Syndicate Accounts

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Classification: Unclassified

Lloyd’s Syndicate

Newline Syndicate 1218

Annual Report and Accounts for the year ended

31 December 2024

Contents

Syndicate Information..............................................................................................................4

Managing Agent’s Report........................................................................................................5

Statement of Profit or Loss and Other Comprehensive Income............................................20

Balance Sheet – Assets.........................................................................................................22

Balance Sheet – Liabilities.....................................................................................................23

Statement of Changes in Members’ Balances.......................................................................24

Statement of Cash Flows.......................................................................................................25

Notes to the Financial Statements – (Forming Part of the Financial Statements)................26

Syndicate Information

At 31 December 2024

NEWLINE SYNDICATE 1218

MANAGING AGENTNewline Underwriting Management Limited

1 Fen Court

London

EC3M 5BN

DIRECTORS OF MANAGINGM J Beane

AGENTR F Beaver

A R Carey

R F Coerver(appointed 12th February 2024)

N D Duncan

S Kapur

R B Kastner

M C Newman(appointed 1st January 2025)

A Pecover

R S Pollock

M G Wacek

H J L Withinshaw

COMPANY SECRETARYH J L Withinshaw

ACTIVE UNDERWRITERA Pecover

REGISTERED INDEPENDENTPricewaterhouseCoopers LLP

AUDITORS7 More London Riverside

London

SE1 2RT

Managing Agent’s Report

For the year ended 31 December 2024

The Directors of the managing agent present their report and annual report and accounts for the year ended 31 December 2024.

This annual report and accounts is prepared using the annual basis of accounting as required by Regulation 5 of Statutory Instrument No 1950 of 2008, the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 (“the Regulations”).

PRINCIPAL ACTIVITY

Newline Underwriting Management Limited (“NUML”) is the managing agent for Syndicate 1218. The principal activity of the Syndicate is primarily the underwriting of casualty (re)insurance business at Lloyd’s. Syndicate 1218, whose capacity is 100% provided by Newline Corporate Name Limited (“NCNL”), had a capacity of £271.0m for the 2024 year of account (2023: £279.0m, 2022: £238.0m). Syndicate capacity is based on gross premiums net of commissions.

NUML and NCNL are wholly owned subsidiaries of Newline Holdings UK Limited (“NHUKL”), a wholly owned subsidiary of Odyssey Reinsurance Company (“ORC”), part of the Odyssey Group. The ultimate parent is Fairfax Financial Holdings Limited (“Fairfax”), a company incorporated in Canada.

The insurance cover provided by the Syndicate includes the following lines of business:

Affinity and Special Risks

This line of business provides motor-related warranty (extended warranty, collision waiver, tyre and alloy wheel and dent protection), non-motor warranty (brown, white and yellow goods, mobile phones, etc.) credit card enhancement products, Truck, Bus and Motor Physical damage protection and value-driven add-ons (e.g. excess waiver).

Cargo and Specie

This line of business provides physical damage coverage for all types of goods during transit, store, exhibition, consolidation, clearing, distribution, restoration and whilst at manufacturing centres.

Clinical Trials

This line of business protects pharmaceutical and biotech manufacturers and developers as well as clinical research organisations in respect of claims made by research subjects who participated in clinical trials and assert they sustained bodily injury by exposure to the products being tested in the clinical trial.

Crime

This line of business protects financial institutions and other organisations against losses that are discovered during the policy period arising from a variety of dishonest, fraudulent or criminal acts committed by either employees or third parties and includes coverage for robbery, hold-ups, forged documents or computer crime.

Cyber

This line of business protects companies in relation to the financial exposure that arises in the digital and data protection age either on a first party and/or third party basis.

Directors’ and Officers’ (D&O) Liability

This line of business protects directors and officers of commercial entities, financial institutions and other organisations against claims that are made during the policy period seeking to hold directors and officers liable for alleged wrongful acts in their capacity as directors and officers.

Errors and Omissions (E&O)

This line of business protects professional service firms, commercial entities and financial institutions against claims made during the policy period by third parties alleging negligence and seeking to hold the company liable.

Managing Agent’s Report

(continued)

General Liability

This line of business protects companies against claims made by employees or third parties for alleged bodily injury and property damage losses, arising from employee injuries at work or activities of the company that are alleged to cause damage to employees or third parties.

Life Sciences

This line of business protects manufacturers, developers and distributors of a wide range of pharmaceutical, nutraceutical, biotech, medical, health and wellbeing related products against claims made during the policy period by third parties for alleged bodily injury and property damage by use of or exposure to the products manufactured, developed and distributed by these insureds.

Medical Malpractice

This line of business protects hospitals, other health care facilities and individual physicians and other health care professionals against claims made during the policy period by third parties alleging negligence and seeking to hold the insureds liable.

Reinsurance

This line of business protects, on a treaty reinsurance basis, underwriters of property, casualty, marine and aerospace insurance.

The Syndicate also underwrites satellite business, mainly through a consortium participation.

BUSINESS REVIEW

Results and performance

The result for the calendar year 2024 is a profit of £90.6m (2023: profit of £94.3m). Profits and losses will continue to be distributed or called by reference to the results of individual underwriting years.

The combined ratio for 2024 is 86.1% (2023: 86.3%), resulting in an underwriting profit excluding investment return of £32.0m (2023: profit £30.5m). A tougher rating environment in our markets, and increased competition from MGA’s and international service company platforms has put pressure on our top line, but maintaining our disciplined underwriting principles, combined with prior year releases across a number of casualty classes, has contributed to a combined ratio of 86.1%.

The investment return for the year was a positive of £69.1m (2023: positive £69.6m) driven by income from the fixed income portfolio and gains on our equity and fixed interest portfolios. The Syndicate’s investment portfolio recorded a positive investment return of £20.9m (2023: investment gain of £21.0m). The investments supporting the Funds in Syndicate and surplus capital accumulated positive investment returns totalling £48.2m (2023: positive return of £48.6m).

During the latter part of 2024, the Syndicate increased its holding of medium to longer term government and treasury bonds, with purchases mainly of US treasury bonds.

Gross written premiums for the year were £280.5m (2023: £255.5m), £25.0m or 9.8% higher, in converted sterling terms. At constant rates of exchange, this represents an increase in premium of £31.4m or 12.3%. The increase in gross premiums is largely driven by Affinity, together with our Liability and Commercial Professional Liability accounts. Overall, we remain cautious in our underwriting approach, given the continuing uncertain economic outlook, seeking growth only in opportunistic or otherwise profitable areas. Market conditions continue to be competitive.

The result for the year of £90.6m has contributed to an increase of £17.7m (after a distribution of £47.6m and a £25.3m release of Funds in Syndicate to Newline Corporate Name Limited) to the net asset position of £412.2m (2023: £394.5m), with Funds in Syndicate accounting for £350.1m (2023: £337.6m).

Managing Agent’s Report

(continued)

Results and performance (continued)

The Syndicate’s capacity for the 2024 year of account decreased slightly to £271.0m from £279.0m on the 2023 year of account, and our income estimates for 2025 are for steady growth across our core profitable classes, driven by both product and territorial opportunities within Affinity, Cargo and Specie, D&O and Cyber lines of business. We will continue to look for cost-effective means of growing our portfolio, and expanding, if possible, those areas where we feel that the market dynamics mean there is potential for increased profitability. Notwithstanding this, we are cognisant of the challenges of doing so in the current environment, and the need to retain bottom line profitability in the business we underwrite.

Business environment

Competition between insurance entities can be based on a number of factors inter alia product, price, service, coverage, financial strength, distribution channels, enhanced commissions and reputation. The Syndicate’s competitors include independent insurance companies, subsidiaries or affiliates of established worldwide insurance companies, MGAs, and other syndicates underwriting at Lloyd’s. Some of these competitors have longer operating histories and larger capital bases than Syndicate 1218 and, in addition, greater underwriting, marketing, and administrative resources. Whilst new entrants at Lloyd’s and the re-emergence of MGAs may threaten the positive pricing environment, we anticipate the opportunity to attract new business with the flight to quality carriers; providing this falls within our risk appetite.

For the Syndicate, the market environment has seen fierce competition, and the rating environment has experienced a softening of rates across a number of classes. We anticipate during 2025 this trend to continue, resulting in further negative rate changes. Underwriters are targeting Underwriting discipline around risk selection and pricing adequacy on new and renewal business. We continue to develop regional service companies to support access to broader and new distribution opportunities.

Casualty market participants continue to compete aggressively for business and we expect the rating environment to remain highly competitive. We will maintain our focus on maximising the opportunities presented by the market: increasing price; rationalising line size; reducing acquisition cost; and tightening policy terms and conditions as appropriate.

Strategy

The Syndicate has an established book of business and renewals constitute a significant element of our premium volume, one year to the next. Excellent producer relationships have been established with the aim of providing commercial advantage when faced by challenging market conditions. Experience gained over the last market cycle in shaping, refining and redefining our core portfolio will serve us well as we move into the next phase of the market cycle.

Price is a primary means of competition in the (re)insurance business. We continue to emphasise disciplined underwriting over premium growth, focusing on carefully selecting the risks we insure and determining the appropriate price for assuming such risks. We are committed to maintaining our underwriting discipline and standards; as a consequence, premium volumes within our product lines and in overall terms will vary in line with prevailing market conditions.

Key factors that enable us to select, price and manage our business successfully are experience, strict underwriting discipline, analytical tools, and access to real time data. We have invested considerable time and effort in developing our systematic approach to underwriting and placing an appropriate control environment around it.

Managing Agent’s Report

(continued)

Strategy (continued)

To ensure that underwriting objectives are properly understood we have implemented strict review and referral processes, sophisticated and flexible rate engines, rate level monitoring, reporting, and enlisted the assistance of actuarial and claims personnel.

Principal risks and uncertainties

The process of risk acceptance and risk management is addressed through a framework of policies, procedures and internal controls as set out in the Risk Management Framework. This ensures that all risks are identified, recorded, assessed and taken into account when determining the Syndicate’s Solvency Capital Requirement (“SCR”) using the Internal Model. The control environment operating around these key risks is regularly reviewed to ensure that controls are operating effectively. A description of the risks and uncertainty from the insurance risks and financial risks facing the Syndicate are set out in note 4 of these annual report and accounts.

All key policies are approved by the Board and the framework is subject to ongoing review by management, Risk Management and Internal Audit as part of the “Own Risk and Solvency Assessment” (“ORSA”) process. An ORSA report is presented to the Board on at least a quarterly basis. The ORSA report sets out the risk profile and key risk indicators of the Syndicate, together with the resulting impact on the SCR, and confirmation that sufficient own and ancillary funds are in place.

Climate risk

Climate risk relates to a range of economic exposures that may impact the business, encompassing:

Physical risk arising from an increase in frequency and severity of natural weather events, leading to increased losses within property lines of business.

Transition and litigation risk resulting from the movement to a zero carbon footprint for individuals, companies and the global community. The impact may be felt in our investment portfolio, from certain assets in our investment portfolio that have to change their business models away from a high carbon emission base. Additionally, litigation risks may impact casualty lines of business in a variety of ways, including potentially through class actions being taken against publicly listed insureds that fail to meet increased reporting requirements, through to lawsuits against organisations’ and individuals’ perceived adverse impact upon the environment or claims against professional services firms and financial institutions alleging climate related breaches of duty.

Reputational risk in respect of insureds, employees and the wider Newline, Odyssey and Fairfax groups.

Newline has developed its sustainability framework and strategy as part of its overall Risk Management Framework. This sustainability framework sets out Newline’s approach to developing operational, investment and underwriting policies. Newline’s high level sustainability strategy is to embed sustainability factors into our business activities and decision-making to ensure our business remains sustainable for the long-term to the benefit of our employees, customers, members and to promote resilience, inclusivity and sustainability in our operations.

Managing Agent’s Report

(continued)

Principal risks and uncertainties (continued)

In managing the risks to the Syndicate associated with climate change, Newline has:

-Underwriting guidelines and authorities to incorporate sustainability factors in underwriting decisions, including:

oThe alignment of environmentally sensitive risk exposures within core risk appetite philosophy and underwriting best practice;

oSustainability being included within underwriter client meetings;

oEnvironmental referrals are being used in the underwriting process;

oMetrics based on our scenario analysis are currently being developed as part of our exposure management process.

-Included financial risks from climate change in the risk management framework.

-Considered climate change as part of the underwriting loss distribution reviews for the internal model.

-Considered climate change risks and scenario analysis and reported them in the annual ORSA.

-Given consideration to the reputational damage of climate change activism to the Syndicate through the risk management framework and stress and scenario testing.

Newline is continuing to develop its approach to sustainable investments and operational activities. Sustainability considerations are now included within the statement of investment risk appetite, to include an additional objective of gradually increasing the sustainable standing of the portfolio and to phase out existing investments in respect of companies with business models which derive at least 30% of their revenues from either thermal coal-fired power plants, thermal coalmines, oil sands or new Arctic energy exploration activities by the end of 2025. Newline has not identified any specific impacts on its operations and infrastructure from the physical risks of climate change.

Newline’s climate change scenario analysis was updated during 2024, and for each scenario, Newline analysed the physical, transition and litigation risks, the sectors/geographies at higher risk and the potential underwriting losses.

As Newline is primarily a casualty underwriter, it has very limited first party exposure to the transition and physical risks associated with climate change; within its casualty portfolio there is limited exposure to high emission sectors, public administration, large utility/infrastructure risks and physically exposed territories. The most material potential exposures identified were in the D&O book due to the potential for increasing disclosure requirements. This remains an emerging area as plaintiff firms continue to be proactive in filing new and varied lawsuits against a wide array of defendants and the Syndicate’s exposure here is under constant review.

The risk of reputational damage through climate change activism has been considered, although Newline does not have any obvious underwriting or investment exposures which might trigger this.

External conflicts

Geopolitical tensions remain high, and there remains the potential for further inflation shocks, in particular from disruption to supply chains and energy price increases arising from ongoing conflicts in the Middle East and Ukraine. Newline continues to give consideration to the possible financial impact on its insurance and investment portfolios to the conflicts ongoing in Israel and Ukraine. Recent developments, notably the Trump administrations effort to ‘getting a deal’ to end the conflict in Ukraine, and the current ceasefire deal brokered between Israel and the Palestinian group Hamas provide some hope that these tensions may reduce.

Managing Agent’s Report

(continued)

Principal risks and uncertainties (continued)

Israel Gaza War and the wider Middle East region

Following Hamas’ attack on Israel and Israel's subsequent retaliation in Gaza, there remain concerns that the conflict could escalate, despite recent developments in a ceasefire deal. This could lead to western sanctions, supply disruptions, and affect other major oil producers in the region. Israel exports a significant amount of gas to Europe via Egypt and the conflict has led to the closure of a major gas field in Israel. There remains significant risk of a regional conflict with Iran which, together with the recent re-enforcement of the international sanctions regime against Iran following the election of President Trump could have a significant impact on the global oil price.

Newline writes business in Israel, but the business is not directly impacted by the conflict. The main impact on the book has been from insureds/brokers requesting extensions to existing policies and lighter touch renewals, given the level of disruption caused by the conflict.

Events in Ukraine

Following Russia’s invasion of Ukraine, geopolitical tensions have increased, notwithstanding the Trump administrations effort on drawing an end to the conflict. The international sanctions placed on Russia’s financial system have seen volatility in both commodity and currency markets. Newline does not insure any of the following classes: war or terrorism, political risk or violence, contract frustration, trade credit or surety, energy, hull, personal accident, A&H, aviation or medical expenses. Newline derives minimal premium income from Ukraine and took the conscious decision in the past year to avoid wherever possible any income from Russia either directly or indirectly, either non-renewing existing business or declining new business with known Russian domiciled insureds. Newline may face some indirect exposure in its Financial Lines book should third party claims be made against financial institutions or Directors and Officers for losses sustained as a result of the wider economic consequence of the international community’s response to the events in Ukraine. Newline has written a small number of Cyber risks, from which it may also face some exposure.

The events unfolding in Ukraine have also been amongst the causal factors that had been instrumental in raising inflation across the world. This is considered within ‘Inflation’ below. Newline is monitoring closely the impact the new government of the United States could have on the conflict in Ukraine which may result in some form of resolution.

Inflation

Inflationary pressures in the UK and major world economies not seen since the 1980s, started to ease from their peaks at the end of 2022 and early 2023. The additional cost of this has been governments tightening monetary policy, with central banks raising interest rates and reversing the quantitative easing process. Despite UK inflation

easing nearer to the Bank of England target rate of 2%, the continued persistence of inflation coupled with forecast stagnating domestic growth provide the Bank of England with a fine balancing act.

The Risk management function updated its holistic inflation risk assessment during 2024. This covered the impacts of both economic and excess inflation including social inflation on claims costs and expenses. The assessment included a detailed review with underwriters and claims adjusters to investigate and document key drivers of claims inflation within each class. The outcome of the review is taken into consideration by the reserving and capital departments when assessing current held reserves and appropriate explicit allowance for heightened claims inflation. These impacts were reflected in the modelling assumptions for the Internal Model. The Internal

Managing Agent’s Report

(continued)

Principal risks and uncertainties (continued)

Model methodology and assumptions were also reviewed and updated to ensure the internal model appropriately captured inflationary impacts and uncertainty for Newline. From an underwriting perspective, Newline has limited exposure to major catastrophic injury claims, where there was a particular risk from claims inflation.

Within the bond portfolio, our fund manager purchased fixed income government bonds with a maturity between 6 to 7 years during latter part of 2023, and in 2024, further purchases of medium to longer term US treasury bonds were made.

Regulatory Risk

Newline writes business on a worldwide basis and is exposed to local regulatory requirements in those jurisdictions. The principal risks in this area are:

oThe Financial Conduct Authority’s oversight of the implementation of Consumer Duty requirements;

oThe Prudential Regulation Authority implementation of Solvency UK;

oThe implementation of collateral arrangements for overseas insurers operating in India and the regulatory oversight;

oThe National Bank of Belgium regulations associated with Lloyd’s Insurance Company S.A.

These risks are mitigated by having a dedicated Compliance Function who monitor and track new regulatory requirements, lead on their implementation within the business, monitor ongoing compliance and liaise with the regulators as required.

Future Outlook

Our client focus remains the mid-market and corporate sector where we consider our ability and expertise to lead business adds the most value. The UK, Commonwealth countries, Continental Europe, Israel and Asia will continue to be our core markets. The Syndicate will take full advantage of Lloyd’s licensing to exploit opportunities in certain sectors or markets in our chosen fields of expertise as and when they develop. Given the changing broker landscape and developments in local (re)insurance markets, we envisage less business coming to London. To counter this, we are making increasing effort to access business regionally, whether this be through:

i)Establishment of and/or expanding existing service companies;

ii)Accessing business through other (re)insurance partners within the Fairfax Group;

iii)Using overseas MGAs where we have strong relationships and/or proven track records.

The Syndicate has an overseas presence in Australia, Canada, Singapore and Malaysia (and has recently opened a new office in Hong Kong) through insurance agents owned by the parent company of the Syndicate’s capital provider, and operates a distribution hub in Mexico. In addition, the Syndicate participates on the Lloyd’s China

platform and through the Lloyd’s European insurance subsidiary in Brussels, ensuring that we continue to provide a service to our stakeholders and customers across Europe. The Syndicate will likely open a presence in India in 2025 in response to the changing local regulatory environment.

Financial instruments

Information on the use of financial instruments by the Syndicate and its management of financial risk is disclosed in Note 4 to the annual report and accounts. In particular, the Syndicate’s exposures to price risk, credit risk and liquidity risk are separately disclosed in that note. The Syndicate’s exposure to cash flow risk is addressed under the headings of ‘Credit risk’, ‘Liquidity risk’ and ‘Market risk’.

Managing Agent’s Report

(continued)

Economic Uncertainty

The Syndicate is also monitoring the possible economic impact of a possible trade war between the United States and other countries, including the EU and the UK. At present the extent, if any of the imposition of trade tariffs is unknown, however, the threat of tariffs is real and is likely to be imposed during 2025.

Solvency II

With respect to our capital requirements for 2024, Lloyd’s approved the Syndicate Solvency Capital Requirement, calculated using the Syndicate’s Internal Model, in November 2023. Our 2025 capital requirement has also been approved by Lloyd’s, in November 2024.

Key performance indicators (KPIs) and metrics

The Board monitors the progress of the Syndicate by reference to the following KPI’s and metrics:

2024

2023

Gross Written Premiums

£280.5m

£255.5m

Gross premiums written, including acquisition costs, in respect of insurance contracts

Net written premiums

£233.5m

£211.2m

Gross Written Premiums less outward reinsurance in respect of insurance contracts

Technical result

£52.9m

£51.5m

Balance on technical account for general business

Net loss ratio

45.1%

47.4%

Ratio of net claims incurred to net earned premiums

Combined ratio

86.1%

86.3%

Ratio of net claims incurred, commissions and expenses to net premiums earned

Net assets

£412.2m

£394.5m

Excess of assets over liabilities

Managing Agent’s Report

(continued)

DIRECTORS OF THE MANAGING AGENT

The Directors listed below have held office from 1 January 2024 to the date of this report unless otherwise stated.

M J Beane

R F Beaver

A R Carey

J Christiansen (resigned 19 March 2024)

R F Coerver(appointed 12th February 2024)

N D Duncan

S Kapur

R B Kastner

M C Newman(appointed 1st January 2025)

C A Overy(resigned 12th February 2024)

A Pecover

R S Pollock

M G Wacek

H J L Withinshaw

None of the Directors participate in the Syndicate, whose capacity is provided entirely by Newline Corporate Name Limited, a wholly owned subsidiary of Odyssey Reinsurance Company (“ORC”).

Third-party indemnity providing cover for claims for actual or alleged acts, errors, omissions, misstatements, misleading statements, neglect or breach of duty in the rendering of professional services was in place for the above directors throughout the year and up to the time of approval of the annual report and accounts.

STATEMENT OF DISCLOSURE OF INFORMATION TO AUDITORS

Each of the persons who is a director at the date of this report confirms that:

•so far as each of them is aware, there is no information relevant to the audit of the Syndicate’s annual report and accounts for the year ended 31 December 2024 of which the auditors are unaware; and

•each director has taken all steps that they ought to have taken in their duty as a director in order 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 independent auditors of the Syndicate are PricewaterhouseCoopers LLP.

Managing Agent’s Report

(continued)

STATEMENT OF MANAGING AGENT’S RESPONSIBILITIES

The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 require the managing agent to prepare syndicate annual report and accounts as at 31 December each year in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including Financial Reporting Standard 102 The Financial Reporting Standard Applicable in the UK and Republic of Ireland (“FRS 102”), and Financial Reporting Standard 103 Insurance Contracts (“FRS 103”). The annual report and accounts are required by law to give a true and fair view of the state of affairs of the syndicate as at that date and of its profit or loss that year.

In preparing the syndicate annual report and accounts, the managing agent is required to:

•select suitable accounting policies and then apply them consistently;

•make judgements and estimates that are reasonable and prudent;

•state whether applicable United Kingdom Accounting Standards, including FRSs 102 and 103 have been followed, subject to any material departures disclosed and explained in the annual report and accounts;

•notify the member in writing about the use of disclosure exemptions, if any, of FRS 102 and FRS 103 used in preparation of the annual report and accounts;

•prepare the annual report and accounts on the basis that the syndicate will continue to write future business unless it is inappropriate to presume that the syndicate will do so; and

•the preparation and review of the iXBRL tagging that has been applied to the Syndicate Accounts in accordance with the instructions issued by Lloyd’s, including designing, implementing and maintaining systems, processes and internal controls to result in tagging that is free from material non-compliance with the instructions issued by Lloyd’s, whether due to fraud or error.

The directors confirm they have complied with the above requirements in preparing the annual report and accounts.

The managing agent is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the syndicate and to enable it to ensure that the syndicate annual accounts report and comply with the 2008 Regulations. It is also responsible for safeguarding the assets of the syndicate and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

On behalf of the Board

S Kapur

Director

5th March 2025

Independent auditors’ report to the member of Syndicate 1218

Report on the audit of the syndicate annual accounts

Opinion

In our opinion, 1218’s syndicate annual accounts:

●give a true and fair view of the state of the syndicate’s affairs as at 31 December 2024 and of its profit and cash flows for the year then ended;

●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

●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 2.0 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: balance sheet – assets and the balance sheet - liabilities as at 31 December 2024; the statement of profit or loss and other comprehensive income, the statement of cash flows, and the statement of changes in members’ 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 other 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 6, 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.

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 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 2024 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.

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 the posting of inappropriate journals and management bias in accounting estimates. Audit procedures performed by the engagement team included:

●

Discussions with management, internal audit and the compliance function of the Managing Agent, including consideration of known or suspected instances of non-compliance with laws and regulation and fraud;

●

Reviewing relevant meeting minutes including those of the Audit Committee and correspondence with regulatory authorities, including Lloyd’s of London, the Financial Conduct Authority and the Prudential Regulation Authority;

●

Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to valuation of claims incurred but not reported (“IBNR”) and estimated premium income;

●

Identifying and testing journal entries for potential indicators of fraud; and

●

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.

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:

●

we have not obtained all the information and explanations we require for our audit; or

●

adequate accounting records have not been kept by the Managing Agent in respect of the syndicate; or

●

certain disclosures of Managing Agent remuneration specified by law are not made; or

●

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 2.0.

Andrew Lyttle (Senior statutory auditor)

for and on behalf of PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

London

5 March 2025

Statement of Profit or Loss and Other Comprehensive Income

Technical account – General business

For the year ended 31 December 2024

Note

2024

£000

2023

£000

Gross premiums written

280,526

255,477

Outwards reinsurance premiums

(47,005)

(44,255)

Premiums written, net of reinsurance

233,521

211,222

Changes in unearned premium

Change in the gross provision for unearned premiums

(4,176)

8,468

Change in the provision for unearned premiums reinsurers’ share

761

3,292

Net change in provisions for unearned premiums

(3,415)

11,760

Earned premiums, net of reinsurance

230,106

222,982

Allocated investment return transferred from the non-technical account

20,929

20,963

Claims paid

Gross amount

(91,796)

(79,084)

Reinsurers’ share

24,949

18,241

Net claims paid

(66,847)

(60,843)

Change in the provision for claims

Gross amount

(43,711)

(23,483)

Reinsurers’ share

6,687

(21,276)

Net change in provisions for claims

(37,024)

(44,759)

Claims incurred, net of reinsurance

(103,871)

(105,602)

Net operating expenses

(94,220)

(86,848)

Balance on the technical account – general business

52,944

51,495

Statement of Profit or Loss and Other Comprehensive Income: (cont’d)

Non-technical account – General business

For the year ended 31 December 2024

Comparative balances have been represented as disclosed in note

(b).

The accompanying notes from page

to 56 form an integral part of these financial statements.

Note

2024£000

2023£000

Balance on the technical account – general business

52,944

51,495

Investment income

24,903

17,174

Realised gains/(losses) on investments

11,402

2,082

Unrealised gains/(losses) on investments

34,701

52,157

Investment expenses and charges

(1,894)

(1,767)

Total investment return

69,112

69,646

Allocated investment return transferred to the general business technical account

(20,929)

(20,963)

Loss on foreign exchange

(10,549)

(5,848)

Profit/(loss) for the financial year

90,578

94,330

Total comprehensive income/(loss) for the year

90,578

94,330

Balance Sheet – Assets

As at 31 December 2024

Note

2024£000

Restated

2023£000

Financial investments

892,221

840,132

Deposits with ceding undertakings

4,425

4,519

Investments

896,646

844,651

Provision for unearned premiums

31,815

31,966

Claims outstanding

215,329

211,749

Reinsurers’ share of technical provisions

247,144

243,715

Debtors arising out of direct insurance operations

97,190

103,538

Debtors arising out of reinsurance operations

2,305

4,069

Other debtors

6,488

2,859

Debtors

105,983

110,466

Cash at bank and in hand

21,753

13,316

Other

58,971

74,541

Other assets

80,724

87,857

Accrued interest and rent

4,695

4,691

Deferred acquisition costs

39,770

37,164

Other prepayments and accrued income

3,888

4,098

Prepayments and accrued income

48,353

45,953

Total assets

1,378,850

1,332,642

Balance Sheet – Liabilities

As at 31 December 2024

Note

2024£000

Restated

2023£000

Members’ balances

412,174

394,465

Total capital and reserves

412,174

394,465

Provision for unearned premiums

120,325

118,127

Claims outstanding

806,566

779,179

Technical provisions

926,891

897,306

Creditors arising out of direct insurance operations

2,037

4,508

Creditors arising out of reinsurance operations

16,685

18,236

Other creditors including taxation and social security

13,974

11,654

Creditors

32,696

34,398

Accruals and deferred income

7,089

6,473

Total liabilities

966,676

938,177

Total liabilities, capital and reserves

1,378,850

1,332,642

The Syndicate financial statements on pages 20 to 25 were approved by the board of Newline Underwriting Management Limited on 5th March 2025 and were signed on its behalf by;

S KapurDirector

5th March 2025

Statement of Changes in Members’ Balances

For the year ended 31 December 2024

2024£000

2023£000

Members’ balances brought forward at 1 January

394,465

301,838

Total comprehensive income/(loss) for the year

90,578

94,330

Payments of profit to members’ personal reserve funds

(47,615)

(9,396)

Net movement on funds in syndicate

(25,254)

7,693

Members’ balances carried forward at 31 December

412,174

394,465

Statement of Cash Flows

For the year ended 31 December 2024

Note

2024£000

2023£000

Cash flows from operating activities

Profit/(loss) for the financial year

90,578

94,330

Adjustments:

Increase in gross technical provisions

47,374

15,219

(Increase)/decrease in reinsurers’ share of gross

technical provisions

(6,905)

18,855

Decrease in debtors

1,627

4,890

Decrease in creditors

(3,015)

(15,102)

Investment return

(69,112)

(69,646)

Other

6,449

9,078

Net cash flows from operating activities

66,996

57,624

Cash flows from investing activities

Purchase of equity and debt instruments

(310,456)

(837,313)

Sale of equity and debt instruments

314,435

713,460

Purchase of derivatives

(4,851)

(6,992)

Sale of derivatives

13,046

20,396

Investment income received

27,783

17,311

Other

534

Net cash flows from investing activities

40,491

(93,138)

Cash flows from financing activities

Distribution of profit

(47,615)

(9,396)

Funds In Syndicate released to members

(25,254)

Other

7,693

Net cash flows from financing activities

(72,869)

(1,703)

Net increase/(decrease) in cash and cash equivalents

34,617

(37,217)

Cash and cash equivalents at the beginning of the year

16,085

56,493

Foreign exchange on cash and cash equivalents

(307)

(3,191)

Cash and cash equivalents at the end of the year

50,395

16,085

Notes to the Financial Statements – (Forming Part of the Financial Statements)

1.Basis of Preparation

Newline Syndicate 1218 (‘The Syndicate’) comprises a member of the Society of Lloyd's that underwrites insurance business in the London Market. The address of the Syndicate’s managing agent is 1 Fen Court, London, EC3M 5BN.

The financial statements have been prepared in accordance with the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and applicable Accounting Standards in the United Kingdom and the Republic of Ireland, including Financial Reporting Standard 102 (FRS 102). FRS 102 requires the application of Financial Reporting Standard 103 (FRS 103) in relation to insurance contracts, and the Lloyd’s Syndicate Accounts Instructions Version 2.0 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 account.

The financial statements are presented in GBP, which is also the Syndicate’s functional currency.

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

During 2024, Lloyd's introduced changes to the syndicate accounts process to rationalise and standardise financial reporting across the market. As a result, certain comparative information has been restated to ensure consistency with current year presentation and compliance with the Lloyd's Syndicate Accounts Instructions.

a) Reclassification changes

Certain financial statement line items have been reclassified whilst the underlying amounts remain unchanged. The principal change is the reclassification of overseas deposits, previously shown as a separate balance sheet item, to form part of other assets. The comparative balances in the affected note

have also been represented to align with the current period presentation. The prior year comparative for staff costs have been reclassified to include only payroll costs, causing a change in the underlying amount. This change is reflected in note

b) Aggregation changes

To align with Lloyd's reporting requirements whilst maintaining FRS 102 compliance, certain items have been aggregated or disaggregated within the financial statements and related notes. This includes the presentation of realised and unrealised gains and losses on investments, which are now shown on a disaggregated basis in the Non-technical account of the Statement of profit or loss and other comprehensive income.

The reclassification and aggregation changes have been applied retrospectively and had no impact on previously reported profit or (loss), total comprehensive income/(loss), total assets, total liabilities, or total capital and reserves.

Going Concern

The Syndicate has financial resources to meet its financial needs and manages its portfolio of insurance risk. The directors have continued to review the business plans, liquidity and operational resilience of the Syndicate and are satisfied that the Syndicate is well positioned to manage its business risks in the current economic environment. The Syndicate

2025

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

2026

year of account. The Syndicate has sufficient capital for each year of account in its Funds in Syndicate (FIS).

Notes to the Financial Statements (Continued)

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 following critical judgements have been made in applying the Syndicate’s accounting policies:

Estimation of claims incurred but not reported (“IBNR”)

The estimation of claims incurred but not reported (“IBNR”) is generally subject to a greater degree of uncertainty than the estimation of the cost of settling claims already notified to the Syndicate, where more information about the claim event is generally available. Claims IBNR may often not be apparent to the insured until many years after the event giving rise to the claim has happened. Classes of business where the IBNR proportion of the total reserve is high will typically display greater variation between initial estimates and final outcomes because of the greater degree of difficulty of estimating these reserves. Classes of business where claims are typically reported relatively quickly after the claim event tend to display lower levels of volatility.

This uncertainty varies between classes written by the Syndicate, but is typically highest for those classes where there are significant delays in the settlement of the final claims amount, more specifically from Liability and other long-tail direct and long-tailed reinsurance classes. In calculating the estimated cost of unpaid claims, the Syndicate uses a variety of estimation techniques, generally based upon statistical analyses of historical experience, which assumes that the development pattern of the current claims will be consistent with past experience. In order to determine the ultimate cost of claims, the Syndicate uses statistical projections on the claims to be included within each reserving class and for each underwriting year. The projections use a number of methods, with chain-ladder and Bornhuetter-Ferguson being the most extensively used on both gross and ceded information. Allowance is made, however, for changes or uncertainties which create distortion in the underlying statistics or which might cause the cost of unsettled claims to increase or reduce when compared with the cost of previously settled claims including:

•changes in syndicate processes which might accelerate or slow down the development and/or recording of paid or incurred claims compared with the statistics from previous periods;

•changes in the legal environment;

•the effects of inflation;

•changes in the mix of business;

•changes in underlying terms and conditions;

•the impact of large losses; and

•movements in industry benchmarks.

Notes to the Financial Statements (Continued)

In setting the provision for insurance liabilities, a best estimate is determined on an undiscounted basis. For areas of specific uncertainty, it may be necessary to include a loading as part of the reserve estimate, known as the Management Adjustment. At 31 December 2024, the carrying value of net claims IBNR is £458.6m (2023: £429.1m), and the Management Adjustment in excess of the best estimate of net reserves was £49.7m (2023: £45.2m). This level of Management Adjustment is considered appropriate in light of the uncertainties surrounding the current economic environment, loss exposure on opioids and other pharma losses.

Our reserving methods incorporate an implicit allowance for inflation, allowing for both economic and excess inflation. The impact of uncertainty in the rate of inflation has been assessed via sensitivity testing.

Premium income

Written premiums include estimates of premiums due but not yet received or notified to the Syndicate (known as ‘pipeline premium’), in particular from those written under delegated authority agreements. The Syndicate considers relevant information when determining estimates, including information provided by brokers and coverholders, past underwriting experience, market conditions, and the contractual terms of policies. As updated information relating to such variables becomes available, for example when bordereaux are received, adjustments to estimates are recorded in the period in which they are determined, and will impact gross premiums written and provisions for unearned premium in the technical account. The pipeline premium included within gross written premium is £28.4m (2023: £25.1m); of that £21.4m is unearned at 31 December 2024 (2023: £21.3m).

Fair values of financial instruments

The fair value of financial instruments that are determined by using valuation techniques require more judgement than those that are either traded in an active market with quoted prices, or are based on observable market information. The carrying value of these instruments is £159.2m (2023: £187.1m). The Syndicate uses its judgement to select a variety of methods and makes assumptions that are mainly based on market conditions existing at the end of each reporting period.

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

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.

Premiums written

Premiums written relate to business which incepted during the year, together with any differences between booked premiums for prior years and those previously accrued, and include estimates of premiums due but not yet received or notified to the Syndicate. Premiums are stated gross of acquisition costs payable, and exclude taxes and duties levied on them.

Insurance contracts

Insurance contracts are those contracts that transfer significant insurance risk. Such contracts may also transfer financial risk. The Syndicate considers significant insurance risk to exist where there is a reasonable possibility

Notes to the Financial Statements (Continued)

of a significant claim arising on the occurrence of an insured event. The Syndicate’s insurance products are classified as insurance contracts.

Unearned premiums

Unearned premiums represent the proportion of premiums written in the year that relate to unexpired terms of policies in force at the balance sheet date, calculated on the basis of established earning patterns on a time apportionment basis as appropriate.

Acquisition costs

Acquisition costs comprise all direct and indirect costs arising from the acquisition of insurance contracts, and are deferred to the extent that they are attributable to premiums unearned at the balance sheet date.

Reinsurance premiums ceded

Outward reinsurance premiums are accounted for in the same accounting period as the premiums for the related inwards business being reinsured.

Reinsurance

Contracts entered into by the Syndicate with reinsurers, under which the Syndicate is compensated for claims on one or more contracts issued by the Syndicate and that meet the classification requirements for insurance contracts are classified as reinsurance contracts. Contracts that do not meet these classification requirements are classified as financial instruments. Insurance contracts entered into by the Syndicate under which the contract holder is another insurer (inwards reinsurance) are included within insurance contracts; provided there is significant transfer of insurance risk.

The amounts that will be recoverable from reinsurers are estimated based upon the gross claims provisions, having due regard to collectability. Reinsurance recoveries in respect of estimated claims incurred but not reported are assumed to be consistent with the historical pattern of such recoveries, adjusted to reflect changes in the nature and extent of the Syndicate’s reinsurance programme over time. The recoverability of reinsurance recoveries is assessed having regard to market data on the financial strength of each of the reinsurance companies. The reinsurers’ share of claims incurred, in the profit and loss account, reflects the amounts received or receivable from reinsurers in respect of those claims incurred during the period. Reinsurance liabilities are primarily premiums payable for reinsurance contracts and are recognised in the profit and loss account as ‘Outward reinsurance premiums’ when written.

Claims incurred

Gross claims incurred comprise claims and related expenses paid in the year and changes in the provisions for outstanding claims, including provisions for claims incurred but not reported and related expenses, together with any other adjustments to claims from previous years. Where applicable, deductions are made for salvage and other recoveries.

Claims provisions and related reinsurance recoveries

Provision is made for the estimated cost of claims incurred but not settled at the balance sheet date, including the cost of claims incurred but not yet reported to the Syndicate. The estimated cost of claims includes expenses to be incurred in settling claims and a deduction for the expected value of salvage and other recoveries. The Syndicate takes all reasonable steps to ensure that it has appropriate information regarding its claims exposures. However, given the uncertainty in establishing claims provisions (see note

), it is likely that the final outcome will prove to be different to the original liability established.

Notes to the Financial Statements (Continued)

Large claims impacting a class of business are generally assessed separately, being measured on a case-by-case basis or projected separately in order to allow for the possible distortive effect of the development and incidence of these claims.

Provisions are calculated undiscounted, and gross of any reinsurance recoveries. A separate estimate is made of the amounts that will be recoverable from reinsurers based upon the gross provisions and having a due regard to collectability.

Unexpired risks provision

A provision for unexpired risks is made where claims and related expenses arising after the end of the financial year in respect of contracts concluded before that date are expected to exceed the unearned premiums, after the deduction of any acquisition costs deferred. The provision for unexpired risks is calculated separately by classes of business which are managed together, after taking into account the relevant investment return.

Financial instruments

The Syndicate has chosen to adopt the provisions of Sections 11 and 12 of FRS 102 in respect of the valuation of financial investments, which are designated by the Syndicate at fair value through profit or loss.

i)Financial assets

Financial investments, including shares and other variable yield securities and units in unit trusts, derivatives, debt, other fixed income securities and overseas deposits are designated at fair value through profit and loss. Other receivables, including short term debtors arising out of direct insurance and reinsurance operations, and deposits with ceding undertakings, are initially recognised at transaction price or cost, less any impairment.

The fair value of financial investments at the balance sheet date are determined through quoted bid prices in an active market for identical instruments. Common stocks and preferred stocks are also valued utilising observable price to book multiples of peer companies and applying such to the most recently available book value per share. When quoted prices are unavailable, the price of a recent transaction for an identical asset provides evidence of fair value as long as there has not been a signiﬁcant change in economic circumstances or a signiﬁcant lapse of time since the transaction took place. If the market for the asset is not active and recent transactions of an identical asset on their own are not a good estimate of fair value, the Syndicate estimates the fair value by using a valuation technique. These include the use of comparable recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and others commonly used by market participants and which make the maximum use of observable inputs.

Receivables are initially recognised at transaction price, and are reviewed for impairment as part of the impairment review of receivables. This basis of valuation is viewed by the directors as having prudent regard to the likely realisable value.

ii)Cash and cash equivalents

Cash and cash equivalents includes cash at bank and in hand, deposits held at call with banks, other short term highly liquid investments with an original maturity date of three months or less and bank overdrafts. Bank overdrafts, when applicable, are shown within borrowings in current liabilities.

iii) Financial liabilities

Short term creditors, including creditors arising out of direct insurance and reinsurance operations are measured at transaction price.

Notes to the Financial Statements (Continued)

iv) Derivative instruments

The Syndicate uses forward foreign exchange contracts to reduce exposure to foreign exchange rates. Derivative financial instruments are initially measured at fair value on the date on which a derivative contract is entered into, and are subsequently re-measured at fair value. Derivatives are carried as assets when the fair value is positive and as a liability when the fair value is negative.

The Syndicate applies hedge accounting for transactions entered into to manage the foreign exchange exposure and has designated them as a fair value hedge. Changes in fair value of foreign exchange hedges are reported directly in profit and loss. Derivatives under hedge accounting are carried as assets when the fair value is positive and as a liability when the fair value is negative.

Investment return

Investment return comprises all investment income, interest receivable and dividends received plus realised gains and losses on the disposal of investments and movements in unrealised gains and losses, net of investment expenses.

Dividend income is recognised when the right to receive payment is established. Interest and expenses are accounted for on an accruals basis.

Realised gains and losses on investments carried at market value are calculated as the difference between net sale proceeds and purchase price.

Unrealised gains and losses on investments represent the difference between the valuation at the balance sheet date and their purchase price, or their valuation at the previous balance sheet date. The movement in unrealised investment gains and losses includes an adjustment for previously recognised unrealised gains and losses of those investments disposed of in the accounting period.

Investment expenses and charges comprise investment management expenses.

Investment return is initially recorded in the non-technical account. A transfer is made from the non-technical account to the general business technical account to reflect the investment return on the funds supporting underwriting obligations arising from insurance policies. Investment return on the Funds in Syndicate is not transferred and remains in the non-technical account.

Foreign currencies

i)Functional and presentation currency

The Syndicate’s functional and presentation currency is the Pound Sterling.

ii)Transactions and balances

Income and expenditure in US Dollars, Euros, Australian Dollars, Canadian Dollars, Egyptian pounds and Polish Zlotys are translated at the average rates of exchange for the period. Underwriting transactions denominated in other foreign currencies are translated at the rates of exchange ruling at the date the transaction is processed. Assets and liabilities denominated in foreign currencies are translated into Sterling at the rates of exchange prevailing at the balance sheet date.

Realised exchange differences are included in the non-technical account.

Notes to the Financial Statements (Continued)

iii)Translation

Exchange differences arising from translating the result from average rates of exchange to closing rates of exchange, and the translation of the opening balance sheet to closing rates of exchange are taken through the non-technical account.

Taxation

Under Schedule 19 of the Finance Act 1993, managing agents are not required to deduct basic rate income tax from trading income, including capital appreciation, of syndicates. In addition, all UK basic rate income tax deducted from syndicate investment income is recoverable by managing agents; therefore the distribution made to members is gross of tax.

No provision has been made for any United States Federal Income Tax payable on underwriting results or investment earnings. Any payments on account made by the Syndicate 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 the underwriting results.

Overseas deposits

Overseas deposits are stated at fair value at the balance sheet date and comprise deposits which are lodged as a condition of conducting underwriting business in certain countries. Overseas deposits have been included in the balance sheet under the heading ‘other assets’.

Syndicate operating expenses

Where expenses are incurred by the managing agent or on behalf of the managing agent on the administration of the managed Syndicate, these expenses are apportioned using various methods depending on the type of expense, the amount of work performed, resources used and the volume of business transacted. These costs include the costs of staff, who were employed by NUML until 15th March 2023, then subsequently employed by Newline Group Services Limited. Short term benefits (including holiday pay) and annual bonus arrangements for employees performing work on behalf of the Syndicate are included within this expense.

Pension costs

Until 15th March 2023, Newline Underwriting Management Limited operated the Group Personal Pension Plan which is on a defined contribution basis. This has subsequently been managed by Newline Group Services Limited. Pension contributions apportioned to the Syndicate are charged and included within net operating expenses.

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.

4.Risk and Capital Management

Introduction and overview

This note presents information about the nature and extent of insurance and financial risks to which the Syndicate is exposed, the Managing Agent’s objectives, policies and processes for measuring and managing insurance and financial risks, and for managing the Syndicate’s capital.

Notes to the Financial Statements (Continued)

Risk management framework

The Board of Directors of the Managing Agent has overall responsibility for the establishment and oversight of the Syndicate’s risk management framework. The Board has established a Risk Management Committee to oversee the operation of the Syndicate’s risk management framework and to review and monitor the management of the risks to which the Syndicate is exposed.

The Board has retained oversight of the management of underwriting and reserving aspects of insurance risk, and is responsible for developing and monitoring insurance risk management policies. The Board has delegated to the Investment Committee management of aspects of financial risks, which is responsible for developing and monitoring financial risk management policies.

The Risk Committee reports regularly to the Board of Directors on its activities.

The risk management policies are established to identify and analyse the risks faced by the Syndicate, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.

A.Insurance risk

Insurance risk is defined as the risk of loss arising from the inherent uncertainties as to the occurrence, amount and timing of insurance liabilities. Insurance risk is sub-divided into underwriting, reinsurance and reserving risks:

Underwriting risk

Underwriting risk arises from fluctuations in the frequency and severity of financial losses incurred as a result of acceptance of insurance policies. The Syndicate manages underwriting risk by agreeing its appetite for these risks annually through the business plan, which sets out targets for volumes, pricing, line sizes and retention by class of business and through the purchase of reinsurance. Performance is monitored against the business plan on a regular basis. The Syndicate uses modelling software to model maximum probable losses from its exposure to catastrophes and large losses as part of its Realistic Disaster Scenario process.

A proportion of the Syndicate’s business is written through delegated authorities. A delegated authority management group monitors coverholder performance, carries out due diligence on new and existing coverholders and manages regulatory requirements. The Syndicate has identified the areas of potential concentration of insurance exposure and monitors this and purchases reinsurance to protect against its gross effect.

Reinsurance risk

Reinsurance risk arises from the reinsurance purchased to protect the gross loss not responding as intended due to a mismatch with gross losses, poorly worded contracts, reinsurer counterparty risk or exhaustion of reinsurance limits. The primary purpose for our purchase of reinsurance cover is to reduce volatility associated with severe losses and systemic losses.

Reinsurance arrangements include excess of loss cover, and it is used to protect capital against underwriting risk volatility. Reinsurance creditworthiness is overseen by the reinsurance management group in placing cover.

Reserving risk

Reserving risk arises from claims reserves held on the balance sheet being understated or overstated. Reserves may be under or overstated due to the inherent uncertainty of knowing the ultimate timing and quantum of liabilities incurred.

Notes to the Financial Statements (Continued)

Claims provisions represent estimates, based on the internal reserving actuary’s statistical projections. The Syndicate estimates the ultimate settlement and administration costs of the claims incurred. Claims estimates are subject to independent review by the external actuary on an annual basis. The external actuary signs an annual Statement of Actuarial Opinion on the sufficiency of the Syndicate’s reserves.

Assumptions

In order to determine the ultimate cost of claims, the Syndicate uses statistical projections on the claims to be included within each reserving class and for each underwriting year. The projections use a number of methods, with chain-ladder and Bornhuetter-Ferguson being the most extensively used on both gross and ceded information.

The basic chain-ladder method uses cumulative data to derive a set of development factors based on historical information, and are most appropriate for those classes and years of account that have reached a relatively stable development pattern.

The Bornhuetter-Ferguson method is a standard actuarial method used to project a set of underwriting year claims ultimates, and is usually used for more recent underwriting years where there is little claims development. The Bornhuetter-Ferguson method weights two independent estimates of the ultimates, the estimate calculated from the basic chain-ladder method and another independent estimate of the claims ultimate.

The Syndicate also performed detailed analysis using cashflow modelling to estimate the impact of the heightened inflationary environment by Year of Account.

Throughout 2023 and 2024 we have built upon our inflation analysis, which supports the explicit uplift that we have included within our net best estimate reserves to reflect the current heightened economic inflationary environment and broader uncertainty in the UK and worldwide economy.

At 2022 year end, we assumed that inflation would be 8% in 2023 and 2024 before returning to 3%. Throughout 2023 and 2024 global consumer price inflation (CPI) rates have decreased, but there remains uncertainty regarding the overall inflationary impact on claims. Additionally, UK CPI trended upwards in Q4 2024. Therefore, we believe our original assumptions remain appropriate.

There has been no change in the methodologies used in determining the ultimate cost of claims in the year.

The claims development table in note

shows the actual claims incurred to previous estimates for the last 10 years.

Development

Conditions and trends that have affected the development of the liabilities in the past may not occur in the future. Accordingly, conclusions about future results may not necessarily be derived from the information presented in the table.

Notes to the Financial Statements (Continued)

Sensitivity to insurance risk

The following table presents the sensitivity of the value of net insurance liabilities disclosed in this note to movements in the assumptions used in the estimation of insurance liabilities. The sensitivity impact on the result for the year and net assets is determined by applying the factors listed below separately to net claims reserves excluding future claims handling costs, and future claims handling costs.

General insurance business sensitivities as at 31 December 2024

Sensitivity

+5.0%£000

-5.0%£000

Claims outstanding – gross of reinsurance

39,579

(39,579)

Claims outstanding – net of reinsurance

28,812

(28,812)

General insurance business sensitivities as at 31 December 2023

Sensitivity

+5.0%£000

-5.0%£000

Claims outstanding – gross of reinsurance

38,234

(38,234)

Claims outstanding – net of reinsurance

27,647

(27,647)

B.Financial risk

The Syndicate is exposed to a range of financial risks. The key financial risk is that the proceeds of sale from financial assets are insufficient to fund the obligations arising from insurance policies and investment contracts as they fall due. The most important components of this financial risk are market risk (including interest rate risk, price risk and currency risk), credit risk and liquidity risk.

All key policies are approved by the Board of the managing agent and the framework is subject to ongoing review by management, Risk Management and Internal Audit as part of the ORSA process. An ORSA report is presented to the Board on at least a quarterly basis. The ORSA report sets out the risk profile and key risk indicators of the Syndicate, together with the resulting impact on the SCR, and confirmation that sufficient own and ancillary funds are in place.

a.Credit risk

Credit risk is the risk of loss if another party fails to perform its obligations or fails to perform them in a timely fashion. Key areas where the Syndicate is exposed to credit risk are:

•reinsurers’ share of insurance liabilities;

•amounts due from reinsurers in respect of claims already paid;

•amounts due from insurance contract holders and intermediaries; and

•amounts due from investment counterparties.

Notes to the Financial Statements (Continued)

The Syndicate places limits on its exposure to a single counterparty or group of counterparties. Reinsurance is used to manage underwriting and reserving risk. This does not, however, discharge the Syndicate’s liability as primary insurer.

If a reinsurer fails to pay a claim, the Syndicate remains liable for the payment to the policyholder. The creditworthiness of reinsurers is considered on an annual basis by reviewing their financial strength prior to finalisation of any contract. In addition, the recent payment history of reinsurers is used to update the reinsurance purchasing strategy.

i.Premiums receivable and reinsurers share of claims outstanding

The maximum exposure to credit risk at the end of the reporting year is the carrying amount of receivables on the balance sheet.

ii.Credit rating of financial assets

The following tables provide information regarding assets bearing credit risk that are neither overdue nor impaired, based on Standard and Poor’s counterparty credit ratings. These ratings for assets in respect of reinsurers’ share of claims outstanding relate to balances accumulated over a number of years and so will not necessarily align with the rating allocations for current reinsurance programs. The credit risk relating to investments is monitored and assessed within an agreed risk appetite. The maximum exposure to credit risk loss at the end of the reporting year is the carrying amount of the investments on the balance sheet as they are measured at fair value.

Other debtors and accrued interest includes overseas deposits of £59.0m (2023: £74.5m) and accrued interest of £4.7m (2023: £4.7m).

Year 2024

AAA£000

AA£000

A£000

BBB£000

Other£000

Not rated£000

Total£000

Shares and other variable yield securities and units in unit trusts

305,595

Debt securities and other fixed income securities

357,668

124,639

46,202

26,357

8,199

563,065

Derivative assets

4,838

Other investments

18,723

Deposits with ceding undertakings

4,425

Reinsurers’ share of claims outstanding

7,426

109,599

98,088

216

215,329

Debtors arising out of direct insurance operations

86,016

Debtors arising out of reinsurance operations

702

856

699

2,266

Cash at bank and in hand

591

21,162

21,753

Other debtors and accrued interest

35,145

8,182

7,168

5,480

2,360

5,331

63,666

Total

400,941

248,292

173,319

31,837

10,559

420,728

1,285,676

Notes to the Financial Statements (Continued)

Year 2023

AAA£000

AA£000

A£000

BBB£000

Other£000

Not rated£000

Total£000

Shares and other variable yield securities and units in unit trusts

323,776

Debt securities and other fixed income securities

337,295

87,432

31,566

39,693

1,716

497,702

Derivative assets

2,772

Other investments

15,882

Deposits with ceding undertakings

4,519

Reinsurers’ share of claims outstanding

6,593

37,507

166,474

1,175

211,749

Debtors arising out of direct insurance operations

95,490

Debtors arising out of reinsurance operations

370

501

3,156

4,027

Cash at bank and in hand

1,579

11,737

13,316

Other debtors and accrued interest

50,030

8,115

6,506

6,322

2,176

6,083

79,232

Total

394,288

139,653

219,439

46,015

3,892

445,178

1,248,465

iii.Financial assets that are past due or impaired

An ageing analysis for certain receivables is provided below. Other receivable balances have not been shown below as they either have no overdue amounts or represent an insignificant portion of overdue amounts.

An analysis of the carrying amounts of past due or impaired debtors is presented in the table below:

Neither past due nor impaired assets

Past due but not impaired assets

Gross value of impaired assets

Impairment allowance

Total

2024

£000

Shares and other variable yield securities and units in unit trusts

305,595

Debt securities and other fixed income securities

563,065

Derivative assets

4,838

Other investments

18,723

Deposits with ceding undertakings

4,425

Reinsurers' share of claims outstanding

215,329

Debtors arising out of direct insurance operations

86,016

11,174

97,190

Debtors arising out of reinsurance operations

2,266

2,305

Other debtors and accrued interest

63,666

Cash at bank and in hand

21,753

Total

1,285,676

11,213

1,296,889

Notes to the Financial Statements (Continued)

Neither past due nor impaired assets

Past due but not impaired assets

Gross value of impaired assets

Impairment allowance

Total

2023

£000

Shares and other variable yield securities and units in unit trusts

323,776

Debt securities and other fixed income securities

497,702

Derivative assets

2,772

Other investments

15,882

Deposits with ceding undertakings

4,519

Reinsurers' share of claims outstanding

211,749

Debtors arising out of direct insurance operations

95,490

8,048

103,538

Debtors arising out of reinsurance operations

4,027

4,069

Other debtors and accrued interest

79,232

Cash at bank and in hand

13,316

Total

1,248,465

8,090

1,256,555

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

2024

£000

Debtors arising out of direct insurance operations

4,832

3,509

1,497

1,336

11,174

Debtors arising out of reinsurance operations

Total

4,832

3,509

1,497

1,375

11,213

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

2023

£000

Debtors arising out of direct insurance operations

3,413

2,048

954

1,633

8,048

Debtors arising out of reinsurance operations

Total

3,413

2,048

954

1,675

8,090

Notes to the Financial Statements (Continued)

b.Liquidity risk

Liquidity risk is the risk that sufficient financial resources are not maintained to meet liabilities as they fall due. The Investment Committee, a sub-committee of the Board, approves annually agreed limits on the minimum proportion of funds available to meet such calls, based on experience of claims settlement history and contemporaneous information. Management regularly review available funds to mitigate any cash flow risk.

i.Maturity analysis of syndicate liabilities

A maturity analysis of the estimated gross claims outstanding liability based on the remaining term to payment at the reporting date, and the investments that have a fixed term is provided below.

000

Undiscounted net cash flows

Year 2024

No maturity stated£000

0-1 yrs£000

1-3 yrs£000

3-5 yrs£000

>5 yrs£000

Total£000

Claims outstanding

99,425

203,535

151,314

352,292

806,566

Derivative liabilities

5,585

Creditors

17,153

9,958

27,111

Total

17,153

114,968

203,535

151,314

352,292

839,262

000

Undiscounted net cash flows

Year 2023

No maturity stated£000

0-1 yrs£000

1-3 yrs£000

3-5 yrs£000

>5 yrs£000

Total£000

Claims outstanding

97,837

198,928

154,111

328,303

779,179

Derivative liabilities

1,872

Creditors

22,136

10,390

32,526

Total

22,136

110,099

198,928

154,111

328,303

813,577

c.Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument or insurance contract will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk.

i.Interest rate risk

Interest rate risk arises primarily from holding investments in fixed interest securities. In addition, to the extent that claims inflation is correlated to interest rates, liabilities to policyholders are exposed to interest rate risk. The Syndicate monitors interest rate risk by modelling the impact of changes in interest rates (+/-50 bps, +/-100 bps, +/-200 bps, +/- 300 bps) on the values of the fixed interest securities and liabilities. The Investment Committee monitors the sensitivity of the investment portfolio to movements in current interest rates. Holding a proportion of the investment portfolio in cash and cash equivalents also helps to mitigate interest rate risk.

Notes to the Financial Statements (Continued)

ii.Currency risk

Currency risk is the risk of loss arising from adverse exchange rate movements in unhedged foreign exchange exposures. The Syndicate writes business internationally, and so is exposed to foreign exchange risk from various activities conducted in the normal course of business. The Syndicate monitors currency exposure, and through the Investment Committee, mitigates this risk by appropriately matching significant foreign currency denominated liabilities with assets denominated in the same currency, the purchase or sale of the relevant currencies, and forward exchange contracts. The table below sets out the significant currency exposures of the Syndicate.

Sterling

US dollar

Euro

Canadian dollar

Australian dollar

Other

Total

2024

£000

Investments

457,533

183,006

125,416

64,852

36,537

29,302

896,646

Reinsurers' share of technical provisions

29,489

133,431

27,115

27,171

29,938

247,144

Debtors

23,170

38,345

12,201

9,382

11,723

11,162

105,983

Other assets

4,784

7,971

3,996

14,057

36,969

12,947

80,724

Prepayments and accrued income

15,630

16,942

8,321

4,707

2,735

48,353

Total assets

530,606

379,695

177,049

120,169

117,902

53,429

1,378,850

Technical provisions

(144,209)

(384,562)

(166,565)

(105,987)

(109,920)

(15,648)

(926,891)

Creditors

(7,455)

(10,235)

2,172

(4,629)

(7,320)

(5,229)

(32,696)

Accruals and deferred income

(3,862)

(2,280)

(294)

(165)

(367)

(121)

(7,089)

Total liabilities

(155,526)

(397,077)

(164,687)

(110,781)

(117,607)

(20,998)

(966,676)

Total capital and reserves

375,080

(17,382)

12,362

9,388

295

32,431

412,174

Sterling

US dollar

Euro

Canadian dollar

Australian dollar

Other

Total

2023

£000

Investments

384,833

215,205

114,121

69,381

24,200

36,911

844,651

Reinsurers' share of technical provisions

26,816

129,998

28,181

26,720

32,000

243,715

Debtors

22,035

41,665

16,621

12,062

14,121

3,962

110,466

Other assets

2,138

7,604

2,658

19,040

47,524

8,893

87,857

Prepayments and accrued income

14,387

16,096

7,875

5,157

2,412

45,953

Total assets

450,209

410,568

169,456

132,360

120,257

49,792

1,332,642

Technical provisions

(131,387)

(362,697)

(168,302)

(109,020)

(110,426)

(15,474)

(897,306)

Creditors

(9,810)

(9,809)

2,519

(6,074)

(4,918)

(6,306)

(34,398)

Accruals and deferred income

(3,508)

(2,104)

(262)

(166)

(398)

(35)

(6,473)

Total liabilities

(144,705)

(374,610)

(166,045)

(115,260)

(115,742)

(21,815)

(938,177)

Total capital and reserves

305,504

35,958

3,411

17,100

4,515

27,977

394,465

Notes to the Financial Statements (Continued)

Following a release of USD funds in Syndicate during the fourth quarter 2024, at year end the Syndicate is reporting a net deficit in USD. This deficit is within the FIS portfolio, as this is where it holds a forward exchange derivative contract for the sale of US$225.4m. This contract has been adjusted in the first quarter of 2025 to eliminate this deficit.

The Syndicate holds sufficient USD free funds to meet short term USD expenses as they become due. In addition, free funds in GBP and other currencies are also available to meet USD expenses should they be required.

iii.Price risk

Price risk is the risk that changes in equity market prices will impact upon the fair value of financial instruments held by the Syndicate, whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded on the market.

iv.Sensitivity analysis to market risks

The analysis below is performed for reasonably possible movements in market indices on financial instruments with all other variables held constant, showing the impact on the result before tax due to changes in fair value of financial assets and liabilities (whose fair values are recorded in the profit and loss account) and members’ balances.

2024Impact on results before tax£000

2024Impact on

members’

balances£000

2023Impact on results before tax£000

2023Impact on

members’

balances£000

Interest rate risk

+ 50 basis points shift in yield curves

(5,125)

(5,391)

- 50 basis points shift in yield curves

5,334

5,594

Equity price risk

5 percent increase in equity prices

11,609

17,091

5 percent decrease in equity prices

(11,609)

(17,091)

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

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

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

Notes to the Financial Statements (Continued)

Capital management

i.Capital framework at Lloyd’s

The Society of Lloyd’s (Lloyd’s) is a regulated undertaking and subject to supervision by the Prudential Regulatory Authority (PRA) under the Financial Services and Markets Act 2000, and in accordance with the Solvency II Framework.

Within this supervisory framework, Lloyd’s applies capital requirements at member level and centrally to ensure that Lloyd’s would comply with the Solvency II requirements, and beyond that to meet its own financial strength, licence and ratings objectives.

Although, as described below, Lloyd’s capital setting processes use a capital requirement set at syndicate level as a starting point, the requirement to meet Solvency II and Lloyd’s capital requirements apply at overall and member level only respectively, not at syndicate level. Accordingly, the capital requirement in respect of Newline Syndicate 1218 is not disclosed in these financial statements.

ii.Lloyd’s capital setting process

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

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

Each member’s SCR shall thus be determined by the sum of the member’s share of the Syndicate SCR ‘to ultimate’. Where a member participates on more than one syndicate, a credit for diversification is provided to reflect the spread of risk, but consistent with determining an SCR which reflects the capital requirement to cover a 1 in 200 loss ‘to ultimate’ for that member. Over and above this, Lloyd’s applies a capital uplift to the member’s capital requirement, known as the Economic Capital Assessment (ECA). The purpose of this uplift, which is a Lloyd’s not a Solvency II requirement, is to meet Lloyd’s financial strength, licence and ratings objectives. The capital uplift applied for 2024 was 35% (2023: 35%) of the member’s SCR ‘to ultimate’.

iii.Provision of capital by members

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

Accordingly, all of the assets less liabilities of the Syndicate, as represented in the members’ balances reported on the balance sheet on page 19, represent resources available to meet members’ and Lloyd’s capital requirements.

Notes to the Financial Statements (Continued)

5.Analysis of underwriting result

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

2024

Gross premiums written£000

Gross premiums earned£000

Gross claims incurred£000

Gross operating expenses£000

Reinsurance balance£000

Underwriting result£000

Direct insurance

Motor (other classes)

Marine, aviation, and transport

6,913

6,940

(5,860)

(2,871)

698

(1,093)

Fire and other damage to property

3,069

2,803

(969)

(1,232)

(288)

314

Third party liability

154,750

155,506

(65,972)

(55,090)

(7,655)

26,789

Miscellaneous

39,728

33,241

(21,977)

(10,966)

(4)

294

Total direct insurance

204,460

198,490

(94,774)

(70,159)

(7,249)

26,308

Reinsurance acceptances

76,066

77,860

(40,733)

(28,076)

(3,344)

5,707

Total

280,526

276,350

(

)

(98,235)

(10,593)

32,015

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:

2024

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 damage to property of which is:

Specialities

3,069

2,803

(969)

(1,232)

(288)

314

Energy

Third party liability of which is:

Energy

Notes to the Financial Statements (Continued)

2023

Gross premiums written£000

Gross premiums earned£000

Gross claims incurred£000

Gross operating expenses£000

Reinsurance balance£000

Underwriting result£000

Direct insurance

Motor (other classes)

(149)

(143)

Marine, aviation, and transport

11,731

13,367

(7,555)

(4,763)

(753)

296

Fire and other damage to property

2,178

1,947

(969)

(785)

(27)

166

Third party liability

149,675

154,088

(51,963)

(52,534)

(27,420)

22,171

Miscellaneous

21,495

22,547

(13,158)

(7,246)

(12)

2,131

Total direct insurance

185,079

191,949

(73,639)

(65,328)

(28,361)

24,621

Reinsurance acceptances

70,398

71,996

(28,928)

(24,901)

(12,256)

5,911

Total

255,477

263,945

(

)

(90,229)

(40,617)

30,532

Prior year comparatives have been reclassified in line with the Lloyds Market standardisation of financial reporting.

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:

2023

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 damage to property of which is:

Specialities

2,178

1,947

(969)

(785)

(27)

166

Energy

Third party liability of which is:

Energy

The gross premiums written for direct insurance by underwriting location of risk is presented in the table below:

2024£000

2023£000

United Kingdom

280,526

255,477

European Union Member States

Rest of the world

Total gross premiums written

280,526

255,477

Notes to the Financial Statements (Continued)

6.Net operating expenses

2024£000

2023£000

Acquisition costs

83,127

71,363

Change in deferred acquisition costs

(2,796)

2,137

Administrative expenses

18,181

17,156

Reinsurance commissions and profit participation

(4,292)

(3,808)

Net operating expenses

94,220

86,848

Total commissions for direct insurance business for the year amounted to:

2024£000

2023£000

Total commission for direct insurance business

43,205

37,723

Administrative expenses include:

2024£000

2023£000

Auditors’ remuneration:

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

225

222

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

300

239

7.Key management personnel compensation

The directors of Newline Underwriting Management Limited received the following aggregate remuneration charged to the Syndicate:

2024£000

2023£000

Directors’ emoluments

1,614

1,415

Fees

The active underwriter received the following aggregate remuneration charged to the Syndicate.

2024£000

2023£000

Emoluments

425

337

Notes to the Financial Statements (Continued)

8.Staff numbers and costs

Until 15th March 2023, all staff were employed by the Newline Underwriting Management Limited, and then subsequently employed by Newline Group Services. The average number of persons employed by the managing agent and subsequently the service company, but working for the Syndicate during the year, analysed by category, was as follows:

Number of employees

2024

2023

Administration and finance

Underwriting

Claims

Total

The following amounts were recharged by the managing agency or service company (see above) to the Syndicate in respect of payroll costs:

2024£000

2023£000

Wages and salaries

11,537

10,580

Social security costs

1,570

1,455

Other pension costs

1,367

1,112

Other [short/long] term incentive costs

1,451

1,135

Total

15,925

14,282

Notes to the Financial Statements (Continued)

9.Investment return

2024£000

2023£000

Interest and similar income

From financial instruments designated at fair value through profit or loss

Interest and similar income

18,886

14,076

Dividend income

5,208

2,667

Interest on cash at bank

809

431

Other income from investments

From financial instruments designated at fair value through profit or loss

Gains on the realisation of investments

15,230

9,266

Losses on the realisation of investments

(3,828)

(7,184)

Unrealised gains on investments

34,701

52,157

Investment management expenses

(1,894)

(1,767)

Total investment return

69,112

69,646

Transferred to the technical account from the non-technical account

20,929

20,963

Investment return on Funds in Syndicate

48,183

48,683

Impairment losses on debtors recognised in administrative expenses

The above figures include a positive return of £48.2m (2023: positive £48.7m) arising from investment returns earned on cash, equities and bonds deposited by Newline Corporate Name Limited into Funds in Syndicate.

10.Distribution and open years of account

A distribution to members of £57.4m will be proposed in relation to the closing year of account (

2022

) (2023: £47.6m distribution in relation to the closing year of account (

2021

)).

11.Financial investments

Carrying value

Cost

2024£000

2023£000

2024£000

2023£000

Shares and other variable yield securities and units in unit trusts

305,595

323,776

264,430

322,442

Debt securities and other fixed income securities

563,065

497,702

569,976

499,941

Derivative assets

4,838

2,772

Other investments

18,723

15,882

18,723

15,354

Total financial investments

892,221

840,132

853,129

837,737

The amount ascribable to listed investments is £165.0m (2023: £165.7m).

Notes to the Financial Statements (Continued)

The table below presents an analysis of financial investments by their measurement classification:

2024£000

2023£000

Financial assets measured at fair value through profit or loss

892,221

840,132

Financial assets measured at fair value as available for sale

Financial assets measured at amortised cost

Total financial investments

892,221

840,132

The table below analyses the derivative assets by type:

2024Notional amount£000

2024Fair value£000

2023Notional amount£000

2023Fair value£000

Foreign exchange forward contracts

514,465

4,651

417,672

1,953

Equity options

10,809

187

15,407

819

Total

525,274

4,838

433,079

2,772

The Syndicate has entered into a number of forward currency contracts to mitigate the exchange rate risk of its foreign currency denominated assets and liabilities. At 31 December 2024, the outstanding contracts mature within 6 months of the year end. The Syndicate is committed to sell US $298.9m, CAD $135.4m, €156.9m, AUD $40.9m, and to receive fixed Sterling, and to sell GBP 52.2m, and receive fixed Euro amounts.

As the Syndicate is fully aligned, the Syndicate holds the capital supporting their underwriting in their Syndicate’s premium trust funds. These funds are known as funds in syndicate (FIS). At 31 December 2024, the following amount was held as funds in syndicate:

2024£000

2023£000

Funds in Syndicate (FIS)

350,099

337,635

Total funds in syndicate

350,099

337,635

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

•Level 1 – the fair value is based on the unadjusted quoted price in an active market, for identical assets or liabilities that the Syndicate can access at the measurement date.

•Level 2 – inputs to level 2 fair values are inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or indirectly..

•Level 3 – Level 3 financial instruments are financial assets and liabilities for which the values are based on prices or valuation techniques that require inputs that are both unobservable, and significant, to the fair value measurement.

Notes to the Financial Statements (Continued)

The table below analyses financial instruments (excluding overseas deposits) held at fair value in the Syndicate’s balance sheet at the reporting date by its level in the fair value hierarchy:

2024

Level 1£000

Level 2£000

Level 3£000

Assets held at amortised cost

Total£000

Shares and other variable yield securities and units in unit trusts

130,006

35,323

140,266

305,595

Debt securities and other fixed income securities

46,483

516,582

563,065

Derivative assets

4,652

187

4,839

Other investments

18,722

Total financial investments

176,489

556,557

159,175

892,221

Derivative liabilities

(5,585)

Total

176,489

550,972

159,175

886,636

2023

Level 1£000

Level 2£000

Level 3£000

Assets held at amortised cost

Total£000

Shares and other variable yield securities and units in unit trusts

119,073

34,259

170,444

323,776

Debt securities and other fixed income securities

21,234

476,468

497,702

Derivative assets

1,953

819

2,772

Other investments

15,882

Total financial investments

140,307

512,680

187,145

840,132

Derivative liabilities

(1,872)

Total

140,307

510,808

187,145

838,260

During the year ended 31 December 2024, the Syndicate held £159.2m (2023: £187.1m) of financial instruments that are classified as Level 3. Financial instruments classified as Level 3 include assets invested in common stock, preferred stocks, limited partnerships, fixed income securities and loans to the Society of Lloyd's.

Limited partnerships are valued based on the net asset values received from the general partners. These limited partnerships invest in securities that trade in active markets, and as a result, their net asset values reflect their fair values. The unobservable inputs in valuing limited partnerships include inputs such as time lags in receiving distributions by the general partners.

Common stocks and preferred stocks are also valued utilising observable price to book multiples of peer companies and applying such to the most recently available book value per share.

The Syndicate uses a market approach, based on quoted prices and other information from independent pricing sources, to determine fair values for its fixed income financial instruments, adjusted for a risk premium for credit risk

Notes to the Financial Statements (Continued)

12.Debtors arising out of direct insurance operations

2024£000

2023£000

Due within one year

97,190

103,538

Due after one year

Total

97,190

103,538

13.Debtors arising out of reinsurance operations

2024£000

2023£000

Due within one year

2,305

4,069

Due after one year

Total

2,305

4,069

14.Other debtors

2024£000

2023£000

Inter syndicate balances

Other related party balances (non-syndicate)

3,765

1,305

Amounts due from members

Other

2,723

1,554

Total

6,488

2,859

15.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:

2024

2023

Gross£000

Reinsurance£000

Net£000

Gross£000

Reinsurance£000

Net£000

Balance at 1 January

37,164

(2,789)

34,375

39,928

(2,542)

37,386

Incurred deferred acquisition costs

83,128

(4,292)

78,836

71,364

(3,807)

67,557

Amortised deferred acquisition costs

(80,055)

4,015

(76,040)

(73,073)

3,381

(69,692)

Foreign exchange movements

(467)

(409)

(1,055)

179

(876)

Balance at 31 December

39,770

(3,008)

36,762

37,164

(2,789)

34,375

Notes to the Financial Statements (Continued)

16.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 first 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 2024 in all cases.

Gross:

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Total

Pure underwriting year

£000

Estimate of gross claims

at end of underwriting year

29,317

24,581

39,304

44,646

42,544

52,597

59,978

61,412

61,686

63,012

one year later

72,135

61,885

86,001

113,392

104,785

129,162

142,757

145,282

152,258

two years later

66,548

66,535

137,695

112,851

128,464

149,944

155,949

three years later

68,898

75,719

137,457

120,805

116,733

150,366

four years later

75,859

87,530

145,004

115,125

106,433

five years later

68,618

84,300

133,948

111,379

six years later

63,530

86,510

98,735

129,878

seven years later

66,739

87,440

96,085

eight years later

65,397

83,984

nine years later

64,608

Estimate of gross claims reserve

64,608

83,984

96,085

129,878

111,379

106,433

150,366

155,949

152,258

63,012

1,113,952

Provision in respect of prior years

76,466

Less gross claims paid

(

)

(

)

(

)

(79,296)

(38,889)

(27,874)

(25,905)

(27,787)

(

)

(5,191)

(383,852)

Gross claims reserve

16,265

30,043

40,879

50,582

72,490

78,559

124,461

128,162

130,838

57,821

806,566

Notes to the Financial Statements (Continued)

Net:

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Total

Pure underwriting year

£000

Estimate of net claims

at end of underwriting year

20,003

19,336

29,105

29,956

32,211

39,460

48,251

49,474

48,531

50,431

one year later

51,643

47,692

65,848

74,753

77,318

94,957

114,949

115,148

119,588

two years later

51,246

51,813

72,277

85,692

86,639

101,575

117,381

122,672

three years later

54,529

50,301

67,429

92,696

90,022

96,364

116,968

four years later

56,559

48,590

63,547

91,687

87,025

92,879

five years later

53,077

47,220

62,938

92,910

84,675

six years later

51,696

51,960

65,006

89,807

seven years later

52,571

52,372

61,413

eight years later

53,076

49,342

nine years later

50,094

Estimate of net claims reserves

50,094

49,342

61,413

89,807

84,675

92,879

116,968

122,672

119,588

50,431

837,869

Provision in respect of prior years

63,979

Less net claims paid

(36,455)

(37,561)

(41,303)

(57,278)

(35,455)

(27,285)

(25,836)

(23,946)

(20,301)

(5,191)

(

)

Net claims reserve

13,639

11,781

20,110

32,529

49,220

65,594

91,132

98,726

99,287

45,240

591,237

17.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.

2024

2023

Gross provisions£000

Reinsurance

Assets£000

Net£000

Gross provisions£000

Reinsurance

Assets£000

Net£000

Claims outstanding

Balance at 1 January

779,179

(211,749)

567,430

785,375

(243,213)

542,162

Claims paid during the year

(91,796)

24,949

(66,847)

(79,084)

18,241

(60,843)

Expected cost of current year claims

153,844

(32,863)

120,981

149,493

(32,676)

116,817

Change in estimates of prior year provisions

(18,337)

1,227

(17,110)

(46,925)

35,711

(11,214)

Foreign exchange movements

(16,324)

3,107

(13,217)

(29,680)

10,188

(19,492)

Balance at 31 December

806,566

(215,329)

591,237

779,179

(211,749)

567,430

Notes to the Financial Statements (Continued)

2024

2023

Gross provisions£000

Reinsurance

Assets£000

Net£000

Gross provisions£000

Reinsurance

Assets£000

Net£000

Unearned premiums

Balance at 1 January

118,127

(31,966)

86,161

131,309

(30,934)

100,375

Premiums written during the year

280,526

(47,006)

233,520

255,477

(44,255)

211,222

Premiums earned during the year

(276,350)

46,245

(

)

(263,945)

40,963

(222,982)

Foreign exchange movements

(1,978)

912

(1,066)

(4,715)

2,260

(2,455)

Other

Balance at 31 December

120,325

(31,815)

88,510

118,126

(31,966)

86,160

18.Creditors arising out of direct insurance operations

2024£000

2023£000

Due within one year

2,037

4,508

Due after one year

Total

2,037

4,508

19.Creditors arising out of reinsurance operations

2024£000

2023£000

Due within one year

16,685

18,236

Due after one year

Total

16,685

18,236

20.Other creditors

2024£000

2023£000

Other related party balances (non-syndicates)

6,480

6,607

Derivative liabilities

5,585

1,872

Other liabilities

1,909

3,175

Total

13,974

11,654

Notes to the Financial Statements (Continued)

21.Cash and cash equivalents

2024£000

2023£000

Cash at bank and in hand

21,753

13,316

Short term debt instruments presented within other financial investments

Deposits with credit institutions

28,642

2,769

Bank overdrafts

Total cash and cash equivalents

50,395

16,085

Only deposits with credit institutions with maturities of three months or less that are used by the Syndicate in the management of its short-term commitments are included in cash and cash equivalents.

Included within cash and cash equivalents are the following amounts which are not available for use by the Syndicate because these are held in trust in overseas deposits.

2024£000

2023£000

Cash at bank and in hand

Total cash and cash equivalents not available for use by the syndicate

22.Related parties

Newline Underwriting Management Limited (“NUML”), a company incorporated in England, is the managing agent for Syndicate 1218. Newline Corporate Name Limited (“NCNL”), a company incorporated in England, is the sole member of Syndicate 1218. NUML and NCNL are wholly owned subsidiaries of Newline Holdings UK Limited (“NHUKL”), a wholly owned subsidiary of Odyssey Reinsurance Company (“ORC”), part of the Odyssey Group. The ultimate parent is Fairfax Financial Holdings Limited (“Fairfax”), a company incorporated in Canada, where the results of the Syndicate are consolidated. Group accounts for Fairfax are available from the company secretary of NUML, 1 Fen Court, London, EC3M 5BN.

During the calendar year 2024, NUML recharged expenses amounting to £22.0m (2023: £9.7m) to the Syndicate, and NGSL has recharged expenses amounting to £2.3m (2023: £11.2m) to the Syndicate.

From 16 March 2023, Newline Group Services Limited (“NGSL”), a company incorporated in England, became the principal employer for United Kingdom based employees within the Newline Holdings UK Limited Group. From 2024, finance, risk and capital modelling staff costs have been charged directly from NGSL to the Syndicate, and all other staff have been charged via NUML to the Syndicate.

Newline Underwriting Limited, Newline Asia Services PTE Limited, Newline Australia Insurance Pty Limited, Newline Malaysia Limited and Newline Canada Insurance Limited are wholly owned subsidiaries of NHUKL and operate as insurance agents for the Syndicate. Newline Underwriting Limited specialises in smaller value employers’ and public liability and professional indemnity risks, Newline Asia Services PTE Limited and Newline Malaysia Limited specialise in casualty insurance business in Singapore and other Asian territories, Newline Australia Insurance Pty Limited specialises in casualty insurance business in Australia, and Newline Canada Insurance Limited specialises in casualty insurance business in Canada. No commission, charges or fees are received by NHUKL from the activities of these service companies.

Notes to the Financial Statements (Continued)

Hamblin Watsa Investment Counsel Ltd. (“HWIC”), a Fairfax subsidiary, provides investment management services to the Syndicate. Fees are charged to NUML and recharged to the Syndicate. During 2024, investment management charges totalled £1.7m (2023: £1.6m).

The Syndicate holds reinsurance contracts with Allied World Assurance Company, Limited (“AWAC”) a subsidiary of Fairfax. Reinsurance premiums of £4.1m (2023: £3.9m) have been ceded to AWAC in respect of the Syndicates core excess of loss program. At the year end, £nil (2023: £nil) was due on recoveries.

During 2024, the London and Paris branches of ORC have placed inwards treaty business with the Syndicate. The Syndicate has also placed outwards business with ORC through quota share agreements in respect of this inwards business written. In 2024, ORC London and Paris branches placed £0.4m (2023: £0.6m) of gross written premiums with Syndicate 1218, on an arm’s length basis. Reinsurance premiums of £5.4m (2023: £4.3m) have been ceded to ORC in the year. At the end of the year, £5,000 was due from ORC (2023: £nil).

Brit Limited (“Brit”) which provides 100% of the capacity for Lloyd’s Syndicate 2987 is a subsidiary of Fairfax. Reinsurance premiums of £nil (2023: £nil) have been paid to Brit in the year. At the year end, £135,000 (2023: £nil) was due on recoveries from Syndicates 2987.

These disclosure requirements are in addition to the requirement to disclose key management personnel compensation. This disclosure is given in note

23.Off-balance sheet items

There are no off-balance sheet items to report (2023: none).

24.Post balance sheet events

The amounts that are proposed to be transferred to members are disclosed in note

25.Contingencies and commitments

There are no contingencies and commitments to report (2023: none)

26.Foreign exchange rates

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

2024

2023

Start of period rate

End of period

rate

Average

rate

Start of period rate

End of period rate

Average

rate

Sterling

1.00

Euro

1.15

1.20

1.18

1.13

1.15

US dollar

1.23

1.30

1.28

1.20

1.23

1.24

Canadian dollar

1.68

1.79

1.74

1.63

1.68

1.67

Australian dollar

1.92

1.95

1.93

1.77

1.92

1.86

Japanese Yen

182.75

193.46

193.13

158.71

182.75

173.12