Accounts disclaimer
Important information about Syndicate Reports and Accounts
Access to this document is restricted to persons who have given the certification set forth
below. If this document has been forwarded to you and you have not been asked to give the
certification, please be aware that you are only permitted to access it if you are able to give
the certification.
The syndicate reports and accounts set forth in this section of the Lloyd’s website, which
have been filed with Lloyd’s in accordance with the Syndicate Accounting Byelaw (No. 8 of
2005), are being provided for informational purposes only. The syndicate reports and
accounts have not been prepared by Lloyd’s, and Lloyd’s has no responsibility for their
accuracy or content. Access to the syndicate reports and accounts is not being provided for
the purposes of soliciting membership in Lloyd’s or membership on any syndicate of Lloyd’s,
and no offer to join Lloyd’s or any syndicate is being made hereby. Members of Lloyd’s are
reminded that past performance of a syndicate in any syndicate year is not predictive of the
related syndicate’s performance in any subsequent syndicate year.
You acknowledge and agree to the foregoing as a condition of your accessing the syndicate
reports and accounts. You also agree that you will not provide any person with a copy of any
syndicate report and accounts without also providing them with a copy of this
acknowledgment and agreement, by which they will also be bound.
Syndicate 2880
Annual Report and Accounts for the year ended
Contents
Directors and administration .................................................................................................. 1
Managing Agent's report ....................................................................................................... 2
Statement of Managing Agent's responsibilities .................................................................... 7
Independent auditor’s report to the members of Syndicate 2880 .......................................... 8
Statement of profit or loss and other comprehensive income .............................................. 13
Statement of Financial Position ........................................................................................... 13
Statement of changes in Members' balances ...................................................................... 17
Statement of cash flows ...................................................................................................... 18
1. Basis of preparation for the year ended 31 December 2024 ........................................ 19
2. Critical accounting estimates and judgements ............................................................. 19
3. Significant accounting policies ..................................................................................... 21
4. Analysis of underwriting result...................................................................................... 27
5. Technical provisions .................................................................................................... 30
6. Net operating expenses ............................................................................................... 31
7. Auditor’s remuneration ................................................................................................. 31
8. Key Management and Personnel……………………………………………………………..32
9. Staff numbers and costs .............................................................................................. 32
10. Investment return ..................................................................................................... 33
11. Financial Investments ............................................................................................... 33
12. Debtors arising out of direct insurance operations .................................................... 36
13. Debtors arising out of reinsurance operations .......................................................... 36
14. Other debtors ........................................................................................................... 36
15. Creditors arising out of direct insurance operations .................................................. 36
16. Creditors arising out of reinsurance operations ......................................................... 37
17. Other creditors .......................................................................................................... 37
18. Cash and cash equivalents....................................................................................... 37
19. Related parties ......................................................................................................... 38
20. Disclosure of interests .............................................................................................. 38
21. Funds at Lloyd's ....................................................................................................... 39
22. Off-balance sheet items ............................................................................................ 39
23. Risk management .................................................................................................... 39
24. Post balance sheet events........................................................................................ 52
1
Directors and administration
Managing Agent
Directors
P A Jardine (Chairman)*
R P Barke
C V Barley
S Bradbury
E M Catchpole*
S Fisher*
L Harfitt
D B Jones
L J M McMaster
A F J Neden*
S D Redmond*
K Shah*
Non-Executive Directors*
Managing Agent's registered office
5th Floor
20 Gracechurch Street
London
EC3V 0BG
Managing Agent's registered number
1918744
Active Underwriter
L O’Donnell
Bankers and investment managers
Barclays
Registered Auditor
PKF Littlejohn LLP
Signing Actuary
PKF Littlejohn LLP
2
Managing Agent's report
The Syndicate's Managing Agent is a company registered in England and Wales. The
Directors of the Managing Agent present their report for the year ended 31 December 2024.
The financial statements herein have been prepared using the annual basis of accounting as
required by Statutory Instrument No 1950 of 2008, The Insurance Accounts Directive (Lloyd's
Syndicate and Aggregate Accounts) Regulations 2008 (“Lloyds Regulations 2008”).
Results
The result for calendar year 2024 is a profit of $4,854,786 (2023: loss of $2,722,622).
The Syndicate presents its results under FRS102, the Financial Reporting Standard applicable
in the UK and Republic of Ireland. In accordance with FRS102, the Syndicate has identified its
insurance contracts and accounted for them in accordance with FRS103 Insurance Contracts.
Principal activity and review of the business
The Syndicate’s principal activity is the underwriting of direct insurance and reinsurance
business in the Lloyd’s market.
Gross written premium income by class of business for the calendar year was as follows:
2024
$’000
2023
$’000
Fire and other damage to property 39,676
18,575
Marine 14,166
4,940
Reinsurance Accepted 7,979
11,949
Transport -
4,630
Energy – Non Marine -
99
61,821
40,193
The Syndicate's financial key performance indicators during the year were as follows:
2024
$
’000
2023
$
’000
Gross premiums written
61,821
40,193
Profit for the financial year
4,855
(2,722)
Combined ratio*
89.0%
117.0%
*The combined ratio is the ratio of net claims incurred and net operating expenses to net
premiums earned in the calendar year. Lower ratios represent better performance.
3
Managing Agent’s report continued
The performance of the Syndicate has been assessed by measuring, as a percentage of
underwriting capacity, the 36-month forecasted result on a funded accounting basis for an
individual underwriting year of account (“YOA”). The return on capacity for each underwriting
year is shown below.
Note that the 2022 underwriting year is now closed, as of 31 December 2024.
2024 YOA
Open
2023 YOA
Open
2022 YOA
Closed
Capacity ($’000)
55,125
38,750
28,869
Forecast result ($’000)
4,769
457
1,518
Forecast return on capacity (%)
8.7%
1.2%
5.3%
Principal risks and uncertainties
The Syndicate sets risk appetite annually, which is approved by the Agency as part of the
Syndicate’s business planning and Solvency Capital Requirement (“SCR”) process. The
Agency Risk and Solvency Committee meets at least quarterly to oversee the risk
management framework. The Management Committee, a sub-committee of the Agency
Board, reviews the risk profile as reflected in the risk register, and monitors performance
against risk appetite using a series of key risk indicators. The principal risk and uncertainties
facing the Syndicate are as follows:
Insurance risk
Insurance risk includes the risks that a policy will be written for too low a premium or provide
inappropriate cover (underwriting risk), that the frequency or severity of insured events will be
higher than expected (claims risk), or that estimates of claims subsequently prove to be
insufficient (reserving risk). The Management Committee manages insurance risk through
challenge and oversight of the approved business plan, which sets out targets for volumes,
pricing, line sizes and retention by class of business. The Management Committee then
monitors performance against the business plan and the aggregation of risk through exposure
management reporting through the year. The Management Committee considers any
proposed underwriting that impacts the Syndicate’s Environmental, Social and Governance
(“ESG”) profile to ensure consistency with the agreed ESG approach. Reserve adequacy is
monitored through quarterly review by the Asta Actuarial team and the Management
Committee.
Credit risk
The key aspect of credit risk is reinsurance counterparty risk which is the risk of default by one
or more of the Syndicate’s reinsurers and intermediaries. The Syndicate’s policy is to only use
approved reinsurers, supported by collateralisation where required. The Agency Reinsurance
Security Committee sets approval and usage criteria, monitors reinsurer ratings and is required
to approve and oversee the application of the reinsurer approval policy. The Syndicate may
also be exposed to broker credit risk, in particular where risk transfer arrangements are in
place. Aged debt reporting for premiums is reviewed in the Management Committee.
4
Managing Agent’s report continued
Market risk
Market risk exposure impacting the Syndicate relates to fluctuations in interest rates or
exchange rates and inflation. The Syndicate is exposed to foreign exchange movements as
a result of mismatches between the currencies in which assets and liabilities are denominated.
The Agency’s policy is to maintain received income or incurred expenditure in the core
currencies in which they were received or paid. Any surplus or deficit in a core currency would
be subject to review by the Management Committee.
Liquidity risk
This is the risk that the Syndicate will not be able to meet its liabilities as they fall due, owing
to a shortfall in cash or can only meet obligations at excessive cost. To mitigate this risk the
Management Committee reviews cash flow projections regularly and ensures that, where
needed, the Syndicate has liquidity facilities in place or has utilised the option of a cash call
from Capital providers.
Operational risk
This is the risk that errors caused by people, processes, systems and external events lead to
losses to the Syndicate. The Agency seeks to manage this risk through a robust operational
risk and control framework including detailed procedure manuals and a thorough training
programme. This is underpinned by a structured programme of testing of processes and
systems by internal audit, who serve as an independent line of assurance, reporting directly to
the Chair of the Agency Audit Committee. Business continuity and disaster recovery plans
are in place and are regularly updated and tested.
Regulatory risk is the risk of loss owing to a breach of regulatory requirements or failure to
respond to regulatory change. The Agency is required to comply with the requirements of the
Financial Conduct Authority (FCA), Prudential Regulatory Authority (PRA) and Lloyd’s. Lloyd’s
requirements include those imposed on the Lloyd’s market by overseas regulators. The
Agency has a Compliance and Governance Director who manages a function that monitors
business activity and regulatory developments to assess any effects on both the Agency and
the Syndicate.
The Syndicate has no appetite for failing to adhere to the requirements of the FCA Consumer
Duty regulations and continues its focus on ensuring that it is treating customers fairly. The
Syndicate manages and monitors consumer duty risk through a suite of risk indicators and
reporting metrics as part of its documented consumer duty risk framework. The consumer duty
risk framework is consistently applied across all Asta syndicates and is overseen by the
Conduct Oversight Group (COG), which is an Agency Board Committee that includes a non-
executive director as a member who fulfils the role of Consumer Duty Champion.
Group and strategic risk
Group Risk is the risk of contagion that arises from being associated with key stakeholders
and the impact that activities and events that occur within other connected or third parties has
on the business.
Strategic risk covers the risks faced by the Syndicate due to changes in underlying strategy of
the business or that of its key stakeholders (including strategic conflicts of interest).
5
Managing Agent’s report continued
Future developments
The Syndicate will continue to transact the current classes of general direct insurance and
reinsurance business. If opportunities arise to write new classes of business, these will be
investigated at the appropriate time.
The capacity for the 2025 underwriting year is $69.8m (2024 underwriting year: $56.7m).
Environmental, Social and Governance (ESG) and sustainability
The Syndicate has documented a position with regard to ESG and sustainability, which is
submitted annually to Lloyd’s as part of business planning. The position has been developed
in alignment with Lloyd’s principles and expectations, broader regulatory requirements, and to
support the Syndicate’s strategic objectives. Lloyd’s published an updated version of its
“Insuring the Transition” Roadmap as well as its principles for doing business regarding
sustainability, and the Syndicate continues to ensure its approach aligns with those
expectations.
Following the Prudential Regulation Authority’s (PRA) Supervisory Statement in 2019 and
subsequent Dear CEO letter in 2020, Asta have built a climate change framework, applicable
to all syndicates, covering physical, transition and liability climate change risks, based on the
underlying business written by each syndicate. Asta’s managed syndicates accept climate
change risk where it is an inherent part of an insurance business model, providing it is
understood, managed, and controlled and/or compensated. There is no appetite for
uncontrolled, unmanaged exposure to the financial risks of climate change.
The framework ensures Board-level engagement and accountability with Lloyd’s and PRA’s
requirements and expectations, assigning clear responsibilities for managing the financial risks
associated with climate change. The Agency’s Chief Risk Officer, who is a Board member, is
responsible for the climate change framework, including identifying and managing financial
climate related risks.
Asta monitors regulatory guidance and expectations on managing the financial risks of climate
change.
Emerging risks
An emerging risk or opportunity is defined as “a developing issue, triggered externally, with
the potential to have a significant business impact but which may not be sufficiently understood
or accounted for”. The business impact in this case could represent a downside risk or an
upside opportunity. Emerging risks and opportunities include:
Syndicate insurable risks, as areas of potential future losses or new product offerings;
Those risks that may affect a syndicate’s ability to carry out normal business operations
and/or lead to unplanned significant costs/income;
Both new risks and those which are re-emerging in a new context.
The Agency and Syndicate continue to monitor the impact of emerging risks on the Syndicate’s
business, taking into account their impacts on the strategic direction of the Syndicate.
Monitoring takes place in various forums, including the Asta Emerging Risks and Opportunities
Group (“EROG”) which meets quarterly and considers emerging risks and opportunities from
both an internal and external lens. Specific areas of focus over the external environment
across the year at Syndicate and Asta level include:
6
Managing Agent’s report continued
The geopolitical landscape from a tension and broader political risk impact, including
any exposures stemming from regional conflicts (e.g. Russia - Ukraine conflict).
The heightened inflationary environment and subsequent volatility surrounding inflation
risk. This has also been considered by the Syndicate within their annual business
planning process and reserve reviews.
Directors and Officers
Details of the Directors of the Managing Agent that were serving at the date of signing these
financial statements are provided on page 1. Changes to Directors from the last report were
as follows:
K A Green Resigned 30 September 2024
A F J Neden Appointed 1 January 2025
S Fisher Appointed 1 February 2025
Changes to the Active Underwriter that were serving at the date of these financial statements
were as follows:
C Wildee Resigned 5 February 2025
L O’Donnell Appointed 5 February 2025
Disclosure of information to the auditor
So far as each person who was a Director of the Managing Agent at the date of approving the
report is aware, there is no relevant audit information, being information needed by the
Syndicate auditor in connection with the auditor's report, of which the auditor is unaware.
Having made enquiries of fellow Directors of the Agency and the Syndicate's auditors, each
Director has taken all the steps that he or she ought to have taken as a Director to become
aware of any relevant audit information and to establish that the Syndicate's auditor is aware
of that information.
Auditor
The Managing Agent intends to reappoint PKF Littlejohn LLP as the Syndicate’s auditor.
Syndicate Annual General Meeting
In accordance with the Syndicate Meetings (Amendment No 1) Byelaw (No 18 of 2000) the
Managing Agent does not propose holding an annual meeting this year; objections to this
proposal or the intention to reappoint the auditors for a further 12 months can be made by
Syndicate members within 21 days of this notice.
On behalf of the Board
C V Barley
Director
06 March 2025
7
Statement of Managing Agent's responsibilities
The Managing Agent is responsible for preparing the financial statements in accordance with
applicable law and regulations.
The Insurance Accounts Directive (Lloyd's Syndicate and Aggregate Accounts) Regulations
2008 require the managing agent to prepare financial statements at 31 December each year
in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable law) including FRS 102 the Financial Reporting
Standard applicable in the UK and Republic of Ireland. The financial statements are required
by law to give a true and fair view of the state of affairs of the Syndicate as at that date and of
its profit or loss for that year.
In preparing the financial statements, the managing agent is required to:
select suitable accounting policies and then apply them consistently subject to changes
arising on the adoption of new accounting standards in the year;
make judgements and estimates that are reasonable and prudent;
state whether applicable Accounting Standards have been followed, subject to any
material departures disclosed and explained in the notes to the Syndicate accounts;
and
prepare the Syndicate Accounts on the basis that the Syndicate will continue to write
future business unless it is inappropriate to presume that the Syndicate will do so.
The Managing Agent is responsible for keeping adequate accounting records which disclose
with reasonable accuracy at any time the financial position of the Syndicate and enable it to
comply with the Insurance Accounts Directive (Lloyd's Syndicate and Aggregate Accounts)
Regulations 2008. It is also responsible for safeguarding the assets of the Syndicate and
hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
The Managing Agent is responsible for the maintenance and integrity of the corporate and
financial information included on the business' website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements may differ from legislation
in other jurisdictions.
The Managing Agent is responsible for the preparation and review 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, whether due
to fraud or error.
8
Independent auditor’s report to the members of Syndicate 2880
Opinion
We have audited the Syndicate Annual Accounts of Syndicate 2880 (the ‘Syndicate’) for the
year ended 31 December 2024 which comprise the Statement of profit or loss and other
comprehensive income, the Statement of changes in Members’ balances, the Statement of
financial position, the Statement of cash flows and notes to the Syndicate Annual Accounts,
including significant accounting policies. The financial reporting framework that has been
applied in their preparation is applicable law and United Kingdom Accounting Standards,
including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of
Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion, the 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 results for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
have been prepared in accordance with the requirements of the Insurance Accounts
Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the
requirements within Lloyd’s Syndicate Accounts Instructions Version 2.0 as modified
by the Frequently Asked Questions Version 1.1 issued by Lloyd’s (the “Lloyd’s
Syndicate Accounts Instructions”).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs
(UK)), The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008, the Lloyd’s Syndicate Accounts Instructions and other applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for
the audit of the Syndicate Annual Accounts section of our report. We are independent of the
Syndicate in accordance with the ethical requirements that are relevant to our audit of the
Syndicate Annual Accounts in the UK, including the FRC’s Ethical Standard, and we have
fulfilled our other ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Other Matter
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 the Lloyd’s Syndicate Accounts Instructions.
Conclusions relating to going concern
In auditing the Syndicate Annual Accounts, we have concluded that the managing agent’s use
of the going concern basis of accounting in the preparation of the Syndicate Annual Accounts
is appropriate.
Based upon 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.
Our responsibilities and the responsibilities of the managing agent with respect to going
concern are described in the relevant sections of this report.
9
Independent auditor’s report continued
Other information
The other information comprises the information included in the Syndicate annual report and
accounts, other than the Syndicate Annual Accounts and our auditor’s report thereon.
The managing agent is responsible for the other information contained within the Syndicate
annual report. Our opinion on the Syndicate Annual Accounts does not cover the other
information and, except to the extent otherwise explicitly stated in our report, we do not express
any form of assurance conclusion thereon. Our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the
Syndicate Annual Accounts or our knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this gives rise to a material
misstatement in the Syndicate Annual Accounts themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008
In our opinion, based on the work undertaken in the course of the audit:
the information given in the managing agent’s report for the financial year for which the
Syndicate Annual Accounts are prepared is consistent with the Syndicate Annual
Accounts; and
the managing agent’s report has been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Syndicate and its environment obtained
in the course of the audit, we have not identified material misstatements in the managing
agent’s report.
We have nothing to report in respect of the following matters in relation to which the Insurance
Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 requires us
to report to you if, in our opinion:
adequate accounting records have not been kept on behalf of the Syndicate; or
the Syndicate Annual Accounts are not in agreement with the accounting records and
returns; or
certain disclosures of managing agent emoluments and other benefits specified by law
are not made; or
we have not received all the information and explanations we require for our audit.
10
Independent auditor’s report continued
Responsibilities of the managing agent
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 and for being
satisfied that they give a true and fair view and for such internal control as the managing agent
determines is necessary to enable the preparation of Syndicate Annual 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 to write new business, disclosing, as applicable, matters
related to its ability to continue to operate and using the going concern basis of accounting,
unless the managing agent intends to cease to operate the Syndicate or has no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the Syndicate Annual Accounts
Our objectives are to obtain reasonable assurance about whether the Syndicate Annual
Accounts as a whole are free from material misstatement, whether due to fraud or error, and
to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these Syndicate
Annual Accounts.
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:
We obtained an understanding of the Syndicate and the insurance sector in which it
operates to identify laws and regulations that could reasonably be expected to have a
direct effect on the Syndicate Annual Accounts such as The Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the Lloyd’s Syndicate
Accounts Instructions. We obtained our understanding in this regard through discussions
with management, industry research and the application of our cumulative audit knowledge
and experience of the insurance sector.
We determined the principal laws and regulations relevant to the Syndicate in this regard
to be those arising from the Financial Conduct Authority (FCA), the Prudential Regulation
Authority (PRA), Lloyd’s of London and the Insurance Accounts Directive (Lloyd’s
Syndicates and Aggregate Accounts) Regulations 2008, and the financial reporting
framework (UK GAAP).
The Company operates in the insurance industry which is a highly regulated environment.
As such the Senior Statutory Auditor considered the experience and expertise of the
engagement team to ensure that the team has the appropriate competence and
capabilities to perform the audit.
We designed our audit procedures to ensure the audit team considered whether there were
any indications of non-compliance by the Syndicate with those laws and regulations. These
procedures included, but were not limited to:
11
Independent auditor’s report continued
• agreement of the Syndicate Annual Accounts disclosures to underlying supporting
documentation;
• enquiries of management and review of minutes of Board, committee and
management meetings throughout the period;
• understanding the Syndicate’s policies and procedures in monitoring compliance with
laws and regulations;
• inspection of correspondence with Lloyd’s of London, the PRA and FCA; and
• reviewing compliance reports and internal audit reports relating to the Syndicate.
We also identified possible risks of material misstatement of the Syndicate Annual
Accounts due to fraud; in particular:
o We considered that there is a rebuttable presumption that there is a significant fraud
risk over revenue recognition. We did not consider fraud over the accuracy of revenue
to be a significant risk for transactions that have been processed during the period as
the segregation of duties between the Syndicate’s and the Managing Agent’s teams
adequately mitigated this risk. However, we considered that there was a potential for
fraud risk over the accuracy and completeness of the estimate for pipeline premiums
at the year-end as this was a key accounting estimate. We performed substantive
testing of income recognised, including the estimated pipeline premiums. These
procedures included an examination of the calculations of the estimated pipeline
premiums and related reinsurance and a review of income declared by bordereaux
as well as engaging in discussions with the Syndicate to confirm that the information
provided to the Manging Agent was complete and accurate.
o We considered that there was potential for management bias in the reporting of
events and transactions in the Syndicate Annual Accounts relating to the valuation of
technical provisions and the calculation of the reinsurer’s share of technical
provisions. To address this, we involved actuarial specialists to assist us in
challenging the assumptions and judgements made by management when auditing
those significant accounting estimates.
o As in all of our audits, we addressed the risk of fraud arising from management
override of controls by performing audit procedures which included, but were not
limited to, the testing of journals, reviewing accounting estimates for evidence of bias
and evaluating the business rationale of any significant transactions that were
unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all
irregularities, including those leading to a material misstatement in the Syndicate Annual
Accounts or non-compliance with laws and regulations. This risk increases the more that
compliance with a law or regulation is removed from the events and transactions reflected in
the Syndicate Annual Accounts, as we will be less likely to become aware of instances of non-
compliance. This risk is also greater regarding irregularities occurring due to fraud rather than
error, as fraud involves intentional concealment, forgery, conclusion, omission or
misrepresentation.
A further description of our responsibilities for the audit of the Syndicate Annual Accounts is
located on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
12
Independent auditor’s report continued
Use of our report
This report is made solely to the Syndicate’s members, as a body, in accordance with Part 2
of the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations
2008. Our audit work has been undertaken so that we might state to the Syndicate’s members
those matters we are required to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility to anyone,
other than the Syndicate and the Syndicate's members as a body, for our audit work, for this
report, or for the opinions we have formed.
Satyajeet Beekarry
(Senior Statutory Auditor) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
06 March 2025
13
Statement of profit or loss and other comprehensive income
Technical account – general business
For the year ended 31 December 2024
| Notes | 2024 $’000 | 2023 $’000 |
| Gross premiums written 4 | | |
| Outward reinsurance premiums | ( | ( |
| Premiums written, net of reinsurance | | |
| Changes in unearned premium | ||
| Change in the gross provision for unearned premiums | ( | ( |
Change in the provision for unearned premiums reinsurers’ share | | |
| Net change in provisions for unearned premiums 5 | ( | ( |
| Earned premiums, net of reinsurance | | |
Allocated investment return transferred from the non-technical account | | |
| Other technical income, net of reinsurance | | |
| Claims paid | ||
| Gross amount | ( | ( |
| Reinsurers’ share | | |
| Net claims paid | ( | ( |
| Changes in the provision for claims | ||
| Gross amount | ( | ( |
| Reinsurers’ share | | |
| Net change in provisions for claims 5 | ( | ( |
| Claims incurred, net of reinsurance | ( | ( |
| Net operating expenses 6 | ( | ( |
Balance on the technical account – general business | | ( |
All the amounts above are in respect of continuing operations.
The notes on pages 19 to 52 form part of these financial statements.
14
Statement of profit or loss and other comprehensive income continued
Non-technical account – general business
For the year ended 31 December 2024
Notes
2024
$’000
2023
$
’000
Balance on the technical account – general
business
(2,684 )
Investment income
Total investment return 10
Allocated investment return transferred to the
general business technical account
(819 )
(186 )
Gain/(loss) on foreign exchange
(143 )
(38 )
Profit/(loss) for the financial year
(2,722 )
There were no recognised gains and losses in the year other than those reported in the
statement of profit or loss, and hence no statement of other comprehensive income has been
presented.
All the amounts above are in respect of continuing operations.
The notes on pages 19 to 52 form part of these financial statements.
15
Statement of financial position
As at 31 December 2024
Notes | 2024 $ ’000 | 2023 $ ’000 |
Assets | ||
Investments | ||
| Financial investments 11 | ||
| Deposits with ceding undertakings | | |
| Reinsurers' share of technical provisions | ||
| Provision for unearned premiums 5 | ||
| Claims outstanding 5 | ||
| Debtors | ||
| Debtors arising out of direct insurance operations 12 | ||
| Debtors arising out of reinsurance operations 13 | ||
| Other debtors 14 | ||
| Other assets | ||
| Cash at bank and in hand 18 | ||
| Other | | |
| Prepayments and accrued income | ||
| Deferred acquisition costs 5 | ||
| Other prepayments and accrued income | | |
| Total assets |
The notes on pages 19 to 52 form part of these financial statements.
16
Statement of financial position continued
As at 31 December 2024
Notes | 2024 $ ’000 | 2023 $ ’000 |
Members’ balance and liabilities | ||
Capital and reserves | ||
Members’ balances | ( | |
| Technical provisions | ||
| Provision for unearned premiums 5 | ||
| Claims outstanding 5 | ||
| Creditors | ||
| Creditors arising out of direct insurance operations 15 | ||
| Creditors arising out of reinsurance operations 16 | ||
| Amounts owed to credit institutions | | |
Other creditors including taxation and social security | | |
Accruals and deferred income | ||
Total liabilities | ||
| Total liabilities, capital and reserves |
The notes on pages 19 to 52 form part of these financial statements.
The financial statements on pages 13 to 52 were approved by Board of Directors on 18
February 2025 and were signed on its behalf by:
R P Barke
Director
06 March 2025
17
Statement of changes in Members' balances
For the year ended 31 December 2024
2024 $’000 | 2023 $’000 | |
Members’ balances brought forward at 1 January | ( | |
Total comprehensive income/(loss) for the year | ( | |
| Members’ balances carried forward at 31 December | ( |
18
Statement of cash flows
For the year ended 31 December 2024
Notes | 2024 $ ’000 | 2023 $ ’000 |
| Cash flows from operating activities | ||
| Profit/(loss) for the financial year | ( | |
| Adjustments: | ||
| Increase in gross technical provisions | | |
(Increase) in reinsurers’ share of technical provisions | ( | ( |
| (Increase) in debtors | ( | ( |
| Increase/(decrease) in creditors | ( | |
(Increase)/decrease in deposits received from reinsurers | | |
| Movement in other assets/liabilities | ( | ( |
| Foreign exchange | | |
| Investment return | ( | ( |
| Net cash flows from operating activities | ( | |
| Cash flows from investing activities | ||
| Purchase of equity and debt instruments | | |
| Sale of equity and debt instruments | | |
| Investment income received | | |
| Net cash flows from investing activities | | |
| Cash flows from financing activities | ||
| Distribution of profit | | |
| Collection of losses | | |
| Injection/(release) of Funds in Syndicate | | |
| Other | | |
| Net cash flows from financing activities | | |
| Net increase in cash and cash equivalents | | |
Cash and cash equivalents at the beginning of the year | | |
| Foreign exchange on cash and cash equivalents | ( | ( |
Cash and cash equivalents at the end of the year 18 | |
19
Notes to the financial statements
1. Basis of preparation for the year ended 31 December 2024
Statement of compliance
The financial statements have been prepared in accordance with The Insurance Accounts
Directive (Lloyd's Syndicate and Aggregate Accounts) Regulations 2008, applicable
Accounting Standards in the United Kingdom and the Republic of Ireland, including Financial
Reporting Standard 102 (FRS 102), Financial Reporting Standard 103 (FRS 103) in relation
to insurance contracts, and the Lloyd’s Syndicate Accounts Instructions Version 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, with the exception
of financial assets which are measured at fair value through the profit and loss account.
The financial statements are presented in USD as the functional currency of the Syndicate is
USD. All amounts have been rounded to the nearest thousand, unless otherwise indicated.
Going Concern
The Directors of the Managing Agent have assessed the Syndicate’s ability to continue as a
going concern. As part of this assessment, the Directors have considered cash forecasts, the
availability of financial resources, consistency of loss ratios, credit worthiness of reinsurers,
capital support for the existing underwriting years, business plans for future underwriting years
and availability of future capital support. Following this assessment, the Directors consider it
appropriate to adopt the going concern basis in preparing the annual report and financial
statements.
2. Critical accounting estimates and judgements
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 accounting estimates have been made in applying the Syndicate’s
accounting policies:
Valuation of claims reserves
The measurement of the provision for claims outstanding involves judgements and
assumptions about the future that have a significant effect on the value recognised in
the financial statements.
The provision for claims outstanding comprises the estimated cost of settling all claims
incurred but unpaid at the balance sheet date, whether reported or not. This is a
judgemental and complex area due to the subjectivity inherent in estimating the impact
of claims events that have occurred but for which the eventual outcome remains
uncertain.
20
Critical accounting estimates and judgements continued
Case estimates are generally set by skilled claims technicians applying their
experience and knowledge to the circumstances of individual claims. Critical
judgement is applied when estimating the value of amounts that should be provided for
claims that have been incurred at the reporting date but have not yet been reported
(IBNR) to the Syndicate. This is a source of significant estimation uncertainty.
The ultimate cost of outstanding claims is estimated using a range of techniques
including actuarial and statistical projections, benchmarking, case by case review and
judgement. Statistical techniques assume that past claims development experience
can be used as a basis to project ultimate claims costs. Typical methods employed
include, but are not limited to, the chain ladder method and the Bornhuetter-Ferguson
method, whilst plan and pricing loss ratios are also considered.
The reserving process will disaggregate the insured risks into reserving classes – these
are collections of risks of a similar profile. Each reserving class will be assessed
separately, and corresponding claims development patterns will be selected as bases
against which to forecast expected claims. Judgement is used to assess the extent to
which past trends may not apply in the future. When selecting historic data to use for
claims forecasting purposes, the suitability and reliability of the dataset is considered.
A dataset that most closely resembles the expected risk profile of a given reserving
class will be selected. The benchmark data provided by Lloyd’s is generally used
reserving development patterns, but these can be substituted by or blended with
additional data, providing that this additional data has an established track record and
is relevant.
Whilst the Directors consider that the claims reserves are fairly stated based on the
information currently available to them, the ultimate liability will vary as a result of
subsequent information and events.
Estimated premium income (“EPI”)
For the majority of assumed (inwards) reinsurance policies, EPI is initially used as the
basis for reporting gross premiums written. EPI is a measure of expected premium
income over the life of a policy. These estimates, typically supplied by the cedent, are
judgemental and could result in misstatements of revenue recorded in the financial
statements.
21
3. Significant accounting policies
The following principal accounting policies have been applied consistently in dealing with items
which are considered material in relation to the Syndicate’s financial statements.
Gross premiums
Gross written premiums comprise the total premiums receivable for the whole period of cover
provided by the contracts entered into during the reporting period, regardless of whether these
are wholly due for payment in the reporting period, together with any adjustments arising in
the reporting period to such premiums receivable in respect of business written in prior
reporting periods. They are recognised on the date on which the policy commences. This is
applicable to both direct premium and assured (inwards reinsurance) premium. Gross written
premiums are stated gross of brokerage payable to intermediaries, and exclude taxes and
duties levied on the policyholder.
Estimated premium income in respect of facility contracts, for example binding authorities and
lines slips, are deemed to be written in a manner that reflects the expected profile of the
underlying business which has been written.
Ceded reinsurance premiums
Reinsurance written premiums comprise the total premiums payable for the whole cover
provided by contracts entered during the period, including portfolio premiums payable, and are
recognised on the date on which the policy incepts. Premiums include any adjustments arising
in the accounting period in respect of reinsurance contracts incepting in prior accounting
periods. They are recognised on the date on which the policy commences.
Provisions for unearned premiums
Unearned premiums are those proportions of premiums written up to the reporting date that
relate to periods of risk after the reporting date. In respect of general insurance business,
written premiums are recognised as earned over the period of the policy on a time
apportionment basis having regard where appropriate, to the incidence of risk. The proportion
attributable to subsequent periods is deferred as a provision for unearned premiums.
Unearned reinsurance premiums are those proportions of ceded premiums written up to the
reporting date that relate to periods of risk after the reporting date. Ceded reinsurance
premiums are earned on the same basis as the inwards business being protected.
Claims incurred
Claims incurred comprise claims and claims handling expenses (both internal and external)
paid in the year and the movement in provision for outstanding claims and settlement
expenses processed in the year. The provision for claims comprises amounts set aside for
claims notified and claims incurred, but not yet reported (IBNR). The Syndicate does not
discount its liability for outstanding claims.
The amount included in respect of IBNR is based on statistical techniques of estimation applied
by actuaries. These techniques generally involve projecting from past experience of the
development of claims over time to form a view of the likely ultimate claims to be experienced,
having regard to variations in the business accepted and the underlying terms and conditions.
The provision for claims also includes amounts in respect of internal and external claims
handling costs. For the most recent years, where a high degree of volatility arises from
projections, estimates may be based in part on output from rating and other models of the
business accepted and assessments of underwriting conditions. An element of IBNR can also
relate to specific large losses.
22
Significant accounting policies continued
The reinsurers’ share of provisions for claims is based on calculated amounts of outstanding
claims and projections for IBNR, net of estimated irrecoverable amounts, having regard to the
reinsurance programme in place for the class of business and the claims experience for the
year. The Syndicate uses a number of statistical techniques to assist in making these
estimates where relevant.
Accordingly, the two most critical assumptions as regards claims provisions are that the past
is a reasonable predictor of the likely level of claims development and that the rating and other
models used for current business are fair reflections of the likely level of ultimate claims to be
incurred.
The Directors consider that the provisions for gross claims and related reinsurance recoveries
are fairly stated on the basis of the information currently available to them. However, ultimate
liability will vary as a result of subsequent information and events and this may result in
significant adjustments to the amounts provided.
Adjustments to the amounts of claims provisions established in prior years are reflected in the
financial statements for the period in which the adjustments are made. The methods used,
and the estimates made, are reviewed regularly.
Unexpired risks
A provision for unexpired risks is made where claims and related expenses are likely to arise
after the end of the financial period in respect of contracts concluded before that date, are
expected to exceed the unearned premiums and premiums receivable under these contracts,
after the deduction of any acquisition costs deferred.
The provision for unexpired risks is calculated separately by reference to classes of business
which are managed together.
As at 31 December 2024, the Syndicate had a nil net unexpired risk provision, (2023: nil).
Reinsurance assets
The Syndicate cedes insurance risk in the normal course of business. Reinsurance assets
represent balances due from reinsurance companies. Amounts recoverable from reinsurers
are estimated in a manner consistent with the outstanding claims provision including IBNR or
settled claims associated with the reinsurer's policies and are in accordance with the related
reinsurance contract.
Reinsurance assets are reviewed for impairment at each reporting date, or more frequently if
an indication of impairment arises during the reporting year. Impairment occurs when there is
objective evidence as a result of an event that occurred after initial recognition of the
reinsurance asset that the Syndicate may not receive all outstanding amounts due under the
terms of the contract and the event has a reliably measurable impact on the amounts that the
Syndicate will receive from the reinsurer. The impairment loss is recorded in the statement of
profit or loss.
Gains or losses on buying reinsurance are recognised in the statement of profit or loss
immediately at the date of purchase and are not amortised.
Ceded reinsurance arrangements do not relieve the Syndicate from its obligations to
policyholders.
23
Significant accounting policies continued
Acquisition costs
Acquisition costs comprise costs arising from the conclusion of insurance contracts, such as
intermediary brokerage and commissions. It is not the Syndicate’s policy to reallocate a portion
of indirect costs, such as the advertising costs or the administrative expenses connected with
the processing of proposals and the issuing of policies, to acquisition costs.
The deferred acquisition cost asset represents the proportion of acquisition costs
corresponding to the proportion of gross premiums written that is unearned at the balance
sheet date. Deferred acquisition costs are amortised over the period in which the related
premiums are earned.
Foreign currencies
Transactions denominated in currencies other than the functional currency are initially
recorded in the functional currency at the exchange rate ruling at the date of the transactions.
Monetary assets and liabilities (which include all assets and liabilities arising from insurance
contracts including unearned premiums and deferred acquisition costs) denominated in foreign
currencies are retranslated into the functional currency at the exchange rate ruling on the
reporting date.
Foreign exchange differences are recorded in the non-technical account.
The following currency exchange rates have been used for principal foreign currency
transactions:
2024 | 2024 | 2024 | 2023 | 2023 | 2023 | |
Start of Period Rate | End of Period Rate | Average Rate | Start of Period Rate | End of Period Rate | Average Rate | |
| GBP | | | | | | |
| USD | | | | | | |
| EUR | | | | | | |
| AUD | | | | |
Financial assets and liabilities
In applying FRS 102, the Syndicate has chosen to apply the recognition and measurement
provisions of IAS 39 Financial Instruments: Recognition and Measurement (as adopted for use
in the UK).
The accounting classification of financial assets and liabilities determines the way in which
they are measured and changes in those values are presented in the statement of profit or
loss and other comprehensive income. Financial assets and liabilities are classified on their
initial recognition.
24
Significant accounting policies continued
The initial classification of a financial instrument shall take into account contractual terms
including those relating to future variations. Once the classification of a financial instrument is
determined at initial recognition, reassessment is only required subsequently when there has
been a modification of contractual terms that is relevant to an assessment of the classification.
Financial assets and financial liabilities at fair value through profit and loss comprise financial
assets and financial liabilities held for trading and those designated as such on initial
recognition. Investments in shares and other variable yield securities, units in unit trusts, and
debt and other fixed income securities are designated as at fair value through profit or loss on
initial recognition, as they are managed on a fair value basis in accordance with the
Syndicate’s investment strategy. Other financial assets, principally certain debt and other fixed
income securities are classified as available for sale.
Deposits with credit institutions, debtors, and accrued interest are classified as loans and
receivables.
Financial instruments are recognised when the Syndicate becomes a party to the contractual
provisions of the instrument. Financial assets are derecognised if the Syndicate’s contractual
rights to the cash flows from the financial assets expire or if the Syndicate transfers the
financial asset to another party without retaining control of substantially all risks and rewards
of the asset. A financial liability is derecognised when its contractual obligations are
discharged, cancelled or expired.
Regular way purchases and sales of financial assets are recognised and derecognised, as
applicable, on the trade date, i.e., the date that the Syndicate commits itself to purchase or sell
the asset.
A financial asset or financial liability is measured initially at fair value plus, for a financial asset
or financial liability not at fair value through profit or loss, transaction costs that are directly
attributable to its acquisition or issue.
Financial assets at fair value through profit or loss are measured at fair value with fair value
changes recognised immediately in profit or loss. Net gains or net losses on financial assets
measured at fair value through profit or loss includes foreign exchange gains/losses arising on
their translation to the functional currency but excludes interest and dividend income.
Financial assets classified as available for sale are initially recognised at fair value, which
typically equates to the cost, plus transaction costs directly attributable to its acquisition. After
initial measurement, these assets are subsequently measured at fair value. Interest earned
whilst holding available for sale financial assets is reported as interest income. Impairment
losses and foreign exchange gains or losses are reported in profit or loss. Other fair value
changes are recognised in other comprehensive income. Any gain or loss recognised in OCI
will be recycled to profit and loss on derecognition of the asset.
Loans and receivables and non-derivative financial liabilities are measured at amortised cost
using the effective interest method, except Syndicate Loans to the Central Fund which are
measured at fair value through profit or loss.
Objective evidence that financial assets are impaired includes observable data that comes to
the attention of the Syndicate about any significant financial difficulty of the issuer, or significant
25
Significant accounting policies continued
changes in the technological, market, economic or legal environment in which the issuer
operates.
Impairment losses on available for sale financial assets are recognised by reclassifying the
losses accumulated in other comprehensive income to profit or loss. The net cumulative loss
that is reclassified from other comprehensive income to profit or loss is the difference between
the acquisition cost, net of any principal repayment, and the current fair value, less any
impairment loss recognised previously in profit or loss. If, in a subsequent period, the fair value
of an impaired available for sale debt security increases and the increase can be related
objectively to an event occurring after the impairment loss was recognised, the impairment
loss is reversed through profit or loss. Otherwise it is reversed through the statement of
comprehensive income.
Financial assets and financial liabilities are offset, and the net amount presented in the balance
sheet when, and only when, the Syndicate currently has a legal right to set off the amounts
and intends either to settle on a net basis or to realise the asset and settle the liability
simultaneously.
Investment return
Investment return comprises investment income and movements in unrealised gains and
losses on financial instruments at fair value through profit or loss, less investment management
expenses, interest expense, realised losses and impairment losses. Investment income
comprises interest income, dividends receivable and realised investment gains.
For the purpose of separately presenting investment income and unrealised gains and losses
for financial assets at fair value through profit or loss, interest income is calculated using the
effective interest method excluding transaction costs that are expensed when incurred. For
investments at fair value through profit or loss, realised gains and losses represent the
difference between the net proceeds on disposal and the purchase price.
Unrealised investment gains and losses represent the difference between the fair value at the
balance sheet date and the fair value at the previous balance sheet date, or purchase price if
acquired during the year. Movements in unrealised investment gains and losses comprise the
increase/decrease in the reporting period in the value of the investments held at the reporting
date and the reversal of unrealised investment gains and losses recognised in earlier reporting
periods in respect of investment disposals of the current period.
Investment return is initially recorded in the non-technical account. The return is transferred in
full to the general business technical account to reflect the investment return on funds
supporting underwriting business.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with maturities of three
months or less from the acquisition date that are subject to an insignificant risk of changes in
fair value and are used by the Syndicate in the management of its short-term commitments.
Cash and cash equivalents are carried at amortised cost in the statement of financial position.
Bank overdrafts that are repayable on demand and form an integral part of the Syndicate’s
cash management are included as a component of cash and cash equivalents for the purpose
of the statement of cash flows.
26
Significant accounting policies continued
Taxation
Under Schedule 19 of the Finance Act 1993 managing agents are not required to deduct basic
rate income tax from trading income. In addition, all UK basic rate income tax (currently at
20%) deducted from Syndicate investment income is recoverable by managing agents and
consequently the distribution made to members or their members’ agents is gross of tax.
Capital appreciation falls within trading income and is also distributed gross of tax.
No provision has been made for any other overseas tax payable by members 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’.
Profit commission
Profit commission is charged by the managing agent at a rate of 10%. Such commission is
recognised when the year of account becomes profitable but does not become payable until
after the appropriate year of account closes normally at 36 months.
Deposits with ceding undertakings
Deposits with ceding undertakings are funds held by Lloyd’s Europe on behalf of the Syndicate
to settle Part VII claims. These funds are held at amortised cost in the balance sheet.
Operating expenses
Where expenses are incurred by the Managing Agent for the administration of managed
syndicates, these expenses are apportioned using various methods depending on the type of
expense. Expenses which are incurred jointly are apportioned between the Managing Agent
and the Syndicate depending on the amount of work performed, resources used, and volume
of business transacted.
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.
Debtors and creditors
Insurance debtors and creditors include amounts due to and from agents, brokers and
insurance contract holders. These are classified as debt instruments as they are non-derivative
financial assets with fixed or determinable payments that are not quoted on an active market.
Insurance debtors are measured at amortised cost less any provision for impairments.
Insurance creditors are stated at amortised cost. The Syndicate does not have any debtors
directly with policyholders, all transactions occur via an intermediary.
Where permitted under UK GAAP accounting standards, insurance creditors are netted off
against insurance debtors where the legally enforceable right to offset exists.
Reinsurance debtors and creditors include amounts due to and from reinsurers. These are
classified as debt instruments as they are non-derivative financial assets with fixed or
determinable payments that are not quoted on an active market. Reinsurance debtors are
measured at amortised cost less any provision for impairments. Reinsurance creditors are
stated at amortised cost. Reinsurance debtor principally relates to claims recoveries where the
underlying claim has been settled and the recovery is due. Reinsurance creditors are primarily
premiums payable for reinsurance contracts and are recognised as an expense when due.
27
4. Analysis of underwriting result
An analysis of the underwriting result before investment return is presented in the table below:
2024
Gross
premiums
written
Gross
premium
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
Result
$
’
000
$
’
000
$
’
000
$
‘
000
$
’
000
$
’
000
Direct
insurance
Fire and
other
damage to
property
39,676
28,182
(21,290)
(7,812)
(8,403)
(9,323)
Marine
14,166
12,213
(4,479)
(4,012)
(2,357)
1,365
Transport
-
-
-
-
-
-
Energy –
Non Marine
-
-
-
-
-
-
Total Direct
53,843
40,395
(25,769)
(11,824)
(10,760)
(7,958)
Reinsurance
acceptances
7,979
11,551
718
(824)
692
12,137
Total
61,821
51,946
(25,051)
(12,648)
(10,068)
4,179
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
Gross
premium
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
Result
Additional
analysis
$
’000
$
’000
$
’000
$
‘000
$
’000
$
’000
Fire and damage to property
of which is:
Specialties
4
5
7
-
(4)
8
Energy
-
-
-
-
-
-
Third party liability of which
is:
Energy
-
-
-
-
-
-
28
Analysis of underwriting result continued
2023
Gross
written
premiums
Gross
premium
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
Result
$
’
000
$
’
000
$
’
000
$
‘
000
$
’
000
$
’
000
Direct
insurance
Fire and
other
damaged
property
18,575
11,620
(7,726)
(3,257)
(2,842)
(2,205)
Marine
4,940
3,081
(1,520)
(1,128)
(763)
(330)
Transport
4,630
3,310
(1,392)
(1,122)
(770)
26
Energy –
Non Marine
99
116
64
(34)
(32)
114
Aviation
-
-
-
-
-
-
Total Direct
28,244
18,127
(10,574)
(5,541)
(4,407)
(2,395)
Reinsurance
acceptances
11,949
6,137
(4,765)
(935)
(912)
(475)
Total
40,193
24,264
(15,339)
(6,476)
(5,319)
(2,870)
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
Gross
premium
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
Result
Additional
analysis
$
’000
$
’000
$
’000
$
‘000
$
’000
$
’000
Fire and damage to property
of which is:
Specialties
8
6
(8)
(1)
-
(3)
Energy
-
-
-
-
-
-
Third party liability of which
is:
Energy
-
-
-
-
-
-
29
Analysis of underwriting result continued
The gross premiums written for direct insurance by underwriting location is presented in the
table below:
2024
2023
$’000
$’000
United Kingdom 8,867
11,942
European Union Member States -
-
US -
-
Rest of the world 52,954
28,251
Total gross premiums written 61,821
40,193
No gains or losses were recognised in profit or loss during the year on buying reinsurance
(2023: nil).
30
5. Technical provisions
2024
Gross
provisions
$
’000
Reinsurance
assets
$
’000
Net
$
’000
Claims outstanding
Balance at 1 January 22,331
(4,217)
18,114
Claims paid during the year (5,157)
-
(5,157)
Expected cost of current year claims 29,787
(6,146)
23,641
Change in estimates of prior year provisions (4,736)
2,291
(2,445)
Foreign exchange movements (189)
45
(144)
Balance at 31 December
42,036
(8,027)
34,009
Unearned premiums
Balance at 1 January 21,360
(1,228)
20,132
Premiums written during the year 61,821
(14,181)
47,640
Premiums earned during the year (51,946)
13,923
(38,023)
Foreign exchange movements (146)
(1)
(147)
Balance at 31 December
31,0
89
(1,487)
29,60
2
Deferred acquisition costs
Balance at 1 January 2,373
-
2,373
Incurred deferred acquisition costs 10,027
-
10,027
Amortised deferred acquisition costs (7,459)
-
(7,459)
Foreign exchange movements (152)
-
(152)
Balance at 31 December
4,789
-
4,789
2023
Gross
provisions
$
’000
Reinsurance
assets
$
’000
Net
$’000
Claims
outstanding
Balance at 1 January 8,202
(2,133)
6,069
Change in claims outstanding
14,094
(2,082)
12,012
Effect of movements in exchange rates
35
(2)
33
Balance at 31 December 22,331
(4,217)
18,114
Claims notified
4,089
-
4,089
Claims incurred but not reported
18,242
(4,217)
14,025
Balance at 31 December 22,331
(4,217)
18,114
Unearned premiums
Balance at 1 January
5,404
(276)
5,125
Change in unearned premiums 15,929
(952)
14,977
Effect of movements in exchange rates
27
-
26
Balance at 31 December
21,360
(1,228)
20,128
Deferred acquisition costs
Balance at 1 January
646
-
646
Change in deferred acquisition costs
1,600
-
1,600
Effect of movements in exchange rates 3
-
3
Balance at 31 December
2,249
-
2,249
31
6. Net operating expenses
2024
2023
$’000
$’000
Acquisition costs (10,027)
(4,378)
Change in deferred acquisition costs 2,568
1,600
Reinsurance commissions and profit participation -
-
Administration expenses (4,275)
(3,210)
Members’ standard personal expenses (914)
(488)
Net operating expenses (12,648)
(6,476)
Total commissions for direct insurance business for the year amounted to:
2024
2023
$’000
$’000
Total commission for direct insurance business (10,027)
(4,378)
7. Auditor’s remuneration
202
4
2023
$
’000
$
’000
Fees payable to the Syndicate’s auditor for the audit of these
financial statements 124
109
Fees payable to the Syndicate’s auditor and its associates in
respect of other services pursuant to legislation 46
38
Total 170
147
Auditors’ remuneration is included as part of administrative expenses in note 6.
32
8. Key management personnel compensation
The active underwriter salary has not been recharged to the syndicate:
2024
$’000
Emoluments -
The aggregate emoluments of the Directors and staff of the Asta Group are charged to
companies of the Asta Group in accordance with the proportion of their time associated with
each company. Further disclosures regarding Directors’ emoluments are provided in the
financial statements of Asta Managing Agency Ltd.
No emoluments of the Directors of Asta Managing Agency Ltd were directly charged to the
Syndicate. No other compensation was payable to key management personnel.
9. Staff numbers and costs
All staff are employed by Sukoon Insurance PJSC. The average number of persons employed
by 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 5
6
Claims -
-
Investments -
-
Total
5
6
The following amounts were recharged by the service company to the Syndicate in respect of
payroll costs:
Payroll costs
2024
2023
£’000
£’000
Wages and salaries 871
811
Social security costs -
-
Other pension costs -
-
Total
871
811
33
10. Investment return
2024
2023
From financial assets designated at fair value through profit or
loss
$’000
$’000
Interest and similar income:
Dividend income
-
-
Interest on cash at bank
819
186
Total investment return
819
186
11. Financial Investments
31 December
2024
Carrying
value
Cost
$’000
$’000
Shares and other variable yield securities and units in unit trusts -
-
Debt securities and other fixed income securities -
-
Loans and deposits with credit institutions 1,000
1,000
Syndicate loans to central fund -
-
Other investments -
-
Total financial investments 1,000
1,000
Carrying
value
Cost
$’000
$’000
Shares and other variable yield securities and units in unit trusts -
-
Debt securities and other fixed income securities -
-
Loans and deposits with credit institutions 500
500
Syndicate loans to central fund -
-
Other investments -
-
Total financial investments 500
500
34
Financial investments continued
The Syndicate classifies its financial assets held at fair value in its balance sheet using a fair
value hierarchy based on the inputs used in the valuation techniques as follows:
Level 1 – financial assets that are measured by reference to published quotes in an
active market. A financial instrument is regarded as quoted in an active market if quoted
prices are readily and regularly available from an exchange, dealer, broker, industry
group, pricing service or regulatory agency and those prices represent actual and
regularly occurring market transactions on an arm’s length basis.
Level 2 – financial assets measured using a valuation technique based on assumptions
that are supported by prices from observable current market transactions. For
example, assets for which pricing is obtained via pricing services but where prices have
not been determined in an active market, financial assets with fair values based on
broker quotes, investments in private equity funds with fair values obtained via fund
managers and assets that are valued using the Syndicate’s own models whereby the
significant inputs into the assumptions are market observable.
Level 3 – financial assets measured using a valuation technique (model) based on
assumptions that are neither supported by prices from observable current market
transactions in the same instrument nor are they based on available market data.
Therefore, unobservable inputs reflect the Syndicate's own assumptions about the
assumptions that market participants would use in pricing the asset or liability (including
assumptions about risk). These inputs are developed based on the best information
available, which might include the Syndicate’s own data.
The following table shows financial investments recorded at fair value analysed between the
three levels in the fair value hierarchy.
2024
$
’000
Level 1
Level 2 Level 3
Assets
held at
fair value
Total
Shares and other variable yield
securities and units in unit trusts -
- -
- -
Debt securities and other fixed
income securities -
- -
- -
Loans and deposits with credit
institutions 1,000
- -
- 1,000
Syndicate loans to central fund -
- -
- -
Other investments -
- -
- -
Total 1,000
- -
- 1,000
35
Financial investments continued
2023
$
’000
Level 1
Level 2 Level 3
Assets
held at
fair value
Total
Shares and other variable yield
securities and units in unit trusts -
- -
- -
Debt securities and other fixed
income securities -
- -
- -
Loans and deposits with credit
institutions 500
- -
- 500
Syndicate loans to central fund -
- -
- -
Other investments -
- -
- -
Total 500
- -
- 500
Information on the methods and assumptions used to determine fair values for each major
category of financial instrument measured at fair value is provided below.
Debt securities are generally valued using prices provided by external pricing vendors. Pricing
vendors will often determine prices by consolidating prices of recent trades for identical or
similar securities obtained from a panel of market makers into a composite price. The pricing
service may make adjustments for the elapsed time from a trade date to the valuation date to
take into account available market information. Lacking recently reported trades, pricing
vendors will use modelling techniques to determine a security price.
Some government and supranational securities are listed on recognised exchanges and are
generally classified as level 1 in the fair value hierarchy. Those that are not listed on a
recognised exchange are generally based on composite prices of recent trades in the same
instrument and are generally classified as level 2 in the fair value hierarchy.
Corporate bonds, including asset backed securities, that are not listed on a recognised
exchange or are traded in an established over the counter market are also mainly valued using
composite prices. Where prices are based on multiple quotes and those quotes are based on
actual recent transactions in the same instrument the securities are classified as level 2,
otherwise they are classified as level 3 in the fair value hierarchy.
At the reporting date Level 1 and Level 2 financial assets and liabilities were valued using
valuation techniques based on observable market data. All of the investments categorised as
Level 3 are fair valued based on the inputs to the valuation technique used.
36
12. Debtors arising out of direct insurance operations
2024
2023
$
’000
$
’000
Due within one year 62,590
24,302
Due after one year -
-
Total 62,590
24,302
13. Debtors arising out of reinsurance operations
2024
2023
$
’000
$
’000
Due within one year 4,079
11,876
Due after one year -
-
Total 4,079
11,876
14. Other debtors
2024
2023
$
’000
$
’
000
1,000
200
Total 1,000
200
15. Creditors arising out of direct insurance operations
2024
2023
$
’000
$
’000
Due within one year 1,778
58
Due after one year -
-
Total 1,778
58
37
16. Creditors arising out of reinsurance operations
2024
2023
$
’000
$
’000
Due within one year 5,421
3,748
Due after one year -
-
Total 5,421
3,748
17. Other creditors
2024
2023
$
’000
$
’
000
-
-
Total -
-
18. Cash and cash equivalents
2024
2023
$
’00
0
$
’
000
Cash at bank and in hand 1,724
1,617
Deposits with credit institutions 1,000
500
Shares and other variable yield securities and units in unit trusts -
-
Bank overdrafts -
-
Total cash and cash equivalents 2,724
2,117
Shares and other variable yield securities and units in unit trusts are investments in nature but
are treated as cash and cash equivalents for cash flow purposes, so therefore are included in
both Financial investments and Cash and cash equivalents.
Deposits with credit institutions with maturities of three months or less that are used by the
Syndicate in the management of its short-term commitments are included in cash and cash
equivalents.
Of the total cash and cash equivalents, the following amount was held in regulated bank
accounts in overseas jurisdictions:
2024
2023
$
’000
$
’000
Total cash and cash equivalents held in regulated accounts in overseas
jurisdictions -
-
38
19. Related parties
Asta provides services and support to the Syndicate in its capacity as Managing Agent. During
the year, Managing Agency fees of $0.3m were charged to the Syndicate (2023: $0.2m). Asta
also recharged $1.5m worth of service charges in the year (2023: $1.2m) and as at 31
December 2024 a cumulative amount of $0.4m is owed to Asta in respect of this service (2023:
$0.1m).
The Syndicate 2880 has recorded an accrual of $0.2m for profit commission (2023: $0.0m)
payable to Asta Managing Agency.
Sukoon Insurance provides 100% of the Syndicate’s insurance capacity. The Aviation
business is a facultative reinsurance of Sukoon, which has no commissions due.
The Syndicate benefits from reinsurance protection that is shared with the wider Sukoon
Insurance Group.
There is a proportional allocation between the Syndicate and Sukoon Insurance relative to the
underlying business protected. At 31 December 2024, the RI Premium related to this was
$3.4m (2023: $1.5m). The group has also recharged expenses to the Syndicate during 2024
of $1.7m (2023: $1.2m).
From time to time, syndicates managed by Asta enter into (re)insurance contracts with one
another. All such transactions are subject to Asta’s internal controls which ensure that all are
compliant with Lloyd’s Related Party Byelaw provisions. All transactions are on an arm’s length
basis.
Asta Capital Ltd, the parent of Asta Managing Agency Ltd, is owned by the Davies Group but
maintains a level of independence by virtue of separate boards and a separate governance
structure.
Other entities within the wider Davies Group provide insurance-related services to the
syndicates under Asta’s management. The provision of these services is managed by a
separate management team distinct from Asta, and these services are provided at an arm’s
length basis.
The ultimate parent company of Asta Managing Agency Ltd is Tennessee Topco Ltd.
20. Disclosure of interests
During 2024 Asta was the Managing Agent for the following syndicates on behalf of third-party
capital providers:
Syndicates 1322, 1609, 1699, 1892, 1985, 1988, 2525, 2689, 2786, 3123, 4242 and
4747,
Special Purpose Arrangement 1416,
Syndicates-in-a-Box 1796, 1902, 1922, 1966, 2427, 2880, 3456 and 5183.
During 2024, Asta took on management of the following syndicates:
Syndicate 1922 on 1 January 2024
Syndicate 1966 on 13 June 2024
Syndicate 2427 on 1 May 2024
Syndicate 3123 on 1 July 2024
39
Disclosure of interests continued
On 1 January 2024, Asta reinsured to close Syndicate 2288 into Renaissance Re Syndicate
1458.
On 1 January 2025, Asta took on management of Syndicate 1618.
The agency also provides administrative services to syndicates and special purpose
arrangements, also undertaking several ancillary roles for other clients.
The Financial Statements of the Managing Agency can be obtained by application to the
Registered Office (see page 1).
21. Funds at Lloyd's
Every member is required to hold capital at Lloyd's which is held in trust and known as Funds
at Lloyd's (“FAL”). These funds are intended primarily to cover circumstances where Syndicate
assets prove insufficient to meet participating members' underwriting liabilities. The level of
FAL that Lloyd's requires a member to maintain is determined by Lloyd's based on PRA
requirements and resource criteria. FAL has regard to a number of factors including the nature
and amount of risk to be underwritten by the member and the assessment of the reserving risk
in respect of business that has been underwritten. Since FAL is not under the management of
the managing agent, no amount has been shown in these financial statements by way of such
capital resources. However, the managing agent is able to make a call on the members' FAL
to meet liquidity requirements or to settle losses.
22. Off-balance sheet items
The Syndicate has not been party to an arrangement, which is not reflected in its statement of
financial position, where material risks and benefits arise for the Syndicate.
23. Risk management
a) Governance framework
The Syndicate's risk and financial management framework aims to protect the Syndicate's
members capital from events that might otherwise prevent the Syndicate from meeting its
policyholder obligations, while maximising the returns to its members. The Directors recognise
the critical importance of having efficient and effective risk management systems in place.
Asta maintains a risk management function for the Syndicate with clear terms of reference
from the Syndicate in a Box Board, its committees and sub committees.
Asta supplements this with a clear organisational structure with documented delegated
authorities and responsibilities from the main Asta Managing Agency board to the Syndicate
who perform the underwriting activities. Lastly, the Syndicate policy framework sets its risk
management and control and business conduct standards for operations. Asta reviews and
monitors each policy to ensure compliance with the policy throughout the Syndicate.
The Syndicate in a Box Board approves the risk management policies and meets regularly to
approve any commercial, regulatory and organisational requirements of such policies. These
policies define the identification of risk and its interpretation to ensure the appropriate quality
and diversification of assets, align underwriting and reinsurance strategy to the Syndicate
goals, and specify reporting requirements.
40
Risk management continued
The Syndicate in a Box Board places significant emphasis on the assessment and
documentation of risks and controls, including the articulation of the Syndicate's risk appetite.
b) Capital management objectives, policies and approach
Capital framework at Lloyd's
The Society of Lloyd's (Lloyd's) is a regulated undertaking and subject to the supervision of
the Prudential Regulatory Authority (PRA) under the Financial Services and Markets Act 2000.
Within the supervisory framework, Lloyd's applies capital requirements at member level and
centrally to ensure that Lloyd's complies with Solvency II capital requirements, and beyond
that to meet its own financial strength, licence and ratings objectives.
Although 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 the Syndicate is not disclosed in these financial statements.
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 Syndicate on which it is participating
but not other members' shares. Accordingly, the capital requirement 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 year 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%
of the member's SCR 'to ultimate'.
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 (funds at Lloyd's), held within and managed within a Syndicate
(funds in Syndicate) or as the member's share of the members' balances on each Syndicate
on which it participates. Accordingly, the ending members balances reported on the Statement
of Financial Position on page 16, represent resources available to meet members' and Lloyd's
capital requirements.
41
Risk management continued
c) Insurance risk
The principal risk the Syndicate faces under insurance contracts is that the actual claims and
benefit payments or the timing thereof, differ from expectations. This is influenced by the
frequency of claims, severity of claims, actual benefits paid and subsequent development of
long-term claims. Therefore, the objective of the Syndicate is to ensure that sufficient reserves
are available to cover these liabilities.
The risk exposure is mitigated by diversification across a large portfolio of insurance contracts
and geographical areas. The variability of risks is also improved by careful selection and
implementation of underwriting strategy guidelines, as well as the use of reinsurance
arrangements.
The Syndicate purchases reinsurance as part of its risk mitigation programme. The
reinsurance program is made up of a variety of proportional and non-proportional contracts on
both a losses occurring during and risk attaching during basis. Amounts recoverable from
reinsurers are estimated in a manner consistent with the outstanding claims provision and are
in accordance with the reinsurance contracts. The Syndicate's placement of reinsurance is
diversified such that it is neither dependent on a single reinsurer nor are the operations
substantially dependent upon any single reinsurance contract.
Sub committees of the Management Committees’ oversee the management of reserving risk.
The use of standardised and internal modelling techniques, as well as benchmarking and the
review of claims development are key in mitigating reserving risk. The purpose of these
underwriting, reinsurance and reserving strategies is to limit exposure to catastrophes or large
losses based on the Syndicate's risk appetite as decided by the Management Committees’.
The Syndicate uses both its own and commercially available risk management software to
assess catastrophe exposure. However, there is always a risk that the assumptions and
Risk management continued techniques used in these models are unreliable or that claims
arising from an un-modelled event are greater than those arising from a modelled event.
Key assumptions
The principal assumption underlying the liability estimates is that the future claims
development will follow a similar pattern to past claims development experience. This includes
assumptions in respect of average claim costs, claim handling costs, claim inflation factors
and claim numbers for each underwriting year. Additional qualitative judgements are used to
assess the extent to which past trends may not apply in the future, for example: once-off
occurrence; changes in market factors such as public attitude to claiming: economic
conditions: as well as internal factors such as portfolio mix, policy conditions and claims
handling procedures. Judgement is further used to assess the extent to which external factors
such as judicial decisions and government legislation affect the estimates.
Other key circumstances affecting the reliability of assumptions include variation in interest
rates, delays in settlement and changes in foreign currency rates.
Sensitivities
The claim liabilities are sensitive to the key assumptions that follow. It has not been possible
to quantify the sensitivity of certain assumptions, such as legislative changes, uncertainty in
the estimation process. The following analysis is performed for reasonably possible
movements in key assumptions with all other assumptions held constant, showing the impact
on net liabilities, profit and members' balances.
42
Risk management continued
The correlation of assumptions will have a significant effect in determining the ultimate claims
liabilities, but to demonstrate the impact due to changes in assumptions, assumptions had to
be changed on an individual basis. It should be noted that movements in these assumptions
are non-linear.
The method used for deriving sensitivity information and significant assumptions did not
change from the previous period.
Sensitivity
General insurance business sensitivities as at 31
December 2024
+5.0%
$
’000
-5.0%
$
’000
Claims outstanding – gross of reinsurance (2,102) 2,102
Claims outstanding – net of reinsurance (1,700) 1,700
Impact on members balance (1,700) 1,700
Impact on profit (movement in year) (1,700) 1,700
Sensitivity
General insurance business sensitivities as at 31
December 2023
+5.0%
$
’000
-5.0%
$
’000
Claims outstanding – gross of reinsurance (1,117) 1,117
Claims outstanding – net of reinsurance (906) 906
Impact on members balance (906) 906
Impact on profit (movement in year) (906) 906
Claims development
The tables below show the Syndicate's cumulative incurred claims development, including
both claims notified and IBNR for each underwriting year, together with the cumulative
payments to date on a gross and net of reinsurance basis at the balance sheet date.
The Syndicate has elected to translate estimated claims and claims payments at a consistent
rate of exchange as determined by the balance sheet date.
43
Risk management continued
The uncertainty associated with the ultimate claims experience of an underwriting year is
greatest when the underwriting year is at an early stage of development and the margin for
future experience potentially being more adverse than assumed is at its highest. As claims
develop, and the ultimate cost of the claims becomes more certain, the relative level of margin
should decrease. Due, however, to the uncertainty inherent in the claims estimation process,
initial reserves may not always be in a surplus. This is particularly so for large catastrophe
claims where uncertainly is initially great.
d) Financial risk
The focus of financial risk management for the Syndicate is ensuring that the proceeds from
its financial assets are sufficient to fund the obligations arising from its insurance contracts.
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss by failing
to discharge an obligation. The Syndicate has the following policies and procedures in place
to mitigate the exposure to credit risk:
Pure
u
nderwriting year
2022
2023
2024
$’000
$’000
$’000
Estimate of cumulative gross claims
incurred
At end of first underwriting year
10,020
11,592
17,141
One year later
11,960
22,756
Two years later
8,540
Less cumulative gross claims paid
2,851
3,264
286
Gross claims reserves
5,689
19,492
16,855
Total gross claims reserves
42,036
Pure underwriting year
2022
2023
2024
$’000
$’000
$’000
Estimate of cumulative net claims
incurred
At end of first underwriting year
7,887
8,901
13,628
One year later
10,441
18,302
Two years later
8,480
Less cumulative net claims paid
2,851
3,264
286
Net claims reserves
5,629
1
5
,
038
13,342
Total n
et claims reserves
34,009
44
Risk management continued
Reinsurance is placed with counterparties that have a good credit rating and
concentration of risk is avoided by following policy guidelines in respect of
counterparties' limits. If the counterparty is downgraded or does not have a good credit
rating, then collateral is sought to mitigate any risk. This is monitored by the
Management Committees’.
The tables below show the maximum exposure to credit risk (including an analysis of financial
assets exposed to credit risk) for the components of the statement of financial position. The
maximum exposure is shown gross, before the effect of mitigation through collateral
agreements and the use of credit derivatives.
2024
$
’000
Neither
past due
nor
impaired
assets
Past due
but not
impaired
assets
Gross
value of
impaired
assets
Impairment
allowance
Total
Shares and other variable
yield securities and units in
unit trusts
- -
-
- -
Debt securities and other
fixed income securities
- -
-
- -
Loans and deposits with
credit institutions
1,000 -
-
- 1,000
Syndicate loans to central
fund
- -
-
- -
Other investments
- -
-
- -
Reinsurers’ share of claims
outstanding
8,027 -
-
- 8,027
Debtors arising out of
reinsurance operations
- -
-
- -
Debtors arising out of direct
insurance operations
62,590 -
-
- 62,590
Cash at bank and in hand
1,724 -
-
- 1,724
Overseas deposits
35 -
-
- 35
Other debtors and accrued
interest
11,488 -
-
- 11,488
Total
84,864 -
-
- 84,864
45
Risk management continued
2023
$
’000
Neither
past due
nor
impaired
assets
Past due
but not
impaired
assets
Gross
value of
impaired
assets
Impairment
allowance
Total
Shares and other variable
yield securities and units in
unit trusts
- -
-
- -
Debt securities and other
fixed income securities
- -
-
- -
Loans and deposits with
credit institutions
500 -
-
- 500
Syndicate loans to central
fund
- -
-
- -
Other investments
- -
-
- -
Reinsurers’ share of claims
outstanding
4,217 -
-
- 4,217
Debtors arising out of
reinsurance operations
- -
-
- -
Debtors arising out of direct
insurance operations
24,302 -
-
- 24,302
Cash at bank and in hand
1,617 -
-
- 1,617
Overseas deposits
139 -
-
- 139
Other debtors and accrued
interest
15,688 -
-
- 15,688
Total
46,463 -
-
- 46.463
46
Risk management continued
The table below sets out the age analysis of financial assets that are past due but not impaired
at the balance sheet date:
2024
0-3 months
past due
3-6 months
past due
6-12
months
past due
Greater
than 1 year
past due
Total
Shares and other variable
yield securities and units in
unit trusts
- -
-
- -
Debt securities and other
fixed income securities
- -
-
- -
Loans and deposits with
credit institutions
- -
-
- -
Syndicate loans to central
fund
- -
-
- -
Other investments
- -
-
- -
Reinsurers’ share of claims
outstanding
- -
-
- -
Debtors arising out of
reinsurance operations
- -
-
- -
Debtors arising out of direct
insurance operations
- -
-
- -
Cash at bank and in hand
- -
-
- -
Overseas deposits
- -
-
- -
Other debtors and accrued
interest
- -
-
- -
Total
- -
-
- -
47
Risk management continued
202
3
0-3 months
past due
3-6 months
past due
6-12
months
past due
Greater
than 1 year
past due
Total
Shares and other variable
yield securities and units in
unit trusts
- -
-
- -
Debt securities and other
fixed income securities
- -
-
- -
Loans and deposits with
credit institutions
- -
-
- -
Syndicate loans to central
fund
- -
-
- -
Other investments
- -
-
- -
Reinsurers’ share of claims
outstanding
- -
-
- -
Debtors arising out of
reinsurance operations
- -
-
- -
Debtors arising out of direct
insurance operations
- -
-
- -
Cash at bank and in hand
- -
-
- -
Overseas deposits
- -
-
- -
Other debtors and accrued
interest
- -
-
- -
Total
- -
-
- -
48
Risk management continued
The table below provides information regarding the credit risk exposure of the Syndicate at the
reporting date by classifying assets according to independent credit ratings of the
counterparties. AAA is the highest possible rating.
2024
$
’000
AAA AA A BBB Other Not
Rated
Total
Shares and other variable
yield securities and units in
unit trusts
- -
- -
-
- -
Debt securities and other
fixed income securities
- -
- -
-
- -
Loans and deposits with
credit institutions - -
1,000 -
-
- 1,000
Syndicate loans to central
fund - -
- -
-
- -
Other investments - -
- -
-
- -
Reinsurers’ share of claims
outstanding - 1,209
6,818 -
-
- 8,027
Debtors arising out of
reinsurance operations - -
- -
-
- -
Debtors arising out of direct
insurance operations - -
- -
-
- -
Cash at bank and in hand - -
1,724 -
-
- 1,724
Overseas deposits 10 3
2 1
4
15 35
Other debtors and accrued
interest - -
- -
-
- -
Total 10 1,212
9,544 1
4
15 10,786
49
Risk management continued
202
3
$
’000
AAA AA
A BBB
Other
Not
Rated
Total
Shares and other variable
yield securities and units in
unit trusts
- -
- -
-
- -
Debt securities and other
fixed income securities
- -
- -
-
- -
Loans and deposits with
credit institutions - -
500 -
-
- 500
Syndicate loans to central
fund - -
- -
-
- -
Other investments - -
- -
-
- -
Reinsurers’ share of claims
outstanding - 2,833
1,384 -
-
- 4,217
Debtors arising out of
reinsurance operations - -
- -
-
- -
Debtors arising out of direct
insurance operations - -
- -
-
- -
Cash at bank and in hand - -
1,617 -
-
- 1,617
Overseas deposits 62 11
7 7
49
3 139
Other debtors and accrued
interest - -
- -
-
- -
Total 62 2,844
3,508 7
49
3 6,473
50
Risk management continued
Maximum credit exposure
It is the Syndicate's policy to maintain accurate and consistent risk ratings across its credit
portfolio. This enables management to focus on the applicable risks and the comparison of
credit exposures across all lines of business.
Liquidity risk
Liquidity risk is the risk that the Syndicate may not have enough cash to pay insurance claims
and other liabilities. This risk is reduced by reviewing the Syndicate’s expected cash
obligations on a weekly basis and keeping adequate cash on deposit to meet those obligations.
Further, a Liquidity Committee meets monthly to review liquidity strength and forthcoming
liquidity needs on a monthly basis.
The table below summarises the maturity profile of the Syndicate's financial liabilities based
on remaining undiscounted contractual obligations, including interest payable and outstanding
claim liabilities based on the estimated timing of claim payments resulting from recognised
insurance liabilities. Repayments which are subject to notice are treated as if notice were to
be given immediately.
2024
$
’0
00
No stated
maturity
$
0
-
1 Year
$
1
-
3 Years
$
3
-
5
Years
$
>
5 years
$
Total
$
Claims
outstanding -
21,974
15,761
2,886
1,415 42,036
Creditors -
7,199
-
-
- 7,199
Total -
29,173
15,761
2,886
1,415 49,235
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: currency risk, interest rate risk and other price risk. Other price risk has
been assessed as negligible, given that the Syndicate does not invest in equities.
The objective of market risk management is to manage and control market risk exposures
within acceptable parameters, while optimising the return on risk.
2023
$
’000
No stated
maturity
0
-
1 Year
1
-
3 Years
3
-
5 Years
>
5 years
Total
Claims
outstanding -
10,442
8,294
2,094
1,501
22,331
Creditors -
3,806
-
-
-
3,806
Total -
14,248
8,294
2,094
1,501
26,137
51
Risk management continued
a) Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in foreign exchange rates.
The Syndicate's functional currency is USD and its exposure to foreign exchange risk arises
primarily with respect to transactions in Sterling, Euro, Canadian Dollar and Australian Dollar.
The Syndicate seeks to mitigate the risk by matching the estimated foreign currency
denominated liabilities with assets denominated in the same currency.
The Syndicate matches its currency position, so it holds net assets across a number of
currencies. The Syndicate takes into consideration the underlying currency of the Syndicate's
required capital and invests its assets proportionately across these currencies so as to protect
the solvency of the Syndicate, against variation in foreign exchange rates.
The following table summarises the exposure of the financial assets and liabilities to foreign
currency exchange risk at the reporting date, as follows, with all numbers reported in converted
dollars:
2024
GBP
USD
EUR
AUD
Total
Investments -
1,000
-
-
1,000
Reinsurers’ share of
technical provisions 184
8,256
1,074
-
9,514
Debtors 2,162
57,782
6,725
-
66,669
Other assets (2,386)
8,911
1,037
(14)
7,548
Prepayments and
accrued income -
133
-
-
133
Total assets
(40)
7
6,082
8,83
6
(14)
8
4
,
8
6
4
Technical provisions (2,534)
(65,525)
(5,066)
-
(73,125)
Deposits received
from reinsurers -
-
-
-
-
Creditors -
(7,125)
(74)
-
(7,199)
Accruals and deferred
income (1,113)
(142)
-
-
(1,255)
Total liabilities
(
3,647
)
(7
2,79
2
)
(
5,140
)
-
(
81,5
79
)
Total capital and
reserves
(
3,687
)
3,29
0
3,696
(14)
3,
28
5
52
Risk management continued
2023
GBP
USD
EUR
AUD
Total
Investments -
500
-
-
500
Reinsurers’ share of
technical provisions 240
5,167
38
-
5,445
Debtors (1,043)
37,770
(549)
-
36,178
Other assets (1,279)
4,853
631
-
4,205
Prepayments and
accrued income -
135
-
-
135
Total assets
(2,0
8
2)
48,4
2
5
120
-
4
6,463
Technical provisions (825)
(42,866)
-
-
(43,691)
Deposits received
from reinsurers -
-
-
-
-
Creditors (60)
(3,746)
-
-
(3,806)
Accruals and deferred
income (536)
-
-
-
(536)
Total
liabilities
(1,
421
)
(46,
612
)
-
-
(48,033)
Total capital and
reserves
(3,5
03
)
1,8
13
120
-
(1,570)
Sensitivity to changes
The table below gives an indication of the impact on profit of a percentage change in the
relative strength of the US Dollar against the value of the Sterling, Euro and Australian Dollar
simultaneously. The analysis is based on the information as at the reporting date.
Currency risk
Impact on profit and member’s balance
2024
2023
$
’000
$
’000
10 percent increase in GBP/USD exchange rate (610)
342
10 percent decrease in GBP/USD exchange rate 610
(342)
b) Interest rate risk
Interest rate risk is the risk that the value or future cash flows of a financial instrument will
fluctuate in response to changes in market interest rates.
Floating rate instruments expose the Syndicate to cash flow interest risk, whereas fixed rate
instruments expose the Syndicate to fair value interest risk.
The Syndicate has no significant concentration of interest rate risk.
24. Post balance sheet events
The Syndicate will distribute the 2022 underwriting year profits to members during 2025.
