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.
Contents
Directors and administration
................................................................................................................................
3
Report of the managing agent
.............................................................................................................................
4
Statement of managing agent’s responsibilities
...............................................................................................
8
Auditors Report
......................................................................................................................................................
9
Statement of profit and loss and comprehensive income – technical account for general business
.......
13
Statement of profit and loss and comprehensive income – non- technical
.................................................
14
Balance sheet - assets
...........................................................................................................................................
15
Balance sheet – liabilities
......................................................................................................................................
16
Statement of changes in members‘ balances
....................................................................................................
17
Cash flow statement
..............................................................................................................................................
18
Notes to the accounts
...........................................................................................................................................
19
Reports & Accounts Syndicate 1856
2
Directors and administration
IQUW Syndicate Management Limited
Managing Agent
Directors
Francois-Xavier B Boisseau (Chairman)
Peter A Bilsby
Charlotte Constable
Michele J Faull
Martin Hall
David J Harris (resigned 31 October 2024)
Richard A Hextall (reappointed 9 February 2024)
John G Holland
David E Morris
Nathan R Ott
Heather I Thomas
Christopher E Watson
Company Secretary
Renuka S Fernando (resigned 19 July 2024)
Managing Agent’s Registered Office
30 Fenchurch Street
London
EC3M 3BD
Managing Agent’s Registered Number
00426475
Syndicate
Syndicate Active Underwriter
Steven Tebbutt
Bankers
Lloyds Bank plc
Citibank NA
RBC Investor and Treasury Services
Barclays Bank plc
Investment Managers
Conning Asset Management Limited
New England Asset Management Limited
Independent Auditors
PricewaterhouseCoopers LLP
Reports & Accounts Syndicate 1856
3
Report of the managing agent
IQUW Syndicate Management Limited (the “Managing Agent”), the managing agent of Syndicate 1856 (the
“Syndicate”) presents its report for the year ended 31 December 2024 which has been prepared under the
regulations outlined in note 2 to the annual accounts, using the presentational currency of US Dollars. The
presentation currency of the Syndicate changed to US Dollars for the 2024 accounts, as this gives a better
understanding of the Syndicate's results and overall financial position. All prior year comparisons have been
restated for this change.
The Managing Agent has an agreed exemption from preparing separate underwriting year accounts for the
closed 2022 year of account.
Principal activity
The principal activity of the Syndicate remains the transaction of general insurance and reinsurance
business in the Lloyd’s market, underwriting a mixture of reinsurance, property, aviation, marine, motor,
energy, portfolio solutions and professional lines business, as well as a range of specialty lines including
cyber, crisis management, terrorism, and political risks. The Syndicate’s functional currency is US Dollars.
Review of the business
The Syndicate’s key financial performance indicators during the year were as follows:
Financial Year
2024
2023*
2022*
2021*
$'000
Total
Total
Total
Total
Gross premium written
1,109,668
913,378
674,576
245,840
Net premium written
866,117
728,916
546,200
229,300
Net earned premium
782,082
632,478
412,000
170,400
Investment return
34,884
17,306
700
100
Profit/(loss) for the financial year
156,429
138,031
(17,000)
(13,400)
Claims ratio
48.3 %
46.7 %
72.2 %
68.9 %
Expense ratio
35.4 %
34.3 %
30.5 %
39.7 %
Combined operating ratio
83.6 %
81.0 %
102.7 %
108.6 %
*Restated due to change of presentational currency from Sterling to US Dollars
The result for the Syndicate in calendar year 2024 was a profit of $
156.4
m
(2023*: profit of $
138.0
m). The
underwriting result has improved this year due to higher net earned premium from the continued growth of
the Syndicate. Natural catastrophe claims incurred by the Syndicate were broadly in line with expectations,
with the Syndicate incurring losses on Hurricanes Helene and Milton. The combined operating ratio of
83.6% was achieved despite large events including Baltimore Bridge and the strengthening of reserves for
the Russia-Ukraine Conflict. There are strong margins across most classes.
Gross premium written grew by 21.5% (2023*: 35.4%) during 2024. There was strong growth in premium
despite rating pressure in multiple classes.
Absolute levels of expense have grown to $276.7m in 2024 (2023*: $217.1m), of which $40.7m is due to
higher commissions driven by premium volumes and mix of business. The remaining increase was driven by
expenditure linked to the continued build out of the underwriting team, management and operational
functions.
The Syndicate’s business is written in a divisional structure reflecting the markets covered.
The 2024 gross
written premium by division is summarised by division below.
*Restated due to change of presentational currency from Sterling to US Dollars
Reports & Accounts Syndicate 1856
4
Gross Written Premium
2024
2023*
2022*
2021*
$'000
Total
Total
Total
Total
Reinsurance
264,129
217,264
163,745
78,056
Property
294,057
233,944
206,642
56,905
Professional Lines
118,315
104,657
81,614
44,920
Marine & Aviation
216,548
188,703
120,467
36,289
Specialty
192,288
151,383
92,320
29,670
Motor
24,331
17,428
9,788
—
Total
1,109,668
913,379
674,576
245,840
*Restated due to change of presentational currency from Sterling to US Dollars
Outwards reinsurance
The Syndicate purchases reinsurance contracts to reduce gross exposures to within the net risk appetite, to
reduce the impact of individual large losses, and to reduce the impact of the accumulation of claims that
may arise from the same event.
In 2024, the Syndicate purchased per occurrence and aggregate reinsurance cover to protect the Direct
Property and Property Treaty lines of business from large catastrophe losses. Separate reinsurance was
purchased to protect against the potential systemic occurrence of losses across the marine, energy, political
violence, and terrorism lines. Proportional reinsurance was purchased to protect the cyber, professional
lines, war political violence and terror and property insurance portfolios. Further reinsurance was purchased
for other classes as appropriate.
Investment report
2024
2023*
$'000
Total
Total
Invested assets
835,194
441,024
Investment return
34,884
17,306
% Return on investments
4.2 %
3.9 %
Investment income
27,240
10,325
*Restated due to change of presentational currency from Sterling to US Dollars
The start of 2024 was marked by ongoing high levels of inflation resulting in interest rates continuing to
remain elevated and markets pricing in an environment of higher interest rates for longer that risked putting
pressure on economic growth and increasing the likelihood of a recession. This resulted in bond yields
remaining elevated during the first half of the year, which weighed on fixed income returns.
However, receding inflation levels allowed for markets to price for an easing of central bank monetary
policy, resulting in the Federal Reserve cutting interest rates by 100bp in the second half of 2024. While this
supported a marked repricing lower of bond yields during the third quarter, much of the fourth quarter
resulted in a partial unwind of these moves.
Reports & Accounts Syndicate 1856
5
Capital
For the 2024 year of account, $863.2m (97.2%) of the capital to support the Syndicate’s underwriting was
provided by IQUW Corporate Member Limited. The remaining $25.1m (2.8%) of the Syndicate’s capacity
was provided by non-aligned members based on 2 year limited tenancy agreements. The non-aligned
members have taken 2.3% for the 2025 year of account on a one year rolling agreement.
Principal risks and uncertainties
A description of the principal risks and uncertainties facing the Syndicate and how it manages risks is set out
in note 5 of the financial statements. In particular, the Syndicate is exposed to Insurance risk, Financial risk,
Market risk, Operational risk, Climate change risk, Economic uncertainty risk and Geopolitical risk.
Russia-Ukraine Conflict
The 2021 and 2022 underwriting years of the Syndicate are exposed to claims relating to the Russia-Ukraine
Conflict. Through its insurance and reinsurance portfolios, the Syndicate has exposure to war on land and
contingent aviation war and hull coverage for aircraft lessors. Exposure scenarios have been updated in
2024, but as claims have started to settle, reserve setting has now moved to a case by case basis
considering circumstances of the claims, taking account of cancellation, law and jurisdiction, subrogation
and recoveries, etc. In 2024 the reserve setting has also taken into consideration the associated legal fees.
The nature of any losses arising from the conflict is an uncertainty for the Syndicate’s total reserves but does
not increase that uncertainty significantly beyond the normal range of uncertainty for insurance liabilities at
this stage of development.
The booked ultimates for these losses as at 31 December 2024 are
$230.6m (2023*: $64.9m) gross of
reinsurance and $76.4m (2023*: $27.3m) net of reinsurance (inclusive of inwards and outwards
reinstatement premiums).
*Restated due to change of presentational currency from Sterling to US Dollars
Reports & Accounts Syndicate 1856
6
Directors’ interests and interests in other Group Companies
The directors of the Managing Agent who were in office during the year and up to the date of signing the
financial statements were:
Francois-Xavier B Boisseau
Independent Non-Executive Chairman
Peter A Bilsby
Chief Executive Officer
Charlotte Constable
Chief Financial Officer
Michele J Faull
Independent Non-Executive Director
Martin Hall
Active Underwriter Syndicate 218
David J Harris
Independent Non-Executive Director (resigned 31 October 2024)
Richard A Hextall
Non-Executive Director (reappointed 9 February 2024 )
John G Holland
Group Chief Risk Officer
David E Morris
Group Director of Underwriting
Nathan R Ott
Non-Executive Director
Heather I Thomas
Independent Non-Executive Director
Christopher E Watson
Non-Executive Director
A number of the directors hold shares in the ultimate parent company. Shares are not held in any other
group company.
Disclosure of information to the auditors
The directors of The Managing Agent who held office at the date of approval of the Report of the Managing
Agent confirm that, so far as each of them is aware, there is no relevant audit information of which the
Syndicate’s auditors are unaware, and each director has taken all the steps that they ought to have taken as
a Director in order to make themselves aware of any relevant audit information and to establish that the
Syndicate’s auditors are aware of that information.
Syndicate auditors
The Syndicate’s auditors, PricewaterhouseCoopers LLP, are deemed reappointed under the provisions of
The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008.
Annual general meeting (“AGM”)
Notice is hereby given that the Managing Agent does not propose holding a Syndicate AGM this year
unless objections to this proposal or the intention to reappoint the auditors are received from Syndicate
members by .
On behalf of the Board:
Peter Bilsby
Director
5 March 2025
Reports & Accounts Syndicate 1856
7
Statement of managing agent’s responsibilities
The managing agent is responsible for preparing the managing agent’s report and the annual accounts in
accordance with applicable law and regulations comprising FRS 102 “The Financial Reporting Standard
applicable in the UK and Republic of Ireland”.
The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 require
the managing agent to prepare annual accounts at 31 December each year in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable
law). The annual accounts are required by law to give a true and fair view of the state of affairs of the
Syndicate as at that date and of its profit or loss for that year.
In preparing the annual accounts, the managing agent is required to:
•
select suitable accounting policies and then apply them consistently;
•
make judgements and estimates that are reasonable and prudent;
•
state whether applicable UK Accounting Standards comprising FRS 102, have been followed, subject
to any material departures disclosed and explained in the notes to the Syndicate Annual Accounts; and
•
prepare the Syndicate Annual 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 proper accounting records which disclose with reasonable
accuracy at any time the financial position of the Syndicate and enable it to ensure that the Syndicate
Annual Accounts 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 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 Annual Accounts may differ from legislation in other jurisdictions.
The preparation and review of the iXBRL tagging that has been applied to the Syndicate Accounts in
accordance with the instructions issued by Lloyd’s, including designing, implementing and maintaining
systems, processes and internal controls to result in tagging that is free from material non-compliance with
the instructions issued by Lloyd’s, whether due to fraud or error.
Reports & Accounts Syndicate 1856
8
Independent auditor’s report to the members of Syndicate 1856
Report on the audit of the syndicate annual accounts
Opinion
In our opinion, 1856’s syndicate annual accounts:
•
give a true and fair view of the state of the syndicate’s affairs as at 31 December 2024 and of its
profit and cash flows for the year then ended;
•
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting
Standard applicable in the UK and Republic of Ireland”, and applicable law); and
•
have been prepared in accordance with the requirements of The Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the requirements within the
Lloyd’s Syndicate Accounts Instructions version 2.0 as modified by the Frequently Asked Questions
issued by Lloyd’s version 1.1 (“the Lloyd’s Syndicate Instructions”).
We have audited the syndicate annual accounts included within the Annual Accounts, which comprise: the
Balance sheet - assets and Balance sheet - liabilities as at 31 December 2024; the Statement of profit or loss
and comprehensive income – technical account general business; Statement of profit or loss and
comprehensive income – non-technical account, the Cash flow statement, and the Statement of changes in
members’ balances for the year then ended; and the notes to the syndicate annual accounts , which include
a description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”), The
Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, the Lloyd’s
Syndicate Instructions and other applicable law. Our responsibilities under ISAs (UK) are further described
in the Auditors’ responsibilities for the audit of the syndicate annual accounts section of our report. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Independence
We remained independent of the syndicate in accordance with the ethical requirements that are relevant to
our audit of the syndicate annual accounts in the UK, which includes the FRC’s Ethical Standard, as
applicable to other entities of public interest, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical
Standard were not provided.
Other than those disclosed in note 8, we have provided no non-audit services to the syndicate in the period
under audit.
Conclusions relating to going concern
Based on the work we have performed, we have not identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast significant doubt on the syndicate’s ability to
continue as a going concern for a period of at least twelve months from when the syndicate annual accounts
are authorised for issue.
In auditing the syndicate annual accounts, we have concluded that the Managing Agent’s use of the going
concern basis of accounting in the preparation of the syndicate annual accounts is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as
to the syndicate's ability to continue as a going concern.
Reports & Accounts Syndicate 1856
9
Our responsibilities and the responsibilities of the Managing Agent with respect to going concern are
described in the relevant sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the syndicate annual
accounts and our auditors’ report thereon. The Managing Agent is responsible for the other information.
Our opinion on the syndicate annual accounts does not cover the other information and, accordingly, we do
not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of
assurance thereon.
In connection with our audit of the syndicate annual accounts, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
syndicate annual accounts or our knowledge obtained in the audit, or otherwise appears to be materially
misstated. If we identify an apparent material inconsistency or material misstatement, we are required to
perform procedures to conclude whether there is a material misstatement of the syndicate annual accounts
or a material misstatement of the other information. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report based on these responsibilities.
With respect to the Report of the managing agent (the “Managing Agent’s Report”), we also considered
whether the disclosures required by The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate
Accounts) Regulations 2008 have been included.
Based on our work undertaken in the course of the audit, The Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 requires us also to report certain opinions and
matters as described below.
Managing Agent’s Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the
Managing Agent’s Report for the year ended 31 December 2024 is consistent with the syndicate annual
accounts and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the syndicate and its environment obtained in the course of
the audit, we did not identify any material misstatements in the Managing Agent’s Report.
Responsibilities for the syndicate annual accounts and the audit
Responsibilities of the Managing Agent for the syndicate annual accounts
As explained more fully in the Statement of managing agent’s responsibilities, the Managing Agent is
responsible for the preparation of the syndicate annual accounts in accordance with the applicable
framework and for being satisfied that they give a true and fair view. The Managing Agent is also responsible
for such internal control as they determine is necessary to enable the preparation of syndicate annual
accounts that are free from material misstatement, whether due to fraud or error.
In preparing the syndicate annual accounts, the Managing Agent is responsible for assessing the syndicate’s
ability to continue as a going concern, disclosing as applicable, matters related to going concern and using
the going concern basis of accounting unless it is intended for the syndicate to cease operations, or it has
no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the syndicate annual accounts
Our objectives are to obtain reasonable assurance about whether the syndicate annual accounts as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
syndicate annual accounts.
Reports & Accounts Syndicate 1856
10
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud, is detailed below.
Based on our understanding of the syndicate and industry, we identified that the principal risks of non-
compliance with laws and regulations related to breaches of regulatory principles, such as those governed
by the Prudential Regulation Authority and the Financial Conduct Authority, and those regulations set by
the Council of Lloyd’s, and we considered the extent to which non-compliance might have a material effect
on the syndicate annual accounts. We also considered those laws and regulations that have a direct impact
on the syndicate annual accounts such as The Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008 and the Lloyd’s Syndicate Instructions. We evaluated
management’s incentives and opportunities for fraudulent manipulation of the syndicate annual accounts
(including the risk of override of controls), and determined that the principal risks were related to
management bias in accounting estimates and the posting of inappropriate journals. Audit procedures
performed by the engagement team included:
•
Discussions with the Audit Committee, management, internal audit, and the syndicate’s compliance
function, including consideration of known or suspected instances of non-compliance with laws and
regulation and fraud;
•
Assessment of any matters reported on the Managing Agent’s whistleblowing helpline and
management’s investigation of such matters;
•
Reviewing relevant meeting minutes including those of the Board, the Audit Committee, the Risk
Management Committee, the Reserving Committee, and correspondence with regulatory
authorities, including Lloyd’s of London, the Financial Conduct Authority and the Prudential
Regulatory Authority;
•
Reviewing, and challenging where appropriate, the assumptions and judgements made by
management in their significant accounting estimates, in particular in relation to the estimation of
claims outstanding, with a focus on the incurred but not reported (“IBNR”) claims, and the
estimation of gross premiums written;
•
Designing audit procedures to incorporate unpredictability around the nature, timing or extent of
our testing; and
•
Identifying and testing journal entries based on selected fraud risk criteria, in particular journal
entries posted with unusual account combinations.
There are inherent limitations in the audit procedures described above. We are less likely to become aware
of instances of non-compliance with laws and regulations that are not closely related to events and
transactions reflected in the syndicate annual accounts. Also, the risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through
collusion.
A further description of our responsibilities for the audit of the syndicate annual accounts is located on the
FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the syndicate’s member in
accordance with part 2 of The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008 and for no other purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent in writing.
Reports & Accounts Syndicate 1856
11
Reports & Accounts Syndicate 1856
12
Other required reporting
Under The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 we
are required to report to you if, in our opinion:
•
we have not obtained all the information and explanations we require for our audit; or
•
adequate accounting records have not been kept by the Managing Agent in respect of the
syndicate; or
•
certain disclosures of Managing Agent remuneration specified by law are not made; or
•
the syndicate annual accounts are not in agreement with the accounting records.
We have no exceptions to report arising from this responsibility.
Other matter
We draw attention to the fact that this report may be included within a document to which iXBRL tagging
has been applied. This auditors’ report provides no assurance over whether the iXBRL tagging has been
applied in accordance with section 2 of the Lloyd’s Syndicate Instructions 2.0.
Sean Forster (Senior statutory auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
5 March 2025
Statement of profit or loss and comprehensive income –
technical account general business
For the year ended 31 December 2024
2024
2023*
Note
$'000
$'000
Earned premium, net of reinsurance
Gross premium written
6
Outward reinsurance premium
(243,551 )
(184,462 )
Premiums written, net of reinsurance
Changes in unearned premium:
Gross amount
(95,159 )
(107,573 )
Reinsurers’ share
Net change in provisions for unearned premiums
(84,035 )
(96,438 )
Earned premium, net of reinsurance
13
Allocated investment return transferred from
non-technical account
7
Claims incurred, net of reinsurance
Claims paid:
Gross amount
(284,299 )
(209,896 )
Reinsurers’ share
Net claims paid
13
(204,443 )
(172,182 )
Change in the provision for claims:
Gross amount
(323,448 )
(135,858 )
Reinsurers’ share
Net change in provisions for claims
13
(173,006 )
(123,339 )
Claims incurred, net of reinsurance
13
(377,449 )
(295,521 )
Net operating expenses
8
(276,690 )
(217,102 )
Balance on the technical account for general business
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
All amounts relate to continuing operations.
The notes on pages
19
to
53
form an integral part of these annual accounts.
Reports & Accounts Syndicate 1856
13
Statement of profit or loss and comprehensive income –
non-technical account
For the year ended 31 December 2024
2024
2023*
Note
$'000
$'000
Balance on the technical account for general business
Investment return:
Investment income
Realised gains on investments
Unrealised gains on investments
Investment expenses and charges
(310 )
(179 )
Total investment return
7
Allocated investment return transferred to general business
technical account
(34,884 )
(17,306 )
Foreign exchange (loss)/gain
12
(6,398 )
Profit for the financial year
Total comprehensive income for the year
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
The notes on pages
19
to
53
form an integral part of these annual accounts.
Reports & Accounts Syndicate 1856
14
Balance sheet - assets
At 31 December 2024
2024
2023*
Note
$'000
$'000
Investments
Financial investments
11
Deposits with ceding undertakings
Reinsurers’ share of technical provisions
Provision for unearned premiums
13
Claims outstanding
13
Debtors
Debtors arising out of direct insurance operations
15
Debtors arising out of reinsurance operations
16
Other debtors
17
Other assets
Cash at bank and in hand
Other
11
Prepayments and accrued income
Accrued interest and rent
Deferred acquisition costs
14
Other prepayments and accrued income
Total assets
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
The notes on pages
19
to
53
form an integral part of these annual accounts.
Reports & Accounts Syndicate 1856
15
Balance sheet – liabilities
At 31 December 2024
2024
2023*
Note
$'000
$'000
Capital and reserves
Members’ balances
Total capital and reserves
Technical provisions
Provision for unearned premiums
13
Claims outstanding
13
Creditors
Creditors arising out of direct insurance operations
20
(653 )
Creditors arising out of reinsurance operations
21
100,494
92,053
Other liabilities
Other creditors including taxation and social security
22
Creditors
Total Liabilities
Total liabilities, capital and reserves
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
The notes on pages
19
to
53
form an integral part of these annual accounts.
The Syndicate annual accounts on pages
13
to
53
were approved by the Board on 27 February 2025 and
signed on behalf of the Syndicate’s managing agent by:
Charlotte Constable
Director
5 March 2025
Reports & Accounts Syndicate 1856
16
Statement of changes in members‘ balances
For the year ended 31 December 2024
2024
2023*
$'000
$'000
Members’ balances brought forward at 1 January
(47,576 )
Total comprehensive income for the year
Distribution loss
Total members’ balances
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
Members participate in Syndicates by reference to years of account and their ultimate result. Assets and
liabilities are assessed with reference to policies incepting in that year of account.
The notes on pages
19
to
53
form an integral part of these annual accounts.
Reports & Accounts Syndicate 1856
17
Cash flow statement
For the year ended
31 December 2024
2024
2023*
(Restated)
Note
$'000
$'000
Net cash flows from operating activities
Profit for the financial year
Movement in gross technical provisions
13
Movement in reinsurers' share of gross technical provisions
13
(198,699 )
(24,613 )
Movement in debtors
(109,482 )
(122,378 )
Movement in creditors
(6,392 )
Investment return
7
(34,884 )
(17,306 )
Movement in other liabilities
(23,747 )
(20,351 )
Net cash inflow from operating activities
Net cash flows from investing activities
Purchase of equity and debt instruments
(1,155,163 )
(399,648 )
Sale of equity and debt instruments
Investment income received
Other
Net cash used in investing activities
(374,526 )
(208,926 )
Net cash flows from financing activities
Distribution loss
Net cash generated in financing activities
Net (decrease)/increase in cash at bank and in hand
(33,488 )
Cash and cash equivalents at the beginning of the year**
Foreign exchange on cash and cash equivalents
(4,800 )
Cash and cash equivalents at the end of the year**
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
**Restated to reclassify money market funds (note 2 and 11).
The notes on pages 19
to 53
form an integral part of these annual accounts.
Reports & Accounts Syndicate 1856
18
Notes to the accounts
1.
General information
Syndicate 1856 (The "Syndicate") comprises a group of members of the Society of Lloyd's that underwrites
insurance business in the London Market. The address of the Syndicate’s managing agent IQUW Syndicate
Service Limited ("The Managing Agent") is 30 Fenchurch Street, London, EC3M 3BD. The principal activity
of the Syndicate is the transaction of general insurance and reinsurance business at Lloyd’s and through the
Lloyd’s Brussels platform Lloyd’s Insurance Company S.A (“LIC”).
2.
Statement of compliance and basis of preparation
The financial statements have been prepared in accordance with the Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008, and applicable Accounting Standards in the United
Kingdom and the Republic of Ireland, including Financial Reporting Standard 102 (FRS 102). FRS 102
requires the application of Financial Reporting Standard 103 (FRS 103) in relation to insurance contracts,
and the Lloyd’s Syndicate Accounts Instructions Version 2.0 as modified by the Frequently Asked
Questions Version 1.1 issued by Lloyd’s.
These annual accounts have been prepared under the historical cost basis, except for financial assets at fair
value through profit or loss that are measured at fair value.
For the 2024 annual accounts the presentational currency has been changed from Sterling to US Dollars.
The Syndicate’s functional currency is US Dollars as that is the currency of the primary economic
environment in which the Syndicate operates. All amounts have been rounded to the nearest hundred
thousand and presented in thousands, unless otherwise indicated.
This change does not affect the net
assets or result for the financial year of the Syndicate for either period presented.
During 2024, Lloyd's introduced changes to the Syndicate accounts process to rationalise and standardise
financial reporting across the market. As a result, certain comparative information has been restated to
ensure consistency with current year presentation and compliance with the Lloyd's Syndicate Accounts
Instructions. The changes have been included within notes 5, 6, 7, 11, 13, 14, 18, 19, 27 and comprise:
a) Reclassification changes - Certain financial statement line items have been reclassified whilst the
underlying amounts remain unchanged. The principal change is a reclassification of 2023 overseas deposits
of $46.6m, previously shown as a separate balance sheet item, to form part of other assets. The comparative
balances in notes 5 and 11 have also been represented to align with the current period presentation. Money
market funds of $100.9m have been reclassified from shares and other variable yield securities, unit trusts to
participation in investment pools which are recognised as cash equivalents. The cash flow statement has
been restated to recognise this reclassification of money market funds to cash and cash equivalents. The
reclassification and aggregation changes have been applied retrospectively and had no impact on
previously reported income statement and balance sheet.
b) Aggregation changes - To align with Lloyd's reporting requirements whilst maintaining FRS 102
compliance, certain items have been aggregated or disaggregated within the financial statements and
related notes. This includes the presentation of the 2023 financial investments $441.0m, which are now
shown on a disaggregated basis in the notes 5, 11 and 18.
The reclassification and aggregation changes have been applied retrospectively and had no impact on
previously reported income statement and balance sheet.
Going Concern
T
he Syndicate has financial resources to meet its financial needs and manages its portfolio of insurance risk.
The directors have continued to review the business plans, liquidity and operational resilience of the
Syndicate and are satisfied that the Syndicate is well positioned to manage its business risks in the current
economic environment. The Syndicate 2025 year of account has opened and the directors have concluded
that the Syndicate has sufficient resources to, and a reasonable expectation that it will, open a 2026 year of
Reports & Accounts Syndicate 1856
19
account. The Syndicate has sufficient capital for each year of account in its Funds at Lloyd’s ('FAL'). There is
no intention to cease underwriting or cease the operations of the Syndicate.
Accordingly, the directors of the Managing Agent continue to adopt the going concern basis in preparing
the annual report and financial statements.
Reports & Accounts Syndicate 1856
20
3.
Summary of significant accounting policies
The principal accounting policies applied in the preparation of these annual accounts are set out below.
These policies have been consistently applied to all years presented, unless otherwise stated.
(i)
Gross premium written
Gross premium written comprises premium on contracts incepted during the financial year as well as
adjustments made in the year to premium written in prior accounting periods. Premium is shown gross of
brokerage payable and exclude taxes and duties levied on them.
Premium written includes an estimate of gross premium written during the year. For certain contracts,
premium is initially recognised based on estimates of ultimate premium. This occurs where pricing is based
on variables, which are not known with certainty at the point of binding the policy. In determining the
estimated premium, use is made of information provided by brokers and coverholders, past underwriting
experience, the contractual terms of the policy, and prevailing market conditions. Subsequently,
adjustments to those estimates arise as updated information relating to those pricing variables becomes
available, for example due to declarations obtained on binding authority contracts, reinstatement premium
on reinsurance contracts, or other policy amendments. Such adjustments are recorded in the period in
which they are determined, and impact gross premium written in the income statements and premium
received from insureds and cedants recorded on the balance sheet.
(ii)
Unearned premium
Written premium is recognised as earned according to the risk profile of the policy. The provision for
unearned premium comprises the proportion of gross and outwards reinsurance premium written, which is
estimated to be earned in the following or subsequent financial years, computed using the daily pro-rata
method weighted by the risk profile of the underlying policies.
(iii)
Reinsurance premium ceded
Outwards reinsurance premium comprises premium on contracts incepted during the financial year.
Outwards reinsurance premium is also disclosed gross of commissions and profit participations recoverable
from reinsurers. Written outwards reinsurance premium is recognised as earned according to the coverage
period and in line with the risk profile to which the inwards business being protected relates. Reinstatement
premiums are fully earned at the stage they are recognised in the financial statements.
(iv)
Investment return
Investment return comprises interest, realised and unrealised gains and losses on assets held at fair value
through profit or loss.
Fair value realised gains and losses are calculated as the difference between net sales proceeds and fair
value at acquisition.
Fair value unrealised gains and losses are calculated as the difference between the current fair value at the
balance sheet date and the fair value at acquisition or at previous remeasurement date, adjusted for by
excluding previously recognised unrealised gains and losses of those financial assets disposed of in the
accounting period.
The returns on pooled investments arising in each calendar year are apportioned to years of account open
during the calendar year in proportion to average funds available for investment on each year of account.
Investment return is initially recorded in the statement of comprehensive income within the non technical
account. A transfer is made from the statement of comprehensive income non-technical account to the
statement of comprehensive income technical account for general business. Investment return has been
wholly allocated to the technical account as all investments relate to underwriting activities.
Reports & Accounts Syndicate 1856
21
(v)
Operating expenses
Where expenses are incurred by, or on behalf of, the Managing Agent for the administration of the
Syndicate, these expenses are apportioned appropriately based on type of expense. Expenses that are
incurred jointly are apportioned between The Managing Agent and the Syndicate on bases depending on
the amount of work performed, resources used, and the volume of business transacted. Syndicate operating
expenses are normally allocated to the year of account for which they are incurred, but the 2023 and 2024
years of account were supported by non-aligned members and were charged a profit commission, the profit
commission is charged to the 2023 and 2024 underwriting years.
(vi)
Taxation
Under Schedule 19 of the Finance Act 1993, managing agents are not required to deduct basic rate income
tax from trading income. In addition, all UK basic rate income tax deducted from syndicate investment
income is recoverable by managing agents and consequently the distribution made to members or their
members’ agents is gross of tax. Capital appreciation falls within trading income and is also distributed gross
of tax.
No provision has been made for any United States Federal income tax payable on underwriting results or
investment earnings. Any payments on account made by the Syndicate during the year are included in the
balance sheet under the heading ‘Members’ balances’. No provision has been made for any overseas tax
payable by members on underwriting results.
(vii)
Foreign currency
The functional currency of the Syndicate is US Dollars which is the currency of the primary economic
environment in which the Syndicate operates.
Transactions denominated in foreign currencies are translated into US Dollars at the rates of exchange
ruling at the date of the transaction. At the balance sheet date, monetary assets and liabilities are translated
at the year-end rates of exchange. For foreign currency translation, unearned premiums and deferred
acquisition costs are treated as if they are monetary items.
From the 1 January 2024, the Syndicate’s presentational currency changed from Sterling to US Dollars.
Given that the majority of the Syndicate’s earnings are in US Dollars the directors believe that the change
gives a better understanding of the Syndicate’s results and overall financial position. Following this change
the prior years’ figures have been translated into US Dollars on the below basis:
•
Assets and Liabilities are translated into US Dollars at the closing rates of exchange. The 31
December 2023 closing rate was 1.27.
•
Profit and
loss results are translated into US Dollars at the average rates of exchange. The 31
December 2023 average rate was 1.24.
Differences arising on translation of foreign currency amounts relating to insurance operations of the
Syndicate are recognised in the profit/(loss) on financial exchange in the statement of comprehensive
income non-technical account.
(viii)
Financial instruments
The Managing Agent has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments.
Financial instruments are recognised in the balance sheet at such time as the Syndicate becomes a party to
the contractual provisions of the financial instrument. A financial asset is derecognised when the contractual
rights to receive cash flows from the financial assets expire, or where the financial assets have been
transferred, together with substantially all the risks and rewards of ownership. Financial liabilities are
derecognised if the Syndicate’s obligations specified in the contract expire, are discharged or cancelled.
Reports & Accounts Syndicate 1856
22
Financial assets
The Syndicate has classified these assets into the following categories: financial assets at fair value through
profit or loss, and loans and receivables.
At each reporting date the Syndicate assesses whether there is objective evidence that financial assets not
at fair value through profit or loss are impaired. Financial assets are impaired when objective evidence
demonstrates that a loss event has occurred after the initial recognition of an asset, and that the loss event
has an impact on the future cash flows on the asset that can be estimated reliably.
Financial investments
Financial investment assets are designated at fair value through profit or loss on initial recognition where it
is the Syndicate’s strategy to manage those financial investments on a fair value basis. Internal reporting and
performance measurement of these assets are also on a fair value basis. Note 11 sets out the amount of each
class of financial asset that has been designated at fair value through profit or loss.
Investments carried at fair value through profit or loss are initially recognised at fair value with any
associated transaction costs being expensed through the statement of comprehensive income non
technical account.
If the market for an investment is not active, the valuation is based upon the net asset values of underlying
holdings, which are independently sourced. The fair value of listed equity and debt securities is determined
by reference to their quoted bid price at the balance sheet date.
Fair values for unlisted debt securities are estimated at the present value of their future cash flows,
discounted at the market rate of interest at the reporting date.
Loans and receivables
Loans and receivables are recognised at amortised cost, being the fair value of consideration paid plus
incremental direct transaction costs less any provision for impairments. Syndicate loans to the central fund
are measured at fair value through profit and loss .
(ix)
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly
liquid investments with original maturities of three months or less and bank overdrafts. Bank overdrafts,
when applicable, are shown within current borrowings in liabilities.
For the purpose of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents
as defined above, net of outstanding bank overdrafts.
(x)
Deferred acquisition costs
The costs of acquiring new business, which are incurred during the financial year, but where the benefit of
such costs will be obtained in subsequent accounting periods, are deferred, and recognised as an asset to
the extent that they are recoverable out of margins in future matching revenues. All other costs are
expensed when they are incurred.
In respect of insurance contracts, acquisition costs comprise direct and indirect costs incurred in writing
new contracts. Deferred acquisition costs are amortised over the life of the policy in line with the
recognition of earned premium.
All deferred acquisition costs are tested for recoverability at each reporting date. The carrying values are
adjusted to recoverable amounts and any resulting impairment losses are charged through the profit and
loss account.
Reports & Accounts Syndicate 1856
23
(xi)
Claims provision and related recoveries
Gross claims incurred comprise the estimated cost of all claims occurring during the year, whether reported
or not, including related direct and indirect claims handling costs and adjustments to claims incurred from
previous years.
The provision for claims outstanding is assessed on an individual case basis and is based on the estimated
ultimate cost of all claims notified but not settled by the balance sheet date, together with a provision for
related claims handling costs. The provision also includes an estimated cost of claims incurred but not
reported (“IBNR”) at the balance sheet date based on statistical methods.
These methods generally involve projecting from past experience the development of claims over time to
form a view of the likely ultimate claims to be experienced for more recent underwriting, having regard to
variations in the business accepted and the underlying terms and conditions. For the most recent years,
where a high degree of volatility arises from projections, estimates may be based in part on output from
premium rating and other pricing models of business accepted, together with assessments of underwriting
conditions.
The reinsurers’ share of provision for claims is based on the amount of outstanding claims and projections
for IBNR, net of estimated irrecoverable amounts, having regard to the reinsurance programme in place for
the class of business, the claims experience for the year and the current rating of the reinsurance companies
involved. Several statistical methods are used to assist in making these estimates.
The two most critical assumptions as regards claims provisions are that the past is a reasonable predictor of
the likely level of future claims development, and that the premium rating and other pricing models used for
current business are fair reflections of the likely level of ultimate claims to be incurred.
The directors consider that the provision for gross claims and related reinsurance recoveries are fairly stated
based on the information currently available to them. However, the ultimate liability will vary because of
subsequent information and future 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
annual accounts for the period in which the adjustments are made. The methods used, and the estimates
made, are reviewed regularly.
(xii)
Unexpired risks provision
A provision for unexpired risks is made where claims, related claims handling costs and other related
expenses arising after the end of the financial year in respect of contracts concluded before that date are
expected to exceed the unearned premiums on these contracts, after the deduction of any deferred
acquisition costs.
The provision for unexpired risks is calculated by reference to classes of business that are managed
together. No account is taken of the relevant investment return arising from investments supporting the
unexpired premiums and unexpired risk provisions.
(xiii)
Reinsurance assets and liabilities
Amounts due to and from reinsurers are accounted for in a manner consistent with the insured policies and
in accordance with the relevant reinsurance contract. Reinsurance assets are assessed for impairment at
each balance sheet date. A reinsurance asset is deemed impaired if there is objective evidence, because of
an event that occurred after its initial recognition, that the Syndicate may not recover all amounts due, and
that the event has a reliably measurable impact on the amounts that the Syndicate will receive from the
reinsurer. Objective factors that are considered when determining whether a reinsurance asset or group of
reinsurance assets may be impaired include, but are not limited to the following:
•
negative rating agency announcements of reinsurers;
•
significant reported financial difficulties of reinsurers;
•
actual breaches of credit terms such as persistent late payment or actual default; and
•
adverse economic or regulatory conditions that may restrict future cash flows and asset recoverability.
Reports & Accounts Syndicate 1856
24
Impairment losses on reinsurance assets are recognised in the profit and loss account.
(xiv)
Bad debt
For Syndicate 1856, a full bad debt general provision is made for doubtful debts when a debtor balance is
more than 1 year outside credit terms; beginning with a 75% provision at 9 months overdue. Bad debt
provisions are recognised in the profit and loss account.
(xv)
Pension costs
IQUW Administration Services Limited (“IQUW ASL”) employs all UK based employees and operates a
defined contribution scheme. Pension contributions relating to staff are recharged to the Syndicates via
IQUW Syndicate Services Limited (“IQUW SSL”) and are included within net operating expenses.
(xvi)
Profit commission
For the 2023 and 2024 year of accounts, a 17.5% profit commission is being charged to the non-aligned
members. The Managing Agent has exempted IQUW Corporate Member Limited from the profit
commission. However, for the 2022 and prior year of accounts, no profit commission is being charged as
these years of accounts are wholly aligned.
(xvii)
Deposit components of reinsurance contracts
Where a deposit component exists in a reinsurance contract it is not unbundled and is recorded as part of
the reinsurance assets. Any interest payable on the deposit component is accrued annually at the effective
interest rate.
(xviii) Classification of insurance and reinsurance contracts
Insurance and reinsurance contracts are classified as insurance contracts where they transfer significant
insurance risk. If a contract does not transfer significant insurance risk it is classified as a financial
instrument. All of the Syndicates written contracts and purchased reinsurance contracts transfer significant
insurance risk and therefore are recognised insurance contracts.
(xix) Reinsurance to close ("RITC") received
When the Syndicate accepts an RITC from another Syndicate it records all the assets and liabilities
transferred from the other Syndicate on the balance sheet at fair value on the date the RITC agreement is
effective. The RITC transaction has no impact on the Syndicate's profit or net assets at the time that it is first
recorded.
Reports & Accounts Syndicate 1856
25
4.
Judgements and key sources of estimation uncertainty
In the application of the accounting policies, which are described in note 3, the directors are required to
make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as
at the balance sheet date and the amounts reported for revenues and expenses during the year.
The following judgements, estimations and assumptions have had the most significant effect on amounts
recognised in the financial statements.
(i)
Valuation of general insurance contract liabilities
The estimation of the ultimate liability arising from claims made under insurance contracts is the Syndicate's
most critical accounting estimate. The carrying amount of the liability is disclosed in note 13. For general
insurance contracts, estimates are made for the expected ultimate cost of claims notified at the balance
sheet date and the cost of claims incurred but not yet reported. It can take a significant period before the
ultimate cost of claims can be established with certainty, and the final outcome may be better or worse than
that provided. The estimation of these claims is based on historical experience projected forward, and where
the syndicate does not have sufficient historical experience this is supplemented with other data sources
such as relevant market loss data. Since 2021, the Syndicate has aligned with the updated strategy of the
Managing Agency, meaning historic experience is less reliable as an indicator for future trends. To
determine the Actuarial best estimate's for the 2021 year of account onwards reserving use a combination
of historic experience since 2021, internal pricing loss ratios and Lloyd’s Market Association (“LMA”)
benchmark data. The Syndicate's estimate of claims and related claims handling costs is mainly assessed
through the application of several commonly accepted
actuarial projection methodologies based on the
following:
•
paid claims development, where payments to date are extrapolated based upon market data and
observed development of earlier years;
•
the development of claims based on seasonally adjusted exposure curves;
•
incurred claims development, where incurred claims to date for each year are extrapolated based upon
observed development of earlier years;
•
expected ultimate loss ratios, which are estimated using an average of (developed) years, the averaging
period varies depending on reserving subclass, but is based on historic claims trends and risk
characteristics;
•
quarterly underwriter updates on expected premium and associated rating assumptions; and
•
inflationary assumptions are set so as to allow for both exposure inflation and claims inflation. The former
is based on an appropriate economic index, relative to the class of business, and the latter with additional
excess inflation and social inflation allowances.
The claims provisions are initially calculated gross of any reinsurance recoveries. A separate estimate is
made of the amounts recoverable from all the Syndicate’s reinsurance arrangements, having due regard to
collectability. Claims provisions are subject to regular review, both within the Syndicate and externally.
The Syndicate’s management discusses and challenges the actuarial best estimate and selected booked
claims provisions at the quarterly Reserve Committee (“RC”) and
Audit Committee (“AC”). The
membership of
the AC comprises exclusively non-executive directors with significant insurance expertise.
External actuaries are also engaged to calculate an independent best estimate of the ultimate cost of claims
as at each 31 December and present a Statement of Actuarial Opinion (“SAO”) against which the
Syndicate’s best estimate is assessed.
The total gross estimate for incurred but not reported ("IBNR") losses as at 31 December 2024 is $763.2m
(2023*: $
419.8
m). The total net estimate for IBNR losses as at 31 December 2024 is $441.4m (2023*:
$
302.7
m).
Reports & Accounts Syndicate 1856
26
Major catastrophes, both man-made and natural, and specific large losses are reviewed separately, and
specific reserves are set. These reserves are set with input from the actuarial, claims and underwriting teams
using market knowledge and historical experience.
A management margin is set, over and above the actuarial best estimate net reserves, non-cat only, to allow
for inherent uncertainty within the reserves. Uncertainty regarding the catastrophe estimates is considered
when setting reserves for each event.
(ii)
Premium estimates
Gross premium written is initially based on estimated premium income (“EPI”) of each contract. EPI is based
on information provided by the brokers, policyholders, coverholders, past underwriting experience, and the
contractual terms of the policy. Uncertainty arises because EPI could be different to the signed premium
ultimately received. This risk is mitigated by detailed reviews of EPI and signed premium and regular reviews
that coverholder income is coming through as expected.
Premium in respect of insurance contracts underwritten under binding authorities is booked as the
underlying contracts incept. Premium is earned on a pro-rata basis that is seasonally adjusted for the risk
exposure of the policy. The carrying value amount of the unearned premium is disclosed in note 13.
Gross premium written includes an estimation for reinstatement premium which is determined based on
incurred losses held in the technical provisions. Reviews of the reinstatement premiums held is carried out
on a regular basis as part of the reserve review process.
Reports & Accounts Syndicate 1856
27
5.
Risk Management
The Syndicate’s overall appetite for accepting and managing varying classes of risk is defined by the
Managing Agent’s Board (the “Board”). The Board has developed a governance framework and has set risk
management policies and procedures which include risk identification, risk assessment, risk response, risk
monitoring, and risk reporting. The objective of these policies and procedures is to protect the Syndicate’s
members, policyholders and other stakeholders from negative events that could hinder the Syndicate’s
delivery of its contractual obligations and its achievement of sustainable profitable performance.
The Board exercises oversight of the development and operational implementation of its risk management
policies and procedures through the Managing Agent’s Risk and Compliance Committee (“RCC”). Ongoing
compliance is monitored through the Internal Audit function, which is shared with other entities within the
IQUW group, and which has operational independence, a charter and clear upwards reporting structures
back into the AC and the Board. The Risk Management Function (“RMF”) under the stewardship of the
Chief Risk Officer (“CRO”), coordinates the risk management policies and procedures and supports the
Board and the RCC. The Executive Committee operate regular oversight of the RMF activities and
outcomes.
The Board risk appetites and tolerances consider the risk capacity, Solvency UK adequacy, prevailing
regulatory and legislative adherence, and the fair treatment and protection of customer and stakeholder
interests. Risk metrics and measures of the business are monitored against the risk appetites reported to the
RCC and Board quarterly.
The Board is ultimately responsible for ensuring that the RMF is in place and adhered to. Responsibilities are
then delegated through the Three Lines of Defence Model across the IQUW group, summarised as follows:
•
Line 1: Business units operating within a framework of internal controls underpinned by policies,
procedures, and senior management oversight with direct responsibility for risk management and
controls;
•
Line 2: Risk Management and Compliance functions ensure that the RMF is effective, and that the
Syndicate operates within its legal and regulatory boundaries. Employees in Line 2 coordinate, facilitate
and oversee the effectiveness and integrity of the RMF. As a key input to decision making, the RMF
focusses on assuring the Board that the risk profile is in line with expectations, escalating all material
risk and capital issues to the Board, and providing input to, challenge and oversight of Line 1 decision
making; and
•
Line 3: Internal Audit provides independent assurance to the Board via the AC as to the effectiveness
of the internal control environment. Employees in Line 3 provide independent assurance and challenge
across all business functions in respect of the integrity and effectiveness of the RMF.
The principal sources of risk relevant to the Syndicate fall into four broad categories: insurance risk, financial
risk,operational risk and climate change risk.
5.1
Insurance risk
The predominant risk to which the Syndicate is exposed is insurance risk, which is assumed through the
underwriting process. Insurance risk is defined as the risk of fluctuations in the frequency, severity and
timing of insured events and claims settlements relative to expectation. Insurance risk can be
subcategorised into: (a) underwriting risk including the risk of catastrophe and systemic insurance losses,
and the insurance cycle and competition; and (b) reserving risk, being the risk that provisions to cover
insurance claim losses turn out to be insufficient.
Reports & Accounts Syndicate 1856
28
5.1 (a) Underwriting risk
Underwriting risk is defined as the risk that insurance premium will not be sufficient to cover future
insurance claims and associated expenses. Underwriting risk also encompasses people, process and system
risks directly related to underwriting.
The Board sets the Syndicate’s underwriting strategy and risk appetite, seeking to benefit from identified
opportunities considering other relevant anticipated market conditions.
The Syndicate aims to manage underwriting risk:
•
to achieve acceptable profits and return on equity by ensuring that insurance risks are carefully
selected in accordance with the underwriting strategy and risk appetite tolerances, underwritten in
accordance with risk strategy and priced to reflect the underlying risk; and
•
to mitigate insurance risk using optimal reinsurance arrangements.
5.1 (a)(i) Underwriting strategy
Specific underwriting objectives such as aggregation limits, reinsurance protection thresholds, geographical
disaster event risk exposures, and line of business diversification parameters are prepared and reviewed by
the Managing Agent’s management team to translate the Board’s underwriting strategy into specific
measurable actions and targets. These actions and targets are reviewed and approved in advance of the
underwriting year. The Board continually reviews its underwriting strategy throughout the course of each
underwriting year considering evolving market pricing and loss conditions, and as opportunities present
themselves.
The underwriters and the Managing Agent’s management consider underwriting risk at an individual
contract level and from a portfolio perspective where the risks assumed in similar classes of policies are
aggregated and the exposure evaluated considering historical portfolio experience and prospective factors.
The delegation of underwriting authority to specific individuals, both internally and externally, is subject to
regular review. All underwriting staff and binding agencies are set strict parameters in relation to the levels
and types of business they can underwrite, based on individual levels of experience and competence. These
parameters cover areas such as maximum sums insured per insurance contract, maximum gross premium
written, and maximum aggregated exposures per geographical zone and risk class. All delegations are
strictly controlled through these underwriting guidelines and limits, and extensive monitoring, review, and
auditing of the agencies.
The Syndicate compiles estimates of losses arising from realistic disaster events using statistical and/or
meteorological models alongside input from the underwriters. They also reflect the areas that represent
significant exposures for the Syndicate. The events are extreme and therefore mostly untested, which
increases the risk that estimates may prove inadequate because of incorrect assumptions, model
deficiencies, or losses from unmodelled risks.
Reports & Accounts Syndicate 1856
29
5.1 (a)(ii) Sensitivity to insurance risk
The liabilities established could be significantly lower or higher than the ultimate cost of settling the claims
arising. This level of uncertainty varies between the classes of business and the nature of the risk being
underwritten and can arise from developments in case reserving for large losses and catastrophes, or from
changes in estimates of claims IBNR.
The following table presents the profit and loss impact of the sensitivity of the value of insurance liabilities
disclosed in the accounts to potential movements in the assumptions applied within the technical
provisions. Given the nature of the business underwritten by the Syndicate, the approach to calculating the
technical provisions for each class can vary and as a result the sensitivity performed is to apply a beneficial
and adverse risk margin to the total insurance liability. The amount disclosed in the table represents the
profit or loss impact of an increase or decrease in the insurance liability as a result of applying the sensitivity.
The amount disclosed for the impact on claims outstanding – net of reinsurance represents the impact on
both the profit and loss for the year and member balance.
General insurance business sensitivities as at 31 December 2024
Sensitivity
+5.0%
$'000
-5.0%
$'000
Claims outstanding - gross of reinsurance
50,480
(50,480)
Claims outstanding - net of reinsurance
32,332
(32,332)
General insurance business sensitivities as at 31 December 2023
Sensitivity
+5.0%
$'000
-5.0%
$'000
Claims outstanding - gross of reinsurance
30,018
(30,018)
Claims outstanding - net of reinsurance
20,938
(20,938)
5.1 (a)(iii) Outwards reinsurance
The Syndicate also manages underwriting risk by purchasing reinsurance. The classes of business expose
the Syndicate to claims not only at individual risk level, but also at event level. The Syndicate therefore
reinsures a portion of the risks that it underwrites to control its exposure to claims and to protect its capital
resources. Reinsurance protections, such as excess of loss and quota share covers, are purchased to
mitigate the effect of individual large losses, catastrophes and concentrations of risk beyond the risk
appetite approved by the Board. The scope and type of reinsurance protection purchased may change
depending on the extent and competitiveness of cover available in the market. There is exposure to credit
risk to the extent that any reinsurer is unable to meet its obligations assumed under such reinsurance
arrangements as outlined above, to mitigate this risk, the Syndicate either purchases reinsurance with rated
insurers, or requires non-rated insurers to be collateralised.
Reports & Accounts Syndicate 1856
30
5.1 (b) Reserving risk
Reserving risk is defined as the risk that reserves set in respect of insurance claim losses are ultimately
insufficient to fully settle these claims and associated expenses. The Syndicate’s procedures for estimating
the outstanding costs of settling insured losses at the balance sheet date, including IBNR, are detailed in
note 5(i).
The Syndicate aims to manage reserving risk:
•
to minimise reserve volatility through robust reserving and application of actuarial modelling
approaches; and
•
to monitor reserve adequacy and performance on an ongoing basis
The Syndicate undertakes both an internal and external actuarial review of the claims’ provisions,
independent of the underwriting teams. The SAO on claims reserve adequacy, required by Lloyd’s, is
provided by an independent external actuarial firm.
The Syndicate’s provision estimates are subject to regular and rigorous review by senior management from
all areas of the business. The final provision is approved by the Board.
Booked reserves include a net margin of $31.2m (2023*: $
20.4
m). This is the margin above the best estimate
to further mitigate the uncertainty within the reserve estimates.
5.1 (b)(i) Sources of uncertainty in the estimation of future claim payments
For the inwards reinsurance lines, there is often a time lag between the establishment and re-estimation of
case reserves and reporting to the Syndicate. The Syndicate works closely with the reinsured to ensure
timely reporting and analyses industry loss data to verify the reported reserves. Additional reserves are
provided for, particularly for IBNR, especially for the longest-tailed lines such as Professional Lines where
the final settlement may not occur until several years after the claim occurred. Actuarial projection
methodologies are used to estimate ultimate claims based on the historical development patterns for paid
and incurred claims. For the most uncertain claims, standard actuarial techniques are augmented with
bespoke analysis, views of other business functions such as claims, underwriting and exposure management,
and alternative data sources.
The recent inflationary environment presents additional uncertainty, as settlement delays coupled with
inflation may result in inadequate reserves being projected by actuarial techniques which do not explicitly
take this environment into account. A number of techniques, including the development of a cash-flow
model addressing inflation, and stress/sensitivity testing are employed by the internal actuarial team to
quantify both the impact of the environment and the potential range of uncertainty.
5.1 (b)(ii) Development of claims provision
The tables below show the estimated ultimate cumulative claims, being incurred claims plus IBNR and
claims handling costs, for each successive underwriting year at each balance sheet date.
The Syndicate seeks to set robust reserves and to minimise volatility in those reserves over time to mitigate
the risk that reserves will be insufficient to meet future claims payments and related expenses. The tables
below show the development of the estimated ultimate claims costs over an extended period to provide an
illustration of the Syndicate’s ability to accurately estimate the ultimate level of claims. It should be noted
that the Syndicate’s material change in strategy and management from the 2021 underwriting year means
the development of prior years is less relevant to the 2021 and future underwriting years.
The data for claims development periods prior to 2022 includes data for Syndicate 3268 which was
reinsured into Syndicate 1856 with effect from 1 January 2024.
Reports & Accounts Syndicate 1856
31
Analysis of claims development - gross of reinsurance
Underwriting
year
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
$000's
$000's
$000's
$000's
$000's
$000's
$000's
$000's
$000's
$000's
At end of
reporting year
42,201
86,181
140,998
116,480
175,883
183,162
260,975
168,820
318,948
1,493,648
One year later
73,898
117,221
207,257
214,298
309,749
341,264
402,150
293,479
1,959,316
Two years later
148,891
211,633
250,028
223,602
323,832
373,107
404,010
1,935,103
Three years
later
65,374
122,145
151,360
132,633
324,332
523,702
1,319,546
Four years
later
66,353
108,910
150,082
138,647
317,073
781,065
Five years later
58,795
84,146
113,143
135,488
391,572
Six years later
66,197
110,913
113,460
290,570
Seven years
later
72,131
110,139
182,270
Eight years or
more later
71,439
71,439
Current
estimate of
cumulative
claims
71,439
110,139
113,460
135,488
317,073
523,702
404,010
293,479
318,948
2,287,738
Cumulative
payments to
date
(70,266)
(104,906)
(106,409)
(111,570)
(267,613)
(260,993)
(251,877)
(69,865)
(34,645)
(1,278,144)
Total gross
provision
included in
the balance
sheet
1,173
5,233
7,051
23,918
49,460
262,709
152,133
223,614
284,303
1,009,594
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
Reports & Accounts Syndicate 1856
32
Analysis of claims development - net of reinsurance
Underwriting
year
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
$000's
$000's
$000's
$000's
$000's
$000's
$000's
$000's
$000's
$000's
At end of
reporting year
27,528
46,651
77,693
64,976
148,285
137,286
207,440
145,362
244,202
1,099,423
One year later
51,580
68,590
116,909
144,883
240,144
240,915
336,085
250,864
1,449,970
Two years later
109,785
138,040
156,768
156,537
244,291
257,298
319,769
1,382,488
Three years
later
50,633
64,365
64,634
66,476
241,469
290,954
778,531
Four years
later
52,530
52,421
61,894
73,238
236,354
476,437
Five years later
45,157
40,978
28,063
71,766
185,964
Six years later
48,623
67,677
35,938
152,238
Seven years or
more later
54,894
60,288
115,182
Eight years or
more later
53,568
53,568
Current
estimate of
cumulative
claims
53,568
60,288
35,938
71,766
236,354
290,954
319,769
250,864
244,202
1,563,703
Cumulative
payments to
date
(52,229)
(52,828)
(28,462)
(55,499)
(203,941)
(202,974)
(220,650)
(67,179)
(33,298)
(917,060)
Total net
provision
included in
the balance
sheet
1,339
7,460
7,476
16,267
32,413
87,980
99,119
183,685
210,904
646,643
*Protected by stop loss
5.1 (b)(iii) Sensitivity analysis of reserve estimates
Assumptions about future developments, outcomes or events underpin the setting of the Syndicate’s
booked reserves. The sources of estimation uncertainty are discussed in note 4(ii)(a). Sensitivity analysis of
the key assumptions provides an illustration of the inherent uncertainty in the reserves as shown below.
The following illustrates the sensitivity of some of the key assumptions.
The Syndicate has material exposure to Hurricanes Milton and Helene. Hurricane Milton was the largest
catastrophe loss in the Syndicate in the 2024 calendar year. This increases the uncertainty of the
Syndicate’s total reserves but not beyond the normal range of uncertainty for insurance liabilities at this
state of development. By performing a sensitivity analysis it was determined a 25% deterioration in the
current selected gross ultimate for Hurricane Milton would lead to a $11.8m increase to the net loss plus
$1.2m increase to outwards reinstatement premiums (‘RIPs’).
The Syndicate, through its reinsurance and insurance portfolios, has exposure relating to the Russia-
Ukraine Conflict. The Syndicate has exposure to war on land and contingent aviation war and hull coverage
for aircraft lessors. Modelled scenarios have been updated in 2024, but as claims have started to settle
reserve setting has now moved to a case by case basis considering circumstances of the claims, taking
account of cancellation, law and jurisdiction, subrogation and recoveries, and legal fees.
The booked ultimates for these losses as at 31 December 2024 are
$230.6m (2023*: $64.9m) gross of
reinsurance and $76.4m (2023*: $27.3m) net of reinsurance (inclusive of inwards and outwards
reinstatement premiums).
Reports & Accounts Syndicate 1856
33
5.2 Financial risk
The Syndicate is exposed to financial risk through its ownership of financial instruments including financial
liabilities. The Syndicate invests in financial assets to fund obligations arising from its insurance contracts
and other liabilities.
The key financial risk for the Syndicate is that the proceeds from its financial assets and investment result
generated therefrom are not sufficient to fund the obligations. The most important variables that could
result in such an outcome relate to (a) credit risk, (b) market risk, and (c) liquidity risk.
5.2 (a) Credit risk
Credit risk is the risk that a counterparty will suffer a deterioration in solvency or be unable to pay amounts
in full when due. The primary sources of credit risk for the Syndicate are:
•
brokers and intermediaries – whereby counterparties fail to pass on premiums collected or claims paid
on behalf of the Syndicate.
•
reinsurers – whereby reinsurers may fail to pay valid claims against a reinsurance contract.
•
investments – where issuer default results in the Syndicate losing all or part of the value of a financial
instrument.
The Syndicate has a relatively low appetite for credit risk, as its principal business is to accept insurance risk.
This approach is intended to protect the Syndicate’s capital from erosion from credit risk so that it can meet
its insurance liabilities. The Syndicate structures the acceptable levels of credit risk by placing limits on its
exposure to singular and group counterparties, to geographical and industry segments and by reviewing the
creditworthiness of reinsurers through credit ratings provided by rating agencies and other publicly
available financial information detailing their financial strength and performance. Risk limits are subject to
regular review. The Syndicate also mitigates credit risk through the requirement for certain counterparties
to hold high-credit quality collateral in segregated accounts.
The credit control function monitors the ageing and collectability of debtor balances, with credit evaluations
performed on all relevant counterparties.
5.2 (a) (i) Investments
The Syndicate is exposed to counterparty risk with respect to cash and cash equivalents, and investments
and other deposits.
The Syndicate mitigates counterparty credit risk by ensuring appropriate diversification of total invested
assets across high-quality instruments. Investments are to be fully admissible for Lloyd’s/Prudential
Regulatory Authority (“PRA”) solvency purposes, primarily only in liquid securities and with counterparties
that have a credit rating equal to investment grade or better.
The Syndicate imposes guidelines on its external investment managers in relation to the constituents of the
investment portfolios. These guidelines specify the acceptable asset classes, duration, and credit ratings.
The performance of the investment managers is regularly reviewed to confirm adherence to these
guidelines.
Reports & Accounts Syndicate 1856
34
5.2 (a) (ii) Analysis of counterparty credit risk
The following table summarises the Syndicate’s significant credit risk for impacted assets:
AAA
AA
A
BBB
Other
Asset
classes
not
subject
to rating
Total
2024
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Shares and other variable
yield securities and units in
unit trusts
5,397
—
—
42,186
—
—
47,583
Debt Securities
72,393
195,733
167,815
194,108
41,076
3,834
674,959
Participation in investment
pools
53,483
—
—
—
—
55,924
109,407
Deposits with ceding
undertakings
—
—
191
—
—
—
191
Cash at bank and in hand
—
—
12,697
—
—
—
12,697
Other Investments
18,962
4,494
3,807
2,859
2,604
23,649
56,375
Syndicate loan to the
central fund
—
3,055
—
—
—
—
3,055
Reinsurers’ share of claims
outstanding
—
70,706
251,191
—
9,830
31,224
362,951
Debtors arising out of
insurance operations
47,250
7,121
1,160
918
219
115,281
171,949
Debtors arising out of
reinsurance operations
100,743
16,868
7,193
7,888
893
114,135
247,720
Other Assets
—
—
—
—
—
212,667
212,667
Total
298,228
297,977 444,054 247,959
54,622
556,714 1,899,554
Reports & Accounts Syndicate 1856
35
AAA
AA
A
BBB
Other
Asset
classes
not
subject
to rating
Total
2023*
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Shares and other variable
yield securities and units
in unit trusts
—
—
—
—
—
—
—
Debt Securities
8,024
58,561
233,512
31,348
6,460
299
338,204
Participation in
investment pools
62,847
—
—
—
—
38,075
100,922
Deposits with ceding
undertakings
—
—
36
—
—
—
36
Cash at bank and in hand
—
—
59,520
—
—
—
59,520
Other Investments
14,018
2,442
1,894
1,764
2,930
23,508
46,556
Syndicate loan to the
central fund
—
—
1,862
—
—
—
1,862
Reinsurers’ share of
claims outstanding
—
85,225
96,376
—
—
—
181,601
Debtors arising out of
insurance operations
—
—
18,290
9,231
411
119,960
147,892
Debtors arising out of
reinsurance operations
92
—
7,790
52,693
362
123,062
183,999
Other Assets
—
—
—
—
—
152,528
152,528
Total
84,981
146,228
419,280
95,036
10,163 457,432
1,213,120
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
Reports & Accounts Syndicate 1856
36
The tables below provide information regarding the maximum credit risk exposure to these assets, together
with the extent to which they are due, past due and impaired.
An assessment is performed on all assets,
based on the ageing of these assets, which may result in an impairment charge in the statement of
comprehensive income if the Syndicate considers this to be appropriate.
Neither due
nor
impaired
assets
Past due
up to 3
months
Past due
3 to 6
months
Past due
6 months
to 1 year
Past due
greater
than 1
year
Past due
and
impaired
Total
2024
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Shares and other
variable yield securities
and units in unit trusts
47,583
—
—
—
—
—
47,583
Debt securities
674,958
—
—
—
—
—
674,958
Participation in
investment pools
109,407
—
—
—
—
—
109,407
Deposits with ceding
undertakings
191
—
—
—
—
—
191
Cash at bank and in
hand
12,697
—
—
—
—
—
12,697
Other Investments
56,376
—
—
—
—
—
56,376
Syndicate loan to the
central fund
3,055
—
—
—
—
—
3,055
Reinsurers’ share of
claims outstanding
362,951
—
—
—
—
—
362,951
Debtors arising out of
insurance operations
87,723
56,233
16,282
11,671
41
—
171,950
Debtors arising out of
reinsurance operations
77,941
39,450
62,059
63,180
5,090
—
247,720
Other assets
212,666
—
—
—
—
—
212,666
Total
1,645,548
95,683
78,341
74,851
5,131
—
1,899,554
Reports & Accounts Syndicate 1856
37
Neither due
nor
impaired
assets
Past due
up to 3
months
Past due
3 to 6
months
Past due
6 months
to 1 year
Past due
greater
than 1
year
Past due
and
impaired
Total
2023*
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Shares and other
variable yield securities
and units in unit trusts
—
—
—
—
—
—
—
Debt securities
338,206
—
—
—
—
—
338,206
Participation in
investment pools
100,922
—
—
—
—
—
100,922
Deposits with ceding
undertakings
36
—
—
—
—
—
36
Cash at bank and in
hand
59,520
—
—
—
—
—
59,520
Other Investments
46,556
—
—
—
—
—
46,556
Syndicate loan to the
central fund
1,862
—
—
—
—
—
1,862
Reinsurers’ share of
claims outstanding
181,601
—
—
—
—
—
181,601
Debtors arising out of
insurance operations
95,695
1,156
29,578
16,878
4,585
—
147,892
Debtors arising out of
reinsurance operations
57,892
29,301
46,096
46,928
3,781
—
183,998
Other assets
152,527
—
—
—
—
—
152,527
Total
1,034,817
30,457
75,674
63,806
8,366
—
1,213,120
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
5.2 (c) Market risk
Market risk is the risk of a variation in the value of financial institution deposits and financial investments,
relative to the variation in the value of liabilities due to market movements. Market risk arises where the
value of assets less liabilities changes because of movements in foreign exchange rates, interest rates,
inflation rates and/or market prices.
The Syndicate engages external investment managers to actively manage the market risk associated with
financial investments. Detailed guidelines imposed on the investment managers are in place and the Board
and its investment committee regularly monitor performance and risk metrics.
5.2 (c) (i) Foreign currency risk
Most of the Syndicate’s gross premium written is in US Dollars.
The Syndicate’s financial assets are
denominated in the same currencies as its insurance liabilities to reduce currency exchange volatility. The
profit/loss is distributed/collected in line with Lloyd’s rules using a combination of UK Pound Sterling and
US Dollars.
The following table summarises the carrying value of total assets and total liabilities categorised by currency:
Reports & Accounts Syndicate 1856
38
GBP
USD
EUR
CAD
AUD
JPY
Total
2024
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Reinsurers’ share of
technical provisions
4,354 367,249
28,179
1,046
11,767
111
412,706
Insurance and reinsurance
receivables
10,622
378,772
13,187
(1,127)
12,710
5,505
419,669
Financial investments
6,972 729,668
32,312
49,093
16,958
—
835,003
Cash in hand and at bank
1,971
2,772
1,663
325
1,033
4,933
12,697
Other assets
87,180
91,541
7,941
9,207
23,283
327
219,479
Total assets
111,099 1,570,002
83,282
58,544
65,751
10,876
1,899,554
Technical provisions
(66,891)
(1,248,855)
(71,535) (23,505) (58,000)
(7,035)
(1,475,821)
Insurance and reinsurance
payables
562
(87,071)
(11,751)
137
(2,759)
388
(100,494)
Other creditors
(6,113)
(16,230)
509
(29)
(930)
(68)
(22,861)
Total liabilities
(72,442) (1,352,156)
(82,777)
(23,397)
(61,689)
(6,715)
(1,599,176)
Currency adjustments
—
—
—
—
—
—
—
Total capital and reserves
38,657
217,846
505
35,147
4,062
4,161
300,378
GBP
USD
EUR
CAD
AUD
JPY
Total
2023*
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Reinsurers’ share of
technical provisions
3,273
187,031
20,688
1,319
8,514
100
220,925
Insurance and reinsurance
receivables
15,335 288,090
11,781
722
13,708
2,254
331,890
Financial investments
1,861
377,967
11,045
31,099
19,016
—
440,988
Cash in hand and at bank
4,236
6,976
20,007
1,312
12,478
14,511
59,520
Other assets
56,568
78,508
4,464
6,045
13,678
534
159,797
Total assets
81,273 938,572
67,985
40,497
67,394
17,399
1,213,120
—
Technical provisions
(49,368) (809,206)
(52,346)
(12,973)
(47,256)
(5,573)
(976,722)
Insurance and reinsurance
payables
(9,793)
(60,782)
(12,087)
(1,627)
(7,768)
4
(92,053)
Other creditors
(7,935)
(5,449)
(711)
(26)
(327)
(262)
(14,710)
Total liabilities
(67,096) (875,437)
(65,144)
(14,626)
(55,351)
(5,831)
(1,083,485)
Currency adjustments
—
—
—
—
—
—
—
Total capital and reserves
14,177
63,135
2,841
25,871
12,043
11,568
129,635
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
At 31 December 2024, the Syndicate used closing rates of exchange of $1:£
0.80
and $1:€
0.97
(2023*: $1:
£0.79 and $1: €0.91).
The Syndicate performs sensitivity analysis on a 10% strengthening or weakening of the presentational
currency, US Dollar, against the Euro and Sterling. This analysis assumes that all other variables, in particular
interest rates, remain constant and that the underlying valuation of assets and liabilities in their base
currency is unchanged. The process of deriving the undernoted estimates takes account of the linear
retranslation movements of foreign currency monetary assets and liabilities. A 10% strengthening
(weakening) of the following currencies at 31 December would have increased (decreased) members’
Reports & Accounts Syndicate 1856
39
balances for the financial year by the amounts shown below:
(Decrease)/increase on members’ balances
2024
2023*
$'000
$'000
10% strengthening of GBP
3,864
1,416
10% weakening of GBP
(3,868)
(1,420)
10% strengthening of EUR
3,513
2,585
10% weakening of EUR
(3,517)
(2,589)
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
5.2 (c)(ii) Interest rate risk
The Syndicate undertakes a sensitivity analysis for interest rate risk to illustrate how changes in the fair value
or future cash flows of a financial instrument will fluctuate because of changes in market interest rates at the
reporting date. An increase or decrease of 50 basis points in interest yields would result in a charge or credit
to members’ balances as set out below.
Impact on loss for the year
Increase/(decrease) on
members’ balances
$'000
2024
2023*
2024
2023*
Shift in yield (basis points):
50 basis points increase
(6,985)
(2,797)
(6,985)
(2,797)
50 basis points decrease
6,986
2,785
6,986
2,785
100 basis points increase
(13,970)
(5,594)
(13,970)
(5,594)
100 basis points decrease
13,972
5,571
13,972
5,571
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
This is applied to the position as at 31 December 2024 and considers the full effect of mark to market
movements, but without recognising any running yield benefit.
Insurance contract liabilities are not directly sensitive to the level of market interest rates, as they are
discounted and contractually non-interest-bearing.
5.2 (c) (iii) Liquidity risk
Liquidity risk arises where cash may not be available at a reasonable cost to pay obligations when due. The
Syndicate is exposed to daily cash outflows on its available cash resources, mostly for the settlement of
claims arising from insurance contracts. Limits on the minimum level of cash and maturing funds available to
meet such outflows are set to cover unexpected levels of claims and other cash demands. A sizeable
proportion of the Syndicate’s investments is in highly liquid assets that can be converted to cash at short
notice without any significant capital loss or material expense. These funds are monitored by management
daily.
Reports & Accounts Syndicate 1856
40
Undiscounted net cash flows
No
stated
maturity
0-1 year
1-3 years
3-5
years
>5 years
Total
2024
$'000
$'000
$'000
$'000
$'000
$'000
Gross claims outstanding
—
391,230
375,143
136,744
106,477 1,009,594
Creditors
—
100,494
—
—
—
100,494
Other credit balances
—
22,861
—
—
—
22,861
Total
—
514,585
375,143
136,744
106,477 1,132,949
Undiscounted net cash flows
No
stated
maturity
0-1 year
1-3 years
3-5
years
> 5 years
Total
2023*
$'000
$'000
$'000
$'000
$'000
$'000
Gross claims outstanding
—
239,015
211,219
74,665
75,469 600,368
Creditors
—
92,053
—
—
—
92,053
Other credit balances
—
14,710
—
—
—
14,710
Total
—
345,778
211,219
74,665
75,469
707,131
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
5.2 (c) (iv) 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 UK requirements. The SCRs of each
Syndicate are subject to review by Lloyd’s and approval by the Lloyd’s Capital and Planning Group.
A Syndicate may be comprised of one or more underwriting members of Lloyd’s. Each member is liable for
its own share of underwriting liabilities on the Syndicates on which it is participating but not other members’
shares. Accordingly, the capital requirements that Lloyd’s sets for each member operate on a similar basis.
Each member’s SCR shall thus be determined by the sum of the member’s share of the Syndicate SCR ‘to
ultimate’. Where a member participates on more than one Syndicate, a credit for diversification is provided
to reflect the spread of risk, but consistent with determining an SCR which reflects the capital requirement
to cover a 1 in 200 loss ‘to ultimate’ for that member. Over and above this, Lloyd’s applies a capital uplift to
the member’s capital requirement, known as the Economic Capital Assessment (ECA). The purpose of this
uplift, which is a Lloyd’s not a Solvency II requirement, is to meet Lloyd’s financial strength, licence and
ratings objectives. The capital uplift applied for 2024 was 35% (2023: 35%) of the member’s SCR ‘to
ultimate’.
5.3 Operational risk
Operational risk is the risk of loss from people, processes or systems, or external events with origins outside
the scope of other risk categories. The Managing Agent actively monitors and controls its operational risks.
The nature of the risk means that it can impact all areas of the business. Examples of key operational risks
for the Syndicate include IT performance and stability, cyber security, and the delivery of major projects.
Key activities to manage operational risk across the Syndicate include:
•
quarterly assessment of the risk register across all areas of the business to identify instances where
the risk profile has increased, and/or areas where additional mitigation may be necessary to control
the risk within tolerance;
Reports & Accounts Syndicate 1856
41
•
the Operational Committee reviewing key activities across the business, with governance, reporting
and escalation paths for operational risk;
•
independent second line and third line reviews of key controls designed to mitigate operational risk;
•
risk culture and management training to ensure continued awareness of operational risk for all
employees: and
•
disaster recovery planning, with effective communication programmes in place utilising Everbridge
and scenario testing across the business.
5.3 (a) Third-party risk
The company recognises the evolving risks associated with third-party relationships, particularly in the areas
of cyber security, operational resilience, technology reliance, and data protection. These risks are
heightened by increasing regulatory scrutiny, the complexity of supply chains, and the ever-present threat
of cyberattacks. The potential impact of third-party incidents could include financial loss, regulatory
penalties, operational disruptions, and reputational damage.
To mitigate these risks, the company has made significant investments over the past year to enhance its IT
infrastructure and cyber resilience. Key initiatives include a significant upgrade of the infrastructure to
improve resilience, implementing advanced threat detection and response systems, advanced security and
protection across the laptop estate, and strengthening data protection measures. Additionally, the company
has improved third-party risk management practices, including enhanced due diligence, regular audits of
third-party providers, and robust incident response planning. These efforts are aimed at ensuring continued
operational integrity and safeguarding stakeholder interests in a rapidly changing risk landscape.
5.4 Climate change risk
The Syndicate’s underwriting performance is exposed to the physical risk of climate change from an
increased frequency or severity of physical hazards because of global temperature increases of 1.5 degrees
or more. Further, there are elements of the portfolio that may be exposed to transition risk from the
resulting economic transition following regulatory or government intervention, and liability risk from
increased litigation raising the issue of climate change in investment management practices.
Reports & Accounts Syndicate 1856
42
6.
Segmental analysis
An analysis of the technical account balance before investment return is set out below:
2024
Gross
premium
written
Gross
premium
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Total
$'000
$'000
$'000
$'000
$'000
$'000
Direct insurance:
Accident and Health
661
391
(98)
(98)
(65)
130
Motor (other classes)
9,581
7,178
1,426
(1,831)
(1,930)
4,843
Marine
16,641
31,683
(3,230)
(12,646)
(6,074)
9,733
Aviation
13,371
20,352
(3,330)
(5,946)
(3,042)
8,034
Transport
46,757
42,392
(19,367)
(12,154)
(5,175)
5,696
Energy-Marine
15,348
15,071
(26,582)
(4,595)
7,231
(8,875)
Energy Non-Marine
17,626
16,632
(7,292)
(4,704)
(156)
4,480
Fire and Other damage to
Property
294,951
246,919
(293,672)
(67,504)
44,441
(69,816)
Third party liability
163,434
143,991
(6,796)
(38,759)
(24,263)
74,173
Pecuniary Loss
21,076
20,363
(57)
(6,001)
(4,469)
9,836
Total direct
599,446
544,972
(358,998)
(154,238)
6,498
38,234
Reinsurance
510,222
469,537
(248,749)
(122,452)
(8,626)
89,710
Total
1,109,668
1,014,509
(607,747)
(276,690)
(2,128)
127,944
2024
Gross
premium
written
Gross
premium
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Total
$'000
$'000
$'000
$'000
$'000
$'000
Additional analysis
Fire and other damage to property which is:
Specialities
32,595
27,287
(32,454)
(7,460)
4,911
(7,716)
Energy
2,318
1,941
(2,308)
(531)
349
(549)
Third party liability is:
Energy
3,910
3,445
(163)
(927)
(581)
1,774
Reports & Accounts Syndicate 1856
43
2023*
Gross
premium
written
Gross
premium
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Total
$'000
$'000
$'000
$'000
$'000
$'000
Direct insurance:
Motor (other classes)
1,972
1,835
(756)
(496)
(298)
285
Marine
12,859
19,728
(15,698)
(6,051)
236
(1,785)
Aviation
10,627
15,029
(7,514)
(4,067)
(2,071)
1,377
Transport
36,654
29,822
(12,189)
(8,110)
(4,836)
4,687
Energy-Marine
13,814
12,698
(6,734)
(3,609)
(1,340)
1,015
Energy Non-Marine
15,364
14,074
(6,746)
(3,906)
(1,860)
1,562
Fire and other damage to
property
244,487
209,531
(90,517)
(57,231)
(32,036)
29,747
Third party liability
153,648
127,633
(51,175)
(34,484)
(21,340)
20,634
Pecuniary Loss
13,826
11,222
(6,708)
(3,323)
(719)
472
Total direct
503,251
441,572
(198,037)
(121,277)
(64,264)
57,994
Reinsurance
410,127
364,233
(147,717)
(95,825)
(58,829)
61,862
Total
913,378
805,805
(345,754)
(217,102)
(123,093)
119,856
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
2023
Gross
premium
written
Gross
premium
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Total
$'000
$'000
$'000
$'000
$'000
$'000
Additional analysis
Fire and other damage to property which is:
Specialities
23,778
20,380
(8,804)
(5,569)
(3,115)
2,892
Energy
7,409
6,350
(2,743)
(1,735)
(971)
901
Third party liability is:
Energy
3,047
2,531
(1,015)
(684)
(423)
409
The reinsurance balance is the aggregate total of reinsurance outwards balances included in the technical
account.
The geographical analysis of gross premiums by destination as a proxy for risk location is as follows:
2024
2023*
$'000
$'000
UK
304,769
238,836
European Union member states
68,008
78,616
United States of America
579,722
421,264
Rest of the world
157,169
174,662
Gross premium written
1,109,668
913,378
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
Reports & Accounts Syndicate 1856
44
7.
Investment return
All the Syndicate’s investments are recognised at fair value through the profit and loss.
2024
2023*
Interest income
$'000
$'000
From financial instruments designated at fair value through profit or
loss
Interest and similar income
23,890
6,061
Total income from financial assets at fair value through profit and loss
23,890
6,061
Interest on cash at bank
3,350
4,264
Other income from investments
From financial instruments designated at fair value through profit or
loss
Gains on the realisation of investments
3,166
1,671
Losses on the realisation of investments
(281)
(18)
Unrealised gain on investments
7,907
2,388
Unrealised (loss) / gain on investments
(2,838)
3,119
Investment expenses and charges
(310)
(179)
Total investment return
34,884
17,306
Transferred to the technical account from the non technical account
34,884
17,306
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
Syndicate funds include investments and cash, $919.8m (2023*: $553.8m) funds are held in trust fund and
short-term deposit accounts.
8.
Net operating expenses
2024
2023*
$'000
$'000
Acquisition costs
251,025
194,666
Reinsurance commissions
(22,674)
(16,806)
Change in deferred acquisition costs
(23,179)
(24,534)
Administrative expenses
55,206
51,508
Members’ standard personal expenses
16,312
12,268
Total
276,690
217,102
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
Acquisition costs include brokerage and commission costs written on direct business of $127.3m (2023*:
$100.9m).
Administrative expenses including staff costs (note 10) of $69.9m (2023*: $73.4m), and audit fees of $0.7m
(2023*: $0.7m).
Reports & Accounts Syndicate 1856
45
2024
2023*
$'000
$'000
Total commission on direct insurance business
127,255
100,931
9.
Auditors’ remuneration
The above represents the Syndicate’s share of the total audit fee.
During the year the Syndicate, obtained the following services
2024
2023*
$'000
$'000
Fees payable to the Syndicate's auditor for the audit of these financial
statements
591
543
Fees payable to the auditors and its associates for other services pursuant
to legislation
123
118
Total
714
661
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
10.
Staff costs
The Syndicate and the Managing Agent have no employees, and incur no staff costs directly. All employees
are employed by IQUW ASL and costs are recharged to the Syndicate via IQUW Syndicate Services Limited
("IQUW SSL"). The following salary and related costs were recharged to the Syndicate during the year:
2024
2023*
$'000
$'000
Wages and salaries
43,318
32,512
Social security costs
5,560
7,239
Other pension costs
2,281
2,159
Other
18,729
31,496
Total
69,888
73,406
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
The average number of staff employed by IQUW ASL and recharged to the Syndicate during the year was
as follows:
2024
2023
FTE
FTE
Underwriting
138
115
Claims
11
9
Administration
100
93
Total
249
217
The Directors of the Managing Agent received the following aggregate remuneration recharged to the
Syndicate and included in net operating expenses:
Reports & Accounts Syndicate 1856
46
2024
2023*
$'000
$'000
Directors’ emoluments
1,429
1,600
Pension contributions
87
—
Total
1,516
1,600
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
The active underwriter received the following remuneration charged as Syndicate expense
:
2024
2023*
$'000
$'000
Underwriter’s emoluments
507
500
Total
507
500
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
11.
Financial investments
2024
2023* (Restated)
Fair value
Cost
Fair value
Cost
$'000
$'000
$'000
$'000
Shares and other variable yield securities, unit
trusts**
47,583
46,839
—
—
Debt securities and other fixed income securities
674,958
664,404
338,204
330,241
Participation in investment pools**
109,407
109,407
100,922
100,922
Syndicate loan to the central fund
3,055
3,219
1,862
1,566
Financial investments
835,003
823,869
440,988
432,729
Other investments
56,376
37,528
46,556
45,594
Total
891,379
861,397
487,544
478,323
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
**Presentational restatement to reclassify money market funds from shares and other variable yield securities, unit trusts to
participation in investment pools. This change does not affect the net assets or result for the financial year of the Syndicate for either
period presented.
All financial investments in the current and prior financial year were carried at fair value through profit or
loss. No financial assets in the current or prior financial year were classified as ‘held for trading’ under FRS
102.
Fair value hierarchy
The Syndicate has classified its financial investments using the fair value hierarchy in accordance with the
FRS 102 amendments to “Fair value hierarchy disclosures” issued by the Financial Reporting Council on 8
March 2016. The fair value of the Syndicates financial assets is based on prices provided by custodians and
asset managers who follow the the practice as outlined in the level structure further down. The fair value
hierarchy classifies financial instruments into Levels 1 through 3 based on the significance of the inputs used
in measuring their fair value with Level 1 being the most reliable. The classifications within the fair value
hierarchy are defined as follows:
•
Level 1 – Quoted price for an identical asset in an active market. This includes securities and financial
investments that are priced based on unadjusted quoted prices in an active market for identical assets
that can be accessed at the measurement date.
Reports & Accounts Syndicate 1856
47
•
Level 2 – Price of a recent transaction for an identical asset and valuation technique using observable
market data. This includes securities and financial investments that are priced using valuation techniques
based on direct or indirect observable market data, including market prices from recognised exchanges,
broker-dealers, recognised indices, or pricing vendors.
•
Level 3 – Valuation technique using unobservable market data. This includes securities which are not
actively traded. The pricing service uses common market valuation pricing models. Observable inputs
used in common market valuation pricing models include, but are not limited to, broker quotes, credit
ratings, interest rates, and yield curves, prepayment speeds, default rates, and other such inputs which
are available from market sources.
2024
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
Shares, other variable yield securities and units in
unit trusts
95
16,291
31,197
47,583
Debt securities and other fixed income securities
3,928
671,030
—
674,958
Participation in investment pools
109,407
—
—
109,407
Syndicate loan to the central fund
—
—
3,055
3,055
Other investments
18,702
37,674
—
56,376
Total
132,132
724,995
34,252
891,379
2023* (Restated)
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
Shares, other variable yield securities and units in unit
trusts
—
—
—
—
Debt securities and other fixed income securities
5,009
333,195
—
338,204
Participation in investment pools
100,922
—
—
100,922
Syndicate loan to the central fund
—
—
1,862
1,862
Other investments
18,388
28,168
—
46,556
Total
124,319
361,363
1,862
487,544
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
Restated due to a change in a basis of preparation to align to IQUW group methodology.'
Level 3 investments include loans made to the Lloyd’s Central Fund to which a fair value adjustment has
been applied based on the Lloyd’s RT1 valuation model and investments included in Octagon. The fund has
been classed as equity as it is not tradeable. The repayment of the loan, and payment of interest thereon, is
at the discretion of the Corporation of Lloyd’s.
The table below sets out a reconciliation of the opening and
closing balances for financial instruments classified under level 3 of the fair value hierarchy:
2024
2023*
$'000
$'000
Balance at 1 January
1,862
1,780
3268 RITC as at January 1
1,582
—
Purchases
31,198
—
Unrealised gain/(loss) in the year on securities held at the end of the year
(390)
82
Balance at 31 December
34,252
1,862
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
Reports & Accounts Syndicate 1856
48
12.
Foreign exchange (loss)/gain
2024
2023*
$'000
$'000
Non-technical account foreign exchange (loss)/gain
(6,398)
870
Total
(6,398)
870
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
13.
Technical provisions
Technical Provisions - Unearned premium
Gross
Reinsurer’s
share
Net
2024
$'000
$'000
$'000
At 1 January 2024
376,354
(39,324)
337,030
Premium written in the year
1,109,668
(243,551)
866,117
Premium earned in the year
(1,014,509)
232,427
(782,082)
Effect of movements in exchange rates
(5,286)
693
(4,593)
At 31 December 2024
466,227
(49,755)
416,472
Technical Provisions - Unearned premium
Gross
Reinsurer’s
share
Net
2023*
$'000
$'000
$'000
At 1 January 2023
282,718
(29,455)
253,263
Premium written in the year
913,378
(184,462)
728,916
Premium earned in the year
(805,805)
173,327
(632,478)
Effect of movements in exchange rates
(13,937)
1,266
(12,671)
At 31 December 2023
376,354
(39,324)
337,030
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
Reports & Accounts Syndicate 1856
49
Technical Provisions - claims outstanding
Gross
Reinsurer’s
share
Net
2024*
$'000
$'000
$'000
At 1 January 2024
600,368
(181,601)
418,767
Claims incurred in the year
607,747
(230,299)
377,448
Claims paid during the year
(284,299)
79,857
(204,442)
RITC from Syndicate 3268
96,610
(35,939)
60,671
Foreign exchange
(10,832)
5,031
(5,801)
At 31 December 2024
1,009,594
(362,951)
646,643
*Balance at 1 January 2024 includes the RITC of Syndicate 3268
Technical Provisions - claims outstanding
Gross
Reinsurer’s
share
Net
2023*
$'000
$'000
$'000
At 1 January 2023
487,213
(177,125)
310,088
Claims incurred in the year
345,754
(50,233)
295,521
Claims paid during the year
(209,896)
37,714
(172,182)
Foreign exchange
(22,703)
8,043
(14,660)
At 31 December 2023
600,368
(181,601)
418,767
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
A
n unexpired risk reserve was not required at 31 December 2024 or 31 December 2023.
14.
Deferred acquisition costs
2024
2023
$'000
Gross
RI
Net
Gross
RI
Net
Balance at 1 January
85,699
(7,262)
78,437
52,934
(4,069)
48,865
Incurred Deferred Acquisition
258,293
7,268
265,561
187,432
(7,234)
180,198
Amortised Deferred Acquisition
(245,325)
(10,211) (255,536) (158,798)
4,100 (154,698)
Foreign Exchange Movements
11,849
168
12,017
4,131
(59)
4,072
Balance at 31 December
110,516
(10,037)
100,479
85,699
(7,262)
78,437
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
15.
Debtors arising out of direct insurance operations
2024
2023*
$'000
$'000
Amounts due from intermediaries
Due within one year
171,949
147,892
Total
171,949
147,892
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
Reports & Accounts Syndicate 1856
49
16.
Debtors arising out of reinsurance operations
2024
2023*
$'000
$'000
Amounts due from intermediaries
Due within one year
247,720
183,999
Total
247,720
183,999
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
17.
Other debtors
2024
2023*
$'000
$'000
Amounts due from IQUW group companies (due within one year)
36,682
20,455
Total
36,682
20,455
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
Included within amounts due from IQUW group companies is $25.6m (2023: $-m) due from IQUW SSL in
relation to a Credit Asset Facility held to procure Fixed Assets.
18.
Cash and cash equivalents
2024
2023*
$'000
$'000
Cash at bank and in hand
12,697
59,520
Short term debt instruments presented within other financial instruments
109,407
100,922
Total
122,104
160,442
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
19.
Analysis of net debt
At 1
January
2024
Cash flows
Acquired
Fair value
and foreign
exchange
movements
Non-cash
changes
At 31
December
2024
$'000
$'000
$'000
$'000
$'000
$'000
Cash and cash equivalents
160,442
(36,259)
—
(2,079)
—
122,104
Total
160,442
(36,259)
—
(2,079)
—
122,104
Reports & Accounts Syndicate 1856
50
20.
Creditors arising out of direct insurance operations
2024
2023*
$'000
$'000
Amounts due to intermediaries:
Due within one year
(653)
8,977
Total
(653)
8,977
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
21.
Creditors arising out of reinsurance operations
2024
2023*
$'000
$'000
Amounts due to intermediaries:
Due within one year
101,147
83,076
Total
101,147
83,076
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
22.
Other creditors
2024
2023*
$'000
$'000
Amounts due to IQUW group companies (due within one year)
12,823
7,445
Deferred income
10,037
7,265
Total
22,861
14,710
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
23.
Other net cashflow from investing activities
Other net cashflow from investing activities of $1.2m (2022: $3.0m) comprises of overseas deposits and
deposits with ceded undertakings.
24.
Related parties
IQUW Corporate Member Limited (“IQUW CML”)
IQUW CML is a wholly-owned subsidiary of IQUW IGL through which IQUW group conducts its
underwriting business at Lloyd’s.
IQUW CML’s share of the Syndicate profit for the year is $
157.7
m (2023*: profit $130.6m).
IQUW Syndicate Management Limited (The “Managing Agent”)
The Managing Agent is a wholly owned subsidiary of IQUW IGL and acts as managing agent for the
Syndicate. The Managing Agent charged management fees of $8.8m (2023*: $7.1m) to the Syndicate.
Reports & Accounts Syndicate 1856
51
IQUW Administration Services Limited (“IQUW ASL”)
IQUW ASL is a wholly-owned subsidiary of IQUW IGL and provides services for all activities of IQUW group
companies. All expenses not paid directly by the Syndicate are paid for by IQUW ASL and recharged
accordingly via IQUW SSL. In accordance with the Managing Agent’s current Syndicate expense policy,
which complies with the Lloyd’s Code of Practice:
•
directly attributable expenses are recharged fully to the Syndicate; and
•
non-directly attributable expenses are recharged to the Syndicate on an allocation basis across all
other IQUW group companies. These allocations are on an equitable basis, to ensure no gain or loss
arises from these accounting treatments.
IQUW Syndicate Services Limited (“IQUW SSL”)
IQUW SSL is a wholly owned subsidiary of the Managing Agent and acts as a service company for the
Syndicate.
IQUW SSL became an appointed representative of the Managing Agent on 14 January 2005 and is
authorised by the PRA and regulated by the Financial Conduct Authority (“FCA”) and the PRA. The
Managing Agent does not receive any direct income from IQUW SSL. No director of the Managing Agent
has received any benefit for acting as a director of IQUW SSL.
IQUW SSL recharged the following expenses to the Syndicate:
2024
2023*
$'000
$'000
Closing balance receivable
36,682
20,455
In-year expense
89,317
82,460
*Restated all balances to reflect the change in presentational currency from Sterling to US Dollar (note 2)
25.
Syndicate structure
The Managing Agent of the Syndicate IQUW Syndicate Management Limited whose immediate parent
undertaking is IQUW IGL, a company registered in England and Wales.
The ultimate parent undertaking of the largest and smallest group of companies for which group accounts
are drawn up is IQUW Holdings Bermuda Limited. Copies of financial statements can be obtained from the
Company Secretary Appleby Global Services at Canon's Court, 22 Victoria Street, Hamilton HM12,
Bermuda.
26.
Funds at Lloyd's
Every member is required to hold capital at Lloyd's, which is held in trust and known as 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 resources criteria. These resources are calculated by Lloyd's under the rules of the
Solvency UK regime.
The resources calculation 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 control of the managing agents, no amount has been shown in
these annual accounts for such capital resources. However, managing agents are able to make a call on the
members' FAL to meet liquidity requirements to to settle losses.
Reports & Accounts Syndicate 1856
52
27.
Foreign exchange rates
The following currency exchange rates have been used for principal foreign currency transactions:
2024
2023
Start of
period rate
End of
period rate
Average
rate
Start of
period rate
End of
period rate
Average
rate
Sterling
Euro
US Dollar
Canadian Dollar
Australian Dollar
Japanese Yen
28. Contingencies and commitments
The 2024 annual accounts include a note disclosing contingencies and commitments detailing any
contractual obligations made by the Syndicate to stakeholders or external parties or any uncertainties or
potential liabilities that may arise in the future. There are no contingencies and commitments applicable to
the Syndicate for 2024.
29. Post balance sheet events
The Syndicate's exposure to the California Wildfires which began on 7th January is being assessed.
The
estimated final net range for this loss is $53.3m to $71.5m (inclusive of inwards and outwards reinstatement
premiums).
The closing underwriting year of account 2022 was reinsured to close into the Syndicate on 1 January 2025.
Reports & Accounts Syndicate 1856
53