Syndicate Annual Report and Accounts
Blenheim Syndicate 5886
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Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
Important information about Annual 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 o
r 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 Reports and Accounts without also providing them with a copy of this
acknowledgment and agreement, by which they will also be bound.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
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Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
Blenheim Underwriting Limited
Syndicate Annual Report and Accounts
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
Contents
Underwriter’s Report
1
Directors and Administration
4
Managing Agent’s Report
5
Syndicate Annual Report and Accounts
13
Statement of Managing Agent’s Responsibilities
14
Independent Auditor’s Report
15
Statement of Comprehensive Income
20
Statement of Financial Position
22
Statement of Changes in Members' Balances
24
Statement of Cash Flows
25
Notes to the Syndicate Annual Report and Accounts
26
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
1
Underwriter’s Report
Introduction
2024 was another active catastrophe year with over $140bn of worldwide insured losses,
marking the
fifth consecutive year of losses exceeding $100bn. Despite this, the only
catastrophes to materially affect the syndicate are Hurricanes Milton and Helene. Geopolitical
tensions continue with no resolution apparent to the war in Ukraine nor to tensions in the Middle
East, although it is not clear what effect the new U.S. administration will have. It is important
to note though that neither natural catastrophes nor continued complex losses in the Specialty
Treaty market such as the Dali Baltimore Bridge collision, appear to have dampened the
market’s
appetite for risk as we enter 2025. Retained earnings, driven by several years of
strong returns means that capital is plentiful again and this inevitably will influence pricing and
potentially lead to a widening of cover as we enter 2025.
The stamp capacity is £525m for the 2025 Year of Account.
Calendar Year Result
On an annual accounting basis, the result of the Syndicate for the 2024 calendar year is a profit
of £55.6m before currency translation differences (2023: £74.3m profit before currency
translation differences). This represents a combined ratio of 84.7% (2023: 77.9%) and reflects
the favourable trading conditions and low loss activity in the year. Some £179.1m (2023:
£144.2m) of gross premium predominantly attributable to the 2024 Year of Account is unearned
at the Statement of Financial Position date. This will become fully earned over the next twelve
to twenty-four months.
2022 Year of Account
Our stamp capacity was £360 million for the 2022 Year of Account. The makeup of the account
was discussed in last year’s report
. We are closing the 2022 Year of Account with a profit of
£28.8m being 8.0% of stamp, which is within the range of estimates we last indicated.
As indicated in prior reports, 2021 was the last year in a run of poor results for the Syndicate.
2022 marks our first year of profit and we are confident that this is set to start a sequence of
strong results as we reap the rewards of our remedial action and take advantage of strong
trading conditions in all of the markets in which we operate.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
2
Underwriter’s Report
(continued)
2023 Year of Account
Our stamp capacity was £352 million for the 2023 Year of Account.
As I wrote last year, despite facing another challenging loss environment, the syndicate
performed admirably and avoided any significant losses. This, combined with an extremely
favourable trading environment, particularly in our Direct Property account, created the perfect
conditions for a strong underwriting year.
Our decision to exit the Property Treaty class accentuated these factors, as did our continued
diversification of the portfolio.
At this stage the 2023 Year of Account is developing favourably and forecast to be profitable
in the range of 17.5% to 25.0% of capacity.
2024 Year of Account
Our stamp capacity is £400 million for the 2024 Year of Account.
2024 was again marked by significant natural and non-natural disasters, including the landfall
of two major hurricanes, Helene and Milton, in Florida, and the Dali Baltimore Bridge collision
earlier in the year.
Despite this, we believe that these losses, primarily affecting our Direct Property and Specialty
Treaty accounts are containable within our expected catastrophe load for the year and
therefore should not materially affect profitability.
We continued the diversification of the Syndicate with our hire of David Barber, our new
Delegated Casualty Underwriter. He has made a strong start in 2024 and has continued this
into 2025.
We also began the process of developing our Portfolio Solutions class. This enables us to
provide capacity to syndicates or expand in lines of business where we either lack the specific
expertise and/or may have future plans to expand into.
At this stage the 2024 Year of Account is forecast to be profitable. However, significant live
exposure remains on risk at this time, and I must therefore emphasise a note of caution at this
stage.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
3
Underwriter’s Report
(continued)
2025 Year of Account
Our stamp capacity is £525 million for the 2025 Year of Account.
For the 2025 Year of Account the Syndicate has increased its capacity to support the growth
in our Casualty and Portfolio Solutions accounts.
We are planning on a stable income base for most of our other classes except for our Direct
Property account which will decrease, recognising prevailing market conditions.
All our accounts continue to trade profitably and we enter 2025 with strong underwriting
fundamentals. It is crucial to maintain these as the market enters a softening phase of the
cycle.
Concluding Comments
When the Syndicate began trading in 2017, we were unaware of the significant head winds
that we would face in subsequent years. We traded through a marked increase in the frequency
and severity of catastrophic loss, a seemingly endless appetite for capital to bear these losses
and a regulatory environment responding to all these factors. We have declared our first closed
year profit and we anticipate continued profitability as the Syndicate finds itself on a much
firmer footing. I would like to take the opportunity once again to thank the entire team for all
their hard work and professionalism in continuing to move the business forward.
N J Destro
Active Underwriter
4 March 2025
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
4
Directors and Administration
Managing Agent
Directors
Nicholas Joseph Destro
Sharon Julia Ingham
John Anthony Lynch
Tessa Helen Mijatovic
Peter David Scales
Christopher Norman Clark*
Kenneth Douglas Curtis* (appointed on 1 February 2024)
Esther Ruth Felton*
John Charles Hamblin* (resigned 31 March 2024)
Lawrence Albert Holder (Chair)*
Michael James Leonard*
*Non-Executive Directors
Company Secretary
Shirley Anne Holley
Managing Agent's Registered Office
7th Floor
70 Mark Lane
London
EC3R 7NQ
Managing Agent's Registered Company Number
10254215
Active Underwriter
N J Destro
Bankers
Barclays Bank PLC
Citibank N.A.
RBC Dexia
Investment Manager
Conning Asset Management Limited
Registered Auditors
Deloitte LLP
2 New Street Square
London
EC4A 3BZ
United Kingdom
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
5
Managing Agent's Report
The Directors of the Managing Agent present their report for the year ended 31 December
2024.
The Syndicate's Managing Agent is Blenheim Underwriting
Limited (“
Blenheim
”) a company
registered in England and Wales.
Blenheim is a wholly owned subsidiary of White Bear Capital Limited (“WBC”), a company
registered in England and Wales. WBC was incorporated on 8 June 2016 and operates in the
United Kingdom
(“
UK
”)
as the holding company of a number of wholly owned subsidiaries (“the
Group”).
Results
The result for the 2024 calendar year is a profit of £55.6m (2023: profit of £74.3m) before a
gain on currency translation of £1.2m (2023: gain on currency translation of £1.0m) which
equates to a total comprehensive income of £56.8m (2023: total comprehensive income of
£75.3m). The net combined ratio is 84.7% (2023: 77.9%).
A distribution to members of £28.0m will be proposed in relation to the closing Year of Account
(2022) (2023: £8.8m collection in relation to the closing Year of Account (2021)).
The Syndicate has presented its results under Financial Reporting Standard 102
–
“The
Financial Reporting Standard applicable to the United Kingdom and Republic of Ireland” (“FRS
102”).
In accordance with FRS 102, the Syndicate has identified its insurance contracts and
accounted for them in accordance with Financial Reporting Standard 103
–
“Insurance
Contracts” (“FRS 103”).
Principal activity and review of the business
The Syndicate’s principal activity is the underwriting of direct insurance and reinsurance
business in the Lloyd’s market. For further narrative, see Underwriter’
s Report on pages 1 to
3.
Gross premiums written income by class of business for the calendar year were as follows;
2024
£m
2023
£m
Property Treaty
0.3
54.3
Direct Property
185.4
186.3
Contingency
11.1
13.4
Accident & Health
27.3
18.5
Specialty Treaty
120.0
97.6
Construction
13.6
4.1
Political Risk
21.6
18.0
Casualty
7.1
-
Portfolio Solutions
7.3
-
393.7
392.2
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
6
Managing Agent's Report
(continued)
Principal activity and review of the business
(continued)
The Syndicate's Key Performance Indicators
(“KPIs”)
during the year were as follows;
2024
£m
2023
£m
Gross premiums written
393.7
392.2
Profit for the financial year
55.6
74.3
Total comprehensive income
56.8
75.3
Net combined ratio
84.7%
77.9%
Gross premiums written have increased in 2024 by £1.5m with growth in the Specialty Treaty,
Accident & Health and Construction accounts as well as the introduction of the Casualty and
Portfolio Solutions classes in 2024 being offset by the reduction in Property Treaty premium as
a result of the cessation of that book in 2023. Both the profit for the financial year and total
comprehensive income have been impacted by reduced Property Treaty premiums in 2024.
The net combined ratio is the ratio of claims incurred, net of reinsurance and net operating
expenses to earned premiums, net of reinsurance. The net combined ratio for the 2024
calendar year has been impacted by a timing catch up for the Managing Agent Profit
Commission expense. This has increased the ratio by 4.9p.p. this year and this will not impact
the 2025 calendar year.
These KPIs are used by management to monitor the performance of the Syndicate. Gross
premiums written are a measure of underwriting volume year on year.
Total comprehensive
loss and net combined ratio are both measures of profitability in the calendar year.
Investments
The total investment return for the calendar year is a profit of £13.1m (2023: £8.3m profit).
U.S. government bonds underperformed over the year as longer maturity yields rose, whilst
short maturity yields were unmoved. Volatility was high over the year as the Federal Reserve
began its rate cutting cycle, after seeing continued progress on inflation, despite strong
employment data being reported. While progress was made on inflation in September, there
was a reacceleration in the fourth quarter as inflation ended the year at 2.9%. Concerns around
the inflation outlook were heightened following the election of Donald Trump as President of
the United States as he threatened to impose tariffs on the USA’s largest trading partners. U
.S.
Credit spreads narrowed over the year, with real estate, banking, and insurance outperforming
at a subsector level.
Shorter maturity Canadian government bond yields fell over the year as the Bank of Canada
cut interest rates by 175 basis points over 2024. Inflation fell substantially over the year from
3.4% to 1.8% and sits below the Bank of Canada
’s 2% target. As such, rates were lowered
from 5.0% to 3.25%. On the political front, Canadian credit spreads narrowed over the year,
with real estate, insurance, and basic industry outperforming at a subsector level.
Given our cautious investment risk appetite, the overall investment return for the year (and the
performance of the investment manager) is viewed as being satisfactory.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
7
Managing Agent's Report
(continued)
Underwriting Year of Account summary
The
table below shows the Syndicate’s a
ctual results for the closed 2022 Year of Account and
the forecast range for the 2023 open Year of Account based
on the traditional three year Lloyd’s
basis after charging standard Managing A
gent’s fees and
Profit Commission but before
charging members’ agents fees.
2023 Year
Forecast
2022 Year
Actual
Capacity (£m)
350.9
359.8
Profit on capacity (%)
25.0 to 17.5
8.0
2022 underwriting year result
The result for the 2022 Year of Account closed on 31 December 2024 with a total
comprehensive profit of £28.8m on gross premiums written of £405.1m.
Gross premiums written income by class of business for the Year of Account were as follows;
2022
£m
Property Treaty
115.9
Direct Property
163.0
Contingency
12.3
Accident & Health
19.0
Specialty Treaty
79.7
Construction
3.7
Political Risk
11.5
405.1
The key financial performance indicators for the Year of Account were as follows;
2022
£m
Gross premiums written
405.1
Total comprehensive profit
28.8
Net combined ratio
93.8%
Gross premiums written included growth in both the Direct Property and Specialty Treaty
books in 2022 Year of Account. The net combined ratio is the ratio of claims incurred, net of
reinsurance and net operating expenses to earned premiums, net of reinsurance. The net
combined ratio and total comprehensive profit have been impacted by catastrophe losses
including Hurricane Ian and the conflict in Ukraine. The timing catch up of the Profit
Commission has no impact on the closing 2022 Year of Account.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
8
Managing Agent's Report
(continued)
2023 underwriting year forecast
The 2023 forecast has been based on the following assumptions:
Future claims development will follow an expected pattern. In particular, the incidence or
development of major or attritional losses or the ability of the Syndicate’s reinsurers to respond
to potential recoveries will not diverge materially from expectations based on developments to
date;
•
No material changes occur in estimates as to ultimate premium levels and future
reinsurance costs;
•
There will be no material reinsurance failure;
•
There will be no material surplus or deficiency arising from the reinsurance to close
(“RITC”) of the 202
2 Year of Account;
•
Interest, inflation and exchange rates at 31 December 2025 will not significantly impact
the assumptions taken into account in the forecast; and
•
There will be no significant changes in regulatory or legislative policies which will affect
the activities of the Syndicate.
Principal risks and uncertainties
The Board approves the risk appetite framework annually as part of the Syndicate’s business
planning and Solvency Capital Requirement (“SCR”) process. The Blenheim Risk Committee
(“RiC”), a committee of the Board of Blenheim (“the Board”), meets at least q
uarterly and has
responsibility for the oversight and monitoring of the Syndicate risk management framework.
The Board reviews the risk profile of the Syndicate as reflected in the Quarterly Risk Reporting,
and monitors performance against risk appetite using tolerance metrics that are calibrated
annually. The principal risks and uncertainties facing the Syndicate are as follows:
Insurance risk
Insurance risk includes the risks that a policy will be written for too low a premium or provide
inappropriate cover (underwriting risk), that the frequency or severity of insured events will be
higher than expected (claims risk), or that estimates of claims subsequently prove to be
insufficient (reserving risk). The Board manages insurance risk through the approved business
plan, which sets out targets for volumes, pricing, line sizes and retention by class of business.
The Board then monitors performance against the business plan through the year. Reserve
adequacy is monitored through quarterly review by the Reserving Committee (“RC”)
, a
management committee.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
9
Managing Agent's Report
(continued)
Principal risks and uncertainties
(continued)
Credit risk
The key aspect of credit risk is reinsurance counterparty risk which is the risk of default by one
or more of the Syndicate’s reinsurers
or
intermediaries. The Board’s policy is that the Syndicate
will only reinsure with approved reinsurers, supported by collateralisation where required. The
Reinsurance Security and Broker Committee
(“RISBC”)
, a management committee, sets
approval and usage criteria, monitors reinsurer ratings and is required to approve and oversee
the application of the reinsurer approval policy.
Market risk
Market risk exposure impacting the Syndicate relates to fluctuations in interest rates or
exchange rates. The Syndicate is exposed to foreign exchange movements as a result of
mismatches between the currencies in which assets and liabilities are denominated. The
Blenheim policy is to maintain received income or incurred expenditure in the core currencies
in which they were received or paid.
Exposure to changes in interest rates arises from the Syndic
ate’s investment
portfolio.
Blenheim seeks to minimise this risk through investing in highly liquid financial instruments.
Liquidity risk
This is the risk that the Syndicate will not be able to meet its liabilities as they fall due, owing
to a shortfall in cash or can only meet obligations at excessive cost. To mitigate this risk, the
Board reviews cash flow projections regularly and ensures that, where needed, the Syndicate
has liquidity facilities in place and may also utilise the option of a cash call from capital
providers. The Syndicate also mitigates its liquidity risk by ensuring it retains adequate assets
in liquid instruments.
Blenheim has also arranged various facilities to help manage the Syndicate’s
cash flow.
Further details are set out in Note 22 of the Syndicate Annual Report Accounts.
Operational risk
This is the risk that errors caused by people, processes, systems and external events lead to
losses to the Syndicate. Blenheim seeks to manage this risk through the use of an operational
risk and control framework, detailed procedure manuals, thorough training programmes and a
structured programme of testing of processes and systems by internal audit. Business
continuity and disaster recovery plans are in place and are regularly updated and tested.
An important aspect of operational risk is regulatory risk. Regulatory risk is the risk of loss
owing to a breach of regulatory requirements or failure to respond to regulatory change.
Blenheim is required to comply with the requirements of the Financial Conduct Authority,
Prudential Regulatory Authority (“PRA”) and The Society of Lloyd’s (“Lloyd’s”). Lloyd’s
requirements include those imposed on the Lloyd’s market by overseas regulators. Blenhe
im
has a Compliance Director who manages a function that monitors business activity and
regulatory developments to assess any effects on Blenheim.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
10
Managing Agent's Report
(continued)
Principal risks and uncertainties
(continued)
Operational risk
(continued)
The Syndicate promotes and maintains an open and transparent culture which champions and
supports the fair treatment of customers and delivery of good customer outcomes. The
Syndicate has a suite of controls in place to help mitigate this risk and monitors its conduct risk
exposure through a series of key risk indicators and reporting metrics as part of its documented
conduct risk framework.
Future developments
Climate change
In response to the PRA Supervisory Statement in 2019 and a subsequent
“
Dear Chief
Executive Officer
”
letter in 2020, Blenheim implemented significant changes to address and
quantify the financial risks of climate change where possible and relevant, in order to meet the
PRA’s
requirements. We expect our approach to managing the financial risks from climate
change to develop over time.
Blenheim has ensured Board-
level engagement and accountability with the PRA’s
requirements, assigning clear responsibilities for managing the financial risks associated with
climate change. The Chief Executive Officer, who is a Board member, is responsible for
identifying and managing financial climate related risks.
Risk management
The Board addresses the financial risks from climate change through the risk management
framework. The Board considers the risks with respect to the current and future impacts to the
business environment in which it operates. The Board assesses the financial risk from climate
change using stress testing developed by the Exposure Management team and has
implemented a Board approved risk appetite of limits for the financial risks from climate change.
The Board has identified two main areas of financial risk arising from climate change that are
applicable in the short and long-term:
Catastrophe risk
A proportion of the underwriting activity relates to (re)insurance which provides cover for
natural catastrophes and man-made events. Therefore, the main focus of
Blenheim’s
activities
to understand this exposure in relation to underwriting has been on catastrophe modelling and
climate change. The intention has been to ensure we do not overcommit
the Syndicate’s
capital
at a time when the pattern of natural catastrophes may be altering due to climate change.
Blenheim utilises industry standard catastrophe models for our main peril regions, but we also
have considerable in-house expertise in developing our own catastrophe models both to help
validate the outputs of the former or to address significant peril regions not covered by the
models we licence.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
11
Managing Agent's Report
(continued)
Future developments
(continued)
Investment risk
Financial investments are a material asset to the balance sheet which could be exposed to the
financial (physical or transition) risks. As per the Prudent Person Principle, insurers must
diversify their assets to avoid excessive accumulation risk in the investment portfolio.
Therefore, the Blenheim Board has instructed the investment manager to have regard to and
consider the impact of, any climate-related risks where their impact could adversely impact
returns having specific regard to thermal coal, oil sands and arctic energy.
As per SS3/19 the actions taken are proportionate to the nature, scale and complexity of the
Syndicate and we expect the expertise of the Board to manage the financial risks relating to
climate change to evolve over time.
Environmental, Social and Governance (“ESG”)
Blenheim acknowledges and recognises the significance of ESG considerations in delivering
optimum outcomes for all stakeholders, both internal and external, and believes that
appropriate ESG policies and practices support building a sustainable business.
Blenheim, as part of the wider White Bear Group, is committed to ensuring ethical behaviours
in our activities, promoting diversity, equality and inclusion in the workplace, considering our
own impact on the environment, continuing our strong governance work and facilitating ESG
related knowledge sharing throughout the Group.
The White Bear Group, of which Blenheim is a part, has an Environmental, Social and
Governance (“ESG”) Committee which is responsible for developing and
recommending ESG
strategy to Group companies, including Blenheim. The ESG Committee includes senior
members of Blenheim management including the Chief Executive Officer, Finance Director,
Chief Risk Officer and the Active Underwriter. The ESG Committee reports on and
recommends ESG Policy to the Blenheim Board and meets at least quarterly to consider
progress and develop strategy.
The ESG Committee is focused on
:
•
Communicating ESG policy to employees and providing appropriate training.
•
Taking steps as part of our recruitment practices to widen the pool of talent from which we
draw our workforce, together with supporting volunteering programmes that promote the
London Insurance Market within local communities.
•
Tracking progress in promoting diversity, equality and inclusion in the workplace with a
number relevant KPIs active which are reported regularly to the Group and subsidiary
boards.
•
Operating robust and independent whistleblowing arrangements across the Group that
actively encourage employees to speak up on actual or suspected wrongdoing.
•
Continuing to work towards formalising our approach to reducing the Group’s
environmental footprint.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
12
Managing Agent's Report
(continued)
Environmental, Social and Governance (“ESG”)
(continued)
Developing a sustainable and consistent underwriting approach to ESG issues and the
associated risk management framework to support this. The Group approach is to work
closely with (re)insurance clients and producing brokers to help manage and navigate
transition to more sustainable worldwide energy sources and emissions levels.
Developing our catastrophe modelling and scenario testing in respect of climate change
related risks to support underwriting decision making and business planning.
Considering impact of any ESG risks within our investment strategies.
Blenheim’s activity will be kept under review to ensure that progress continues to align with,
and is responsive to, new scientific developments, emerging trends and priorities,
stakeholder expectation, legislation, and regulation.
Disclosure of information to the Auditor
So far as each person who was a Director of the Managing Agent at the date of approving the
report is aware, there is no relevant audit information, being information needed by the
Syndicate auditor in connection with the auditor's report, of which the auditor is unaware.
Having made enquiries of fellow Directors of Blenheim and the Syndicate's auditors, each
Director has taken all the steps that he or she ought to have taken as a Director to become
aware of any relevant audit information and to establish that the Syndicate's Auditor is aware
of that information.
Auditors
The Managing Agent intends to reappoint Deloitte LLP as the Syndicate's auditor.
Syndicate Annual General Meeting
As permitted under the Syndicate Meetings (Amendment No 1) Byelaw (No 18 of 2000) the
Managing Agent does not propose holding a Syndicate Annual General Meeting of the
members of the Syndicate. Members may object to this proposal within 21 days of the issue of
these accounts. Any such objection should be addressed to T Mijatovic, Compliance Director
at the registered office of Blenheim Underwriting Limited.
On behalf of the Board
J A Lynch
Director
4 March 2025
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
13
Blenheim Underwriting Limited
Syndicate Annual Report and Accounts
31 December 2024
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
14
Statement of Managing Agent's Responsibilities
The Managing Agent is responsible for preparing the Syndicate Annual Report and Accounts
in accordance with applicable law and regulations.
The Insurance Accounts Directive (Lloyd's Syndicate and Aggregate Accounts) Regulations
2008 require the Managing Agent to prepare Syndicate Annual Report and Accounts at 31
December each year in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable law) including FRS 102 and
FRS 103. The Annual Syndicate Accounts are required by law to give a true and fair view of
the state of affairs of the Syndicate as at that date and of its profit or loss for that year.
In preparing the Syndicate Annual Report and Accounts, the Managing Agent is required to:
•
Select suitable accounting policies and then apply them consistently subject to changes
arising on the adoption of new accounting standards in the year;
•
Make judgements and estimates that are reasonable and prudent;
•
State whether applicable Accounting Standards have been followed, subject to any
material departures disclosed and explained in the notes to the Syndicate accounts; and
•
Prepare the Syndicate accounts on the basis that the Syndicate will continue to write future
business unless it is inappropriate to presume that the Syndicate will do so.
The Managing Agent is responsible for keeping adequate accounting records which disclose
with reasonable accuracy at any time the financial position of the Syndicate and enable it to
comply with the Insurance Accounts Directive (Lloyd's Syndicate and Aggregate Accounts)
Regulations 2008. It is also responsible for safeguarding the assets of the Syndicate and hence
for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Managing Agent is responsible for the maintenance and integrity of the corporate and
financial information included on the business' website. Legislation in the United Kingdom
governing the preparation and dissemination of Annual Syndicate Accounts may differ from
legislation in other jurisdictions.
The Directors of the Managing Agent are responsible for 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 syst
ems,
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.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
15
Independent auditor’s report to the members of Syndicate 5886
Report on the audit of the Syndicate Annual Report and Accounts
Opinion
In our opinion the Syndicate Annual Report and Accounts
of Syndicate 5886 (the ‘
S
yndicate’
):
•
give a true and fair view of the state of the S
yndicate’s
affairs as at 31 December 2024
and of its profit for the year then ended;
•
have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice, including Financial Reporting Standard 102 “The Financial
Reporting Standard applicable in the UK and Republic of Ireland”; and
•
have been prepared in accordance with the requirements of The Insurance Accounts
Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and sections
1 and 5 of the Syndicate Accounts Instructions Version 2.0 as modified by the
Frequently Asked Qu
estions Version 1.1 issued by Lloyd’s (the “Lloyd’s Syndicate
Accounts Instructions”)
We have audited the Syndicate Annual Report and Accounts which comprise:
•
the statement of comprehensive income;
•
the statement of financial position;
•
the statement of changes in members’ balances;
•
the statement of cash flows; and
•
the related notes 1 to 25.
The financial reporting framework that has been applied in their preparation is applicable law
and United Kingdom Accounting Standards, including Financial Reporting Standard 102 “The
Financial Reporting Standard applicable in the UK and Republic of Irelan
d” (United Kingdom
Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs
(UK)) and applicable law and the Syndicate Accounts instructions. Our responsibilities under
those standards are further described in the auditor's responsibilities for the audit of the Annual
Syndicate Accounts section of our report.
We are independent of the Syndicate in accordance with the ethical requirements that are
relevant to our audit of the Syndicate Annual Report and Accounts in the UK, including the
Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the Syndicate Annual Report and Accounts , we have concluded that the managing
agent’s use of the going concern basis of accounting in the preparation of the
Syndicate Annual
Report and Accounts is appropriate.
Based on the work we have performed, we have not identified any material uncertainties
relating to events or conditions that, individually or collectively, may cast significant doubt on
the syndicate’s ability to continue in operations for a period of at l
east twelve months from
when the Syndicate Annual Report and Accounts are authorised for issue.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
16
Independent auditor’s report to the members of Syndicate 5886
(continued)
Our responsibilities and the responsibilities of the managing agent with respect to going
concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report, other than the
Syndicate Annual Report and Accounts
and our auditor’s report thereon. The managing agent
is responsible for the other information contained within the annual report. Our opinion on the
Syndicate Annual Report and Accounts does not cover the other information and, except to
the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the Syndicate Annual Report and Accounts or our
knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material misstatement themselves. If, based
on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of managing agent
As explained more fully in the managing agent’s responsibilities statement, the managing
agent is responsible for the preparation of the Syndicate Annual Report and Accounts and for
being satisfied that they give a true and fair view, and for such internal control as the managing
agent determines is necessary to enable the preparation of Syndicate Annual Report and
Accounts that are free from material misstatement, whether due to fraud or error.
In preparing the Syndicate Annual Report and Accounts , the managing agent is responsible
for assessing the syndicate’s ability to continue in operation, disclosing, as applicable, matters
related to the syndicate’s ability to continue in operation and to use the going concern basis of
accounting unless the m
anaging agent intends to cease the syndicate’s operations, or has no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
Annual Syndicate
Accounts
Our objectives are to obtain reasonable assurance about whether the Syndicate Annual Report
and Accounts as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level
of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these Syndicate
Annual Report and Accounts.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
17
Independent auditor’s report to the members of Syndicate 5886
(continued)
A further description of our responsibilities for the audit of the Annual Syndicate Accounts is
located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
Extent to which the audit was considered capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We
design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud. The extent to which our procedures
are capable of detecting irregularities, including fraud is detailed below.
We considered the nature of the syndicate and its control environment and reviewed the
syndicate’s documentation of their policies and procedures relating to fraud and compliance
with laws and regulations. We also enquired of management, internal audit and those charged
with governance, about their own identification and assessment of the risks of irregularities.
We obtained an understanding of the legal and regulatory frameworks that the syndicate
operates in, and identified the key laws and regulations that:
•
had a direct effect on the determination of material amounts and disclosures in the
Syndicate Annual Report and Accounts. These included the Insurance Accounts
Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the
Lloyd’s Syndicate Accounting Byelaw (no. 8 of 2005); and
•
do not have a direct effect on Syndicate Annual Report and Accounts but compliance
with which may be fundamental to the syndicate’s ability to operate or to avoid a
material penalty. These included permissions and supervisory requirements of Lloyd’s
of London, The Prudential Regulation Authority (PRA) and the Financial Conduct
Authority and the requirements of Solvency UK.
We discussed among the audit engagement team including relevant internal specialists such
as actuarial and IT specialists regarding the opportunities and incentives that may exist within
the organisation for fraud and how and where fraud might occur in the Syndicate Annual Report
and Accounts.
As a result of performing the above, we identified the greatest potential for fraud in the following
area, and our procedures performed to address it are described below:
•
Estimation of pipeline premiums requires significant management judgement and
therefore there is potential for management bias through manipulation of core
assumptions. In response our testing included, for classes associated with significant
risk, on a sa
mple basis, comparing management’s estimates on prior year policies
against actual premiums received as well as to historical experience on similar policies.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
18
Independent auditor’s report to the members of Syndicate 5886
(continued)
•
Valuation of technical provisions in relation to incurred but not reported claims (IBNR)
includes assumptions requiring significant management judgement and involves complex
calculations, and therefore there is potential for management bias. There is also a risk of
overriding controls by making late adjustments to the technical provisions. In response to
these risks we involved our actuarial specialists to develop independent estimates of the
technical provisions for classes associated with significant risk and we tested the
adjustments made to technical provisions outside of the normal reserving process.
In
addition, significant management judgement is exercised in the valuation of Catastrophe
IBNR reserves given uncertainties in estimating claims emergence relating to event
frequency and severity, data limitations and reinsurance recoveries. We assessed a sample
of Catastrophe IBNR reserves classified as significant risk by inspecting case
documentation, challenging management judgements, and performing benchmarking
where possible.
In common with all audits under ISAs (UK), we are also required to perform specific procedures
to respond to the risk of management override. In addressing the risk of fraud through
management override of controls, we tested the appropriateness of journal entries and other
adjustments; assessed whether the judgements made in making accounting estimates are
indicative of a potential bias; and evaluated the business rationale of any significant
transactions that are unusual or outside the normal course of business.
In addition to the above, our procedures to respond to the risks identified included the following:
•
reviewing Syndicate Annual Report and Accounts disclosures by testing to supporting
documentation to assess compliance with provisions of relevant laws and regulations
described as having a direct effect on the Annual Syndicate Accounts;
•
performing analytical procedures to identify any unusual or unexpected relationships that
may indicate risks of material misstatement due to fraud;
•
enquiring of management and internal audit concerning actual and potential litigation and
claims, and instances of non-compliance with laws and regulations; and
•
reading minutes of meetings of those charged with governance, reviewing internal audit
reports and reviewing correspondence with Lloyd’s, PRA and FCA.
Report on other legal and regulatory requirements
Opinions on other matters prescribed by The Insurance Accounts
Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations
2008
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the managing agent’s report for the financial year for which the
Syndicate Annual Report and Accounts are prepared is consistent with the Syndicate
Annual Report and Accounts; and
•
the managing agent’s report has been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the syndicate and its environment obtained
in the course of the audit, we have not identified any material misstatements in the managing
agent’s report.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
19
Independent auditor’s report to the members of Syndicate 5886
(continued)
Matters on which we are required to report by exception
Under The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008 we are required to report in respect of the following matters if, in our opinion:
the managing agent in respect of the syndicate has not kept adequate accounting
records; or
the Syndicate Annual Report and Accounts are not in agreement with the accounting
records; or
we have not received all the information and explanations we require for our audit.
We have nothing to report in respect of these matters.
Use of our report
This report is made solely to the syndicate’s members, as a body, in accordance with regulation
10 of The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008. Our audit work has been undertaken so that we might state to the
syndicate’s members those matters we are required to state to them in an auditor’s report and
for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the syndicate’s members as a body, for our audit work, for
this report, or for the opinions we have formed.
As required by the Syndicate Accounts Instructions Version 2.0, these Syndicate Annual
Report and Accounts will form part of the Electronic Format Syndicate Annual Report and
Accounts filed with the Council of Lloyd’s and published on the Lloyd’s website. This auditors’
report provides no assurance over whether the Electronic Format Syndicate Annual Report
and Accounts have been prepared in compliance with Section 2 of the Syndicate Accounts
Instructions Version 2. We have been engaged to provide assurance on whether the Electronic
Format Syndicate Annual Report and Accounts has been prepared in compliance with Section
2 of the Syndicate Accounts Instructions Version 2 and will privately report to the Council of
Lloyd’s on this.
Ben Newton (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
4 March 2025
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
20
Statement of Comprehensive Income
Technical account
–
General business
For the year ended 31 December 2024
Note
2024
£’000
2023
£’000
Gross premiums written
4
Outward reinsurance premiums
(85,644 )
(86,939 )
Premiums written, net of reinsurance
Changes in unearned premium
Change in the gross provision for unearned premiums
(36,064 )
(11,001 )
Change in the provision for unearned premiums
reinsurers’ share
Net change in provisions for unearned premiums
5
(29,196 )
(3,987 )
Earned premiums, net of reinsurance
Allocated investment return transferred from the
non-technical account
9
Claims paid
Gross amount
(138,822 )
(180,544 )
Reinsurers’ share
Net claims paid
(113,142 )
(147,328 )
Change in the provision for claims
Gross amount
(3,169 )
Reinsurers’ share
(4,154 )
(34,211 )
Net change in provisions for claims
5
(7,323 )
Claims incurred, net of reinsurance
(120,465 )
(142,353 )
Net operating expenses
6
(115,832 )
(92,462 )
Balance on the technical account
–
general
business
All the amounts above are in respect of continuing operations.
The notes on pages 26 to 64 form part of these Syndicate Annual Report and Accounts.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
21
Statement of Comprehensive Income
(continued)
Non-technical account - General business
For the year ended 31 December 2024
Note
2024
£’000
2023
£’000
Balance on technical account
–
general business
Investment income
Realised gains on investments
Unrealised gains on investments
Investment expenses and charges
(212 )
(148 )
Total investment return
9
Allocated investment return transferred to the
general business technical account
(13,111 )
(8,295 )
Loss on foreign exchange
(113 )
(453 )
Profit for the financial year
Other comprehensive income:
2024
£’000
2023
£’000
Currency translation gain
Total comprehensive income for the year
All the amounts above are in respect of continuing operations.
The notes on pages 26 to 64 form part of these Syndicate Annual Report and Accounts.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
22
Statement of Financial Position
As at 31 December 2024
Note
2024
£’000
2023
£’000
ASSETS
Investments
Financial investments
10
Deposits with ceding undertakings
Investments
Reinsurers' share of technical
provisions
Provision for unearned premiums
5
Claims outstanding
5
Reinsurers' share of technical provisions
Debtors
Debtors arising out of direct insurance
operations
11
Debtors arising out of reinsurance
operations
12
Other debtors
13
Debtors
Other assets
Cash at bank and in hand
18
Other
19
Other assets
Prepayments and accrued income
Accrued interest
Deferred acquisition costs
5
Other prepayments and accrued income
Prepayments and accrued income
Total assets
The notes on pages 26 to 64 form part of these Syndicate Annual Report and Accounts.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
23
Statement of Financial Position
(continued)
As at 31 December 2024
Note
2024
£’000
2023
£’000
Capital and reserves
Members’ balances
Total Capital and Reserves
Technical provisions
Provision for unearned premiums
5
Claims outstanding
5
Technical provisions
Creditors
Creditors arising out of
direct insurance operations
1
4
Creditors arising out of reinsurance operations
15
Other creditors including taxation and social
security
1
6
Creditors
Accruals and deferred income
Total liabilities
Total
liabilities, Capital and Reserves
The notes on pages 26 to 64 form part of these Syndicate Annual Report and Accounts.
The Syndicate Annual Report and Accounts on pages 20 to 23 were approved by the Board of
Directors on 4 March 2025 and were signed on its behalf by:
S J Ingham
Director
4 March 2025
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
24
Statement of Changes in Members' Balances
For the year ended 31 December 2024
2024
£’000
2023
£’000
Members’ balances
brought forward at 1 January
(54,117 )
Total comprehensive income for the year
Losses collected in relation to distribution on closure of
underwriting year
Members agent fees
(763 )
(696 )
Members’ balances
carried forward at 31 December
All the amounts above are in respect of continuing operations.
The notes on pages 26 to 64 form part of these Syndicate Annual Report and Accounts.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
25
Statement of Cash Flows
For the year ended 31 December 2024
The notes on pages 26 to 64 form part of these Syndicate Annual Report and Accounts.
Note
2024
£’000
2023
£’000
Cash flows from operating activities
Profit for the financial year
Increase/(decrease) in gross technical provisions
(51,499 )
(Increase)/decrease
in reinsurers’ share of gross technical
provisions
(3,126 )
(Increase)/decrease in debtors
(29,704 )
Increase/(decrease) in creditors
(8,128 )
Movement in other assets/liabilities
(4,256 )
Investment return
(13,111 )
(8,295 )
Foreign exchange
Other
(215 )
(2,182 )
Net cash flows from operating activities
Cash flows from investing activities
Purchase of equity and debt instruments
(317,973 )
(154,100 )
Sales of equity and debt instruments
Investment income received
Other
(150 )
Net cash flows from investing activities
(129,331 )
(45,110 )
Cash flows from financing activities
Collection of losses
Net cash flows from financing activities
Net (decrease)/increase in cash and cash equivalents
(50,568 )
Cash and cash equivalents at beginning of year
Foreign exchange gain/(loss) on opening cash and cash
equivalents
(3,838 )
Cash and cash equivalents at the end of the year
17
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
26
Notes to the Syndicate Annual Report and Accounts
For the year ended 31 December 2024
1. Basis of preparation
Syndicate 5886
(‘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 is
7th Floor, 70 Mark Lane, London, EC3R 7NQ.
Statement of compliance
The Syndicate Annual Report and Accounts 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. The annual
report is prepared in accordance with the provisions of Schedule 3 of the Large and Medium-
sized Companies and Groups (Accounts and Reports) Regulations relating to insurance
companies and the Lloyds Syndicate Accounts Instructions Version 2.0 as modified by the
Frequently Asked Question Version 1.1 issued by Lloyds.
The Syndicate Annual Report and Accounts have been prepared on the historical cost basis
except for certain financial instruments, which are measured at fair value. The Syndicate's
functional currency is US Dollars, being the primary economic environment in which it operates.
The accounts have been presented in Sterling (“GBP”), which is the Syndicate’s presentation
currency and rounded to the nearest £'000.
Going concern
The directors have made the necessary enquiries and have a reasonable expectation that the
Syndicate has adequate resources to continue in operational existence for the foreseeable
future. Therefore, the Directors considered it appropriate to adopt the going concern basis of
accounting in preparing the accounts.
Restatement of comparative information
During 2024, Lloyd’s introduced changes to the Syndicate accounts process to rationalize and
standardize 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 comprise:
a) Reclassification changes
Certain Annual Syndicate Accounts line items have been reclassified whilst the underlying
amounts remain unchanged. The principal change is the reclassification of Deposits with
Ceding Undertakings, previously shown within Other Debtors. The comparative balances in
the affected notes 13 and 24 have also been represented to align with the current period
presentation.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
27
Notes to the Syndicate Annual Report and Accounts
(continued)
Restatement of comparative information
(continued)
b) Aggregation changes
To align with Lloyd’s reporting requirements whilst maintaining FRS 102 compliance, certain
items have been aggregated or disaggregated with the Annual Syndicate Accounts and related
notes. This includes presentation of note 5, technical provisions further disaggregating the
movement in outstanding claims into claims paid during the year, expected cost of current year
claims and the change in estimate of prior year provisions.
2. Accounting policies
Significant accounting policies
The following significant accounting policies have been applied consistently in dealing with
items which are considered material in relation to the Syndicate Annual Report and Accounts.
Gross premiums
Gross premiums written comprise the total premiums receivable for the whole period of cover
provided by the contracts entered into during the reporting period, regardless of whether these
are wholly due for payment in the reporting period, together with any adjustments arising in the
reporting period to such premiums receivable in respect of business written in prior reporting
periods. They are recognised on the date on which the policy commences. Gross premiums
written are stated gross of brokerage payable and exclude taxes and duties levied on them.
Reinstatement premiums are estimated in accordance with the contract terms and recorded
based upon claims provisions.
Profit commissions on contracts are estimated based on underlying profitability and accrued
where the amount can be estimated with reasonable certainty.
Outwards reinsurance premiums
Outwards reinsurance premiums comprise the total premiums payable for the whole cover
provided by contracts entered in the period, including portfolio premiums payable, and are
recognised on the date on which the policy incepts. Premiums include any adjustments arising
in the accounting period in respect of reinsurance contracts incepting in prior accounting
periods.
Reinsurance outwards premiums are earned according to the nature of the cover. ‘Losses
occurring during’ policies are earned evenly over the policy period. ‘Risks attaching’ policies
are expensed on the same basis as the inwards business being protected.
Claims incurred
Claims incurred comprise claims and claims handling expenses (both internal and external)
paid in the year and the movement in provision for outstanding claims and settlement
expenses, including an allowance for the cost of claims incurred by the Statement of Financial
Position date, but not reported until after the year end.
The provision for claims comprises amounts set aside for claims notified and Incurred But Not
Reported (“
IBNR
”)
.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
28
Notes to the Syndicate Annual Report and Accounts
(continued)
2. Accounting policies
(continued)
Claims incurred
(continued
)
The amount included in respect of IBNR is based on a combination of statistical techniques of
estimation applied by the in-house actuaries and a detailed review of losses by management,
further reviewed by external consulting actuaries. The statistical techniques generally involve
projecting from past experience of the development of claims over time (using market data
where Syndicate data is unavailable) 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. The provision for claims also includes amounts in
respect of internal and external claims handling costs. For the most recent years, where a high
degree of volatility arises from projections, estimates may be based in part on output from
rating and other models of the business accepted and assessments of underwriting conditions.
The reinsurers’ share of provisions for claims is based on calculated amounts of outstanding
claims and projections for IBNR, net of estimated irrecoverable amounts, having regard to the
reinsurance programme in place for the class of business and the claims experience for the
year. The Syndicate uses a number of statistical techniques to assist in making these
estimates.
Accordingly, the two most critical assumptions as regards claims provisions are that the past
is a reasonable predictor of the likely level of claims development and that the rating and other
models used for current business are fair reflections of the likely level of ultimate claims to be
incurred.
The Directors consider that the provisions for gross claims and related reinsurance recoveries
are fairly stated on the basis of the information currently available to them. However, the
ultimate liability will vary as a result of subsequent information and events and this may result
in significant adjustments to the amounts provided.
Provision for unearned premiums
Unearned premiums are those proportions of premiums written in a year that relate to periods
of risk after the reporting date. Gross premiums written are recognised as earned over the
period of the policy on a time apportionment basis having regard, where appropriate, to the
incidence of risk. The proportion attributable to subsequent periods is deferred as a provision
for unearned premiums.
Unearned reinsurance premiums are those proportions of premiums written in a year that relate
to periods of risk after the reporting date. Unearned reinsurance premiums are deferred over
the term of the outwards reinsurance policy based on the underlying direct or inwards
reinsurance business being reinsured.
Unexpired risks
A provision for unexpired risks is made where claims and related expenses are likely to arise
after the end of the financial period in respect of contracts concluded before that date and are
expected to exceed the unearned premiums and premiums receivable under these contracts,
after the deduction of any acquisition costs deferred.
The provision for unexpired risks is calculated separately by reference to classes of business
which are managed together, after taking into account relevant investment return.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
29
Notes to the Syndicate Annual Report and Accounts
(continued)
2. Accounting policies
(continued)
Deferred acquisition costs
Acquisition costs comprise costs arising from the conclusion of insurance contracts. They
include both direct costs, such as intermediary commissions or the cost of drawing up the
insurance document or including the insurance contract in the portfolio, and indirect costs, such
as the advertising costs or the administrative expenses connected with the processing of
proposals and the issuing of policies.
Deferred acquisition costs are costs arising from the conclusion of insurance contracts that are
incurred during the reporting period, but which relate to a subsequent reporting period and
which are carried forward to subsequent reporting periods. Deferred acquisition costs are
amortised over the period in which the related premiums are earned.
Profit commission
Profit Commission is charged by the Managing Agent at a rate of 20% of the profit on an earned
Year of Account basis subject to the operation of a two year deficit clause. The Profit
Commission is payable after the appropriate Year of Account closes.
Reinsurance assets
The Syndicate cedes insurance risk in the normal course of business. Reinsurance assets
represent balances due from reinsurance companies and Lloyd’s syndicates.
Amounts
recoverable from reinsurers are estimated in a manner consistent with the outstanding claims
provision or settled claims associated with the reinsurer's policies and are in accordance with
the related reinsurance contract.
Reinsurance assets are reviewed for impairment at each reporting date, or more frequently
when an indication of impairment arises during the reporting year. Impairment occurs when
there is objective evidence as a result of an event that occurred after initial recognition of the
reinsurance asset that the Syndicate may not receive all outstanding amounts due under the
terms of the contract and the event has a reliably measurable impact on the amounts that the
Syndicate will receive from the reinsurer. Any impairment loss is recorded in the Statement of
Comprehensive Income, however we do not expect any impairment losses as we maintain
strong monthly controls and reviews over the reinsurance overdue balances to ensure that
balances do not become overdue, or are fully collateralised where reinsurers do not meet the
required minimum credit rating. Gains or losses on buying reinsurance are recognised in the
Statement of Comprehensive Income immediately at the date of purchase and are not
amortised.
Ceded reinsurance arrangements do not relieve the Syndicate from its obligations to
policyholders.
Insurance receivables
Insurance receivables are recognised when due and measured on initial recognition at the fair
value of the consideration received or receivable. Subsequent to initial recognition, insurance
receivables are measured at amortised cost. The carrying value of insurance receivables is
reviewed for impairment whenever events or circumstances indicate that the carrying amount
may not be recoverable, with the impairment loss recorded in the Statement of Comprehensive
Income.
Insurance receivables are derecognised when the derecognition criteria for financial assets
have been met.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
30
Notes to the Syndicate Annual Report and Accounts
(continued)
2. Accounting policies
(continued)
Insurance payables
Insurance payables are recognised when due and measured on initial recognition at the fair
value of the consideration due less directly attributable transaction costs. Subsequent to initial
recognition, they are measured at amortised cost. Insurance payables are derecognised when
the obligation under the liability is settled, cancelled or expired.
Foreign currencies
The Syndicate's functional currency is US Dollars being the primary economic environment in
which it operates. The Syndicate’s
presentation currency is Sterling (GBP).
Transactions denominated in currencies other than the functional currency are initially recorded
in the functional currency at the exchange rate ruling at the date of the transactions or
appropriate average rate. Monetary assets and liabilities (which include all assets and liabilities
arising from insurance contracts including unearned premiums and deferred acquisition costs)
denominated in foreign currencies are retranslated into the functional currency at the exchange
rate ruling on the reporting date.
Exchange differences are recorded in the non-technical account.
In translating its results and financial position into the presentational currency, the Syndicate
translates all assets and liabilities at the closing rates of exchange and translates all income
and expense items at average rates, with all resulting exchange gains and losses recognised
in other comprehensive income.
The following Statement of Financial Position rates of exchange have been used in the
preparation of these accounts:
2024
2024
2024
2023
2023
2023
Start of
period
rate
Year
End
Average
rate
Start of
period
rate
Year
End
Average
rate
AUD
CAD
EUR
JPY
USD
GBP
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
31
Notes to the Syndicate Annual Report and Accounts
(continued)
2. Accounting policies
(continued)
Financial assets and liabilities
In applying FRS 102, the Syndicate has chosen to apply the recognition and measurement
provisions of IAS 39 Financial Instruments: Recognition and Measurement (as adopted for use
in the U.K.).
Financial assets and financial liabilities at fair value through the profit and loss comprise
financial assets and financial liabilities held for trading and those designated as such on initial
recognition.
Investments in shares and other variable yield securities, units in unit trusts, and debt and other
fixed income securities are designated as at fair value through profit or loss on initial
recognition, as they are managed on a fair value basis in accordance with the Syndicate’s
investment strategy.
Financial instruments are recognised when the Syndicate becomes a party to the contractual
provisions of the instrument. Financial assets are derecognised if the Syndicate’s contractual
rights to the cash flows from the financial assets expire or if the Syndicate transfers the financial
asset to another party without retaining control of substantially all risks and rewards of the
asset. A financial liability is derecognised when its contractual obligations are discharged,
cancelled, or expire.
Regular way purchases and sales of financial assets are recognised and derecognised, as
applicable, on the trade date, i.e. the date that the Syndicate commits itself to purchase or sell
the asset.
Initially, financial assets and liabilities are measured at fair value (including transaction costs,
for assets and liabilities not measured at fair value through profit or loss).
Financial assets at fair value through profit or loss are measured at fair value with fair value
changes recognised immediately in the Statement of Comprehensive Income. Net gains or net
losses on financial assets measured at fair value through profit or loss includes foreign
exchange gains/losses arising on their translation to the functional currency but excludes
interest and dividend income. At each reporting date the Syndicate assesses whether there is
objective evidence that financial assets not measured at fair value through profit or loss are
impaired. Financial assets are impaired when objective evidence demonstrates that a loss
event has occurred after the initial recognition of an asset, and that the loss event has an
impact on the future cash flows on the asset that can be estimated reliably.
Objective evidence that financial assets are impaired includes observable data that comes to
the attention of the Syndicate about any significant financial difficulty of the issuer, or significant
changes in the technological, market, economic or legal environment in which the issuer
operates.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as
the difference between its carrying amount, and the present value of the estimated future cash
flows discounted at the asset’s original effective interest rate.
Individually significant financial
assets are tested for impairment on an individual basis. The remaining financial assets are
assessed collectively in groups that share similar credit risk characteristics.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
32
Notes to the Syndicate Annual Report and Accounts
(continued)
2. Accounting policies
(continued)
Financial assets and liabilities
(continued)
An impairment loss recognised reduces directly the carrying amount of the impaired asset. All
impairment losses are recognised in the Statement of Comprehensive Income. An impairment
loss is reversed if the reversal can be related objectively to an event occurring after the
impairment loss was recognised.
For financial assets measured at amortised cost the reversal is recognised in the Statement of
Comprehensive Income.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with maturities of three
months or less from the acquisition date that are subject to an insignificant risk of changes in
fair value and are used by the Syndicate in the management of its short-term commitments.
They also comprise collective investment schemes which are invested on a short-term basis.
This excludes Lloyd’s overseas deposits which are included within other assets.
Investment return
Investment return is initially recorded in the non-technical account. A transfer is made from the
non-technical account to the general business technical account to reflect the investment return
on funds supporting underwriting business.
Fair value measurement of investments
Financial instruments that are classified as fair value through the profit or loss account are
assigned a level using a fair value hierarchy that reflects the significance of the inputs used in
these measurements.
The Syndicate uses the following hierarchy for determining the fair value of financial
instruments by valuation technique:
Level 1 financial instruments comprise government bonds that are regularly traded, deposits
with credit institutions and collective investment schemes which comprise Money Market
Funds.
•
Bonds have been valued at fair value using quoted prices in an active market.
•
Deposits with credit institutions are included at cost plus accrued income.
•
Money Market Funds are valued on a stable net asset value (“NAV”) basis. Money Market
Funds are readily convertible into cash, are subject to an insignificant risk of changes in
fair value and are used by the Syndicate in the management of its short-term commitments.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
33
Notes to the Syndicate Annual Report and Accounts
(continued)
2. Accounting policies
(continued)
Fair value measurement of investments
(continued)
Level 2 financial instruments are less regularly traded government and agency bonds,
supranational bonds, corporate bonds, currency derivatives, bond futures, and fund
investments.
•
Bonds are included in the Statement of Financial Position at bid price using prices supplied
by the custodian or by the investment managers, who obtain market data from numerous
independent pricing services. The prices used are reconciled against a common market
pricing source.
•
Currency derivatives and bond futures are included at market price.
•
Investments in regulated collective investment schemes are valued on the NAVs of each
of the individual funds as published publicly by the managers.
•
Investments in pooled investments in unregulated investment schemes (hedge funds) are
valued based on the underlying NAVs of each of the individual funds. Hedge fund NAVs
are provided by the administrators of the schemes.
•
Investments in investment pools are valued on the valuations supplied by the investment
manager (Lloyd’s).
Level 3 financial instruments have a fair value derived from inputs that are not based on
observable market data.
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 other overseas tax payable by members on underwriting
results or investment earnings. Any payments on account made by the Syndicate during the
year have been included in the Statement of Financial Position
under the heading ‘
Other
debtors’.
Pension costs
The Managing Agent operates a defined contribution scheme. Pension contributions to
Syndicate staff are charged to the Syndicate and included within net operating expenses.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
34
Notes to the Syndicate Annual Report and Accounts
(continued)
3. Critical accounting judgements and key sources of estimation
uncertainty
In preparing these Annual Syndicate Accounts, the Directors of the Managing Agent have
made judgements,
estimates and assumptions that affect the application of the Syndicate’s
accounting policies and the reported amounts of assets, liabilities, income and expenses.
Critical accounting judgements
There have been no critical accounting judgements made in the process of applying the
Syndicate’s accounting policies, other than those involving estimations that have had a
significant effect on the amounts recognised in the Annual Syndicate Accounts.
Key sources of estimation uncertainty
The key sources of estimation uncertainty at the Statement of Financial Position date that have
a significant risk of causing material adjustment to the carrying amounts of assets and liabilities
within the next financial year are discussed below.
Gross premiums written
Gross premiums written are a key source of estimation uncertainty as it relies upon the
underwriter’s judgement of pipeline premium at policy level as well as projection of future
premiums at portfolio level based, primarily on the assumption past premium development can
be used to project future premium development.
For certain insurance contracts, premium is initially recognised based on estimates of ultimate
premiums. These estimates, primarily relating to binder business, are judgemental and actual
results could differ significantly differ from those estimated in the Annual Syndicate Accounts.
£115.3m of pipeline premium is included in gross premiums written. If the pipeline premium
were to change by 5%, this would have £5.8m impact on gross premiums written.
Claims outstanding and related reinsurance recoveries
The measurement of the provision for claims outstanding involves assumptions and estimates
about the future that have the most significant effect on the amounts recognised in the
Syndicate Annual Report and Accounts.
The provision for claims outstanding comprises the estimated cost of settling all claims incurred
but unpaid at the Statement of Financial Position date, whether reported or not. This is a
judgemental and complex area due to the subjectivity inherent in estimating the impact of
claims events that have occurred but for which the eventual outcome remains uncertain. In
particular, judgement is applied when estimating the value of amounts that should be provided
for claims that have been incurred at the reporting date but have not yet been reported to the
Syndicate.
The ultimate cost of outstanding claims is estimated using a range of techniques including
actuarial and statistical projections, benchmarking and case by case review. Statistical
techniques assume that past claims development experience can be used as a basis to project
ultimate claims costs. Judgement is used to assess the extent to which past trends may not
apply in the future. Case estimates are generally set by skilled claims technicians applying their
experience and knowledge to the circumstances of individual claims.
Whilst the Directors consider that the gross provision for claims and the related reinsurance
recoveries are fairly stated based on the information currently available to them, the ultimate
liability will vary as a result of subsequent information and events. Please see note 24.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
35
Notes to the Syndicate Annual Report and Accounts
(continued)
4. Analysis of underwriting result
An analysis of the underwriting result before investment return is set out below:
2024
Gross
premiums
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Total
£’000
£’000
£’000
£’000
£’000
£’000
Direct Insurance
Accident & Health
22,497
19,776
(11,800)
(8,735)
(1,385)
(2,144)
Motor (other
classes)
8,162
8,556
(5,375)
(2,847)
(936)
(602)
Marine, aviation and
transport
15,717
14,438
(9,292)
(4,011)
511
1,646
Fire and other
damage to Property
165,990
152,165
(48,221)
(52,812)
(26,125)
25,007
Third party liability
9,521
2,821
(1,682)
(1,162)
(200)
(223)
Credit and
suretyship
33,147
29,473
(9,860)
(9,918)
(3,089)
6,606
Legal expenses
1,236
105
(53)
(97)
-
(45)
Total direct
insurance
256,270
227,334
(86,283)
(79,582)
(31,224)
30,245
Reinsurance
acceptances
137,475
130,347
(55,708)
(36,250)
(26,026)
12,363
Total
393,745
357,681
(141,991)
(115,832)
(57,250)
42,608
Below
is an additional disclosure for Lloyd’s reporting purposes and is included to facilitate the
classification of the above segments into Lloyd’s aggregate classes of business:
2024
Gross
premiums
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Total
£’000
£’000
£’000
£’000
£’000
£’000
Fire and other
damage to
property of which
is:
Specialities
11,882
10,282
(2,246)
(2,456)
(5,763)
(183)
Energy
2,759
2,394
(801)
(736)
33
890
Third party liability
of which is:
Energy
(306)
(84)
28
43
(6)
(19)
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
36
Notes to the Syndicate Annual Report and Accounts
(continued)
4. Analysis of underwriting result
(continued)
2023
Gross
premiums
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Total
£’000
£’000
£’000
£’000
£’000
£’000
Direct Insurance
Accident & Health
15,529
13,657
(5,459)
(5,829)
(899)
1,470
Motor (other
classes)
10,605
10,946
(6,166)
(3,470)
(1,523)
(213)
Marine, aviation
and transport
14,518
13,747
(14,722)
(3,330)
2,507
(1,798)
Fire and other
damage to Property
150,776
143,112
(43,853)
(38,729)
(21,302)
39,228
Third party liability
881
276
(94)
(125)
(69)
(12)
Credit and
suretyship
31,661
25,767
(10,610)
(7,558)
(2,001)
5,598
Legal expenses
-
-
-
-
-
-
Total direct
insurance
223,970
207,505
(80,904)
(59,041)
(23,287)
44,273
Reinsurance
acceptances
168,210
173,674
(60,454)
(33,421)
(57,633)
22,166
Total
392,180
381,179
(141,358)
(92,462)
(80,920)
66,439
Below
is an additional disclosure for Lloyd’s reporting purposes and is included to facilitate the
classification of the above segments into
Lloyd’s
aggregate classes of business:
2023
Gross
premiums
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Total
£’000
£’000
£’000
£’000
£’000
£’000
Fire and other
damage to
property of which
is:
Specialities
8,782
8,323
(324)
(1,616)
(5,359)
1,024
Energy
1,368
1,235
(159)
(284)
28
820
Third party liability
of which is:
Energy
393
144
(41)
(64)
8
47
No gains or losses were recognised in profit or loss during the year on buying reinsurance (2023: £nil).
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
37
Notes to the Syndicate Annual Report and Accounts
(continued)
4. Analysis of underwriting result
(continued)
The gross premiums written for direct insurance by destination of risk is presented in the table
below:
2024
2023
£’000
£’000
United Kingdom
2,484
2,037
European Union Member States
270
263
United States
133,141
115,723
Rest of the World
120,375
105,947
Total gross premiums written
256,270
223,970
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
38
Notes to the Syndicate Annual Report and Accounts
(continued)
5. Technical provisions
2024
Gross
provisions
£’000
Reinsurance
assets
£’000
Net
provisions
£’000
Claims outstanding
Balance at 1 January
326,036
(81,701)
244,335
Claims paid during the year
(138,822)
25,680
(113,142)
Expected cost of current year claims
182,854
(33,909)
148,945
Change in estimate of prior year provisions
(40,863)
12,383
(28,480)
Effect of movements in exchange rates
490
(680)
(190)
Balance at 31 December
329,695
(78,227)
251,468
Unearned premiums
Balance at 1 January
144,163
(15,178)
128,985
Premiums written during the year
393,745
(85,644)
308,101
Premiums earned during the year
(357,681)
78,776
(278,905)
Effect of movements in exchange rate
(1,172)
268
(904)
Balance at 31 December
179,055
(21,778)
157,277
Deferred acquisition costs
Balance at 1 January
29,552
-
29,552
Incurred acquisition costs
76,226
-
76,226
Amortised deferred acquisition costs
(67,834)
-
(67,834)
Effect of movements in exchange rates
(289)
-
(289)
Balance at 31 December
37,655
-
37,655
2023
Gross
provisions
£’000
Reinsurance
assets
£’000
Net
provisions
£’000
Claims outstanding
Balance at 1 January
380,805
(119,905)
260,900
Claims paid during the year
(180,544)
33,216
(147,328)
Expected cost of current year claims
179,434
(18,936)
160,498
Change in estimate of prior year provisions
(38,076)
19,931
(18,145)
Effect of movements in exchange rate
(15,583)
3,993
(11,590)
Balance at 31 December
326,036
(81,701)
244,335
Unearned premiums
Balance at 1 January
140,894
(10,400)
130,494
Premiums written during the year
392,180
(86,939)
305,241
Premiums earned during the year
(381,179)
79,925
(301,254)
Effect of movements in exchange rate
(7,732)
2,236
(5,496)
Balance at 31 December
144,163
(15,178)
128,985
Deferred acquisition costs
Balance at 1 January
28,182
-
28,182
Incurred deferred acquisition costs
71,872
-
71,872
Amortised deferred acquisition costs
(69,128)
-
(69,128)
Effect of movements in exchange rates
(1,374)
-
(1,374)
Balance at 31 December
29,552
-
29,552
There was no provision for unexpired risks at 31 December 2024 (31 December 2023: £nil).
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
39
Notes to the Syndicate Annual Report and Accounts
(continued)
6. Net operating expenses
2024
2023
£’000
£’000
Acquisition costs
76,226
71,872
Change in deferred acquisition costs
(8,392)
(2,744)
Administrative expenses
20,146
17,039
Members
’
standard personal expenses
27,852
6,295
Net operating expenses
115,832
92,462
Members' standard personal expenses amounting to £27.9m (2023: £6.3m) are included in
administrative expenses. Members' standard personal expenses include Lloyd's subscriptions,
New Central Fund contributions, Managing Agent's fees and Profit Commission. The 2024
calendar year Profit Commission includes a timing catch up from prior years. The 2023
calendar year Profit Commission would have been £3.8m higher on that basis.
Total commissions for direct insurance business for the year amounted to:
Administrative expenses include:
2024
2023
£’000
£’000
F
ees payable to the Syndicate’s auditor for the audit of these
Syndicate Annual Report and Accounts
336
327
F
ees payable to the Syndicate’s auditor and its associates in
respect of other services pursuant to legislation
124
38
460
365
The 2024 audit fees were paid to Deloitte LLP (2023: to BDO LLP).
2024
2023
£’000
£’000
Total commission for direct insurance business
56,435
47,572
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
40
Notes to the Syndicate Annual Report and Accounts
(continued)
7. Staff costs and staff numbers
2024
2023
£’000
£’000
Wages and salaries
8,943
8,482
Social security costs
1,126
1,087
Pension costs
1,222
1,043
11,291
10,612
The average number of staff working for the Syndicate during the year is as follows:
2024
2023
Underwriting
25
23
Claims
4
3
Administration and finance
42
38
71
64
8. Emoluments of the Directors of Blenheim Underwriting Limited
and the Active Underwriter
The aggregate emoluments of the Directors and staff of the Syndicate are met by Blenheim
and subsequently recharged to the Syndicate. These are disclosed within the financial
statements of that company.
The directors received the following aggregate remuneration charged to the Syndicate.
2024
2023
£’000
£’000
Directors emoluments
1,134
1,000
The Active Underwriter received the following aggregate remuneration charged to the
Syndicate.
2024
2023
£’000
£’000
Emoluments
339
321
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
41
Notes to the Syndicate Annual Report and Accounts
(continued)
9. Investment return
2024
2023
Interest and similar income
From financial assets designated at fair value through profit
or loss:
£’000
£’000
Interest from financial instruments
9,275
5,523
Interest on cash and cash equivalents
1,605
414
10,880
5,937
Other income from investments
From financial assets designated at fair value through profit
or loss:
Gains on the realisation of investments
10,089
784
Losses on the realisation of investments
(7,947)
(532)
Unrealised gains on investments
2,170
2,282
Unrealised losses on investments
(1,869)
(28)
2,443
2,506
Investment management expenses
(212)
(148)
Total investment return
13,111
8,295
Transferred to the technical account from the non-technical
account
13,111
8,295
2024
2023
Calendar year investment return
£’000
£’000
Average amount of syndicate funds available for investment
during the year
310,138
238,809
Investment return (net of expenses)
13,111
8,295
Calendar year investment yield
4.2%
3.5%
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
42
Notes to the Syndicate Annual Report and Accounts
(continued)
10. Financial investments
2024
2023
Carrying
value
Purchase
price
Carrying
value
Purchase
price
£’000
£’000
£’000
£’000
Shares and other variable yield
securities and units in unit trusts
7,107
7,107
7,541
7,541
Syndicate loans to central fund
2,667
2,667
3,293
3,293
Debt securities and other fixed
income securities
302,942
301,394
160,024
159,675
Total financial investments
312,716
311,168
170,858
170,509
The amount attributable to listed investments is £199.9m (2023: £144.1m)
Amounts included within shares and other variable securities include Collective Investment
Schemes where funds are invested in a single vehicle which invests in investments.
There was no material change in fair value for financial instruments held at fair value
attributable to own credit risk in the current period.
The table below presents an analysis of financial investments by their
measurement classification:
2024
2023
£’000
£’000
Financial assets measured at fair value through profit or loss
312,716
170,858
Total financial investments
312,716
170,858
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
43
Notes to the Syndicate Annual Report and Accounts
(continued)
10. Financial investments
(continued)
The following table shows financial investments recorded at fair value analysed between the
three levels in the fair value hierarchy.
Level 1
Level 2
Level 3
Total
£’000
£’000
£’000
£’000
31 December 2024
Shares and other variable yield
securities and units in unit trusts
376
6,731
-
7,107
Syndicate loans to central fund
-
-
2,667
2,667
Debt securities and other fixed income
securities
-
302,942
-
302,942
Total financial investments
376
309,673
2,667
312,716
Total
376
309,673
2,667
312,716
Level 1
Level 2
Level 3
Total
£’000
£’000
£’000
£’000
31 December 2023
Shares and other variable yield
securities and units in unit trusts
967
6,574
-
7,541
Syndicate loans to central fund
-
-
3,293
3,293
Debt securities and other fixed income
securities
-
160,024
-
160,024
Total financial investments
967
166,598
3,293
170,858
Total
967
166,598
3,293
170,858
Included in the level 1 category are financial assets that are measured by reference to
published quotes in an active market. A financial instrument is regarded as quoted in an active
market if quoted prices are readily and regularly available from an exchange, dealer, broker,
industry syndicate, pricing service or regulatory agency and those prices represent actual and
regularly occurring market transactions on an arm's length basis.
Included in the level 2 category are financial assets measured using a valuation technique
based on assumptions that are supported by prices from observable current market
transactions. For example, assets for which pricing is obtained via pricing services but where
prices have not been determined in an active market, financial assets with fair values based
on broker quotes, investments in private equity funds with fair values obtained via fund
managers and assets that are valued using the Syndicate's own models whereby the
significant inputs into the assumptions are market observable.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
44
Notes to the Syndicate Annual Report and Accounts
(continued)
10. Financial investments
(continued)
Included in the level 3 category, are financial assets measured using a valuation technique
(model) based on assumptions that are neither supported by prices from observable current
market transactions in the same instrument nor are they based on available market data.
Therefore, unobservable inputs reflect the Syndicate's own assumptions about the
assumptions that market participants would use in pricing the asset or liability (including
assumptions about risk). These inputs are developed based on the best information available,
which might include the Syndicate's own data.
The main asset classes in the level 3 category are unlisted equities, structured bond-type debt
products and interest rate swaps.
•
For unlisted equities, the non-observable inputs relate to assumptions regarding the
price/equity ratio of the investee compared to those of comparable listed entities together
with an illiquidity adjustment which typically ranges between 10-20%.
•
For structured bond-type debt products, these are valued using an internally developed
cash flow model using a discount rate with a non-observable illiquidity adjustment of
between 5-10%.
•
For interest rate swaps, these are valued from broker quotes which include non-observable
discount rates based on the credit rating of the counterparty.
The Syndicate’s level 3 financial investment are in respect of a loan to the Lloyd’s Central Fund.
Lloyd’s considers the loans to meet the criteria to be recognised as a basic financial instrument
under FRS 102 and be classified as level 3 in the fair value hierarchy. These loans are being
valued at cost.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
45
Notes to the Syndicate Annual Report and Accounts
(continued)
11. Debtors arising out of direct insurance operations
2024
2023
£’000
£’000
Due from intermediaries (within one year)
80,372
59,340
Due from intermediaries (after one year)
3,706
1,207
84,078
60,547
12. Debtors arising out of reinsurance operations
2024
2023
£’000
£’000
Due from intermediaries (within one year)
87,460
82,817
Due from intermediaries (after one year)
170
508
87,630
83,325
13. Other debtors
2024
2023
£’000
£’000
Amounts due from members
2,739
2,468
Other
8,468
6,871
11,207
9,339
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
46
Notes to the Syndicate Annual Report and Accounts
(continued)
14. Creditors arising out of direct insurance operations
2024
2023
£’000
£’000
Direct Business - intermediaries (within one year)
1,850
1,380
Direct Business - intermediaries (after one year)
1,304
-
3,154
1,380
15. Creditors arising out of reinsurance operations
2024
2023
£’000
£’000
Reinsurance (within one year)
47,807
46,666
Reinsurance (after one year)
1,380
-
49,187
46,666
16. Other creditors
2024
2023
£’000
£’000
Other related party balances (non-syndicates)
1,817
1,792
Managing Agency Profit Commission payable
22,197
515
Other liabilities
186
573
24,200
2,880
Other creditors include £24.0m (2023: £2.3m) due to related undertakings.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
47
Notes to the Syndicate Annual Report and Accounts
(continued)
17. Cash and cash equivalents
2024
2023
£’000
£’000
Cash at bank and in hand
19,360
69,444
Short term debt instruments presented within other financial
investments
7,106
7,541
26,466
76,985
Only deposits with credit institutions with maturities of three months or less that are used by
the Syndicate in the management of its short-term commitments are included in cash and cash
equivalents.
Included within cash and cash equivalents are the following amounts which are not available
for use by the Syndicate because they are held in regulated bank accounts in overseas
jurisdictions:
2024
2023
£’000
£’000
Short term debt instruments presented within other financial
investments
4,604
6,050
4,604
6,050
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
48
Notes to the Syndicate Annual Report and Accounts
(continued)
18. Analysis of net debt
At 1
January
2024
Cash
flows
Acquired
Fair value
and
exchange
movements
Non-
cash
changes
At 31
December
2024
£’000
£’000
£’000
£’000
£’000
£’000
Cash and cash
equivalents
76,985
(50,568)
-
49
-
26,466
Total
76,985
(50,568)
-
49
-
26,466
19. Other assets
2024
2023
£’000
£’000
Overseas deposits
17,221
22,150
Overseas deposits are advanced as a condition of conducting underwriting business in certain
countries and therefore are restricted assets.
20. Related parties
Blenheim, Managing Agent of the Syndicate since 6 August 2021 is a wholly owned subsidiary
of WBC.
Blenheim incurs the majority of the Syndicate’s
administrative expenses which it then
recharges to the Syndicate without mark-up. Expenses incurred jointly for the Group are
recharged to group companies on a basis representing the nature of the expenses and their
usage by group companies. As at 31 December 2024, amounts owed to Blenheim from the
Syndicate relating to expense recharges totalled £1.8m (2023: £1.8m).
Managing agency fees of £3.0m (2023: £2.6m) were charged by Blenheim to the Syndicate
during 2024. The balance owing as at 31 December 2024 is £nil (2023: £nil). Managing Agent
Profit Commission relating to Blenheim of £4.7m was accrued on the 2022 Year of Account
and £17.5m was accrued on the 2023 Year of Account (2023: £0.5m on the 2022 Year of
Account). The amounts only become payable subject to the Year of Account closing with a
profit.
Blenheim receives fees for acting as a manager of several consortia that are led by Syndicate
5886. No fees were charged to the Syndicate by Blenheim for this service.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
49
Notes to the Syndicate Annual Report and Accounts
(continued)
20. Related parties
(continued)
As part of the Group, WBC
wholly owns White Bear Corporate Capital Limited, a Lloyd’s
corporate member which participates on Syndicate 5886 on the 2022 Year of Account for
£104.8m on the 2023 Year of Account for £105.0m and on the 2024 Year of Account for
£117.5m. The Syndicate provided five binding authorities (2023: three binding authorities) to
Blenheim Partnerships Ltd (“BPL”) formerly White Bear Managers Ltd (“WBM”), a Lloyd’s
coverholder and member of the Group. During the financial year, BPL had written total fees of
£1.7m (2023: £2.1m) in respect of the services for these binding authorities. Both companies
have common Directors with Blenheim.
All transactions are entered into on an arm’s length basis.
21. Funds at Lloyd's
Every member is required to hold capital at Lloyd's which is held in trust and known as Funds
at Lloyd's (“FAL”). These funds are intended primarily to cover circumstances where Syndicate
assets prove insufficient to meet participating members' underwriting liabilities.
The level of FAL that Lloyd's requires a member to maintain is determined by Lloyd's based on
PRA requirements and resource criteria. FAL has regard to a number of factors including the
nature and amount of risk to be underwritten by the member and the assessment of the
reserving risk in respect of business that has been underwritten. Since FAL is not under the
management of the Managing Agent, no amount has been shown in these Annual Syndicate
Accounts by way of such capital resources. However, the Managing Agent is able to make a
call on the members' FAL to meet liquidity requirements or to settle losses.
22. Bank facilities
At the start of the year, the Syndicate had the benefit of a revolving credit facility for US$70.0m
with Barclays Bank Plc. This facility was reduced to US$50.0m in December 2024 and was
subsequently renewed in December 2024 for the 12 months to 31 December 2025.
The Syndicate utilised US$15.0m of the letter of credit facility until February 2024 when the
utilisation was reduced to US$nil.
23. Off-Statement of Financial Position items
As noted in Note 22, during the year, the Syndicate had the benefit of a combined letter of
credit and revolving credit facility of US$70.0m which was reduced to US$50.0m in December
2024 (2023: US$70.0m) with Barclays Bank PLC of which it utilised US$15.0m until February
2024 when the utilisation was reduced to US$nil (2023: US$15.0m) for the purposes of
regulated trust funding at 31 December 2024. This arrangement is considered to be off-
Statement of Financial Position as neither the asset nor the liability are owned by the Syndicate.
24. Risk and capital management
This note presents information about the nature and extent of insurance and financial risks to
which the Syndicate is exposed, the Managing Agent’s objectives, policies and processes for
measuring and managing insurance and financial risks, and for managing the
Syndicate’s
capital.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
50
Notes to the Syndicate Annual Report and Accounts
(continued)
24. Risk and capital management
(continued)
a) Risk management framework
The Syndicate's risk and financial management framework aims to protect the Syndicate's
members
’
capital from events that might otherwise prevent the Syndicate from meeting its
policyholder obligations, while maximising the returns to its members. The Directors recognise
the critical importance of having efficient and effective risk management systems in place.
Blenheim maintains a risk management function for the Syndicate with clear terms of reference
from the Board and its committees. The RiC is the predominant committee to consider risk
management within the governance structure. The RiC is a non-executive committee formed
by and at the direction of the Board.
The RiC is intended to act as a governance body for ensuring Blenheim maintains a
comprehensive and up to date risk management framework to enable monitoring of the risks
to which the business and syndicates under management are, or could be exposed to, and the
appropriateness and effectiveness of the strategies and the control environment used to
mitigate them.
The Board, on the recommendation of the RiC, approves Blenheim’s core risk management
policies and any commercial, regulatory and organisational requirements of such policies. The
Board places significant emphasis on the assessment and documentation of risks and controls,
including the articulation of the Syndicate's risk appetite.
b) Capital management objectives, policies and approach
Capital framework at Lloyd's
Lloyd's is a regulated undertaking and subject to the supervision of the PRA under the Financial
Services and Markets Act 2000.
Within the supervisory framework, Lloyd's applies capital requirements at member level and
centrally to ensure that Lloyd's complies with Solvency II capital requirements, and beyond that
to meet its own financial strength, licence and ratings objectives. Although Lloyd's capital
setting processes use a capital requirement set at syndicate level as a starting point, the
requirement to meet Solvency II and Lloyd's capital requirements only apply at
Lloyd’s
overall
and individual member level respectively, not at syndicate level. Accordingly, the capital
requirement in respect of the Syndicate is not disclosed in these Annual Syndicate Accounts.
A syndicate may be comprised of one or more underwriting members of Lloyd's. Each member
is liable for its own share of underwriting liabilities on the Syndicate on which it participates but
not other members' shares. Accordingly, the capital requirement that Lloyd's sets for each
member operates on a similar basis. Each member's SCR shall thus be determined by the sum
of the member's share of the Syndicate SCR 'to ultimate'. Where a member participates on
more than one syndicate, a credit for diversification is provided to reflect the spread of risk,
but consistent with determining an SCR which reflects the capital requirement to cover a 1 in
200 year loss 'to ultimate' for that member. Over and above this, Lloyd's applies a capital uplift
to the member's capital requirement, known as the Economic Capi
tal Assessment (“ECA”).
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
51
Notes to the Syndicate Annual Report and Accounts
(continued)
24. Risk management
(continued)
c) Insurance risk
The purpose of this uplift, is to meet Lloyd's financial strength, licence and ratings objectives.
The capital uplift applied for 2024 was 35% (2023:
35%) of the members’ SCR 'to ultimate'.
Provision of capital by members
Each member may provide capital to meet its ECA by assets held in trust by Lloyd's specifically
for that member (FAL), held within and managed within a syndicate (funds in syndicate) or as
the member's share of the members' balances on each syndicate on which it participates.
Accordingly, the ending member’s balances reported on the Statement of Financial Position
on page 22, represent resources available to meet members' and Lloyd's capital requirements.
The principal risk the Syndicate faces under insurance contracts is that the actual claims or
the timing thereof, differ from expectations.
This is influenced by the frequency of claims, severity of claims, actual claims paid and
subsequent development of long-term claims. Therefore, the objective of the Syndicate is to
ensure that sufficient reserves are available to cover these liabilities.
The risk exposure is mitigated by diversification across a large portfolio of insurance contracts
and geographical areas. The variability of risks is also improved by careful selection and
implementation of underwriting strategy guidelines, as well as the use of reinsurance
arrangements. Further details are set out in the Managing Agent’s Report on pages
5 to 12.
The Syndicate purchases reinsurance as part of its risk mitigation strategies. Reinsurance
ceded is placed largely on a non-proportional basis. Non-proportional reinsurance is excess-
of-loss reinsurance designed to mitigate the Syndicate's net exposure to large losses. Amounts
recoverable from reinsurers are estimated in a manner consistent with the outstanding claims
provision and are in accordance with the reinsurance contracts. The Syndicate's placement of
reinsurance is diversified such that it is neither dependent on a single reinsurer nor are the
operations substantially dependent upon any single reinsurance contract.
The RC, a management committee, oversees the management of reserving risk. The use of
standardised and internal modelling techniques, as well as benchmarking and the review of
claims development are key in mitigating reserving risk. The purpose of these underwriting,
reinsurance and reserving strategies is to limit exposure to catastrophes or large losses based
on the Syndicate's risk appetite as decided by the Board.
In terms of COVID-19 and Ukraine losses, including Russian related aviation losses,
management have considered all policies exposed and potential coverages. The validity of
each potential claims advice was assessed and any provision made on a case by case basis.
Many issues are yet to be clarified from a legal perspective and to date few cases, particularly
as they relate to reinsurance, have reached either arbitration or court. We believe that the
overall loss reserves are sufficient to reflect the uncertainties of COVID-19 and Ukraine losses.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
52
Notes to the Syndicate Annual Report and Accounts
(continued)
24. Risk management
(continued)
c) Insurance risk
The Syndicate uses commercially available risk management software and internal modelling
methodologies including specific deterministic realistic disaster scenarios (“RDS”), in
accordance with Lloyd’s franchise guidelines, to enable the quantification and
management of
natural and man-made catastrophe portfolio exposures. However, there is always a risk that
claims that arise are greater than those resulting from modelled scenarios depending on the
size, nature and geographic impact of the event or from un-modelled events.
Based on the July 2024 Lloyd’s RDS submission, the largest Gross RDS was a Florida (Miami
-
Dade) windstorm event with an industry loss estimate of US$131.0bn. This equates to a loss
to the Syndicate of US$192.3m gross and US$64.6m net of reinsurance recoveries and
reinstatement costs (2023: Florida (Miami-Dade) windstorm event US$207.9m gross and
US$85.3m net of reinsurance recoveries and reinstatement costs).
Key assumptions
The principal assumption underlying the liability estimates is that the future claims development
will follow a similar pattern to past claims development experience. This includes assumptions
in respect of average claim costs, claim handling costs, claim inflation factors and claim
numbers for each underwriting year. Additional qualitative judgements are used to assess the
extent to which past trends may not apply in the future, for example: one-off occurrence;
changes in market factors such as public attitude to claiming and economic conditions, as well
as internal factors such as portfolio mix, policy conditions and claims handling procedures.
Judgement is further used to assess the extent to which external factors such as judicial
decisions and government legislation affect the estimates.
Other key circumstances affecting the reliability of assumptions include variation in interest
rates, delays in settlement and changes in foreign currency rates.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
53
Notes to the Syndicate Annual Report and Accounts
(continued)
24. Risk management
(continued)
c) Insurance risk
Sensitivities
The claim liabilities are sensitive to the key assumptions that follow. It has not been plausible
to quantify the sensitivity of certain assumptions such as legislative changes or uncertainty in
the estimation process.
The following analysis is performed for reasonably possible movements in key assumptions
with all other assumptions held constant, showing the impact on gross and net liabilities, profit
and members' balances. The correlation of assumptions will have a significant effect in
determining the ultimate claims liabilities, but to demonstrate the impact due to changes in
assumptions, assumptions had to be changed on an individual basis. It should be noted that
movements in these assumptions can be non-linear.
31 December 2024
Gross
+5.0%
£’000
-5.0%
£’000
Claims outstanding
–
gross of reinsurance
16,485
(16,485)
Claims outstanding
–
net of reinsurance
12,573
(12,573)
31 December 2023
+5.0%
£’000
-5.0%
£’000
Claims outstanding
–
gross of reinsurance
16,302
(16,302)
Claims outstanding
–
net of reinsurance
12,217
(12,217)
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
54
Notes to the Syndicate Annual Report and Accounts
(continued
)
24. Risk management
(continued)
c) Insurance risk
(continued)
Claims development table gross of reinsurance
The table below and on the following page shows the Syndicate's cumulative incurred claims development, including both claims notified and
IBNR for each underwriting year, together with the cumulative payments to date on a gross and net of reinsurance basis at the Statement of
Financial Position date. The Syndicate has elected to translate estimated claims and claims payments at a consistent rate of exchange as
determined by the Statement of Financial Position date.
Underwriting Year
Estimate of cumulative
Gross claims incurred:
2017
£’000
2018
£’000
2019
£’000
2020
£’000
2021
£’000
2022
£’000
2023
£’000
2024
£’000
Total
£’000
At end of underwriting year
122,562
87,126
77,505
116,836
152,297
201,588
93,121
113,684
One year later
149,345
124,108
135,979
164,574
212,613
242,552
123,293
-
Two years later
156,165
126,346
144,087
168,301
209,414
236,614
-
-
Three years later
156,390
124,632
146,563
173,575
210,902
-
-
-
Four years later
157,310
121,181
149,802
178,289
-
-
-
-
Five years later
158,033
120,134
150,484
-
-
-
-
-
Six years later
158,059
119,168
-
-
-
-
-
-
Seven years later
156,527
-
-
-
-
-
-
-
Estimate of gross claims reserve
156,527
119,168
150,484
178,289
210,902
236,614
123,293
113,684
1,288,961
Less gross claims paid
(153,465)
(115,671)
(140,324)
(160,613)
(170,016)
(168,933)
(42,731)
(7,513)
(959,266)
Gross claims reserve
3,062
3,497
10,160
17,676
40,886
67,681
80,562
106,171
329,695
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
55
Notes to the Syndicate Annual Report and Accounts
(continued
)
24. Risk management
(continued)
c) Insurance risk
(continued)
Claims development table net of reinsurance
The table below show the Syndicate's cumulative incurred claims development, including both claims notified and IBNR for each underwriting
year, together with the cumulative payments to date on a net of reinsurance basis at the Statement of Financial Position date.
Underwriting Year
2017
2018
2019
2020
2021
2022
2023
2024
Total
Estimate of cumulative
Net claims incurred:
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
At end of underwriting year
66,988
61,374
59,488
82,282
114,342
148,669
81,551
90,559
One year later
82,320
88,993
105,336
121,469
160,417
202,145
106,183
-
Two years later
84,641
92,395
111,530
124,044
158,453
200,619
-
-
Three years later
82,735
90,139
115,262
125,922
160,275
-
-
-
Four years later
82,594
88,098
119,465
131,733
-
-
-
-
Five years later
82,143
87,283
120,801
-
-
-
-
-
Six years later
82,145
86,258
-
-
-
-
-
-
Seven years later
81,265
-
-
-
-
-
-
-
Estimate of net claims reserves
81,265
86,258
120,801
131,733
160,275
200,619
106,183
90,559
977,693
Less net claims paid
(79,496)
(84,038)
(112,282)
(118,161)
(134,315)
150,855)
(39,693)
(7,385)
(726,225)
Net claims reserve
1,769
2,220
8,519
13,572
25,960
49,764
66,490
83,174
251,468
The uncertainty associated with the ultimate claims experience of an underwriting year is greatest when the underwriting year is at an early stage
of development and the margin for future experience potentially being more adverse than assumed is at its highest. As claims develop, and the
ultimate cost of the claims becomes more certain, the relative level of margin should decrease. Due, however, to the uncertainty inherent in the
claims estimation process, initial reserves may not always be in a surplus.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
56
Notes to the Syndicate Annual Report and Accounts
(continued
)
24. Risk management
(continued)
d) Financial risk
The focus of financial risk management for the Syndicate is ensuring that the proceeds from
its financial assets are sufficient to fund the obligations arising from its insurance contracts.
The goal of the investment management process is to optimise the risk-adjusted investment
income and risk-adjusted total return by investing in a diversified portfolio of securities, whilst
ensuring that the assets and liabilities are managed on a cash flow and duration basis in line
with the investment guidelines.
1. Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss by failing
to discharge an obligation. The following policies and procedures are in place to mitigate the
exposure to reinsurer credit risk:
•
Reinsurance is placed with counterparties that have a good credit rating and concentration
of risk is avoided by following policy guidelines in respect of counterparties' limits. If the
counterparty has no credit rating, then collateral is usually sought to mitigate any risk. This
is monitored by the RISBC, a management committee.
The table below shows the maximum exposure to credit risk (including an analysis of financial
assets exposed to credit risk) for the components of the statement of financial position. The
maximum exposure is shown gross, before the effect of mitigation through collateral
agreements.
31 December 2024
£’000
Neither past due
nor impaired
assets
Past due
but not
impaired
assets
Gross
value of
Impaired
assets
Total
Shares and other variable yield
securities and units in unit trusts
7,107
-
-
7,107
Debt securities and other fixed
income securities
302,942
-
-
302,942
Syndicate loans to central fund
2,667
-
-
2,667
Deposits with ceding undertakings
221
-
-
221
Reinsurers share of claims
outstanding
78,227
-
-
78,227
Debtors arising out of direct
insurance operations
75,251
8,827
-
84,078
Debtors arising out of reinsurance
operations
77,093
10,537
-
87,630
Other debtors and accrued
interest
32,717
-
-
32,717
Cash at bank and in hand
19,360
-
-
19,360
Total
595,585
19,364
-
614,949
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
57
Notes to the Syndicate Annual Report and Accounts
(continued
)
24. Risk management
(continued)
d) Financial risk
(continued)
1. Credit risk
(continued)
31 December 2023
£’000
Neither past
due nor
impaired
assets
Past due
but not
impaired
assets
Gross
value of
Impaired
assets
Total
Shares and other variable yield
securities and units in unit trusts
7,541
-
-
7,541
Debt securities and other fixed income
securities
160,024
-
-
160,024
Syndicate loans to central fund
3,293
-
-
3,293
Deposits with ceding undertakings
70
-
-
70
Reinsurers share of claims outstanding
81,701
-
-
81,701
Debtors arising out of direct insurance
operations
56,523
4,024
-
60,547
Debtors arising out of reinsurance
operations
69,360
13,965
-
83,325
Other debtors and accrued interest
34,899
-
-
34,899
Cash at bank and in hand
69,444
-
-
69,444
Total
482,855
17,989
-
500,844
The table below sets out the age analysis of financial assets that are past due but not impaired at the
Statement of Financial Position date:
£’000
31 December 2024
0-3 months
past due
3-6 months
past due
6-12 months
past due
Greater
than one
year
Total
Debtors arising out of direct
insurance operations
3,341
1,583
2,329
1,574
8,827
Debtors arising out of
reinsurance operations
10,537
-
-
-
10,537
Total
13,878
1,583
2,329
1,574
19,364
£’000
31 December 2023
0-3 months
past due
3-6 months
past due
6-12 months
past due
Greater
than one
year
Total
Debtors arising out of direct
insurance operations
513
190
3,321
-
4,024
Debtors arising out of
reinsurance operations
13,965
-
-
-
13,965
Total
14,478
190
3,321
-
17,989
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
58
Notes to the Syndicate Annual Report and Accounts
(continued
)
24. Risk management
(continued)
d) Financial risk
(continued)
1. Credit risk
(continued)
The table below provides information regarding the credit risk exposure of the Syndicate at 31 December
2024 by classifying assets according to independent credit ratings of the counterparties. AAA is the
highest possible rating. Assets that fall outside the range of AAA to BB are classified as speculative
grade and have not been rated..
31 December 2024
£’000
AAA
AA
A
BBB
Other
Not
Rated
Total
Shares and other variable yield
securities and units in unit
trusts
377
-
6,730
-
-
-
7,107
Debt securities and other fixed
income securities
30,650
68,086
150,225
53,981
-
-
302,942
Syndicate loans to central fund
-
-
2,667
-
-
-
2,667
Deposits with ceding
undertakings
-
-
221
-
-
-
221
Reinsurers share of claims
outstanding
-
6,396
46,606
-
-
25,225
78,227
Cash at bank and in hand
-
-
19,360
-
-
-
19,360
Debtors arising out of direct
insurance operations
-
-
-
-
-
84,078
84,078
Debtors arising out of
reinsurance operations
-
-
-
-
-
87,630
87,630
Other debtors and accrued
interest
6,328
1,954
2,389
1,610
600
19,836
32,717
Total
37,355
76,436
228,198
55,591
600
216,769
614,949
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
59
Notes to the Syndicate Annual Report and Accounts
(continued
)
24. Risk management
(continued)
d) Financial risk
(continued)
1. Credit risk
(continued)
31 December 2023
£’000
AAA
AA
A
BBB
Other
Not
Rated
Total
Shares and other variable yield
securities and units in unit
trusts
967
-
6,574
-
-
-
7,541
Debt securities and other fixed
income securities
19,629
47,470
83,197
9,728
-
-
160,024
Syndicate loans to central fund
-
-
3,293
-
-
-
3,293
Deposits with ceding
undertakings
-
-
70
-
-
-
70
Reinsurers share of claims
outstanding
-
12,431
45,071
-
220
23,979
81,701
Cash at bank and in hand
-
-
69,444
-
-
-
69,444
Debtors arising out of direct
insurance operations
-
-
-
-
-
60,547
60,547
Debtors arising out of
reinsurance operations
-
-
-
-
-
83,325
83,325
Other debtors and accrued
interest
13,653
2,699
2,517
1,766
1,445
12,819
34,899
Total
34,249
62,600
210,166
11,494
1,665
180,670
500,844
Maximum credit exposure
It is the Syndicate's policy to maintain accurate and consistent risk ratings across its credit
portfolio. This enables management to focus on the applicable risks and the comparison of
credit exposures across all lines of business.
During the year, no credit exposure limits were exceeded.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
60
Notes to the Syndicate Annual Report and Accounts
(continued
)
24. Risk management
(continued)
d) Financial risk
(continued)
2. Liquidity risk
Liquidity risk is the risk that the Syndicate may not have enough cash to pay insurance claims
and other liabilities. The Syndicate tries to reduce this risk by reviewing its expected cash
obligations on a quarterly basis and keeping adequate cash on deposit to meet those
obligations and utilising available banking facilities.
The table below summarises the maturity profile of the Syndicate's financial liabilities based
on remaining undiscounted contractual obligations, including interest payable and outstanding
claim liabilities based on the estimated timing of claim payments resulting from recognised
insurance liabilities. Repayments which are subject to notice are treated as if notice were to
be given immediately.
31 December 2024
£’000
Undiscounted net cash flows
No
maturity
stated
0-1 Year
1-3
Years
3-5 Years
More than
5 years
Total
Creditors
-
73,853
2,688
-
-
76,541
Claims outstanding
-
167,796
113,367
32,939
15,593
329,695
Total
-
241,649
116,055
32,939
15,593
406,236
31 December 2023
£’000
Undiscounted net cash flows
No
maturity
stated
0-1 Year
1-3
Years
3-5 Years
More than
5 years
Total
Creditors
-
50,926
-
-
-
50,926
Claims outstanding
-
170,432
113,686
29,109
12,809
326,036
Total
-
221,358
113,686
29,109
12,809
376,962
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
61
Notes to the Syndicate Annual Report and Accounts
(continued
)
24. Risk management
(continued)
d) Financial risk
(continued)
Market risk is the risk that the fair value or future cash flows of a financial instrument or
insurance contract will fluctuate because of changes in market prices. Market risk comprises
three types of risk: interest rate risk, currency risk and other price risks.
The objective of market risk management is to manage and control market risk exposures
within acceptable parameters, while optimising the return on risk.
a) Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in foreign exchange rates. The Syndicate's functional currency
is US Dollars and its exposure to foreign exchange risk arises primarily with respect to
transactions in Sterling, Euro, Japanese Yen, Canadian Dollars and Australian Dollars.
The table below summarises the exposure of the financial assets and liabilities to foreign
currency exchange risk at the reporting date, as follows:
31 December 2024
CNV £’000
GBP
USD
EUR
CAD
AUD
JPY
Total
Investments
2,733
279,215
83
30,906
-
-
312,937
Reinsurers’ share of
technical provisions
1,505
92,089
2,888
3,523
-
-
100,005
Debtors
14,071
138,220
17,579
6,733
5,870
442
182,915
Other assets
9,518
13,686
150
3,229
9,086
912
36,581
Prepayments and
accrued income
4,318
30,079
2,696
2,141
2,670
40
41,944
Total Assets
32,145
553,289
23,396
46,532
17,626
1,394
674,382
Technical provisions
(32,321)
(401,516)
(39,566)
(18,564)
(15,829)
(954)
(508,750)
Creditors
(24,527)
(44,018)
(4,757)
(2,880)
(153)
(206)
(76,541)
Accruals and deferred
income
(1,064)
(213)
-
-
-
-
(1,277)
Total Liabilities
(57,912)
(445,747)
(44,323)
(21,444)
(15,982)
(1,160)
(586,568)
Total capital and
reserves
25,767
(107,542)
20,927
(25,088)
(1,644)
(234)
(87,814)
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
62
Notes to the Syndicate Annual Report and Accounts
(continued
)
24. Risk management
(continued)
d) Financial risk
(continued)
3. Market risk
(continued)
a) Currency risk
(continued)
31 December 2023
CNV £’000
GBP
USD
EUR
CAD
AUD
JPY
Total
Investments
3,303
136,733
5
30,887
-
-
170,928
Reinsurers’ share of
technical provisions
1,644
91,512
1,215
2,508
-
-
96,879
Debtors
13,342
117,656
10,681
4,643
5,859
1,030
153,211
Other assets
9,362
63,030
702
3,862
11,465
3,173
91,594
Prepayments and
accrued income
3,646
22,843
1,612
1,907
2,828
126
32,962
Total Assets
31,297
431,774
14,215
43,807
20,152
4,329
545,574
Technical provisions
(32,063)
(350,139)
(45,732)
(19,825)
(18,164)
(4,276)
(470,199)
Creditors
(3,511)
(43,277)
(1,556)
(2,398)
(65)
(119)
(50,926)
Accruals and deferred
income
(1,205)
(276)
-
-
-
-
(1,481)
Total Liabilities
(36,779)
(393,692)
(47,288)
(22,223)
(18,229)
(4,395)
(522,606)
Total capital and
reserves
5,482
(38,082)
33,073
(21,584)
(1,923)
66
(22,968)
The Syndicate holds assets and liabilities in these six main currencies. The Syndicate for the
most part aims to ensure its assets and liabilities match in currency as closely as possible to
mitigate the currency risk. The currency shortfall in the currencies above is partly driven by the
gross claims being in those currencies and any recoveries being in US Dollars. However, it
should be noted that there is a degree of currency mitigation because the reinsurance
collections made on these losses are based on the gross losses being converted to Sterling at
the prevailing exchange rate to mitigate the currency risk.
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
63
Notes to the Syndicate Annual Report and Accounts
(continued
)
24. Risk management
(continued)
d) Financial risk
(continued)
3. Market risk
(continued)
b) Currency risk
(Continued)
Sensitivity to changes
The table below gives an indication of the impact on profit of a reasonably possible change in
the relative strength of Sterling
(“GBP”) exchange rate (“FX rate”)
against the value of the US
Dollar
(“USD”)
, Canadian Dollar
(“CAD”)
, Australian Dollar
(“AUD”)
, Japanese Yen
(“JPY”)
and
Euro
(“EUR”)
simultaneously. The analysis is based on the information as at 31 December
2024.
Impact on profit and members’ balance
2024
2023
£’000
£’000
Sterling weakens
10% against other currencies
(11,358)
(2,845)
20% against other currencies
(22,716)
(5,690)
Sterling strengthens
10% against other currencies
11,358
2,845
20% against other currencies
22,716
5,690
Blenheim Syndicate 5886
Syndicate Annual Report and Accounts
64
Notes to the Syndicate Annual Report and Accounts
(continued
)
24. Risk management
(continued)
d) Financial risk
(continued)
3. Market risk
(continued)
b) Interest rate risk
Interest rate risk is the risk that the value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rates.
Floating rate instruments expose the Syndicate to cash flow interest risk, whereas fixed rate
instruments expose the Syndicate to fair value interest risk.
The most significant contribution to risk in the fixed income portfolio is interest rate risk:
Interest rate risk
Impact on
results
before tax
2024
£’000
Impact on
members
balances
2024
£’000
Impact on
results
before tax
2023
£’000
Impact on
members
balances
2023
£’000
50 basis points increase
(2,255)
(2,255)
(1,389)
(1,389)
50 basis points decrease
2,210
2,210
1,406
1,406
The Board monitors the duration of investments in order to manage the interest rate risk within
the fixed income portfolio. If interest rates fall the syndicates fixed income securities fair value
will tend to increase and if they rise the fair value will tend to decrease. The value of Debt
securities and other fixed income securities at 31 December 2024 was £302.9m (2023:
£160.0m) with an average duration of around 1.54 years (2023: 1.81 years).
Insurance liabilities are not discounted and therefore not exposed to interest rate risk.
25. Subsequent events
The Syndicate will distribute the 2022 underwriting year profit of £28.0m in US Dollars to
members in June 2025. The Syndicate will distribute the 2022 Underwriting Year Managing
Agency Profit Commission of £4.7m in Sterling to Blenheim in March 2025.