
following:
ï‚· Underwriting Committee (responsible for overseeing underwriting and reinsurance risks);
ï‚· Insurance Management Committee (responsible for overseeing underwriting operational risks);
ï‚· Reserve Committee (responsible for overseeing reserve risk);
ï‚· Aggregation Risk Committee (responsible for overseeing systemic risk);
ï‚· Finance Committee (responsible for overseeing credit risk (excluding investments), liquidity risk,
currency matching risk and financial reporting and process risk);
ï‚· Sustainability Committee (responsible for developing and embedding the framework for overseeing
climate change risk);
ï‚· Investment Committee (responsible for overseeing market risk and credit risk with regard to
investments);
ï‚· Operational Risk Committee (responsible for overseeing operational risks); and
ï‚· Internal Model Governance Committee (responsible for overseeing the Internal Model).
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
31
C. Insurance risk
Insurance risk is defined as the risk of actual claims experience and/or policyholder behaviour being
materially different than initially expected at the inception of an insurance contract or at the latest
valuation. Uncertainties related to insurance risk can lead to deviations in magnitude and/or time of
prospective cash flows associated with the Syndicate’s liabilities compared to what is expected.
Insurance risk can be categorised into underwriting risk and reserve risk.
a. Underwriting risk
Underwriting risk is the risk that in aggregate insurance premiums will not be sufficient to cover future
insurance claims and associated expenses. This might arise because premiums are set too low for the
cover provided, or because the actual timing, frequency, severity or aggregation of claims events is
higher than was expected during the underwriting process.
i. Management of underwriting risk
Underwriting strategy is established by management and agreed by the Board through the annual
Syndicate business planning process. The annual Syndicate business plan is submitted to Lloyd’s for
approval each year. Underwriting strategy is focused on profitable growth, underpinned by a minimum
profit expectation, through regular monitoring of both rate change and rate adequacy for the business
written.
Underwriting strategy includes risk limits by class of business and aggregate limits by catastrophe peril,
both natural and man-made, with the aim of ensuring a well-diversified book without outsized exposure
to any one risk or event. The Syndicate is protected by a shared Group reinsurance programme that
comprises proportional and non-proportional treaty reinsurance to mitigate the risk of incurring
significant losses from one large risk or event. Additional facultative reinsurance is also purchased from
time-to-time to manage individual exposures within the Syndicate’s risk appetite.
Underwriting guidelines include minimum standards for the timeliness, completeness and accuracy of
data recorded for all business written, plus more detailed information about the Syndicate’s risk appetite,
and underwriting and pricing requirements.
Underwriting performance against underwriting strategy and the Syndicate business plan is monitored
regularly throughout the year by the Underwriting Committee, Insurance Management Committee and
Aggregation Risk Committee, reporting to the Executive Committee, and overseen by the Board. The
assessment of underwriting performance includes a range of underwriting metrics, including rate
changes, rate adequacy metrics and premium volumes by renewed and new business, planned, priced
and actual loss ratios, for both open market business and delegated underwriting, and large claims.
Natural catastrophe risk
The Syndicate is exposed to natural catastrophe risk. TUL uses third-party natural catastrophe risk
models, adjusted where appropriate to align to the in-house view of risk, to model the frequency and
severity of natural catastrophe risk arising from the business it writes, at both an individual risk level and
in aggregate. Adjustments to align to the in-house view of risk are assessed using hazard and
engineering data, client and industry exposure, and loss information. Adjustments are also made to
allow for the evolving impact of climate change on natural catastrophe risk.
TUL models the following natural catastrophe perils: (1) cyclones, typhoons and hurricanes; (2) storm
surge; (3) earthquakes; (4) flooding; (5) wildfires; (6) severe convective storms; and (7) extratropical
storms.
Man-made catastrophe risk
The Syndicate is also exposed to man-made catastrophe risk, for example cyber, war, terrorism and
other geopolitical conflict. Man-made catastrophe risk is generally managed using scenario, country and
region limits.
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
32
b. Reserve risk
Reserve risk is the risk that the reserves established in respect of insurance claims and claim expenses
incurred at the balance sheet date, whether reported or IBNR, are insufficient to settle those claims and
associated expenses in full. The level of uncertainty in the reserves set can vary significantly across
lines of business. It can arise from inadequate reserving data and processes or from the naturally
uncertain progress of insurance events.
i. Management of reserve risk
TUL’s actuaries perform a reserving analysis on a quarterly basis, liaising closely with underwriters,
claims and reinsurance technicians. The aim of this exercise is to estimate the mean of the distribution
of all possible outcomes, which should lie within a range of reasonable best estimates. These projections
include an analysis of claims development compared to the previous best estimate projections.
The reserving exercise considers attritional, large and catastrophe claims separately. Aggregate IBNR
for attritional claims up to $2m is generally estimated using standard actuarial projection methodologies.
Large claims in excess of $2m and natural catastrophe losses are assessed individually using inputs
from claims, underwriters and catastrophe models as necessary. For major event losses, TUL’s event
loss procedure may be invoked. This establishes a team from across actuarial, underwriting, claims,
reinsurance, catastrophe modelling and exposure management to coordinate the ultimate loss estimate
process using detailed exposure data and modelling, information from brokers and other, publicly
available, information. Internal and external benchmarking is also carried out where appropriate and
available to validate the reserve estimates.
The Syndicate’s quarterly reserves are reviewed and approved by the Reserve Committee, reporting to
the Executive Committee, and overseen by the Audit Committee. The Syndicate reserves are also
subject to an annual, independent statement of actuarial opinion (SAO). The work of the in-house
actuarial team and of the third-party actuaries providing the SAO is carried out in compliance with the
relevant principles, guidance and rules published by Lloyd’s, with the formal Actuarial Professional
Standards published by the Institute and Faculty of Actuaries, and with the Technical Actuarial
Standards published by the Financial Reporting Council (FRC).
Note 2 contains further details around the key judgements and uncertainties involved in the estimate for
IBNR claims provisions as well as how these are managed and overseen. The Syndicate also has in
place detailed procedures and controls to manage and monitor the handling and assessment of claims
and the setting of appropriate case reserves. Notes 17 and 18 include further detail on claims provisions
and claims development triangles.
ii. Sensitivity to reserve risk
The reserves established could ultimately prove to be significantly lower or higher than the actual cost
of settling the claims arising. This level of uncertainty varies between classes of business and the nature
of the risk being underwritten and can arise from developments in case reserving for large losses and
catastrophes, or from changes in estimates of claims IBNR.
The following table illustrates the sensitivity of the insurance reserves disclosed in the financial
statements to movements in the assumptions applied within the reserving process. Given the nature of
the business underwritten by the Syndicate, the approach to calculating the reserves for each class can
vary and as a result the sensitivity performed is to apply a beneficial and adverse risk margin to the total
insurance liability.
The amount disclosed in the table represents the profit or loss impact of an increase or decrease in the
insurance liability, gross and net of reinsurance, as a result of applying the sensitivity, being a 5 basis
points increase or decrease in the loss ratio.
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
33
General insurance business sensitivities as at 31 December 2025 | +5.0% $ 000 | -5.0% $ 000 |
| Claims outstanding – gross of reinsurance | ( | |
| Claims outstanding – net of reinsurance | ( | |
General insurance business sensitivities as at 31 December 202 4 | +5.0% $ 000 | -5.0% $ 000 |
Claims outstanding – gross of reinsurance | ( | |
Claims outstanding – net of reinsurance | ( |
D. Financial risk
The focus of financial risk management for the Syndicate is ensuring that the proceeds from its financial
assets are sufficient to fund the obligations arising from its insurance contracts. The goal of the
investment management process is to optimise the risk-adjusted investment income and risk-adjusted
total return by investing in a diversified portfolio of securities, whilst ensuring that the Syndicate can
meet its liabilities as they fall due.
a. Credit risk
Credit risk is defined as the risk that the Syndicate’s policyholders or counterparties are unable or
unwilling to repay their contractual obligations when they become due. Credit risk may also result from
a downgrade of a counterparty’s credit ratings or a widening of its credit spreads.
The Syndicate is exposed to credit risk across its asset portfolio, from its brokers and from its reinsurers.
Refer to note 4D(a)(ii) for further details. The nature of the Syndicate’s exposures to credit risk and its
objectives, policies and processes for managing credit risk have not changed significantly from the prior
year.
i. Management of credit risk
Investment counterparties
Investment guidelines require that the Syndicate’s investments are held in high quality instruments. The
portfolio is monitored for concentration with respect to issuers and credit ratings. Credit risk exposures
are calculated regularly and compared with authorised credit limits before further transactions are
undertaken with counterparties. Of the total investments and cash as at 31 December 2025, 84.3%
(2024: 82.5%) are with counterparties having a credit agency rating of A or better.
Reinsurance counterparties
Reinsurance is placed with reinsurers who generally have a rating of A or above and who have a good
record of claims payment. New reinsurers are approved by the Broker and Reinsurance Security
Committee (a sub-committee of the Finance Committee). As at 31 December 2025, 90.3% (2024: 83.7
%) of reinsurance balances receivable is with reinsurers with a credit agency rating of A or greater.
Broker and coverholder counterparties
Underwriters may only write business through an approved counterparty. New broker counterparties are
approved by the Broker and Reinsurance Security Committee and new coverholder counterparties are
approved by the Delegated Authority Oversight Group (a sub-committee of the Insurance Management
Committee).
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
34
ii. Exposure to credit risk
The carrying amount of financial assets and reinsurance assets represents the maximum credit risk
exposure. The table below analyses the credit rating by investment grade of the Syndicate’s following
assets:
31 December 2025 | AAA $ 000 | AA $ 000 | A $ 000 | BBB $ 000 | Other $ 000 | Not rated $ 000 | Total $ 000 |
Debt securities and other fixed income securities | |||||||
Shares and other variable yield securities | |||||||
| Debt funds | |||||||
| Lloyd’s overseas deposits | | ||||||
Syndicate loans to the Central Fund | |||||||
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 |
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
35
AAA $ 000 | AA $ 00 0 | A $ 000 | BBB $ 000 | Other $ 000 | Not rated $ 000 | Total $ 000 | |
Debt securities and other fixed income securities | |||||||
Shares and other variable yield securities | |||||||
| Debt funds | |||||||
| Lloyd’s overseas deposits | |||||||
Syndicate loans to the Central Fund | |||||||
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 |
Comparative balances for the year ended 31 December 2024 have been restated – refer to note 3R to the
financial statements for further details.
iii. Financial assets that are past due or impaired
The Syndicate has debtors arising from direct insurance and reinsurance operations that are past due
but not impaired at the reporting date. The amounts past due date are not considered to be impaired
based on historical payment behaviour and analysis of credit risk. There are no other assets that are
past due at the reporting date.
An analysis of the carrying amounts of past due debtors is presented in the table below:
Neither past due nor impaired assets | Past due but not impaired assets | Total | |
31 December 2025 | $000 | $000 | $000 |
Debt securities and other fixed income securities | |||
Shares and other variable yield securities | |||
Debt funds | |||
Lloyd’s overseas deposits | |||
Syndicate loans to the Central Fund | |||
Deposits with ceding undertakings | |||
Reinsurers’ share of claims outstanding | |||
Debtors arising out of direct insurance operations | |||
Debtors arising out of reinsurance operations | |||
Other debtors and accrued interest | |||
Cash at bank and in hand | |||
| Total |
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
36
Neither past due nor impaired assets | Past due but not impaired assets | Total | |
31 December 2024 | $000 | $000 | $000 |
Debt securities and other fixed income securities | |||
| Shares and other variable yield securities | | ||
| Debt funds | |||
| Lloyd’s overseas deposits | |||
| Syndicate loans to the Central Fund | | ||
| Deposits with ceding undertakings | | ||
| Reinsurers’ share of claims outstanding | | ||
Debtors arising out of direct insurance operations | |||
| Debtors arising out of reinsurance operations | | ||
| Other debtors and accrued interest | | ||
| Cash at bank and in hand | |||
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 | |||||
0-3 months past due | 3-6 months past due | 6-12 months past due | Greater than 1 year past due | Total | |
31 December 2025 | $ 000 | $000 | $000 | $000 | $000 |
Debt securities and other fixed income securities | |||||
| Shares and other variable yield securities | | ||||
| Debt funds | | ||||
| Lloyd’s overseas deposits | | ||||
| Syndicate loans to the Central Fund | | ||||
| Deposits with ceding undertakings | | ||||
| Reinsurers’ share of claims outstanding | | ||||
Debtors arising out of direct insurance operations | |||||
Debtors arising out of reinsurance operations | |||||
| Other debtors and accrued interest | | ||||
| Cash at bank and in hand | | ||||
Total | |||||
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
37
Past due but not impaired
0-3 months past due | 3-6 months past due | 6-12 months past due | Greater than 1 year past due | Total | |
31 December 202 4 | $000 | $000 | $000 | $000 | $000 |
Debt securities and other fixed income securities | |||||
| Shares and other variable yield securities | | ||||
| Debt funds | |||||
| Lloyd’s overseas deposits | |||||
| Syndicate loans to the Central Fund | | ||||
| Deposits with ceding undertakings | | ||||
| Reinsurers’ share of claims outstanding | | ||||
Debtors arising out of direct insurance operations | |||||
Debtors arising out of reinsurance operations | |||||
| Other debtors and accrued interest | | ||||
| Cash at bank and in hand | |||||
Total |
b. Liquidity risk
Liquidity risk is defined as the risk that the Syndicate's financial condition will be adversely affected by
the inability or perceived inability to meet its short-term cash, collateral or other financial obligations as
they fall due.
The Syndicate is exposed to daily calls on its available cash resources mainly from claims arising from
insurance contracts. The nature of the Syndicate’s exposure to liquidity risk and its objectives, policies
and processes for managing liquidity risk have not changed significantly from the prior year.
i. Management of liquidity risk
The Syndicate’s approach to managing liquidity risk is to ensure, as far as possible, that it will always
have sufficient liquidity to meet its liabilities when they fall due, under both normal and stressed
conditions.
The Syndicate’s approach to managing its liquidity risk is as follows:
ï‚· Forecasts are prepared and reviewed on a regular basis to predict cash outflows from insurance
contracts over the short, medium and long term, in both normal and stressed circumstances;
ï‚· The Syndicate regularly reviews stress tests 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.
ï‚· Syndicate cash flow forecasts are reviewed periodically by the Investment Committee. Liquidity is
also considered periodically by the Investment Committee, the Audit Committee and the Board,
when reviewing asset allocation constraints within the investment guidelines.
ii. Maturity analysis of Syndicate liabilities
The maturity analysis presented in the table below shows the remaining contractual maturities for the
Syndicate’s insurance contracts and financial instruments. For insurance and reinsurance contracts, the
contractual maturity is taken to be the estimated date when the final gross undiscounted contractually
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
38
required cash flows will occur. For financial liabilities, it is taken to be the earliest date on which the
gross undiscounted cash flows (including contractual interest payments) could be paid assuming
conditions are consistent with those at the reporting date.
At 31 December 2025, the average duration of Syndicate funds to maturity was 1.9 years (2024: 2.0
years) compared to 1.8 years (2024: 1.9 years) for Syndicate claims outstanding.
Undiscounted net cash flows | ||||||
31 December 2025 | No maturity stated $ 000 | 0-1 yrs $ 000 | 1-3 yrs $ 000 | 3-5 yrs $ 000 | >5 yrs $ 000 | Total $ 000 |
| Claims outstanding | | |||||
| Creditors | | |||||
Total | ||||||
Undiscounted net cash flows | ||||||
31 December 2024 | No maturity stated $ 000 | 0-1 yrs $ 000 | 1-3 yrs $ 000 | 3-5 yrs $ 000 | >5 yrs $ 000 | Total $ 000 |
| Claims outstanding | | |||||
| Creditors | | |||||
Total | ||||||
c. Market risk
Market risk is defined as the risk of adverse impact due to systemic movements in one or more of the
following market risk drivers: equity and commodity prices, residential and commercial real estate
values, interest rates, credit spreads, foreign exchange, inflation, and their respective levels of
uncertainty. Market risk can also be influenced by political turmoil, natural disasters, and terrorist
attacks.
The objective of market risk management is to manage and control market risk exposure within the
Board’s risk appetite, while optimising the return on risk subject to preserving capital. The nature of the
Syndicate exposure to market risk and its objectives, policies and processes for managing market risk
have not changed significantly from the prior year.
i. Management of market risks
For each of the major components of market risk the Syndicate has policies and procedures in place
which detail how each risk should be managed and monitored. The management of each of these major
components of major risk and the exposure of the Syndicate at the reporting date to each major risk are
outlined below.
Interest rate risk
This is the risk that an increase in interest rates or volatility in the fixed income markets could result in
significant unrealised or realised losses in the market value of the investment portfolio. The Syndicate
is exposed to interest rate risk arising on interest bearing assets. Assets with floating interest rates
expose the Syndicate to cash flow interest rate risk. Fixed interest rate assets expose the Syndicate to
fair value risk. The Syndicate’s strategy is to invest in high quality, liquid, fixed and floating rate interest
securities and cash, and actively to manage duration. The investment portfolios are actively managed
to achieve a balance between cash flow interest rate risk and fair value interest rate risk bearing in mind
the need to meet the liquidity requirements of the business.
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
39
Currency risk
This is the risk that foreign exchange rate movements could impact the valuation of assets and liabilities
in the Syndicate’s reporting currency. While US dollars are the largest currency in which the Syndicate
transacts and the Syndicate’s results are reported in US dollars, the Syndicate also transacts business
in several other currencies and funds are also held in non-US dollar currencies, primarily sterling.
Therefore, there is a risk that fluctuations in exchange rates may have an impact, possibly significant,
on the Syndicate’s results and net assets. To manage the economic effect of this exposure, funds by
currency are reviewed against liabilities by currency on a quarterly basis. Where practical, assets and
liabilities are matched by currency after consideration has been given to the overall TUL group position
with the aim of holding surplus funds in US dollars.
The profile of the assets and liabilities, categorised by currency at their translated carrying amounts is
as follows:
Sterling | US dollar | Euro | Canadian dollar | Australian dollar | Other | Total | |
31 December 2025 | $000 | $000 | $000 | $000 | $000 | $000 | $000 |
| Investments | |||||||
Reinsurers' share of technical provisions | |||||||
| Debtors | ( | ( | |||||
| Other assets | |||||||
Prepayments and accrued income | |||||||
Total assets | |||||||
| Technical provisions | ( | ( | ( | ( ) | |||
| Creditors | ( | ( | ( | ( | ( | ( | ( ) |
Accruals and deferred income | ( | ( | ( | ( | |||
Total liabilities | ( | ( ) | ( ) | ( ) | ( ) | ( ) | ( ) |
Total c apital and reserves | ( ) | ( ) | ( ) | ( ) | ( ) | ( ) |
Sterling | US dollar | Euro | Canadian dollar | Australian dollar | Other | Total | |
31 December 202 4 | $000 | $000 | $000 | $000 | $000 | $000 | $000 |
| Investments | |||||||
Reinsurers' share of technical provisions | |||||||
| Debtors | ( | ||||||
| Other assets | |||||||
Prepayments and accrued income | |||||||
Total assets | |||||||
| Technical provisions | ( | ( | ( | ( | |||
| Creditors | ( | ( | ( | ( | ( ) | ||
Accruals and deferred income | ( | ( | ( | ||||
Total liabilities | ( ) | ( ) | ( ) | ( ) | ( | ||
Total capital and reserves | ( ) | ( ) | ( ) | ( ) | ( ) | ( ) |
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
40
ii. Sensitivity analysis to market risks
The analysis below considers reasonably possible movements in market indices on financial
instruments with all other variables held constant, showing the impact on the profit or loss and on the
member’s balance due to the ensuing changes in fair value of financial assets and liabilities (whose fair
values are recorded in the profit and loss account).
2025 Impact on results $ 000 | 2025 Impact on member’s balances $ 000 | 2024 Impact on results $ 000 | 2024 Impact on member’s balances $ 000 | |
Interest rate risk | ||||
| + 50 basis points shift in yield curves | ( | ( | ( | ( |
| - 50 basis points shift in yield curves | |
Currency risk
10 percent increase in US
dollar/Sterling
exchange rate
(1,486)
(1,486)
(835)
(835)
10 percent decrease in US
dollar/Sterling exchange rate
1,486
1,486
835
835
10 percent increase in US
dollar/Canadian dollar exchange rate
5,901
5,901
4,389
4,389
10 percent decrease in US
dollar/Canadian dollar exchange rate
(5,901)
(5,901)
(4,389)
(4,389)
Comparative balances for the year ended 31 December 2024 have been restated – refer to note 3R to the financial
statements for further details.
A 10% increase (or decrease) in exchange rates and a 50 basis point increase (or decrease) in yield
curves have been selected on the basis that these are considered to be reasonably possible changes
in these risk variables over the following year.
The sensitivity analysis demonstrates the effect of a change in a key variable while other assumptions
remain unchanged. However, the occurrence of a change in a single market factor may lead to changes
in other market factors as a result of correlations.
Additionally, the sensitivity analysis is based on the Syndicate’s financial position at the reporting date
and that may vary at the time that any actual market movement occurs. For example, the sensitivity
analysis does not take into consideration that the Syndicate’s financial investments are actively
managed and if investment markets move past pre-determined trigger points, actions may be taken
which would alter the Syndicate’s position.
E. Operational risk
Operational risk is defined as the risk of loss, or other adverse consequences, resulting from inadequate
or failed internal processes, people, systems, or from external events. Operational risk includes legal,
regulatory, technology, compliance, third-party and business continuity risks, but excludes business and
strategy risks.
Operational risks are managed by the business, reported and reviewed quarterly at the Operational Risk
Committee, reporting to the Executive Committee, and overseen by the Board’s Risk and Compliance
Committee.
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
41
During the year, particular attention continued to be focused on transformation risk following the sale of
Validus to RenaissanceRe in November 2023 and on operational resilience in preparation for a
regulatory deadline in March 2025, which was met.
Transformation risk
The sale of Validus necessitated an acceleration in the separation of TUL from Validus’ IT infrastructure
and support functions and migration to AIG’s. This process involves material transformation risk, which
is being carefully managed. Once complete it will facilitate closer strategic and operational alignment of
TUL with AIG, including full IT connectivity between TUL and AIG with greater efficiency and reduced
duplication of systems, applications and tools. TUL will have reliance on the same third parties as AIG
and will benefit from a managed IT infrastructure service, while retaining high-level oversight of the IT
environment and overall accountability for the IT infrastructure services provided to TUL by AIG.
To effect the transformation, TUL established detailed implementation plans for this work in late 2023
and early 2024, and subsequently began to execute the plans during 2024. The business has put in
place dedicated governance, oversight and mitigations for the work and the associated risks. The work
is subject to regular senior management and Board scrutiny and oversight. Execution against the plans
has continued successfully throughout 2025 and at the end of the year, all users, data and substantially
all applications have been migrated. Three final applications remain in the legacy IT environment and
will be migrated in early 2026. The legacy IT environment is anticipated to be decommissioned in the
first quarter of 2026.
Operational resilience
A key element of TUL’s operational risk management is to maintain ongoing compliance with operational
resilience regulations. TUL achieves this with well-established business continuity and disaster recovery
plans in place and an Incident Management team, reporting to the Operational Risk Committee, to
oversee execution of these plans and compliance with the PRA’s operational resilience regulations. TUL
has maintained these plans as it transitions from locally operated IT services to AIG IT provided services,
incorporating resilience by design and extensive testing of applications as it has worked through
migrations. TUL has continued to engage with Lloyd’s and the LMA on operational resilience,
participating in market tests, and ensuring that TUL complies with Lloyd’s Principles in this area,
including ongoing scenario testing and third-party resilience.
F. Climate change risk
TUL recognises the material risk that climate change poses to its business and is committed to
embedding climate change considerations within its risk management and decision making.
TUL has committed to reaching net zero greenhouse gas (GHG) emissions across its underwriting and
investment portfolios by 2050, or sooner, aligned to the commitments of its parent, AIG. TUL’s initial
underwriting actions to these ends include no longer providing new insurance cover for thermal coal-
fired power plants, thermal coal mines, oil sands or Arctic energy exploration, as well as phasing out
existing insurance risks with clients that derive 30 percent or more of their revenues from these activities
by 1 January 2030 or sooner. Similarly, TUL’s initial investment actions include no longer investing in
new thermal coal-fired power plants, thermal coal mines, oil sands or new Arctic energy exploration
activities, as well as phasing out existing investments with companies that derive 30 percent or more of
their revenues from these activities, which was achieved in 2025.
TUL has also committed to reducing its own GHG emissions by reviewing energy efficiencies in its
facilities, business travel, printing and procurement areas. This is aligned to AIG’s Net Zero
Commitments and Climate Transition Plan, published in its 2024 Sustainability Report.
During 2025, the PRA published a consultation paper CP10/25, updating supervisory statement SS3/19,
concerning how insurers manage financial risks from climate change. The final supervisory statement,
SS3/25 was published in December 2025.
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
42
The transition to a low carbon economy is likely to provide opportunities for TUL’s business strategy,
with the potential for new products and services to help clients and customers manage their climate-
related risks and improve resource efficiency.
Risks associated with climate change are commonly grouped under physical risks, transitional risks and
liability risks.
a. Physical risks
Physical risks from climate change arise from changing frequency, magnitude and location of severe
weather events (e.g. windstorms, floods and wildfires) and longer-term shifts in the climate (e.g. sea
level rise, increases in average temperatures and greater variability in weather events).
Physical climate change risks may have financial impacts on the Syndicate, for example through
challenging TUL’s ability to underwrite, model and price catastrophe risk effectively, particularly allowing
for change over time in the frequency and severity of catastrophe events.
TUL manages these physical risks through its risk appetite limits and underwriting by using risk models
that have been adjusted to allow for the impact of climate change over time, providing forward-looking
scenario analysis for natural catastrophe risk pricing. The claims and actuarial functions track specific
types of losses, including natural catastrophes, for which climate change may be an exacerbating factor
with the potential to worsen loss scenarios. They also work closely with the underwriting team to assess
the impact of those events on both the level of risk to which TUL might be exposed, and the pricing of
that risk. The business regularly reassesses the increasing frequency and severity of claims that may
stem from climate change impacts, as well as claims from emerging risks such as previously un-
modelled catastrophes.
Physical climate change risks impacting underwriting are also mitigated because the majority of physical
damage, catastrophe-exposed risks are renewed on an annual basis. This provides TUL the opportunity
to re-underwrite and re-price most risks annually.
Physical climate change risks may also have an operational impact, for example on individual facilities
and office locations. TUL also assesses and manages these as part of its regular management of
operational resilience.
b. Transitional risks
Transitional risks from climate change arise from the adjustment of countries around the world to a low-
carbon economy (e.g. climate-related developments in policy and regulation, and the emergence of
new, possibly disruptive, technology and business models). Transitional risks around investment,
reputation and technology are discussed briefly below.
As the world starts to move away from a carbon-intensive economy, investment transitional risks may
arise if financial markets begin fundamentally to reassess the value of carbon-intensive assets and the
businesses that rely on them, leading to material change in their valuation and ongoing viability. The
changes to the Syndicate’s investment policy described above are designed to mitigate this risk in the
short term.
Investors, customers, regulators and other stakeholders are placing increasing importance on how the
companies with which they deal are addressing climate change and their expectations of those with
whom they do business are evolving. Companies that are unable to meet stakeholders’ expectations
could suffer from negative publicity and reputational harm, leading to the loss of business from
customers and loss of confidence from investors, which could adversely affect their operations. As a
wholly-owned subsidiary of AIG, TUL seeks to manage this risk by aligning with AIG’s approach and
public commitments to managing the financial risks and impacts of climate change.
Technological advancements that support the transition to a lower-carbon, energy-efficient economic
system may have a significant impact on a wide range of companies. The economic transition may also
materially affect the demand for insurance in specific sectors, most obviously in energy and transport.
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
43
Although this may not necessarily reduce the overall demand for insurance products and services, it
may alter the patterns of demand and the nature of insurance cover required. Working in alignment with
AIG, the Syndicate will need to respond to these changing demands for insurance in order to remain
competitive in the future.
c. Liability risks
Liability risks may arise from parties who have suffered loss or damage attributable to physical or
transitional climate change risks and who seek to recover them from those they hold responsible. For
example, a material and sustained increase in the physical risk of flooding may affect the value of
multiple property assets, which could lead to increased credit risk for banks and other mortgage lenders
from loan defaults, which if it is material enough could lead to a reduction in their share price and
shareholder claims against their directors and officers. Alternatively, company share prices may fall if
they fail to address the impact of climate change on their business or are accused of making misleading
public statements about how they are addressing the impact of climate change, which could again lead
to shareholder claims against their directors and officers.
In recent years, the insurance industry has observed an increase in climate-related litigation and the
Syndicate therefore now incorporates climate litigation scenarios into its capital setting process.
Modelling the medium and long-term impacts of climate litigation is however an evolving area in light of
the limited amount of liability claims data currently available. TUL will therefore continue to monitor
climate change litigation trends to assess the potential impact of any developments on our business and
our overall risk mitigation strategies.
G. Corporate and social responsibilities
TUL is committed both to making lasting, positive change to the communities in which we operate and
to our employees.
TUL values Culture and Inclusion and seeks to embed this with a motivated and committed workforce,
equipped with the skills required to deliver the strategy and perform at their best. TUL is committed to
equitable pay and also identifies skill requirements and delivers these through training and recruitment
designed to attract, develop and retain diverse talent.
TUL works with a number of charities to raise funds and promote their cause, as well as supporting our
communities, either by financial charitable contributions or by donating time to a range of volunteering
initiatives. There are also a number of partnerships with non-profit initiatives, such as mentoring, to
extend our charitable reach.
H. Capital management
i. Lloyd’s capital framework
The Society of Lloyd’s (Lloyd’s) is a regulated insurance and reinsurance marketplace that is subject to
supervision by the Prudential Regulatory Authority (PRA) under the Financial Services and Markets Act
2000, in accordance with the requirements of Solvency UK.
Within this supervisory framework, Lloyd’s applies capital requirements at member level, supported by
mutualised, centrally-held assets, to ensure that Lloyd’s can comply with the Solvency UK requirements,
and beyond that to meet its own financial strength, licencing and ratings objectives.
ii. Lloyd’s capital setting process
Lloyd’s capital setting process, as outlined below, uses capital requirements assessed at syndicate level
as a starting point, from which it agrees capital requirements for each member at Lloyd’s, this being the
level at which underwriting at Lloyd’s is capitalised. For this reason, the capital requirement in respect
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
44
of the Syndicate is not disclosed in these financial statements. The Syndicate is wholly supported by
its sole member, Talbot 2002 Underwriting Capital Ltd, which only supports the Syndicate.
In order to meet Lloyd’s requirements, each Syndicate must calculate its Lloyd’s Solvency Capital
Requirement (SCR) for the prospective underwriting year. This amount must be sufficient to cover a 1-
in-200 year loss, reflecting uncertainty in the ultimate run-off of underwriting liabilities (referred to as the
ultimate SCR or uSCR). The Syndicate must also calculate its regulatory SCR at the same confidence
level but reflecting uncertainty over a one-year time horizon (referred to as the one-year SCR or SCR1)
for Lloyd’s to use in meeting Solvency UK requirements. The SCRs of each Syndicate are subject to
review by Lloyd’s and approval by the Lloyd’s Capital and Planning Group (CPG).
Once the uSCR has been approved by Lloyd’s, Lloyd’s applies an Economic Capital Uplift (ECU) to the
uSCR to calculate the Economic Capital Assessment (ECA), which is the level at which Lloyd’s members
must capitalise their underwriting. The purpose of the ECU (a Lloyd’s, not Solvency UK, 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 uSCR.
iii. Provision of capital by members
Each member may provide capital to meet its ECA either by assets held in trust by Lloyd’s specifically
for that member, known as Funds at Lloyd’s (FAL), assets held and managed within a syndicate, known
as Funds in Syndicate (FIS), or as the member’s share of the members’ balances on each syndicate on
which it participates. See below for further details on FAL and FIS.
All of the assets less liabilities of the Syndicate, as represented in the member’s balances reported on
the balance sheet on page 19, represent resources available to meet the member’s Lloyd’s capital
requirements.
An additional level of security is the Central Fund to which all syndicates contribute, based on their
premium income, for every underwriting year of account. In the event that a member’s resources are
exhausted, outstanding claims may be paid out of the Central Fund once approved by the Council of
Lloyd’s.
iv. Funds at Lloyd’s
Every member is required to hold capital at Lloyd’s, which is held in trust as FAL. These funds are
intended primarily to cover circumstances where syndicate assets prove insufficient to meet participating
members’ underwriting liabilities from the syndicate. The level of FAL that Lloyd’s requires a member to
maintain is determined by Lloyd’s based on Prudential Regulatory Authority requirements. The
determination of FAL has regard to a number of factors including the nature and amount of risk to be
underwritten by the member and an assessment of the reserving risk in respect of business that has
been underwritten, both of which are reflected in the SCR. Since FAL is not under the management of
the Managing Agent, no FAL amount has been included in these financial statements. However, the
Managing Agent is able to make a call on the member’s FAL to meet liquidity requirements or to settle
losses.
v. Funds in Syndicate
The member participates on the Syndicate by underwriting year. The balance due to/from the member
is payable on the closure of an underwriting year usually at the end of three years. The Syndicate is
wholly aligned to one member, Talbot 2002 Underwriting Capital Ltd (T2002), and is therefore able to
retain closed year profits as capital to support its underwriting activities. The member may also pay
additional funds into the Syndicate to be held as capital. These are known as FIS.
At both 31 December 2025 and 31 December 2024, the value of FIS held is nil.
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
45
5. Analysis of underwriting result
An analysis of the underwriting result before investment return is presented in the table below:
2025 | Gross premiums written $ 000 | Gross premiums earned $ 000 | Gross claims incurred $ 000 | Gross operating expenses $ 000 | Reinsurance balance $ 000 | Underwriting result $ 000 |
Direct insurance | ||||||
| Accident and health | ( | ( | ( ) | |||
Marine, aviation, and transport | ( | ( | ( | |||
Fire and other damage to property | ( | ( | ( | |||
| Third party liability | ( | ( | ( | |||
| Credit and suretyship | ( | ( | ( | |||
Total direct insurance | ( ) | ( ) | ||||
Reinsurance acceptances | ( | ( | ( | |||
Total | ( ) | ( ) | ( ) |
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 $000 | Gross premiums earned $000 | Gross claims incurred $000 | Gross operating expenses $000 | Reinsurance balance $000 | Underwriting result $000 |
Additional analysis | ||||||
Fire and other damage to property of which: | ||||||
| Energy | | ( | ( | |||
Third party liability of which: | ||||||
| Energy | | ( | ( | ( |
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
46
202 4 | Gross premiums written $ 000 | Gross premiums earned $ 000 | Gross claims incurred $ 000 | Gross operating expenses $ 000 | Reinsurance balance $ 000 | Underwriting result $ 000 |
Direct insurance | ||||||
| Accident and health | ( | ( | ||||
Marine, aviation, and transport | ( | ( | ( | |||
Fire and other damage to property | ( | ( | ( | |||
| Third party liability | ( | ( | ( | |||
| Credit and suretyship | | ( | ( | ( | ( | |
Total direct insurance | ( ) | ( ) | ( ) | |||
Reinsurance acceptances | ( | ( | ( | ( | ||
Total | ( ) | ( ) |
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:
202 4 | Gross premiums written $ 000 | Gross premiums earned $ 000 | Gross claims incurred $ 000 | Gross operating expenses $ 000 | Reinsurance balance $ 000 | Underwriting result $ 000 |
| Additional analysis | ||||||
Fire and other damage to property of which: | ||||||
| Energy | ( | ( | ||||
Third party liability of which: | ||||||
| Energy | ( | ( |
No gains or losses were recognised in profit or loss during the year on buying reinsurance (2024: no
gains or losses).
The gross premiums written for direct insurance by underwriting location of risk is presented in the table
below:
2025 $ 000 | 2024 $ 000 | |
| United Kingdom | ||
| European Union Member States | | |
| US | ||
| Rest of the world | ||
Total gross premiums written |
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
47
6. Movement in prior year’s provision for claims outstanding
There has been no material change to the method of reserving during the year under review. Favourable
movements amounting to $48,309k (2024: adverse movements of $125,152k) in the past year’s
provision for claims outstanding, net of expected reinsurance recoveries, are included in claims incurred,
net of reinsurance.
2025
$
000
2024
$
000
Direct insurance
Accident and health (1,338)
298
Marine, aviation, and transport (32,323)
(67,043)
Fire and other damage to property 60,526
27,258
Third party liability 17,586
12,629
Credit and suretyship (1,266)
(27,038)
Total direct insurance
43
,
185
(53,896)
Reinsurance acceptances 5,124
(71,256)
Total
48,309
(125,152)
7. Net operating expenses
2025 $ 000 | 2024 $ 000 | |
| Acquisition costs | ||
| Change in deferred acquisition costs | ||
| Administrative expenses | ||
| Reinsurance commissions and profit participation | ( | ( |
Net operating expenses |
Brokerage and commissions for direct insurance business (included within the acquisition costs total
above) for the year amounted to:
2025 $ 000 | 2024 $ 000 | |
| Total commission for direct insurance business |
An analysis of the amounts paid to the Syndicate’s auditor and associates is given below. The audit
and non-audit fees are borne by Talbot Underwriting Services Ltd (TUSL) and are incorporated in the
management fee charged (included within the administrative expenses total above). Refer to note 23
for further details of the management fee.
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
48
2025 $ 000 | 2024 $ 000 | |
Auditor’s 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 |
Other services pursuant to legislation relate to the audit and review of Lloyd’s regulatory returns, group
reporting, the provision of iXBRL tagging assurance services as well as the provision of the statement
of actuarial opinion as required by Lloyd’s Byelaws.
8. Key management personnel compensation
The directors of the Managing Agent received the following aggregate remuneration charged to the
Syndicate:
2025 $ 000 | 2024 $ 000 | |
| Directors’ emoluments |
The active underwriters received the following aggregate remuneration charged to the Syndicate.
9. Staff numbers and costs
All staff are employed by the Managing Agent. The average number of persons employed by the
Managing Agent, but working for the Syndicate during the year, analysed by category, was as follows:
Number of employees | 202 5 | 202 4 |
| Administration and finance | | |
| Underwriting | ||
| Claims | ||
Total |
The following amounts were recharged by the managing agency to the Syndicate in respect of payroll
costs:
2025 $ 000 | 2024 $ 000 | |
| Wages and salaries | | |
| Social security costs | | |
| Other pension costs | | |
| Other staff benefits and short/long term incentive costs | | |
Total |
Comparative balances for the year ended 31 December 2024 have been restated – refer to note 3R to the
financial statements for further details.
2025 $ 000 | 2024 $ 000 | |
| Emoluments | |
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
49
10. Investment return
2025 $ 000 | 2024 $ 000 | |
Interest and similar income | ||
From financial assets designated at fair value through profit or loss | ||
| Interest and similar income | ||
Other income from investments | ||
From financial assets designated at fair value through profit or loss | ||
| Gains on the realisation of investments | ||
| Losses on the realisation of investments | ( | ( |
| Unrealised gains on investments | ||
| Unrealised losses on the investments | ( | ( |
| Investment management expenses | ( | ( |
Total investment return | ||
| Transferred to the technical account from the non-technical account | | |
| Investment return on Funds in Syndicate |
11. Distribution and open years of account
A distribution of $158,448 k to the member will be proposed in relation to the closing year of account
(2023) (2024: $35,636 k in relation to the closing year of account (2022)).
12. Financial investments
Carrying value | Cost | |||
2025 $ 000 | 2024 $ 000 | 2025 $ 000 | 2024 $ 000 | |
| Debt securities and other fixed income securities | | |||
| Shares and other variable yield securities | ||||
| Debt funds | ||||
| Lloyd’s overseas deposits | ||||
| Syndicate loans to the Central Fund | ||||
Total financial investments | ||||
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:
ï‚· Level 1 – financial assets that are measured by reference to published quotes in an active market.
A financial instrument is regarded as quoted in an active market if quoted prices are readily and
regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory
agency and those prices represent actual and regularly occurring market transactions on an arm’s
length basis.
ï‚· Level 2 – financial assets measured using a valuation technique based on assumptions that are
supported by prices from observable current market transactions. For example, assets for which
pricing is obtained via pricing services but where prices have not been determined in an active
market, financial assets with fair values based on broker quotes, investments in private equity funds
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
50
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.
ï‚· Level 3 – financial assets measured using a valuation technique (model) based on assumptions
that are neither supported by prices from observable current market transactions in the same
instrument nor are they based on available market data. Therefore, unobservable inputs reflect the
Syndicate's own assumptions about the assumptions that market participants would use in pricing
the asset or liability (including assumptions about risk). These inputs are developed based on the
best information available, which might include the Syndicate’s own data.
The table below analyses financial instruments held at fair value in the Syndicate’s balance sheet at
the reporting date by its level in the fair value hierarchy.
202 5 | Level 1 $ 000 | Level 2 $ 000 | Level 3 $ 000 | Total $ 000 |
| Debt securities and other fixed income securities | ||||
Shares and other variable yield securities and units in unit trusts | ||||
| Debt funds | ||||
| Lloyd’s overseas deposits | ||||
| Syndicate loans to the Central Fund | | |||
| Total financial investments |
202 4 | Level 1 $ 000 | Level 2 $ 000 | Level 3 $ 000 | Total $ 000 |
| Debt securities and other fixed income securities | ||||
Shares and other variable yield securities and units in unit trusts | ||||
| Debt funds | ||||
| Lloyd’s overseas deposits | ||||
| Syndicate loans to the Central Fund | ||||
| Total financial investments |
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.
Shares and other variable securities and units in unit trusts are generally categorised as level 1 in the
fair value hierarchy except where they are not actively traded, in which case they are generally
measured at prices of recent transactions in the same instrument. The Syndicate has no exposure to
hedge funds.
Some government and supranational securities are listed on recognised exchanges and are generally
classified as level 1 in the fair value hierarchy. Those that are not listed on a recognised exchange are
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
51
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.
Management performs an analysis of the prices obtained from pricing vendors to ensure that they are
reasonable and produce a reasonable estimate of fair value. Management considers both qualitative
and quantitative factors as part of this analysis. Examples of analytical procedures performed include
reference to recent transactional activity for similar securities, review of pricing statistics and trends and
consideration of recent relevant market events.
Debt funds represent capital TUL has provided to a fund company in return for either a limited partner
interest or shares in the fund. The fund company will in turn utilise this capital by purchasing a portfolio
of private debt and mezzanine securities. The debt funds have been classified as level 3 assets. The
valuation techniques adopted by the fund company establishes the fair transaction price of the
Syndicate’s assets based upon modelling techniques and analysis which incorporates unobservable
inputs for which market data is unavailable. The Syndicate’s interest in the fund is a proportionate share
of the underlying.
Lloyd’s overseas deposits are lodged as a condition of conducting underwriting business in certain
countries or states within countries. These funds are managed by Lloyd’s Treasury Services.
Syndicate loans to the Lloyd’s Central Fund are classified as level 3 assets. The Syndicate loans were
fully repaid to the Syndicate during 2025 and a gain of $905k (2024: nil) was recognised as the amount
was recovered in full and this was above the fair value of the loan held.
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.
As the Syndicate is fully aligned, the Syndicate is able to hold the capital supporting underwriting in the
Syndicate’s premium trust funds. These funds are known as Funds in Syndicate (FIS). At 31 December
2025, the Syndicate did not hold any FIS (2024: nil).
13. Debtors arising out of direct insurance operations
2025 $ 000 | 2024 $ 000 | |
| Due within one year | | |
| Due after one year | | |
Total |
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
52
14. Debtors arising out of reinsurance operations
2025 $ 000 | 2024 $ 000 | |
| Due within one year | ||
| Due after one year | | |
Total |
15. Other debtors
2025 $ 000 | 2024 $ 000 | |
| Amounts due from group companies | ||
| Other debtors | ||
Total |
Amounts owed by group companies are unsecured, interest free, have no fixed date of repayment and
are repayable on demand. Other debtors are primarily in relation to tax assets recoverable.
16. 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.
202 5 | 202 4 | |||||
Gross $ 000 | Reinsurance $ 000 | Net $ 000 | Gross $ 000 | Reinsurance $ 000 | Net $ 000 | |
| Balance at 1 January | ( | ( | ||||
Incurred deferred acquisition costs | ( | ( | ||||
Amortised deferred acquisition costs | ( | ( | ( | ( | ||
Foreign exchange movements | ( | ( | ( | |||
Balance at 31 December | ( | ( ) |
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
53
17. Claims development
The following tables illustrate the development of the estimates of earned ultimate cumulative claims
incurred, including claims notified and IBNR, for each successive underwriting year, illustrating how
amounts estimated have changed from the first estimates made.
As these tables are on an underwriting year basis, there is an apparent large increase from amounts
reported for the end of the underwriting year to one year later as a large proportion of premiums are
earned in the year of account’s second year of development.
Balances have been translated at exchange rates prevailing at 31 December 2025 in all cases.
Gross:
Pure underwriting year | 2016 $ 000 | 2017 $ 000 | 2018 $ 000 | 2019 $ 000 | 2020 $ 000 | 2021 $ 000 | 2022 $ 000 | 2023 $ 000 | 2024 $ 000 | 2025 $ 000 | Total $ 000 |
Estimate of gross claims | |||||||||||
at end of underwriting year | |||||||||||
| one year later | |||||||||||
| two years later | |||||||||||
three years later | |||||||||||
four years later | |||||||||||
five years later | |||||||||||
six years later | |||||||||||
seven years later | |||||||||||
eight years later | |||||||||||
nine years later | |||||||||||
Estimate of gross claims liabilities | |||||||||||
Provision in respect of prior years | |||||||||||
Less gross claims paid | ( ) | ( ) | ( ) | ( ) | ( ) | ( | ( ) | ( ) | ( ) | ( ) | ( ) |
Gross claims liabilities |
Net:
Pure underwriting year | 2016 $ 000 | 2017 $ 000 | 2018 $ 000 | 2019 $ 000 | 2020 $ 000 | 2021 $ 000 | 2022 $ 000 | 2023 $ 000 | 2024 $ 000 | 2025 $ 000 | Total $ 000 |
Estimate of net claims | |||||||||||
at end of underwriting year | |||||||||||
| one year later | |||||||||||
| two years later | |||||||||||
three years later | |||||||||||
four years later | |||||||||||
five years later | |||||||||||
| six years later | |||||||||||
seven years later | |||||||||||
eight years later | |||||||||||
nine years later | |||||||||||
Estimate of net claims liabilities | |||||||||||
Provision in respect of prior years | |||||||||||
Less net claims paid | ( | ( | ( | ( | ( | ( | ( | ( | ( ) | ( | ( ) |
Net claims liabilities | ( |
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
54
18. 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.
202 5 | 202 4 | |||||
Gross provisions $ 000 | Reinsurance assets $ 000 | Net $ 000 | Gross provisions $ 000 | Reinsurance assets $ 000 | Net $ 000 | |
Claims outstanding | ||||||
| Balance at 1 January | ( | ( | ||||
| Claims paid during the year | ( | ( | ( | ( ) | ||
Expected cost of current year claims | ( | |||||
Change in estimates of prior year provisions | ( | ( | ( | |||
Foreign exchange movements | ( | ( | ( | |||
Balance at 31 December | ( | ( ) |
202 5 | 202 4 | |||||
Gross provisions $ 000 | Reinsurance assets $ 000 | Net $ 000 | Gross provisions $ 000 | Reinsurance assets $ 000 | Net $ 000 | |
Unearned premiums | ||||||
| Balance at 1 January | ( | ( | ||||
Premiums written during the year | ( | ( | ||||
Premiums earned during the year | ( | ( | ( | ( | ||
Foreign exchange movements | ( | ( | ( | |||
Balance at 31 December | ( | ( |
Refer to note 4C(b)(iii) for the sensitivity analysis performed over the value of insurance liabilities,
disclosed in the financial statements, to potential movements in the assumptions applied within the
technical provisions.
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
55
19. Creditors arising out of direct insurance operations
2025 $ 000 | 2024 $ 000 | |
| Due within one year | | |
| Due after one year | | |
Total |
20. Creditors arising out of reinsurance operations
2025 $ 000 | 2024 $ 000 | |
| Due within one year | | |
| Due after one year | | |
Total |
21. Other creditors
2025 $ 000 | 2024 $ 000 | |
| Amounts due to group companies | | |
| Other liabilities | ||
Total |
Amounts owed to group companies include amounts that are unsecured, interest free, have no fixed
date of payment and are payable on demand. This also includes the intra-group loan and profit
commission balances owed to group entities. Refer to note 23 for further details.
22. Cash and cash equivalents
2025 $ 000 | 2024 $ 000 | |
| Cash at bank and in hand | ||
| Short term debt instruments presented within other financial investments | | |
Total cash and cash equivalents |
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
56
23. Related parties
Parent Companies
The immediate parent company of Talbot Underwriting Ltd is Talbot Underwriting Holdings Ltd, a
company registered in England and Wales.
The ultimate parent and controlling party of TUL is American International Group, Inc. (AIG). The
registered office of which is 1271 Avenue of the Americas, New York, NY 10020, United States of
America. AIG is listed on the New York Stock Exchange.
Directors’ interests
J Hancock and CJ Flatt held senior management positions and executive directorships within the AIG
group of companies during the year. P Bergamaschi previously held a position on the AIG Board of
Directors as an independent director and was paid fees accordingly.
Corporate member
Talbot 2002 Underwriting Capital Ltd (T2002) is the sole corporate member underwriting on the
Syndicate.
The distributions and cash calls during the year between the Syndicate and T2002 are reported in the
statement of changes in member’s balance.
Managing agent
Talbot Underwriting Ltd is the Managing Agent of the Syndicate and the registered address is the AIG
Building, 58 Fenchurch Street, London, EC3M 4AB.
TUL charges the Syndicate an annual management fee and profit commission. The annual fee for 2025
was $12,782k (2024: $12,133k). Profit commission of $36,193k was chargeable in 2025 (2024:
$14,633k).
Reinsurance
The Syndicate places reinsurance contracts with American International Group UK Limited (AIG UK)
and National Union Fire Insurance Company of Pittsburgh, PA (NUFIC), subsidiaries of AIG.
Transactions concerning ceded premium and earned premium during the financial year, as well as the
reinsurance balance receivable and payable at 31 December are detailed below.
202
5
202
4
Ceded
Premium
$
000
Earned
Premium
$
000
Receivable
$000
Payable
$
000
Ceded
Premium
$
000
Earned
Premium
$
000
Receivable
$000
Payable
$000
NUFIC 324
23,234
16,751
(2,284)
57,567
33,812
13,166
(11,090)
AIG UK 10,691
6,180
975
(8,473)
-
-
-
-
Total
11,015
29
,
414
17,726
(10,757)
57,567
33,812
13,166
(11,090)
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
57
Coverholders
The following group companies provided services to the Syndicate as coverholders and charged
management fees to the Syndicate on an arm’s length basis.
Management fees
charged to the
S
yndicate
Receivable/(Payable)
by the Syndicate at
31 December
2025
$
000
2024
$
000
2025
$
000
2024
$
000
Talbot Risk Services Pte Ltd 4,105
4,736
(7,107)
(5,507)
Talbot Specialty Insurance
Services Inc.
3,578
6,898
(11,551)
(8,078)
Total
7,683
11,634
(
1
8
,
6
58
)
(
13,585
)
An additional group company, Talbot Underwriting Risk Services Ltd, also provides coverholder
services to the Syndicate, however no management fees are payable (2024: nil).
Management fees are stated before any reallocation to other acquisition costs or claims handling
expenses.
Service Companies
The following group companies provided services to the Syndicate and charged management fees to
the Syndicate on an arm’s length basis.
Management fees
charged to the
S
yndicate
Receivable/(Payable)
by the Syndicate at
31 December
2025
$
000
2024
$
000
2025
$
000
2024
$
000
Talbot Underwriting Services Ltd 88,977
91,019
(15,326)
(20,662)
Talbot Underwriting Ltd (226)
(242)
(32,230)
(14,775)
Total
88,751
90,777
(
47,556
)
(
35,437
)
Management fees are stated before any reallocation to other acquisition costs or claims handling
expenses.
These disclosure requirements are in addition to the requirement to disclose key management personnel
compensation. This disclosure is given in note 8.
Intra group loan
The Syndicate has a loan facility in place with AIG Transaction Execution Limited (ATEL), a group entity.
At 31 December 2025, the balance of the loan is $170,000k (2024: nil). The loan facility has a limit of
$400,000k and the facility maturity date is 24 April 2030.
24. Collateral arrangements
The Syndicate benefits from collateral pledged by ceded reinsurance counterparties, which is not
recognised on the balance sheet. The collateral is held in segregated funds, and acts as additional
security in the event of failure of those counterparties to meet their contractual obligations. Collateral of
$6,807k (2024: $93,204k) is held in third party trust accounts to guarantee the Syndicate against
reinsurance counterparties and is available for immediate drawdown in the event of a default.
The Syndicate has not been party to any other arrangement, which is not reflected in its balance sheet,
where material risk and benefits arise for the Syndicate.
Notes to the financial statements
Talbot Underwriting Ltd | Lloyd’s Syndicate 1183
Annual Report and Accounts for the year ended 31 December 2025
58
25. Foreign exchange rates
The following currency exchange rates have been used for principal foreign currency transactions:
202 5 | 202 4 | |||||
Start of period rate | End of period rate | Average rate | Start of period rate | End of period rate | Average rate | |
| Sterling | ||||||
| Euro | ||||||
| US dollar | ||||||
| Canadian dollar | | |||||
| Australian dollar | | |||||
| Japanese Yen | | |||||
