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Syndicate 1176
Report, Annual Accounts and Underwriting Year Accounts
Syndicate 1176
Contents
2024 Annual Accounts
Syndicate Information 1
Underwriter’s Report 2
Managing Agent’s Report 8
Statement of Managing Agent's Responsibilities 15
Independent Auditors' Report to the Members of Syndicate 1176 16
Statement of Comprehensive Income for the year ended 31 December 2024 20
Statement of Financial Position as at 31 December 2024 21
Statement of Changes in Members’ Balances for the year ended 31 December 2024 22
Statement of Cash Flows for the year ended 31 December 2024 23
Notes to the Accounts for the year ended 31 December 2024 24
2022 Underwriting Year Accounts
Managing Agent’s Report 52
Statement of Managing Agent’s Responsibilities 53
Independent Auditors' Report to the Members of Syndicate 1176 54
Statement of Comprehensive Income 57
Statement of Financial Position 58
Notes to the Underwriting Year Accounts 59
Seven Year Summary (unaudited) 67
Syndicate 1176
Syndicate Information
1
Directors of the Managing Agent
D C Bendle (resigned 30 October 2024) Chief Operating Officer
R J Callan (resigned 31 March 2024) Chief Financial Officer & Chief Executive Officer
J Faure Senior Independent Non-Executive Director
P A Jardine Chairman and Independent Non-executive Director
R T Milner (appointed 20 May 2024) Chief Executive Officer
A C Pearce Independent Non-Executive Director
H D Spink (appointed 29 November 2024) Chief Operating Officer
N J Stacey Chief Underwriting Officer
Z Wang (resigned 17 December 2024) Group Non-Executive Director
L S Watkins Independent Non-Executive Director
J Wright (appointed 1 April 2024) Chief Financial Officer
Dr H Zuo Group Non-Executive Director
Managing Agent’s company secretary
R N Barnett
Managing Agent’s registered office
52 Lime Street
London
EC3M 7AF
Managing Agent’s registered number
00184915
Managing Agent's independent auditors
KPMG LLP
15 Canada Square
London
E14 5GL
Syndicate active underwriter
M G Dawson
Syndicate banker
The custodian of the Syndicate’s investment funds is:
Citibank N.A.
Syndicate investment manager
Goldman Sachs Asset Management International
Syndicate independent auditors
KPMG LLP
15 Canada Square
London
E14 5GL
Syndicate 1176
Underwriter’s Report
2
Background
Syndicate 1176 (the Syndicate) looks to provide insurance cover to the Nuclear Industry. It does not participate
in the wider non-nuclear insurance market.
Nuclear risk predominantly comprises cover for physical damage loss to civil nuclear power stations, as well
as nuclear liability, where the Syndicate issues policies with terms which have withstood the test of time. The
Syndicate also provides coverage within the wider nuclear fuel cycle and associated risks, including coverage
for radioactive isotopes, raw uranium and nuclear fuel (including manufacturing facilities), as well as shipment
and storage of waste. The Syndicate’s main exposures however derive from the power that nuclear energy
produces in a power station because this is where most of the value from nuclear energy emanates. The
Syndicate has been operating in a unique market niche and on a profitable basis since its inception in 1991.
Nuclear power
Man has an insatiable need for power. In a developing world, even the poorest countries are in a phase of
rapid power production. Against this background, there is a reducing supply of the fossil fuels, which have
provided much of the power to the world’s leading countries. Further increased awareness of the impact of
carbon emissions to the planet are driving momentum away from fossil fuels to renewable energy production,
including nuclear. The recent conflict in Ukraine has highlighted the risk of relying on gas producers, and the
resultant need for “home grown” energy at more stable prices.
All power stations produce energy through the rotation of a generator. The power needed to turn the generator
is produced through the rotation of a turbine, through water, wind or, most commonly, steam propulsion. Steam
is produced by the boiling of water using a heat source; typically, gas, coal, oil or nuclear fission. The difference
between a conventional fossil fuel station and a nuclear power station is that the heat is produced by nuclear
fission. Other than this main heat source, a nuclear power station is similar to a fossil fuel station. Because the
nuclear core is potentially damaging, considerable safety standards have been adopted to ensure that there
is a very small risk of a significant nuclear accident.
Since the nuclear industry’s formation in the early 1950s there has only been one significant core melt nuclear
event paid by the insurance market, at Three Mile Island in the US in 1979. Since then, safety standards have
improved materially, and the insurance industry has typically only suffered the occasional non-nuclear loss of
an attritional nature. Following the Fukushima accident (which was not insured for earthquake and tsunami in
the conventional market) in March 2011, an extensive review of the Syndicate’s potential catastrophe exposure
was undertaken, and exposure is considered to be limited. This topic is further explored below, however, as a
generality, nuclear power stations are not built in areas where natural catastrophe is expected and are not
normally built in cities where an accumulation of risk with other businesses could occur. There has never been
a significant insured nuclear loss from natural catastrophe.
Energy prices have recently been volatile. This is being led by two macro influencers; security of supply –
where countries are nervous of relying on energy supply from often volatile areas, politically; and a low carbon
agenda – where most of the world agrees that generation from coal is just too abusive to the environment.
Future ideas such as carbon capture and nuclear fusion remain on the horizon, where they have remained for
many years. This has led to many countries re-investigating the merits of nuclear power, including the
possibility of developing smaller modular reactors. Whilst currently the main new development remains as
large-scale nuclear units, it is hoped that, in the future, the new nuclear build will be extended to include smaller
modular reactors. One of the areas of debate to be had within society is where these modular reactors, which
are cheaper and less prone to design creep, should be built. At present many of the historic transmission and
distributions lines (i.e., the grid, that carries electricity) are old and around 20% of generating production is lost
in the transmission process. This would encourage the new smaller modular reactors to be built closer to main
cities, which would reduce loss through distribution. However, the general public have not become engaged
in the issue of siting of new nuclear builds and it remains to be seen quite what the enthusiasm for “local” new
nuclear would be. These are important issues that need to be part of a national debate on manageable cost,
safe, secure low carbon energy capacity in the future.
Property damage
The Syndicate provides physical damage and business interruption cover within the nuclear fuel cycle. The
largest values that the Syndicate insures are normally nuclear power stations, although the Syndicate also
covers manufacturers of nuclear fuel and radioisotopes, their transport and ultimately their safe storage.
The probabilistic risk assessment of each unit suggests that there is limited catastrophe exposure. The
Syndicate traditionally has excluded cover for earthquake in Japan and, following the Fukushima tsunami
Syndicate 1176
Underwriter’s Report
3
event, the Syndicate has undertaken extensive analysis of each site insured and the potential for catastrophe
loss; including assessment of the plant location, construction, the coverage offered, deductible levels and
exposure.
In general, though nuclear power plants are not built in areas where there is significant catastrophe exposure;
if there is some residual exposure, construction and safety procedures are introduced to minimise the risk.
An analysis of cyber exposure has been undertaken and whilst there remains some residual risk, the Syndicate
believes the exposure is limited. Cyber protection of nuclear plants is considered paramount, but details of
such protection remain confidential. The Syndicate has developed a new product in conjunction with Chaucer’s
wider Cyber expertise which covers to a limited, manageable extent loss to nuclear operators from a malicious
Cyber-attack. It remains to be seen whether this product proves attractive to operators. A small amount of
premium, £2m, has been forecast for the Syndicate’s share of the exposures in 2025.
Windstorms, hurricanes and cyclones
In terms of other perils, the Syndicate Underwriter remains confident that exposure to windstorm is low. In the
60 years of operating nuclear sites, there has never been a significant loss to a nuclear facility from a windstorm
event. The largest insured windstorm loss to date was from a spares warehouse on a nuclear site from
Hurricane Andrew in 1992. While the warehouse was damaged, with losses in the region of $200m, there was
no damage to the nuclear unit. All the plants in the vicinity of the tracks of recent hurricanes and typhoons
performed to plan and as expected, there were no significant claims advices from these events.
Earthquake and tsunami
Policies with exposures in Japan currently exclude cover for damage arising from earthquake or tsunami perils.
While historically a product was considered for a small aggregate sub-limit, with significant deductibles and a
satisfactory price, this was never pursued. Were it to be requested, following extensive safety upgrades at
Japanese plants, this cover could be considered. But the sub-limit, deductible and price would be all important.
Outside Japan, studies have been undertaken on the two nuclear sites in California. One is approximately
200km from San Francisco and the other is approximately 100km from Los Angeles (this plant was closed in
2014 as a result of economic assessment; there remains some residual risk, during closure, but this is much
reduced from that of an operating plant). Both were built to withstand earthquake, and even if some damage
was incurred, it is considered a low risk that damage to plants would coincide with damage to the main
conurbations of San Francisco and Los Angeles. Separate studies have also been made of tsunami risk. One
site is located on top of a cliff and so tsunami damage is not considered possible; the other has significant sea
walls and the backup generators (which were swamped and failed in the Japanese tsunami) which are located
in watertight bunkers. Elsewhere, exposures have been considered and there does not appear to be significant
peril exposure.
Liability
The Syndicate provides limited nuclear liability coverage to most non-US nuclear power stations. The coverage
issued normally has an aggregate limit for the lifetime of the nuclear site, and also claims typically have to be
made within ten years of an occurrence. These policies, which normally include terrorism coverage, are
enshrined in national nuclear laws and international conventions, and typically the national government retains
exposure in excess of insurer policy limits. The policy includes damage caused by an incident as a result of
terrorism (see below) or any other incident leading to nuclear liability such as cyber. Cyber protection of nuclear
plants is considered paramount, but details of such protection remain confidential. We consider the chance of
a cyber-attack leading to a significant release of radiation, leading to offsite damage, to be remote. Strict liability
would also follow, were damage to occur following any incident. This means, for instance, that were a worker
to fall sick on duty from any illness and cause a nuclear incident releasing nuclear material that causes
damage, the nuclear liability policy would be expected to respond. That said, there are multiple layers of safety,
and such a possibility is not considered likely.
The Syndicate also writes non-nuclear incidental liability policies for much smaller limits, which do not benefit
from international conventions. These are designed to cover incidental risks such as contractors or visitors to
nuclear sites.
The Syndicate historically underwrote reinsurance of the US Nuclear Pool for liability business. The policy had
a strict limit and a large fund was available to cover losses either notified or occurring within a ten-year period.
As a result of the industry’s desire to be more involved in self-insurance, this reinsurance was discontinued
from 31 December 1998. While the Syndicate is not currently involved in any US liability business and remains
Syndicate 1176
Underwriter’s Report
4
cautious generally, were an acceptable risk offered, the Syndicate would consider it, subject to normal
underwriting acceptance procedures.
There is a general need for increased liability limits worldwide. Historically, the bulk of the exposure has been
with governments, which are increasingly looking for the nuclear insurance market to provide additional
capacity. Looking forward, the revision of current international nuclear conventions has resulted in additional
capacity and coverage being sought by operators. In the UK for instance, the indemnity for a nuclear accident
increased at 1 January 2022 from £140m to €700m and thereafter is increasing by €100m in each of the
subsequent five years to take the capacity needed to €1.2bn. This means that the UK liability limit increased
to €1,000m at 1 January 2025. Further, international nuclear conventions have been revised to incorporate
additional coverage. Anticipating the move to increased liability coverage, several years ago, the Syndicate
increased the liability share of maximum exposure to 50%.
Increased income and exposure remain uncertain though, due to the Syndicate’s reluctance to take on the
new discovery period for losses, which has been extended from 10 years to 30 years in the EU and UK. The
Syndicate has resisted the extension to the discovery period and has not written the revised convention liability
business with a new 30-year tail. In the UK the Syndicate has argued to the Government that the capital
required for the extended reporting period means that this risk is unattractive for insurers, at affordable
premium levels. This has resulted in the UK Government providing an indemnity to UK operators for 20 years
in excess of 10 years, for those markets cautious about the extended reporting period. The Syndicate has also
suggested to the UK Government that the 30-year discovery period could be underwritten, were a
demonstrable trigger to be incorporated, which would ensure that claims payments would only be made if a
release of radiation, beyond an agreed trigger threshold, occurred. Other markets have taken a more
accommodative approach to the extended reporting period, including the nuclear industry’s own self-insurance
schemes. The fact that the UK and EU member state Governments have allowed considerable limits of liability
(estimated to be up to €300m per site) to be placed with these self-insurance operations presents a challenge
to the Syndicate’s future premium growth. Further, the wider industry could be impacted in the event of a
systemic loss or losses over 30 years as these self-insurance entities may not have the resources available to
pay the losses. The risk would then fall back to these Governments, who assumed the losses would be paid
by credible insurers. The Syndicate continues to work with the UK and EU member state Governments as well
as the nuclear industry to try and ensure the definition of nuclear event is clarified and that exposure to the 30-
year discovery period does not lead to a systemic loss. Systemic loss concern is exacerbated due to factors
such as “judicial creep”, whereby courts in the future could look to assert that historic small releases of radiation
have harmed people, leading to widespread claims, reminiscent of the aggregation of historic
asbestos/pollution losses. The Syndicate is convinced that with clear policy wordings, or an agreed trigger
beyond which liability would attach, that the extended reporting period can be covered. Without clarity the
Syndicate is cautious of coverage which could result in reduced business in the future. The Syndicate
continues to work with Governments to try and reach a long-term satisfactory coverage position.
The Syndicate’s liability book comprised 29% of total gross written premium in 2024.
Terrorism
In many countries, property terrorism is excluded, or excess coverage has been provided through government
reinsurance schemes such as Pool Re (Nuclear) Ltd (“PRNL”) in the UK (for fire and explosion property
insurance) and under TRIPRA (Terrorism Risk Insurance Program Reauthorization Act 2007) in the US.
Coverage is given where terrorism risk is considered to be lower. Further liability limits do not exclude strict
liability under nuclear conventions for terrorism. While there are significant protections against terrorism, and
the construction of power stations makes significant loss from terrorism unlikely, the Syndicate normally limits
exposure to 50% of the maximum property net line for terrorism. In the UK the UK Property Terrorism scheme,
with unlimited reinsurance provided by the UK Government, ceased accepting new business from 31
December 2023. The Syndicate only utilised this facility for a single risk, which is protected by the scheme
during its run-off. Since this date any UK property terrorism business has been retained net by the Syndicate.
Transit
The Syndicate generates a small amount of premium insuring the transit of nuclear fuel and waste. The limits
are typically modest and there has never been a significant transit loss. Transit of nuclear materials is
undertaken to strict international standards and involves the highest safety procedures.
Syndicate 1176
Underwriter’s Report
5
Construction
The Syndicate has been open to the modest expansion of business to include Construction risks and has
committed a modest line to insuring the new-builds expected over the coming years. The business is different
in that the projects themselves are expected to take at least seven years to complete. Whilst the values of the
projects only increase gradually over this time, resulting in small incremental exposures in the early years, the
values towards the end of the project are high. Accordingly, whilst considerable premium is expected on a risk
by risk basis, it is held to earn over the life of the project. The result is that there is little expected profit over
the early years. Over the longer term, the accounts are expected to be profitable, but there can be no certainty
in this regard. The Syndicate’s line on these projects is expected to be well below that written for operational
plants at a probable maximum loss of circa $15m. This exposure which is less than 2% of the normal contract
loss is expected to be retained net. The overall premium income is planned as modest at less than 1% of total
premium income, and the development of this line is slow, but we remain open to consider this business,
providing we follow respected leaders. Our approach is deliberately cautious, and we will learn and develop
as appropriate over the years.
NuPro
The Syndicate has developed a new trigger-based product which seeks to indemnify Nuclear Power
Generators should they sustain loss as a result of significant material damage and/or a release of radiation
great than 10 millisieverts, measured offsite. The Syndicate is leading a consortium of markets supporting this
insurance with a planned commitment of $62.5m gross and $31.25m net. It remains to be seen how successful
the new facility will be, but it has been developed to respond to the increased revenue generators are
experiencing as a result of higher electricity pricing. The Syndicate had a planned income of £9.3m in 2024
gross, £4.6m net of quota-share reinsurance. This was not achieved with no business bound in 2024. The
Syndicate has renewed the Consortia lead for 2025 and it remains to be seen whether the product will be
attractive to operators in 2025. The Syndicate has a planned income of £7.3m in 2025, £3.1m net of acquisition
costs and quota-share reinsurance.
CyNuC
The Syndicate has developed an innovative malicious Cyber product, called CyNuC for nuclear power
operators. The product has been developed in conjunction with Chaucer’s wider Cyber team. The limit is
modest at USD 25m, and it covers loss during the policy period from a malicious cyber-attack to the operating
system of nuclear power plants. It does not extend to the wider corporate assets outside the nuclear site. At
the time of writing, the Syndicate expects to write a share of up to 50% net of the USD 25m limit. The exposure
could theoretically accumulate with the liability policy, or indeed tail end property cover and the Syndicate will
work to ensure that aggregate exposures remain within maximum exposure. The total estimated income for
year one is planned at £2m and will be underwritten using the CY and CZ risk codes which are new to the
Syndicate for 2025. It remains to be seen whether this is an attractive product for operators.
Premium income
Historically the Syndicate generated approximately 80% of premium income from nuclear property risk and
20% from nuclear liability risk. This is planned to be 76% property and 24% liability for the 2025 year of account,
including the planned income for both NuPro and CyNuC.
Outward reinsurance arrangements
Aside from inter-pool reciprocal exchange of risk and reinsurance through government terrorist schemes, the
Syndicate does not generally purchase reinsurance. Historically, the Syndicate did buy excess of loss
reinsurance, but this was discontinued predominantly on economic grounds in 2012.
Brexit has resulted in EEA required risks being underwritten through Lloyd’s Brussels. Lloyd’s Brussels is not
a Pool and as such can only undertake reinsurance with the Syndicate. This means that in order to allow for
reinsurance with other nuclear pools, the reinsurance needs to be undertaken at Syndicate level. The
Syndicate sought approval from Lloyd’s to these arrangements in 2019, with a small portion of premium ceded
since 2019, with £1m planned in 2025.
The Syndicate’s NuPro is protected by quota-share reinsurance with £3.1m planned for 2025. The success of
the new product is uncertain and so the planned ceded premium is so too speculative.
Business placements
Most of the Syndicate’s business comes through international pools of nuclear capacity. Countries that have
nuclear capacity have established nuclear pools to insure domestic risks. As few pools have sufficient domestic
capacity, the national pools reinsure on a reciprocal basis with the other foreign pools. The Syndicate is the
Syndicate 1176
Underwriter’s Report
6
leading participant of the British Nuclear Pool, Nuclear Risk Insurers Ltd (NRI Ltd), and owns a share of the
associated management company in proportion to its share (approximately 47%) of the Pool. Any profit or loss
from these operations is paid to the Syndicate account.
NRI Ltd insured business is reciprocally reinsured with non-UK countries’ nuclear pools for a share of their
indigenous risks. The Syndicate also participates as a local insurer in the Canadian, Chinese, Japanese and
South African nuclear pools. The exposures and premiums received from the pools are net of the inter-pool
reciprocal reinsurances. In addition, the Syndicate provides reinsurance capacity to nuclear insurance mutual
organisations and underwrites some open market business. The Syndicate is careful to aggregate net
exposures to ensure that these are within the limits set.
The Syndicate has no further involvement in the small exposure it had to Russian risks, following international
sanctions introduced. It does maintain a small exposure in Ukraine for some liability policies, but there is an
appropriate war exclusion clause in place.
The Syndicate underwrites a significant exposure, which is up to eight times the net capacity level committed
to the UK Pool, although there are few exposures at this level. This means that in the event of a significant
nuclear accident at one of the top exposures, a £10,000 share on the Syndicate is expected to suffer a loss of
up to £80,000. Any further loss, however unlikely, would be in addition. Aside from inter-pool reciprocal
exchange of risk and terrorism reinsurance for property risks, at pool level, a small amount of reinsurance is
purchased at Syndicate level from business flowing through Lloyd’s Brussels. Lloyd’s have approved special
arrangements in respect of the Syndicate’s EEA business. The maximum exposure retained by the pools
currently suggests a maximum loss in the region of £300m; there are fewer than 10 risks at this level. In
addition, this should be offset by the normal level of profit in a year reducing the impact of a single loss. During
2022, as a result of weakening on Sterling, exposures were at one time as high as £350m on two risks. Since
this time, Sterling has appreciated and at the time of writing, all exposures are within the £300m net committed
to the pools. Exposures can also fluctuate in line with Sterling’s volatility.
The Underwriter wishes to make it clear that, in the event of a material nuclear loss, an immediate cash call
will be made, many multiples in excess of the Syndicate’s capacity. Any further loss would be in addition. The
Underwriter wishes to draw the members’ attention to the possibility of increased loss because of exchange
rate fluctuations. The Managing Agent carefully monitors the Syndicate’s exposure to currency risk as detailed
in Note 11.
Brexit
Following the decision to leave the EU, UK nuclear insurers, including Syndicate 1176, have not been able to
directly transact EEA business in the UK. Accordingly, the Syndicate’s EEA business has been transacted
through Lloyd’s Brussels and reinsured back into Syndicate 1176. NRI Ltd (the UK Pool) is also no longer able
to act as coverholder for EEA risks, accordingly a subsidiary of NRI Ltd, NRI Europe, was set up and approved
by the Central Bank of Ireland to operate from Dublin. All EEA applicable risks have been placed through NRI
Europe since 1 January 2021.
Underwriting performance
2022 Year of Account
The 2022 year of account had an original planned income of £31.5m, which included c.£4.0m of income that
was expected from the final implementation of the revised liability conventions. However, some markets,
particularly the nuclear industry’s own self-insurance schemes as well as some foreign pools took the 30-year
exposure, which resulted in this business not being placed through the Syndicate. The Syndicate did achieve
some new liability business, particularly in the UK where the Government provided an indemnity to those
insurers not willing to accept the risk associated with 30-year liability business. Rating levels have had some
modest increases and the net effect from these, together with some lost liability business and the weakness
in Sterling has resulted in an expected premium for 2022 of £31.1m. There have been a number of smaller
losses which have been reserved at the year end, within loss expectations. These were slightly higher than in
the most recent years. The closing profit is a return on capacity of 39.3%.
2023 Year of Account
The 2023 year of account had a planned premium income of £30.8m. This has been revised slightly to £31.6m.
In general, pricing of original nuclear business was modestly better than plan leading to premium growth of
£0.7m. The Syndicate has received a number of material damage notifications that have been reserved at
year end. Taking into account these advices the Syndicate’s property losses are slightly ahead of what might
Syndicate 1176
Underwriter’s Report
7
be expected at this stage of the year’s development. Even taking into account these notifications the Syndicate
should still achieve a profit for 2023, should there be no material adverse change or new losses notified. At
the time of writing the forecast profit has reduced slightly but remains within a profit range of 15-30% return on
capacity.
2024 Year of Account:
The 2024 year of account had a planned premium income of £43.0m. This included an amount of £9.3m gross
income that we planned as a result of the NuPro product. We indicated that the planned income for the new
product was speculative as we were uncertain how attractive it would be to operators. The planned roll out of
the product which is piloted in the US, was delayed and no business was bound in 2024. This has led to a
forecast premium income for 2024 of £31.5m, in line with recent years. At the time of writing, we have not been
notified of any significant property or liability losses for 2024, but there remains considerable exposure to the
year and profit confidence is uncertain until later in the year.
To illustrate performance against plan the following key metrics are useful:
Underwriting
Year
Planned Gross
Written Premium
Actual Gross
Written Premium
Planned Net
Loss Ratio
Actual Net
Loss Ratio
2022
£31.5m
£32.3m
52.0%
17.5%
2023
£30.8m
£32.5m
48.7%
53.6%
2024
£43.0m
£36.8m
46.7%
19.8%
The 2024 year of account actual net loss ratio is favourable to plan because we have received few claims and
those received were settled at less than reserved.
Outlook
Until the liability conventions reporting period for claims language is clarified the Syndicate is cautious about
significant opportunity for premium growth in liability business. That said, we are hoping for additional premium
in 2025 as a result of the NuPro and the CyNuC products explained above. The attractiveness of these
products to operators is unknown at the time of writing. The low carbon agenda is suggesting some opportunity
for longer term growth, but this is well into the future. China and our relationship with China Re is leading to
the opportunity for longer-term growth in China. In the UK we are, in a measured way, looking to develop our
existing nuclear output with new builds. This is best illustrated by the Hinkley Point C project and the
announced Sizewell C project which are being led by EDF - the French utility. Other examples include new
units in the United Arab Emirates, which started producing power in 2020 and for which the Syndicate is,
through NRI Ltd, the lead reinsurer and further units being commissioned in China. In the longer term we are
optimistic that the small modular reactors and low carbon agenda will lead to increased nuclear capacity and
increased insurance needs globally. Despite underlying competition and the liability challenges that this report
has explained, the Syndicate has remained, and expects to continue, to be a leading insurer of nuclear risk.
While we still see opportunities as insurers in the specialist area of nuclear insurance, the volatility and
exposure within the portfolio is real. The Syndicate has worked hard to sell stable rating and strong capital to
our ultimate clients. We hope that this consistency of supply in underwriting capacity and stability in terms of
coverage and pricing will continue to be appreciated by our ultimate customers.
I would like to take this opportunity to thank the team working on behalf of the Syndicate for their help. It is an
efficient team that provides a real level of expertise in a highly specialised segment, and I appreciate their
support.
Michael Dawson
Active Underwriter
28 February 2025
Syndicate 1176
Managing Agent’s Report
8
The Directors of the Managing Agent present their report and the audited annual accounts for the year ended
31 December 2024.
This annual report is prepared using the annual basis of accounting as required by Statutory Instrument No.
1950 of 2008, The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations
2008 (Lloyd’s Regulations 2008).
The Managing Agent
The Managing Agent is Chaucer Syndicates Limited , whose registered office is 52 Lime Street, London EC3M
7AF and registered number is 00184915.
Principal activities
This report covers the business of the Syndicate, whose principal activity during the year continued to be the
transaction of worldwide nuclear insurance and reinsurance business in the United Kingdom and overseas,
underwriting at Lloyd’s of London.
Review of the business and future developments
The Syndicate’s key financial performance indicators during the year were as follows:
2024
2023
£000
£000
Restated
2
Gross written premiums
34,153
36,962
Total comprehensive income
16,427
23,374
Combined ratio
1
59.2%
37.3%
Amount due to members
18,481
27,647
1
The combined ratio is the ratio of net claims incurred and net operating expenses to net premiums earned. A lower combined ratio
represents better performance.
2
Refer to Note 31 for further details on the restatement.
Total comprehensive income primarily comprises net earned premium of £33.2m (2023: £32.7m) offset by net
incurred claims of £11.2m (2023: £2.5m) and net operating expenses of £8.5m (2023: £9.7m). The increase
in net incurred claims is mainly driven by an increase in attritional losses in 2024, compared to 2023. Total
comprehensive income also includes investment return of £3.1m (2023: £3.1m).
Refer to the Underwriter’s Report for more detail on the development and performance of the Syndicate during
the year and future developments in the business of the Syndicate.
Principal risks and uncertainties
The following paragraphs describe the principal risks and uncertainties facing the Syndicate.
Underwriting risk
The Managing Agent separately defines underwriting risk appetite in respect of market losses and Syndicate
specific losses, with appetite for the former being greater.
Underwriting risk appetite is expressed at the highest level, as a maximum event-specific net underwriting loss
as a percentage of Syndicate capacity for an annual year of account. Where appropriate, stochastic modelling
of underwriting risk using dynamic financial analysis techniques supports this approach.
The Managing Agent Board approves the risk appetite limit, after considering the relativity between ‘willing to
lose’ and potential forecast profitability for each year of account. The risk appetite will therefore reflect the view
of forecast profitability, utilising the Syndicate’s latest business plan assumptions.
Managing risk aggregation
Underwriting exposure is controlled via risk policy coding systems, setting of maximum lines, setting of
jurisdiction limits, strict underwriter authority limits, Realistic Disaster Scenario monitoring, reinsurance
programme design, policy limitations and exclusions, imposed deductibles and policy wording and coverage
clauses.
The Managing Agent records and monitors individual risk exposures on a regular basis to ensure these remain
within the policies and guidelines set.
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Underwriting controls
The Managing Agent operates a number of underwriting controls, details of which are set out below.
Underwriting planning process
The Underwriting team undertakes an extensive annual underwriting planning process in order to determine
targets for premiums written and profitability for the coming year. Factors taken into account in determining the
targets include the risk appetite agreed by the Managing Agent with the principal and other capital providers,
anticipated policy pricing, terms and conditions, expected claims frequency and cost, and reinsurance cost
and efficacy.
Monitoring performance against plan
The Managing Agent manages performance against plan through monthly reporting of detailed underwriting
management information. Reports are provided to the Syndicate Underwriting Committee, and then to the
Chaucer Underwriting Committee, which ultimately reports to the Managing Agent’s Board. This control
process ensures that several layers of review occur for underwriting risks, with the focus being on the main
components of risk, notably pricing, loss ratio selection, reserving, experience variations, reinsurance
protection and catastrophe modelling.
Emerging risks
Emerging risks are new or future risks where the hazard potential or implications are not yet reliably known.
These risks may evolve over time or hit the business with little warning. Emerging risks could be risks which
have arisen recently or are anticipated in the future or risks which, although known previously may show
changing dynamics with the consequence of unanticipated losses. Emerging risks may not be fully understood
or be allowed for in insurance terms and conditions, pricing, reserving, capital setting or the operational
activities of the Managing Agent. The Managing Agent has a defined emerging risk process to identify, assess
and manage the potential impact of such risks.
Peer, independent and underwriting risk reviews
Peer review is performed on a risk-based sample of business by a fellow underwriter to ensure adherence to
sound underwriting practices. The independent review process involves detailed review of individual
underwriting risks and supporting documentation by experienced specialist individuals independent of the
class of business under review. Themed underwriting reviews are conducted by the Risk Management team
to ensure that underwriting procedures and discipline are followed.
Geopolitical Risks
The Risk Management Function continuously monitor Geopolitical Risks and a dashboard containing the most
significant Geopolitical Risks is presented to the quarterly Risk and Capital Committee. A more extensive list
of risks underpins the dashboard and is updated in detail twice a year. On an ad-hoc basis deep dives may be
carried out to gather more information on how a Geopolitical Risks may impact the Managing Agent.
Internal audit
The Managing agent operates a three lines of defence model, where Internal Audit acts as the third line
providing independent assurance and monitoring the design and operating effectiveness of organisation
controls including those relating to underwriting.
Claims risk
While claims events are inherently uncertain and volatile, the Managing Agent’s Claims function has
experience covering a wide range of business classes. The Managing Agent has management controls in
place to mitigate claims risk; some of these controls are outlined below.
Claims settlement and reserving authority limits
The Managing Agent employs strict claims handling authority limits. All transactions in excess of an individual
claims handler’s authority are referred in a tiered approach to a colleague with the requisite knowledge and
experience.
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Peer review
The Managing Agent currently conducts an internal peer review of claims movements to ensure accurate
recording of claims within the Managing Agent’s systems. Any discrepancies discovered are escalated to the
relevant Claims Handlers for resolution prior to sign off.
Monthly reporting
Monthly reporting is produced for all claims movements in order to identify any movements in excess of Claims
Handlers authority limits. Any qualifying movements are checked to ensure adequate authority was in place
prior to claims agreement. Any discovered breach of authority is escalated to the Head of Technical Claims
Adjusting for further review/action.
Management of external experts
The Managing Agent appoints third party loss adjusters, surveyors and legal advisors for claims investigation
and assessment services. The development of long standing relationships with key experts and agreed Terms
of Engagement aim to ensure that the Syndicate receives a high quality service. Direct contact with external
experts is also actively encouraged. However, this process is not exclusive. If no suitable expert exists on the
Managing Agent’s panel for any one particular claim, an ‘Expert Exception’ process operates to ensure a timely
appointment of an appropriate expert.
Reserving risk
The reserving policy for the Syndicate seeks to ensure appropriate allowance for reserving risk, consistency
in reserving from year to year and the equitable treatment of capital providers on the closure of a year of
account. Reserves are set on a two tier hierarchical basis.
Tier 1: Actuarial best estimate reserves
Actuarial best estimate reserves are prepared on an underwriting year basis and are intended to be true best
estimates, i.e. estimates of expected value claims reserves. These are the basis for internal reporting and the
derivation of expected loss ratios for business planning. The actuarial best estimate reserves are the
responsibility of the internal Signing Actuary. The Managing Agent’s Actuarial Team calculates the reserves in
conjunction with extensive discussions with the Underwriter.
Tier 2: Syndicate reserves
Determination of Syndicate reserves is a two-stage process: first, they are determined on an underwriting year
basis and then they are converted to an annually accounted basis.
(a) Underwriting year Syndicate reserves
Underwriting year Syndicate reserves are prepared on an underwriting year basis and equal the Tier 1 reserves
plus any reserve risk loadings. The intention of such risk loadings is to match areas within the Syndicate where
the perception is that there is a particularly high risk that the best estimate reserve may be inadequate. Such
areas include, but are not limited to, the following:
• New classes of business
• Classes where early development is materially better or worse than expected
• Classes or events with abnormally skewed claim distributions
• Claim events or reserving categories with a poorly understood distribution
To ensure consistency in the application of risk loadings, the starting point in their assessment is, where
possible, formulaic. The formulaic risk loadings are adjusted wherever considered either excessive or
understated. There may also be additional risk loadings in respect of risks not covered by the formulaic basis.
The underwriting year Syndicate reserves provide the basis for all Syndicate results and forecasts.
(b) Annually accounted Syndicate reserves
Annually accounted Syndicate reserves are the underwriting year Syndicate reserves converted to an annually
accounted basis, plus additional loadings.
The Managing Agent’s Board approves all risk loadings within Syndicate reserves.
The assessment of actuarial best estimate reserves is a rolling quarterly process. The underwriting portfolio
comprises a number of heterogeneous business types, each of which the analysis projects to ultimate. Where
certain contracts or claim events obscure development trends, the analysis splits these out for separate review.
The application of standard actuarial techniques to the historical data supports the estimation of ultimate loss
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ratios. The analysis also draws on external data or market data or non-standard methodologies where
appropriate. Whenever actual development of premiums or claims within a reserving category during a quarter
is materially different from expected development based on the existing methodology, then that methodology
is reassessed and, where appropriate, amended. The analysis takes credit for reinsurance recoveries.
Reserving risk is controlled by the robust application of actuarial methodologies, stepped sign-off procedures,
quarterly tracking of projected ultimate loss ratios and reassessment of methodologies where appropriate,
regular dialogue between actuaries and practitioners and access to a history of loss data. Finally, explicit risk
loadings are applied in respect of the areas of greatest risk within the reserve assessment.
Although the risk loadings provide important protection against adverse developments in reserves, the degree
of subjectivity in the reserving process, the exposure to unpredictable external influences (e.g. the legal
environment) and the quantum of reserves relative to net tangible assets, mean that reserving remains a
significant source of risk to the Syndicate.
Financial Risks
Credit risk
The Syndicate does not bear significant exposure to credit risk from reinsurers since it cedes a small proportion
of its book of business. To date, no recoveries have been made and therefore the Managing Agent considers
the Syndicate’s exposure to credit risk on outwards reinsurance to be negligible.
The Syndicate’s credit risk arises from exposure to international pools however this is deemed as low risk.
Investment risk
The Managing Agent’s approach is that investment activities are complementary to the primary underwriting
activities of the business and should not therefore divert or utilise financial resources otherwise available for
insurance operations.
The preservation of capital and maintenance of sufficient liquidity to support the business and the
enhancement of investment returns, within a set of defined risk constraints, are at the heart of the financial
market risk policies adopted by the Managing Agent.
Investment risk constraints, which quantify the maximum amount of investment risk permitted over a one-year
time horizon, are approved by the Board on an annual basis and are used to derive the maximum allocation,
or risk budget, that can be allocated to each asset class.
The Managing Agent reviews and amends asset allocations in accordance with investment risk constraints.
Due regard is given to the outlook for each asset class because of changes in market conditions and
investment returns. Proposed asset allocations are tested using stochastic modelling techniques prior to formal
adoption.
The Syndicate invests a proportion of funds in fixed income and variable yield securities managed by a
professional portfolio manager. The manager operates within a defined set of investment guidelines and
against an appropriate benchmark.
Refer to Note 11 for more detail on the Syndicate’s exposure to investment risks and the processes in place
for managing these risks.
Operational risk
Operational risk arises from inadequate or failed internal processes and systems, from people related or
external events. Operational risk excludes strategic and reputation risk, but includes breakdowns in the internal
control environment, human error, legal & regulatory risk and the risk arising from change initiatives. The
Managing Agent seeks to manage this risk through business performance measures, internal controls, disaster
recovery and operational resilience planning and other governing procedures which are reviewed through a
structured programme of testing of processes and systems by Internal Audit and other assurance processes.
Regulatory and legal risk
Regulatory risk is the risk of loss or reputational damage owing to a breach of regulatory and legal requirements
or failure to respond to regulatory change.
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The Managing Agent’s Compliance function supports and monitors the compliance of the business with
regulatory and legal requirements whilst promoting successful business practices and meeting business
objectives through advice and guidance. The exposure to regulatory risk is managed by monitoring regulatory
compliance with the requirements of the Prudential Regulatory Authority, Financial Conduct Authority and
Lloyd’s and other domestic and international regulatory requirements.
Legal risk is the risk that exposes the Managing Agent to actual or potential legal proceedings. The Managing
Agent has legal risk resource, which monitors legal developments and assesses impact on the business.
Conduct risk
Conduct risk is the risk of treating the Syndicate’s customers unethically or unfairly by delivering inappropriate
outcomes due to improper attitudes, systems, controls and governance, including non-compliance with FCA
Consumer Duty and product requirements. The Managing Agent operates a suitable risk management and
governance framework across the Syndicate, which monitors the various areas of potential exposure to
conduct risk matters and ensures appropriate design and performance of controls and the effective escalation
and resolution of items as required.
Staff matters
Chaucer Underwriting Services Limited (CUSL), the service company that employs people who perform work
on behalf of the Syndicate, considers its employees to be a key priority. It seeks to provide an environment for
all employees that is rewarding, inclusive and safe, and complies with appropriate employee legislation. During
the year there have been no significant injuries to employees in the workplace or any significant actions taken
by any regulatory bodies with regard to employee matters
Climate related risks
The Managing Agent’s Board is responsible for the effectiveness and oversight of the risk management system
and the general management and mitigation of risks including climate change risk. It has delegated the detailed
regular oversight of climate related risk management processes and activities to its Risk and Capital
Committee, who monitor the effectiveness of the risk management framework including internal controls.
The Managing Agent recognises that risks arising from climate change may arise over different time horizons.
However, the current assessment is that the physical risks of climate change will not materially impact the
performance of the Syndicate because the risks insured are not materially exposed to natural catastrophe or
climate change risks. The Syndicate’s principal exposures are nuclear installations, typically at locations
chosen for their naturally low incidence of natural catastrophe and hence inherently low risk. This assessment
is subject to continual review and could change – see transition risk section below. In delivering its business
strategy, the Managing Agent is committed to considering and addressing those risks, including those that are
longer term and extend beyond the usual business and strategy planning timescales.
There are also longer time horizon climate risks, such as acute and chronic risks that will need to be managed
holistically as sea level and temperature rises. The current assessment does not highlight any significant risks,
but the Managing Agent’s existing risk identification and assessment processes and future developments will
continue to seek to capture any potential risks.
Therefore, Syndicate’s most material current climate change exposure is to Transition risk.
In delivering its business strategy, the Managing Agent is committed to considering and addressing those risks,
including those that are longer term and extend beyond its usual business and strategy planning timescales.
The Managing Agent has been working to improve the understanding, approach, management and reporting
and disclosure of climate risks. During the year climate risk has been strengthened at all levels of risk
governance structure.
Climate risk strategy
The Managing Agent will continue to develop its strategy to bolster the management of the risks and
opportunities arising from climate change. Planned actions include:
• The Syndicate will support the energy transition from fossil fuels to low carbon energy production by
providing underwriting capacity for nuclear risks, which are planned to grow in the UK and globally.
• Exposure management activities undertaken to date have demonstrated the importance of data
collection, in particular for modelling exposures and assessing loss scenarios. The Managing Agent
will improve exposure data categorisation to improve the assessment of any exposures the Syndicate
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has to climate change risk. The Managing Agent will prioritise the assessment of exposure to
vulnerable regions and will insist that the exposure to these vulnerable regions is adequately priced
when accepting risk.
• The Managing Agent plans to enhance its due diligence process to understand the potential current
and future impacts of climate risks on material existing counterparty arrangements and all future
material counterparty arrangements.
Identification and assessment of climate risks
The major climate risks are recognised as Physical, Transition and Liability risks, which are monitored through
the Managing Agent’s Enterprise Risk Management (ERM) framework processes. The Managing Agent
considers that the financial risks from climate change can be managed through existing 1st, 2nd and 3rd line
of defence frameworks and in particular risk management processes and activities. The ongoing, forward-
looking ORSA process and annual ORSA Report which documents the various risk management and capital
assessment activities also support the Managing Agent in managing climate risk by clearly assessing and
reporting its ‘Own View’ of risk.
The Managing Agent has been developing specific risk management tools and processes to address climate
risks and ensure the sustainability of its business and targeted performance of the Syndicate. Existing
strategies implemented to date include:
• Enhanced risk management capability and framework specifically adapted to improve understanding
and management of climate change risks;
• Adaptations to processes in the ERM framework ensure that the identification and assessment of long-
term risks is considered with a focus on key risk categories;
• Changes to investment strategy to mitigate the transition risks of climate change;
• Formation of a Sustainability Group and the ongoing development of a Sustainability Report and
objectives which will contribute to the mitigation of climate-related operational risks;
• Development of Own View of Risk which is core to managing climate risk; and
• Production of a quarterly Climate Change Risk Dashboard highlighting the material climate risk
exposures categorising these risks into Physical and Transitional risk types, recognising the time
horizon around expected emergence of issues.
Whilst existing approaches are an effective foundation, the characteristics of climate risks, including time-
horizon and potential to impact all risk categories require that new approaches are also developed to
supplement the foundation. These developments are being undertaken with reference to the PRA’s
Supervisory Statement 3/19.
Transition Risks
The Syndicate’s investment portfolio is exposed to transition risk, and in particular, any impacts to the liquidity
of the portfolio as a result of policy changes and/or risks associated with the transition to a low carbon economy.
Risk management actions taken to date are:
• Continual monitoring of the investment portfolio against multiple climate change and ESG-related
screens to ensure the Managing Agent has as much foresight as possible to any potential issues which
may arise;
• The Managing Agent is in the process of formalising risk appetites and investment strategies for the
Syndicate which fully embed ESG considerations to investment decisions; and
• Quantitative scenario testing of the investment portfolio to understand the potential impact to the
assets the Syndicate holds, across a range of time horizons.
The Syndicate has a very short-dated portfolio and is a hold to maturity investor. As such, the risk from climate
change on the portfolio is seen as minimal. The periodic reinvestment of a portion of the portfolio provides
flexibility in investment decisions and the ability to react to developing market conditions.
The Syndicate could also be exposed to transition risk arising from uncertainty as to the depth and degree of
alignment between the climate change policies of the different jurisdictions that the Syndicate operates in. In
a scenario where transition targets diverge, chronic and acute physical risks may worsen and have the potential
to impact the Syndicate’s exposures by significantly increasing them if not mitigated. Further, transition risk
could cause much deeper, wider disruption including that to the financial system if industry were forced to
predict when or if transition policies may be introduced across different regions.
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Directors’ interests
The Directors who held office during the year and up to the date of signing the annual accounts are detailed on
page 1. Director resignations during the year are as a result of retirements, and the Board of Directors are pleased
to welcome the new Board members. Dr H Zuo, Group Non-Executive Director, will be retiring in 2025.
None of the Directors of the Managing Agent has any participation in the Syndicate’s premium income capacity.
Disclosure of information to the auditors
The Directors each confirm that:
• So far as they are aware, there is no relevant audit information of which the Syndicate's auditors are
unaware, and
• They have taken all the steps that they ought to have taken as a director in order to make themselves
aware of any relevant audit information and to establish that the Syndicate's auditors are aware of that
information.
Independent Auditors
On 2 July 2024, the Board of Directors have appointed KPMG LLP as auditors of the Company, following a
competitive tender process. The auditors have indicated their willingness to continue in office and are deemed
re-appointed as auditors of the company for another term in accordance with Section 487 of the Companies
Act 2006.
Approved by order of the Board of Chaucer Syndicates Limited.
J Wright
Chief Financial Officer
04 March 2025
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Statement of Managing Agent’s Responsibilities
15
The Managing Agent is responsible for preparing the Syndicate annual report and annual 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 accounts at 31 December each year in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable
law). The annual accounts are required by law to give a true and fair view of the state of affairs of the Syndicate
as at that date and of its profit or loss for that year.
In preparing the Syndicate annual accounts, the Managing Agent is required to:
• Select suitable accounting policies and then apply them consistently;
• Make judgements and estimates that are reasonable and prudent;
• State whether applicable UK accounting standards have been followed, subject to any material
departures disclosed and explained in the annual accounts; and
• Prepare the annual accounts on the basis that the Syndicate will continue to write future business unless
it is inappropriate to presume that the Syndicate will do so.
The Managing Agent is responsible for keeping proper accounting records, which disclose with reasonable
accuracy at any time the financial position of the Syndicate and enable it to ensure that the Syndicate annual
accounts comply with the 2008 Regulations. It is also responsible for safeguarding the assets of the Syndicate
and hence for taking reasonable steps for prevention and detection of fraud and other irregularities.
The Managing Agent is responsible for the preparation and review of the iXBRL tagging that has been applied
to the annual accounts in accordance with the instructions issued by Lloyd’s, including designing, implementing
and maintaining systems, processes and internal controls to result in tagging that is free from material non-
compliance with the instructions issued by Lloyd’s, whether due to fraud or error.
The Managing Agent is responsible for the maintenance and integrity of the corporate and financial information
included on the business’ website. Legislation in the United Kingdom governing the preparation and
dissemination of annual accounts may differ from legislation in other jurisdiction.
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Independent auditors’ report to the members of Syndicate 1176
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Opinion
We have audited the Syndicate annual accounts of Syndicate 1176 (“the Syndicate”) for the year ended 31
December 2024 which comprise the Statement of Comprehensive Income, Statement of Financial Position,
Statement of Changes in Members’ Balances, Statement of Cash Flows, and related notes, including the
accounting policies in Note 2.
In our opinion the Syndicate annual accounts:
• give a true and fair view of the state of the Syndicate’s affairs as at 31 December 2024 and of its profit for
the year then ended;
• have been properly prepared in accordance with UK accounting standards, including FRS 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 issued by Lloyd’s, as modified by the Syndicate Accounts Frequently Asked
Questions Version 1.1 dated 18 February 2025 issued by Lloyd’s (together “the Syndicate Accounts
Instructions”).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”), applicable
law, and, under the terms of our engagement letter dated 2 July 2024, the Syndicate Account Instructions. Our
responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent
of the Syndicate in accordance with, UK ethical requirements including the FRC Ethical Standard as applied
to other entities of public interest. We believe that the audit evidence we have obtained is a sufficient and
appropriate basis for our opinion.
Going concern
The Directors of the Managing Agent (“the Directors”) have prepared the Syndicate annual accounts on the
going concern basis as they do not intend to cease underwriting or to cease its operations, and as they have
concluded that the Syndicate’s financial position means that this is realistic. They have also concluded that
there are no material uncertainties that could have cast significant doubt over its ability to continue as a going
concern for at least a year from the date of approval of the Syndicate annual accounts (“the going concern
period”).
In our evaluation of the Directors’ conclusions, we considered the inherent risks to the Syndicate’s business
model and analysed how those risks might affect the Syndicate’s financial resources or ability to continue
operations over the going concern period, including reviewing correspondence with Lloyd’s to assess whether
there were any known impediments to establishing a further year of account.
Our conclusions based on this work:
• we consider that the Directors’ use of the going concern basis of accounting in the preparation of the
Syndicate annual accounts is appropriate; and
• we have not identified, and concur with the Directors’ assessment that there is not, a material uncertainty
related to events or conditions that, individually or collectively, may cast significant doubt on the
Syndicate’s ability to continue as a going concern for the going concern period.
However, as we cannot predict all future events or conditions and as subsequent events may result in
outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above
conclusions are not a guarantee that the Syndicate will continue in operation.
Fraud and breaches of laws and regulations – ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that
could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk
assessment procedures included:
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• Enquiring of directors, the audit committee, internal audit, legal, risk and compliance, management and
inspection of policy documentation as to the Syndicate and Managing Agent’s high-level policies and
procedures to prevent and detect fraud including the internal audit function, and the Syndicate and
Managing Agent’s channel for “whistleblowing”, as well as whether they have knowledge of any actual,
suspected or alleged fraud.
• Reading board, audit committee and other relevant meeting minutes.
• Considering remuneration incentive schemes.
• Using analytical procedures to identify any unusual or unexpected relationships.
We communicated identified fraud risks throughout the audit team and remained alert to any indications of
fraud throughout the audit.
As required by auditing standards, and our overall knowledge of the control environment, we perform
procedures to address the risk of management override of controls, in particular the risk that management may
be in a position to make inappropriate accounting entries and the risk of bias in accounting estimates and
judgements such as incurred but not reported (“IBNR”) reserves. On this audit, there is a fraud risk related to
revenue recognition because of the significant estimates and subjective judgements involved in the
assessment of revenue recognition.
We did not identify any additional fraud risks.
We performed procedures including:
• Identifying journal entries to test based on risk criteria and comparing the identified entries to supporting
documentation. These included entries posted with key words or with no description, entries with no User
ID, entries posted to accounts that contain significant estimates, entries posted or approved by
unauthorised users, entries posted by and approved by the same individual, entries to seldom used
accounts, post-closing entries and entries containing unusual debits and credits.
• Assessing whether the judgements made in making accounting estimates are indicative of a potential bias
including assessing the appropriateness and consistency of the methods and assumptions used for
reserving.
Identifying and responding to risks of material misstatement related to compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the
Syndicate annual accounts from our general commercial and sector experience, and through discussion with
the directors and others management (as required by auditing standards), and from inspection of the Syndicate
and Managing Agent’s regulatory and legal correspondence. We discussed with the directors and other
management the policies and procedures regarding compliance with laws and regulations.
As the Syndicate is regulated, our assessment of risks involved gaining an understanding of the control
environment including the entity’s procedures for complying with regulatory requirements. We communicated
identified laws and regulations throughout our team and remained alert to any indications of non-compliance
throughout the audit.
The potential effect of these laws and regulations on the Syndicate annual accounts varies considerably.
Firstly, the Syndicate is subject to laws and regulations that directly affect the Syndicate annual accounts
including financial reporting legislation (such as the Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008, and the Lloyd’s Syndicate Accounts Instructions) and we assessed
the extent of compliance with these laws and regulations as part of our procedures on the related Syndicate
annual accounts items.
Secondly, the Syndicate is subject to many other laws and regulations where the consequences of non-
compliance could have a material effect on amounts or disclosures in the Syndicate annual accounts, for
instance through the imposition of fines or litigation or the loss of the Syndicate’s capacity to operate. We
identified the following areas as those most likely to have such an effect: regulatory capital requirements,
corruption and bribery, recognising the regulated nature of the Syndicate’s activities and its legal form.
Auditing standards limit the required audit procedures to identify non-compliance with these laws and
regulations to enquiry of the directors and other management and inspection of regulatory and legal
correspondence, if any. Therefore, if a breach of operational regulations is not disclosed to us or evident
from relevant correspondence, an audit will not detect that breach.
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Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some
material misstatements in the Syndicate annual accounts, even though we have properly planned and
performed our audit in accordance with auditing standards. For example, the further removed non-compliance
with laws and regulations is from the events and transactions reflected in the Syndicate annual accounts, the
less likely the inherently limited procedures required by auditing standards would identify it.
In addition, as with any audit, there remained a higher risk of non-detection of fraud, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit
procedures are designed to detect material misstatement. We are not responsible for preventing non-
compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.
Other information - Report of the Directors of the Managing Agent
The Directors are responsible for the Report of the Directors of the Managing Agent. Our opinion on the
Syndicate annual accounts does not cover that report and we do not express an audit opinion or, except as
explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the Report of the Directors of the Managing Agent and, in doing so, consider
whether, based on our Syndicate annual accounts audit work, the information therein is materially misstated
or inconsistent with the Syndicate annual accounts or our audit knowledge. Based solely on that work:
• we have not identified material misstatements in the Report of the Directors of the Managing Agent;
• in our opinion the information given in the Report of the Directors of the Managing Agent is consistent with
the Syndicate annual accounts; and
• in our opinion the Report of the Directors of the Managing Agent has been prepared in accordance with
the requirements of the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008.
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 to you if, in our opinion:
• adequate accounting records have not been kept on behalf of the Syndicate; or
• the Syndicate annual accounts are not in agreement with the accounting records; or
• certain disclosures of Managing Agent’s emoluments specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
We have nothing to report in these respects.
Responsibilities of the Directors of the Managing Agent
As explained more fully in their statement set out on page 15, the Directors of the Managing Agent are
responsible for: the preparation of the Syndicate annual accounts in accordance with the requirements of the
Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the
Syndicate Accounts Instructions, and for being satisfied that they give a true and fair view; such internal control
as they determine is necessary to enable the preparation of Syndicate annual accounts that are free from
material misstatement, whether due to fraud or error; assessing the Syndicate’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of
accounting unless they either intend to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the Syndicate annual accounts as a whole
are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s
report. Reasonable assurance is a high level of assurance, but does not 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 aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of the Syndicate annual accounts.
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A fuller description of our responsibilities is provided on the FRC’s website at
www.frc.org.uk/auditorsresponsibilities.
The Directors of the Managing Agent are required, under the Syndicate Accounts Instructions to include these
Syndicate annual accounts within a document to which XBRL tagging has been applied. This auditor’s report
provides no assurance over whether the XBRL tagged document has been prepared in accordance with those
requirements.
The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the Syndicate’s members, as a body, in accordance with the Insurance Accounts
Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the terms of our engagement
letter by the Managing Agent. 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 the further matters we are
required to state to them in accordance with the terms agreed with the Managing Agent and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the Syndicate and the Syndicate’s members, as a body, for our audit work, for this report, or for the
opinions we have formed.
Timothy Butchart (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London
E14 5GL
04 March 2025
Syndicate 1176
Statement of Comprehensive Income for the year ended 31 December
2024
20
| 2024 | 2023 | ||
| £000 | £000 | ||
| Note(s) | Restated | ||
| Technical Account – General Business | |||
Gross premiums written | 3 | | |
Outward reinsurance premiums | ( | ( | |
| Premiums written, net of reinsurance | |||
Changes in unearned premium | |||
Change in the gross provision for unearned premiums | 18 | ( | ( |
| Change in the provision for unearned premiums reinsurers’ share | 18 | ||
| Net change in provision for unearned premiums | ( | ( | |
| Earned premiums, net of reinsurance | |||
Allocated investment return transferred from the Non-Technical Account | 9 | ||
Claims paid | |||
Gross amount | 18 | ( | ( |
| Net claims paid | ( | ( | |
Change in the provision for claims | |||
Gross amount | 18 | ( | ( |
| Reinsurers’ share | 18 | ( | |
| Net change in provision for claims | ( | ( | |
| Claims incurred, net of reinsurance | ( | ( | |
Net operating expenses | 3, 5 | ( | ( |
| Balance on the Technical Account – General Business | |||
| Non-Technical Account – General business | |||
| Balance on the technical account – general business | |||
Investment income | 9 | ||
Realised gains on investments | 9 | ( | ( |
Unrealised gains on investments | 9 | ||
Investment expenses and charges | 9 | ( | ( |
Total investment return | |||
Allocated investment return transferred to the general business technical Account | ( | ( | |
Loss on foreign exchange | ( | ( | |
| Total comprehensive income for the year |
All the amounts above are in respect of continuing operations.
Refer to Note 31 for further details on the restatement.
Syndicate 1176
Statement of Financial Position as at 31 December 2024
21
| 2024 | 2023 | ||
| £000 | £000 | ||
| Note(s) | Restated | ||
Assets | |||
| Investments | |||
Financial investments | 12 | ||
Deposits with ceded undertakings | |||
| Reinsurers’ share of technical provisions | |||
Provision for unearned premiums | 18 | ||
Claims outstanding | 18 | ||
| Debtors | |||
Debtors arising out of direct insurance operations - intermediaries | 13 | ||
Debtors arising out of reinsurance operations | 14 | ||
Other debtors | 15 | ||
| Other assets | |||
Cash at bank and in hand | |||
Other | 16 | ||
| Prepayments and accrued income | |||
Accrued interest and rent | |||
Deferred acquisition costs | 17 | ||
| Total assets | |||
| Capital and reserves | |||
| Members’ balances | |||
Total capital and reserves | |||
| Liabilities | |||
| Technical provisions | |||
Provision for unearned premiums | 18 | ||
Claims outstanding | 11, 18, 20 | ||
| Creditors | |||
Creditors arising out of direct insurance operations | 21 | ||
Creditors arising out of reinsurance operations | 22 | ||
Other creditors including taxation and social security | 23 | ||
| | |||
| Accruals and deferred income | |||
Total liabilities | |||
| Total liabilities, capital and reserves |
Refer to Note 31 for further details on the restatement.
The annual accounts on pages 20 to 49 were approved by the Board of Chaucer Syndicates Limited on 04
March 2025 and signed on its behalf by:
J Wright
Chief Financial Officer
Syndicate 1176
Statement of Changes in Member’s Balances as at 31 December 2024
22
| 2024 | 2023 | |
| £000 | £000 | |
| Restated | ||
| Members’ balance brought forward at 1 January | ||
Total comprehensive income for the year | ||
Payments of profit to members' personal reserve funds | ( | ( |
| Members’ agent fees | ( | ( |
Other | ( | ( |
| Members’ balance carried forward at 31 December |
Refer to Note 31 for further details on the restatement.
Syndicate 1176
Statement of Cash Flows for the year ended 31 December 2024
23
| 2024 | 2023 | ||
| £000 | £000 | ||
| Note | Restated | ||
| Cash flows from operating activities | |||
| Total comprehensive income | |||
| Adjustments: | |||
Increase in gross technical provisions | |||
Increase / (decrease) reinsurers' share of technical provisions | ( | ||
Increase / (decrease) in debtors | ( | ||
(Decrease) / Increase in creditors | ( | ||
Movement in other assets/liabilities | ( | ( | |
Investment return | 9 | ( | ( |
Foreign exchange | |||
Other | ( | ( | |
Net cash flows from operating activities | |||
| Cash flows from investing activities | |||
Purchase of equity and debt instruments | ( | ( | |
Sale of equity and debt instruments | |||
Investment income received | |||
Net cash flows from investing activities | ( | ||
| Cash flows from financing activities | |||
Distribution profit | ( | ( | |
Open year profit release | ( | ( | |
Net cash flows from financing activities | ( | ( | |
Net increase / (decrease) in cash and cash equivalents | ( | ||
Cash and cash equivalents at the beginning of the year | |||
Foreign exchange on cash and cash equivalents | ( | ( | |
Cash and cash equivalents at the end of the year | 24 |
Refer to Note 31 for further details on the restatement.
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
24
1. Basis of preparation
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 52 Lime Street, London, EC3M 7AF.
The Syndicate annual accounts have been prepared in accordance with the Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, applicable Accounting Standards in the United
Kingdom and the Republic of Ireland, including Financial Reporting Standard (FRS 102), Financial Reporting
Standard 103 (FRS 103) in relation to insurance contracts, and the Lloyd’s Syndicate Accounts Instructions
Version 2.0 as modified by the Frequently Asked Questions Version 1.1 issued by Lloyd’s.
The Syndicate annual accounts have been prepared in accordance with applicable accounting standards. A
summary of the more important accounting policies is set out below, together with an explanation of where
changes have been made to previous policies on the adoption of new accounting standards in the year.
The financial statements are presented in GBP and all amounts have been rounded to the nearest thousand,
unless otherwise indicated.
Restatement of comparative information
During 2024, Lloyd's introduced changes to the syndicate accounts process to rationalise and standardise
financial reporting across the market. As a result, certain comparative information has been restated to ensure
consistency with current year presentation and compliance with the Lloyd's Syndicate Accounts Instructions.
The changes comprise:
a) Reclassification changes
Certain financial statement line items have been reclassified whilst the underlying amounts remain unchanged.
The principal change is the reclassification of holdings in collective investment schemes, previously shown in
cash flows from investing activities, to form part of cash and cash equivalents in the Statement of cash flows.
The comparative balances in Note 24 have also been reclassified to align with the current period presentation.
b) Aggregation changes
To align with Lloyd's reporting requirements whilst maintaining FRS 102 compliance, certain items have been
aggregated or disaggregated within the financial statements and related notes. These changes include;
• The presentation of realised and unrealised gains and losses on investments, which are now shown on a
disaggregated basis in the non-technical account of the Statement of Comprehensive Income;
• The presentation of interest and similar income which is now shown on an aggregated basis to include
income from financial assets at fair value through profit and loss in Note 9;
• The presentation of gross premiums written by location of risk, which is now shown for direct gross
premiums written only in Note 3;
• The presentation of staff numbers, which is now shown to aggregate other into the administration and
finance category in Note 7;
• The presentation of syndicate loans to central fund, which is now shown on a disaggregated basis in the
financial instruments and financial investments in Notes 11 and 12;
• The presentation of overseas deposits, which is now shown on an aggregated basis in credit risk
disclosure in Note 11;
• The presentation of deposits with ceding undertakings, which is now shown on a disaggregated basis in
investments on the Statement of Financial Position;
• The presentation of the note for deferred acquisition cost is now shown separately from the technical
reserves and the movement in deferred acquisition cost now shown on a disaggregated basis in Note 17;
• The presentation of the movements in technical provision are now shown on a disaggregated basis in
Note 18; and
• The presentation of other creditors including taxation and social security is now aggregated to show
other related party balances and other creditors in Note 23.
c) Correction of error
The Syndicate has restated outward reinsurance balances in the 2023 financial year. The impact of this
change is detailed in Note 31.
The reclassification and aggregation changes have been applied retrospectively and had no impact on
previously reported total comprehensive income, total assets, total liabilities, or total capital and reserves.
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
25
1. Basis of preparation (continued)
Going concern
The Syndicate has financial resources to meet its financial needs and manages its portfolio of insurance risk.
The Directors have continued to review the business plans, liquidity and operational resilience of the Syndicate
and are satisfied that the Syndicate is well positioned to manage its business risks in the current economic
environment. The Syndicate’s 2025 Year of Account has opened and the Directors have concluded that the
Syndicate has sufficient resources to, and a reasonable expectation that it will, open a 2026 Year of Account.
The Syndicate has sufficient capital for each year of account in its Funds at Lloyd’s (FAL). There is no intention
to cease underwriting or cease the operations of the Syndicate. Having assessed the principal risks, the
Directors considered it appropriate to adopt the going concern basis of accounting in preparing the accounts.
2. Accounting policies
a) Insurance contracts
Insurance contracts are those contracts that transfer significant insurance risk. Such contracts may also
transfer financial risk.
i) Premiums written
Premiums written comprise premiums on contracts incepted during the financial year as well as adjustments
made in the year to premiums written in prior accounting periods. Premiums are shown gross of brokerage
payable and exclude taxes and duties levied on them. Premium written is initially based on the estimated
premium income (‘EPI’) of each contract. Judgement is involved in determining the ultimate estimates in order
to establish the appropriate premium value and, ultimately, the cash to be received. EPI estimates are updated
to reflect changes in an underwriter’s expectation through consultation with brokers, changes in market
conditions, historic experience and to reflect actual cash received for a contract.
ii) Unearned premiums
Written premiums are recognised as earned according to the risk profile of the policy. Unearned premiums
represent the proportion of premiums written that relate to unexpired terms of policies in force at the balance
sheet date, calculated on the basis of established earnings patterns or time apportionment as appropriate.
iii) Reinsurance premiums ceded
Outwards reinsurance premiums are accounted for in the same accounting period as the premiums for the
related direct or inwards business being reinsured.
iv) Claims provisions and related recoveries
Gross claims incurred comprise the estimated cost of all claims occurring during the year, whether reported or
not, including related direct and indirect claims handling costs and adjustments to claims outstanding from
previous years.
The provision for claims outstanding is assessed on an individual case basis and is based on the estimated
ultimate cost of all claims notified but not settled by the balance sheet date, together with the provision for
related claims handling costs. The provision also includes the estimated cost of claims incurred but not
reported (IBNR) at the balance sheet date based on statistical methods.
These methods generally involve projecting from past experience the development of claims over time to form
a view of the likely ultimate claims to be experienced for more recent underwriting, having regard to variations
in the business accepted and the underlying terms and conditions. For the most recent years, where a high
degree of volatility arises from projections, estimates may be based in part on output from rating and other
models of the business accepted and assessments of underwriting conditions. The amount of salvage and
subrogation recoveries is separately identified and, where material, reported as an asset.
The reinsurers’ share of provisions for claims is based on the amounts of outstanding claims and projections
for IBNR, net of estimated irrecoverable amounts, having regard to the reinsurance programme in place for
the class of business, the claims experience for the year and the current security rating of the reinsurance
companies involved. A number of statistical methods are used to assist in making these estimates.
The two most critical assumptions as regards claims provisions are that the past is a reasonable predictor of
the likely level of claims development and the rating and other models used for current business are fair
reflections of the likely level of ultimate claims to be incurred.
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
26
2. Accounting policies (continued)
Finally, the Actuarial Function applies a bespoke approach for allowing for excess IBNR where existing
methods would not otherwise adequately allow for future inflation expectations. In particular, where future
calendar year inflation is forecast to be different to past experience. This approach considers both frequency
and severity and expectations of economic and excess inflation (including social inflation) applied to the
specific drivers of loss for classes written by the Syndicate.
The Directors consider that the provisions for gross claims 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. Adjustments to the amounts of
claims provisions established in prior years are reflected in the accounts for the period in which the adjustments
are made. The methods used, and the estimates made, are reviewed regularly.
v) Unexpired risks provision
A provision for unexpired risks is made where claims and related expenses arising after the end of the financial
period in respect of contracts concluded before that date are expected to exceed the unearned premiums and
premiums receivable under these contracts, after the deduction of any acquisition costs deferred. The provision
for unexpired risks is calculated by reference to classes of business which are managed together, after taking
into account relevant investment return.
vi) Deferred acquisition costs
Acquisition costs, which comprise commission and other costs directly related to the acquisition of new
insurance contracts, are deferred to the extent that they are attributable to premiums unearned at the balance
sheet date.
b) Net operating expenses
Net operating expenses are recognised on an accruals basis. These comprise the Syndicate’s operating
expenses such as remuneration, office and administrative costs, acquisition costs, Managing Agency costs,
the costs of membership of Lloyd’s and other expenses attributable to the Syndicate’s underwriting.
c) 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.
d) Foreign currencies
The functional and presentation currency of the Syndicate is Pound Sterling .
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the
dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. For this purpose all
assets and liabilities arising from insurance contracts (including unearned premiums, deferred acquisition costs
and unexpired risks provisions) are monetary items. Non-monetary items measured at historical cost are
translated using the exchange rate at the date of the transaction and non-monetary items measured at fair
value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at
period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised
in the non-technical account where the gain is required to be recognised within profit or loss.
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
27
2. Accounting policies (continued)
e) Financial assets
In applying FRS 102, the Syndicate has chosen to apply the recognition and measurement provisions of IAS
39 Financial Instruments: Recognition and Measurement (as adopted for use in the UK).
i. Classification
The accounting classification of financial assets and liabilities determines the way in which they are measured
and changes in those values are presented in the statement of profit or loss and other comprehensive income.
Financial assets and liabilities are classified on their initial recognition.
The initial classification of a financial instrument shall take into account contractual terms including those
relating to future variations. Once the classification of a financial instrument is determined at initial recognition,
re-assessment is only required subsequently when there has been a modification of contractual terms that is
relevant to an assessment of the classification.
All investments are classified as fair value through profit and loss and are measured at fair value.
The Syndicate does not hold any derivative / non-derivative financial assets or financial liabilities for trading
purposes.
ii. Recognition
Financial instruments are recognised when the Syndicate becomes a party to the contractual provisions of the
instrument. Financial assets are derecognised if the Syndicate’s contractual rights to the cash flows from the
financial assets expire or if the Syndicate transfers the financial asset to another party without retaining control
of substantially all risks and rewards of the asset. A financial liability is derecognised when its contractual
obligations are discharged, cancelled or expired.
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.
iii. Measurement
A financial asset or financial liability is measured initially at fair value plus, for a financial asset or financial
liability not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or
issue.
Financial assets at fair value through profit or loss are measured at fair value with fair value changes
recognised immediately in profit or loss. Net gains or net losses on financial assets measured at fair value
through profit or loss includes foreign exchange gains/losses arising on their translation to the functional
currency but excludes interest and dividend income.
Loans and receivables are measured at amortised cost using the effective interest method, except Syndicate
loans to the Central Fund which are measured at fair value through profit or loss.
Fair value is determined using published bid price quotations of each security. The Directors consider the fair
value through profit and loss option to be appropriate as financial assets are managed and their performance
evaluated on a fair value basis, in accordance with a documented investment strategy and information is provided
internally on that basis to key management personnel. In addition, investment risk is assessed on a total return
basis, which is consistent with the adoption of fair value through profit and loss. Deposits with credit institutions
are stated at cost and overseas deposits are stated at market value (per Lloyd’s valuation).
Net gains or losses arising from changes in the fair value of financial assets at fair value through profit or loss are
presented in the Statement of Comprehensive Income within ‘Unrealised gains on investments’ or ‘Unrealised
losses on investments’.
Identification and measurement of impairment
At each reporting date the Syndicate assesses whether there is objective evidence that financial assets not at
fair value through profit or loss are impaired. Financial assets are impaired when objective evidence
demonstrates that a loss event has occurred after the initial recognition of an asset, and that the loss event
has an impact on the future cash flows on the asset that can be estimated reliably.
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
28
2. Accounting policies (continued)
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 recognised on an amortised cost asset reduces directly the carrying amount of the impaired
asset. All impairment losses are recognised in profit or loss. 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 profit or loss.
iv. Off-setting
Financial assets and financial liabilities are offset, and the net amount presented in the balance sheet when,
and only when, the Syndicate currently has a legal right to set off the amounts and intends either to settle on
a net basis or to realise the asset and settle the liability simultaneously.
f) Financial liabilities
Creditors are financial liabilities and are recognised initially at fair value, net of directly attributable transaction
costs. Creditors are subsequently stated at amortised cost, using the effective interest method.
g) Investment return
Investment return comprises all investment income, realised investment gains and losses and movements in
unrealised gains and losses, net of investment expenses, charges and interest.
Realised gains and losses on investments carried at market value are calculated as the difference between
sale proceeds and purchase price. Unrealised gains and losses on investments represent the difference
between the valuation at the balance sheet date and their valuation at the previous balance sheet date, or
purchase price, if acquired during the year, together with the reversal of unrealised gains and losses
recognised in earlier accounting periods in respect of investment disposals in the current period.
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. Investment return has been wholly allocated to the
Technical Account as all investments relate to the Technical Account.
h) 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’
agent is gross of tax.
No provision has been made for any United States Federal Income Tax payable on underwriting results or
investment earning. Any payments on account made by the Syndicate during the year are included in the
statement of financial position under the heading ’Members’ balances’. No provision has been made for any
overseas tax payable by members on underwriting results.
i) Pension costs
CUSL operates a defined contribution scheme. Pension contributions relating to CUSL staff working for the
Syndicate are charged to the Syndicate and included within net operating expenses.
j) Profit commission
Profit commission is charged by the Managing Agent at a rate of 15% of profit subject to the operation of a
deficit clause. Where profit commission is charged, it is included in members’ standard personal expenses
within administrative expenses.
k) Deposits with ceding undertakings
Deposits with ceding undertakings are funds held by Lloyd’s Europe on behalf of the Syndicate to settle Part
VII claims. These funds are held at amortised cost in the balance sheet.
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
29
2. Accounting policies (continued)
l) RITC and Portfolio Transfer Policy
The underwriting accounts for each year of account are normally kept open for three years before the result
on that year is determined. At the end of the three-year period, outstanding liabilities can normally be
determined with sufficient accuracy to permit the Year of Account to be closed by payment of a reinsurance to
close premium to the successor year of account.
The net reinsurance to close premium is determined on the basis of estimated outstanding liabilities and related
claims settlement costs (including claims incurred but not reported), net of estimated collectible reinsurance
recoveries, relating to the closed year of account and all prior years of account reinsured therein.
The reinsurance to close contract transfers the liability in respect of all claims, reinsurance premiums, return
premiums and other payments in respect of the closing year and prior years to the Names on the next open
year in so far as they have not been provided for in these accounts. It gives the Names on the next open year
the benefit of refunds, recoveries, premiums due and other income in respect of those years in so far as they
have not been credited in these accounts. The reinsurance to close is treated as the extinguishment of the
related net insurance liabilities for the closed underwriting year.
m) Reinsurers’ commission
Reinsurers’ commissions which include reinsurance profit commission and overriding commission, are treated
as a contribution to expenses.
n) Debtors and creditors
Insurance debtors and creditors include amounts due to and from agents, brokers and insurance contract
holders. These are classified as debt instruments as they are non-derivative financial assets with fixed or
determinable payments that are not quoted on an active market. Insurance debtors are measured at amortised
cost less any provision for impairments. Insurance creditors are stated at amortised cost. The Syndicate does
not have any debtors directly with policyholders, all transactions occur via an intermediary.
Reinsurance debtors and creditors include amounts due to and from reinsurers. These are classified as debt
instruments as they are non-derivative financial assets with fixed or determinable payments that are not quoted
on an active market. Reinsurance debtors are measured at amortised cost less any provision for impairments.
Reinsurance creditors are stated at amortised cost. Reinsurance debtors principally relate to claims recoveries
where the underlying claim has been settled and the recovery is due. Reinsurance creditors are primarily
premiums payable for reinsurance contracts and are recognised as an expense when due.
Other debtors principally consist of amounts due from sundry debtors and are carried at amortised cost less
any impairment losses.
Other creditors principally consist of amounts due to related entities and taxation. These are stated at
amortised cost determined using the effective interest rate method.
o) Classification of insurance and reinsurance contracts
Insurance and reinsurance contracts are classified as insurance contracts where they transfer significant
insurance risk. If a contract does not transfer significant insurance risk, it is classified as a financial instrument.
All of the Syndicate’s written contracts and purchased reinsurance contracts transfer significant insurance risk
and therefore are recognised as insurance contracts.
p) Key judgements and uncertainty
In preparing these financial statements, the Directors of the Managing Agent have made judgements,
estimates and assumptions that affect the application of the Syndicate’s accounting policies and the reported
amounts of assets, liabilities, income and expenses. In applying the accounting policies described in Note 2,
the following estimates that have had the most significant impact on the accounts are:
• Valuation of general insurance contract liabilities (page 25-26)
• Measurement of premium written (page 25)
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
30
3. Segmental analysis
An analysis of the underwriting result by class of business before investment return is set out below:
Gross
premiums
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Total
£000
£000
£000
£000
£000
£000
2024
Direct insurance
Marine, aviation and
transport
45
43
(4)
(16)
-
23
Fire and other damage to
property
7,756
8,001
(8,392)
(2,001)
-
(2,392)
Third party liability
3,882
3,766
(995)
(1,002)
-
1,769
Total direct insurance
11,683
11,810
(9,391)
(3,019)
-
(600)
Reinsurance acceptances
22,470
22,309
(1,642)
(5,440)
(1,087)
14,140
Total
34,153
34,119
(11,033)
(8,459)
(1,087)
13,540
2023 (Restated)
Direct insurance
Fire and other damage to
property
7,898
7,132
(62)
(1,852)
-
5,218
Third party liability
2,517
2,508
(599)
(647)
-
1,262
Total direct insurance
10,415
9,640
(661)
(2,499)
-
6,480
Reinsurance acceptances
26,547
24,889
(2,359)
(7,177)
(1,330)
14,023
Total
36,962
34,529
(3,020)
(9,676)
(1,330)
20,503
In 2023, Marine, aviation and transport business was presented as part of Fire and Other Damage to Property.
Refer to Note 31 for further details on the restatement.
The gross premiums written for direct insurance by location of where contracts were concluded is presented
in the table below:
2024
2023
£000
£000
UK
11,683
10,415
11,683
10,415
4. Movement in prior year’s provision for claims outstanding
There has been no material change to the method of reserving during the year under review.
During the year, the Syndicate released £7.7m of technical reserves in respect of prior years (2023: £7.0m)
arising from the nuclear property and nuclear liability classes (2023: nuclear property and nuclear liability
classes).
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
31
5. Net operating expenses
2024
2023
£000
£000
Restated
Acquisition costs - brokerage and commissions
1,016
1,036
Change in deferred acquisition costs
(78)
14
Administrative expenses
1,835
1,948
Members' standard personal expenses
5,686
6,678
8,459
9,676
Total commissions for direct insurance business for the year amounted to:
2024
2023
£000
£000
Total commission for direct insurance business
388
56
Refer to Note 31 for further details on the restatement.
6. Auditors’ remuneration
2024
2023
£000
£000
Fee payable to the Syndicate’s auditor for the audit of these annual accounts
119
115
Fees payable to the Syndicate’s auditor and its associates in respect of other services
pursuant to legislation
65
56
Other services pursuant to legislation relate to the audit and review of Lloyd’s regulatory returns as required
by Lloyd’s byelaws.
7. Staff numbers and costs
All staff are employed by a related group undertaking, CUSL.
Syndicate expenses, including the audit fee, are incurred by CUSL and recharged to the Syndicate via Chaucer
Syndicates Limited (CSL) as a flat fee included in administrative expenses.
The average number of employees employed by CUSL but working for the Syndicate during the year was as
follows:
2024
2023
Number
Number
Administration and finance
7
7
Underwriting
3
2
10
9
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
32
8. Emoluments of the Directors of the Managing Agent and Active Underwriter of the Syndicate
The Directors of Chaucer Syndicates Limited were remunerated in respect of their services to the Syndicate,
and charged to the Syndicate via CSL as a flat fee included in administrative expenses
The Active Underwriter received the following consultancy fees, incurred by a related group undertaking and
recharged to the Syndicate within Managing Agency fees.
2024
2023
£000
£000
Emoluments
245
245
9. Investment return
2024
2023
£000
£000
Interest and similar income
From financial assets designated at fair value through profit and loss
Interest and similar income
2,454
1,450
Interest on cash and cash equivalents
286
301
Other income from investments
From financial assets designated at fair value through profit or loss
Gains on the realisation of investments
204
42
Losses on realisation of investments
(465)
(341)
Unrealised gains on investments
918
1,698
Unrealised losses on investments
(295)
(4)
Investment management expenses, including interest
(37)
(35)
Total investment return
3,065
3,111
Transferred to the technical account from the non-technical account
3,065
3,111
The investment return was wholly allocated to the technical account.
10. Distribution
A distribution of £10.4m to members will be proposed in relation to the closing year of account 2022 (2023:
£15.0m in relation to the closing year of account 2021).
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
33
11. Financial instruments
Risk policies
a) Market Risk
Market risk is the risk that the fair value or future cash flows of a financial instrument or insurance contract will
fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk,
currency risk and other price risk.
The objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimising the return on risk. The nature of the Syndicate exposures to market risk and its
objectives, policies and processes for managing market risk have not changed significantly from the prior year.
i. Management of market risks
For each of the major components of market risk the Syndicate has policies and procedures in place which
detail how each risk should be managed and monitored. The management of each of these major components
of major risk and the exposure of the Syndicate at the reporting date to each major risk are addressed below.
ii. Interest rate risk
Interest rate risk is the risk that the fair value and/or future cash flows of a financial instrument will fluctuate
because of changes in interest rates.
The Syndicate is exposed to interest rate risk through its investment portfolio and cash and cash equivalents
The most significant proportion of risk within the Syndicate’s fixed income portfolio is interest rate risk, which
increases as the duration of each portfolio gets longer. In order to manage this risk duration constraints are
set, relative to a benchmark to provide downside protection for increases in interest rates with duration targets
of minimum 2.5 years and maximum 3.5 years for each portfolio.
The Finance and Investment Committee monitors the duration of these assets on a regular basis, targeting an
investment portfolio duration that, in the event of changes in interest rates, always maintains the internal capital
requirements.
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
34
11. Financial instruments (continued)
iii. Currency risk
The Syndicate writes a proportion of insurance business in currencies other than sterling, which gives rise to
exposure to currency risk. The Managing Agent mitigates this through a policy of broadly matching Syndicate
assets and liabilities by currency.
The table below summarises the carrying value of the Syndicate’s assets and liabilities, at the reporting date:
Sterling
US dollar
Euro
Canadian
dollar
Japanese
Yen
Other
Total
2024
£000
£000
£000
£000
£000
£000
£000
Investments
28,870
1,807
-
5,829
-
-
36,506
Reinsurers' share of
technical provisions
1,038
-
-
-
-
-
1,038
Debtors
30,182
7,310
1,137
2,124
219
56
41,028
Other assets
9,544
506
-
869
-
52
10,971
Prepayments and
accrued income
420
780
-
4
-
-
1,204
Total assets
70,054
10,403
1,137
8,826
219
108
90,747
Technical provisions
57,538
7,868
-
3,080
-
-
68,486
Creditors
1,002
2
-
-
-
-
1,004
Accruals and deferred
income
2,739
37
-
-
-
-
2,776
Total liabilities
61,279
7,907
-
3,080
-
-
72,266
Total capital and
reserves
8,775
2,496
1,137
5,746
219
108
18,481
Sterling
US dollar
Euro
Canadian
dollar
Japanese
Yen
Other
Total
2023 (Restated)
£000
£000
£000
£000
£000
£000
£000
Investments
35,794
1,071
-
3,057
-
-
39,922
Reinsurers' share of
technical provisions
1,194
-
-
-
-
-
1,194
Debtors
31,855
6,825
1,273
1,906
-
-
41,859
Other assets
7,241
26
-
479
-
58
7,804
Prepayments and
accrued income
411
710
-
(9)
-
-
1,112
Total assets
76,495
8,632
1,273
5,433
-
58
91,891
Technical provisions
47,661
7,573
-
3,037
-
-
58,271
Creditors
1,791
51
8
-
-
-
1,850
Accruals and deferred
income
4,115
13
-
(5)
-
-
4,123
Total liabilities
53,567
7,637
8
3,032
-
-
64,244
Total capital and
reserves
22,928
995
1,265
2,401
-
58
27,647
Refer to Note 31 for further details on the restatement.
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
35
11. Financial instruments (continued)
iii. Sensitivity analysis to market risks
The analysis below is performed for reasonably possible movements in market indices on financial instruments
with all other variables held constant, showing the impact on the result before tax due to changes in fair value
of financial assets and liabilities (whose fair values are recorded in the profit and loss account) and members’
balances.
The sensitivities shown in the table below indicate the estimated impact on result from parallel shifts in the yield
curve.
2024
2023 (Restated)
Impact on
results
before tax
Impact on
members’
balances
Impact on
results
before tax
Impact on
members’
balances
£000
£000
£000
£000
Interest rate risk
+ 50 basis points shift in yield curves
(700)
(700)
(493)
(493)
- 50 basis points shift in yield curves
406
406
493
493
Currency risk
10 percent increase in GBP/euro exchange rate
(103)
(103)
(115)
(115)
10 percent decrease in GBP/euro exchange rate
126
126
141
141
10 percent increase in GBP/US dollar exchange rate
(227)
(227)
(90)
(90)
10 percent decrease in GBP/US dollar exchange rate
277
277
111
111
The sensitivity analysis demonstrates the effect of a change in a key variable while other assumptions remain
unchanged. A 10% increase (or decrease) in exchange rates and a 50 basis point increase (or decrease) in
yield curves have been selected on the basis that these are considered to be reasonably possible changes in
these risk variables over the following year. However, the occurrence of a change in a single market factor
may lead to changes in other market factors as a result of correlations.
The sensitivity analyses do not take into consideration that the Syndicate’s financial investments are actively
managed. Additionally, the sensitivity analysis is based on the Syndicate’s financial position at the reporting
date and may vary at the time that any actual market movement occurs. As investment markets move past
pre-determined trigger points, action would be taken which would alter the Syndicate’s position.
b) Liquidity risk
Liquidity risk is the risk that the Syndicate will encounter difficulty in meeting obligations arising from its
insurance contracts and financial liabilities. The Syndicate is subject to calls on cash resources, mainly in
respect of claims on insurance business, on a daily basis.
The nature of the Syndicate’s exposures to liquidity risk and its objectives, policies and processes for managing
liquidity risk have not changed significantly from the prior year.
i. Management of liquidity risk
The Managing Agent operates and maintains a liquidity risk policy designed to ensure that cash is available to
settle liabilities and other obligations when due without excessive cost to the business.
The liquidity risk policy sets limits for cash required to meet expected cash flows. It includes a contingency
funding plan, which details the process and provisions for liquidating assets and/or raising additional funds
required to meet liabilities in extreme circumstances.
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
36
11. Financial instruments (continued)
ii. Maturity analysis of syndicate liabilities
The expected payment profile of undiscounted liabilities is as follows:
Maturity band (Years)
<1
1-3
3-5
>5
Total
£000
£000
£000
£000
£000
Creditors
1,004
-
-
-
1,004
Claims outstanding
14,497
17,960
9,353
9,754
51,564
At 31 December 2024
15,501
17,960
9,353
9,754
52,568
Creditors
1,850
-
-
-
1,850
Claims outstanding
10,066
14,285
8,290
8,785
41,426
At 31 December 2023 (Restated)
11,916
14,285
8,290
8,785
43,276
c) Credit risk
Credit risk is the risk of financial loss to the Syndicate if a counterparty fails to discharge a contractual
obligation.
The Syndicate is exposed to credit risk in respect of the following:
• Debt securities and other fixed income securities;
• Reinsurers’ share of claims outstanding;
• Debtors arising out of direct insurance operations;
• Debtors arising out of reinsurance operations;
• Cash and cash equivalents; and
• Other debtors and accrued interest.
The nature of the Syndicate’s exposures to credit risk and its objectives, policies and processes for managing
credit risk have not changed significantly from the prior year.
i. Management of credit risk
The Syndicate holds the majority of its investments in investment grade securities and money market funds,
managed by the external portfolio manager. The Investment manager may expose the Syndicate to credit risk
as a tactical enhancement to fixed income returns when suitable opportunities arise within the risk budget set
for the manager. The Investment manager mitigates credit risk through diversification and by setting maximum
limits for individual counterparties.
The Syndicate limits the amount of cash and cash equivalents that can be deposited with a single counterparty
and maintains an authorised list of acceptable cash counterparties.
The Syndicate’s exposure to intermediaries and reinsurance counterparties is monitored by the individual
business units as part of their credit control processes. All intermediaries must meet minimum requirements
established by the Syndicate. The credit ratings and payment histories of intermediaries are monitored on a
regular basis. The Syndicate assesses the creditworthiness of all reinsurers by reviewing public rating
information and by internal investigations. The impact of reinsurer default is regularly assessed and managed
accordingly.
ii. Exposure to credit risk
The carrying amount of financial assets and reinsurance assets represents the maximum credit risk exposure.
The Syndicate does not hold any collateral as security or purchase any credit enhancements (such as
guarantees, credit derivatives and netting arrangements that do not qualify for offset).
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
37
11. Financial instruments (continued)
The assets bearing credit risk are summarised below, together with an analysis by credit rating:
AAA
AA
A
BBB
Other
Not
rated
Total
£000
£000
£000
£000
£000
£000
£000
Shares and other variable yield securities
1,502
6,132
-
-
-
-
7,634
Debt securities and other fixed income
securities
9,763
4,372
10,993
3,368
-
-
28,496
Syndicate loans to central fund
-
372
-
-
-
-
372
Deposits with ceded undertakings
-
-
4
-
-
-
4
Reinsurers’ share of claims outstanding
-
707
-
-
-
-
707
Debtors arising out of direct insurance
operations
-
-
-
-
-
9,529
9,529
Debtors arising out of reinsurance operations
-
-
-
-
-
31,156
31,156
Cash at bank and in hand
10,045
-
-
-
-
-
10,045
Other debtors and accrued interest
556
45
145
128
52
676
1,602
At 31 December 2024
21,866
11,628
11,142
3,496
52
41,361
89,545
Shares and other variable yield securities
828
3,297
-
-
-
-
4,125
Debt securities and other fixed income
securities
10,135
9,759
11,002
4,411
-
-
35,307
Syndicate loans to central fund
-
-
486
-
-
-
486
Deposits with ceded undertakings
-
-
4
-
-
-
4
Reinsurers’ share of claims outstanding
-
-
895
-
-
-
895
Debtors arising out of direct insurance
operations
-
-
-
-
-
10,021
10,021
Debtors arising out of reinsurance operations
-
-
-
-
-
31,507
31,507
Cash at bank and in hand
7,257
-
-
-
-
-
7,257
Other debtors and accrued interest
366
10
64
48
57
654
1,199
At 31 December 2023 (Restated)
18,586
13,066
12,451
4,459
57
42,182
90,801
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
38
11. Financial instruments (continued)
iii. Financial assets that are past due or impaired
Debtors arising from direct insurance and reinsurance operations have been individually assessed for
impairment by considering information such as the occurrence of significant changes in the counterparty’s
financial position, patterns of historical payment information and disputes with counterparties.
An analysis of the carrying amounts of past due or impaired debtors is presented in the table below:
Neither past due
nor impaired
assets
Past due
but not
impaired
assets
Gross
value of
impaired
assets
Impairment
allowance
Total
£000
£000
£000
£000
£000
Shares and other variable securities
7,634
-
-
-
7,634
Debt securities and other fixed income
securities
28,496
-
-
-
28,496
Syndicate loans to central fund
372
-
-
-
372
Deposits with ceded undertakings
4
-
-
-
4
Reinsurers' share of claims outstanding
707
-
-
-
707
Debtors arising out of direct insurance
operations
9,529
-
-
-
9,529
Debtors arising out of reinsurance
operations
31,156
-
-
-
31,156
Cash at bank and in hand
10,045
-
-
-
10,045
Other debtors and accrued interest
1,602
-
-
-
1,602
At 31 December 2024
89,545
-
-
-
89,545
Shares and other variable securities
4,125
-
-
-
4,125
Debt securities and other fixed income
securities
35,307
-
-
-
35,307
Syndicate loans to central fund
486
-
-
-
486
Deposits with ceded undertakings
4
-
-
-
4
Reinsurers' share of claims outstanding
895
-
-
-
895
Debtors arising out of direct insurance
operations
10,021
-
-
-
10,021
Debtors arising out of reinsurance
operations
31,507
-
-
-
31,507
Cash at bank and in hand
7,257
-
-
-
7,257
Other debtors and accrued interest
1,199
-
-
-
1,199
At 31 December 2023 (Restated)
90,801
-
-
-
90,801
12. Financial investments
2024
2023
Cost
Market
value
Cost
Market
value
£000
£000
£000
£000
Shares and other variable yield securities
7,923
7,634
4,341
4,126
Debt securities and other fixed income securities
28,780
28,496
36,213
35,306
Syndicate loans to central funds
398
372
512
486
37,101
36,502
41,066
39,918
The amount ascribable to listed investments is £nil (2023: £nil)
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
39
12. Financial investments (continued)
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
36,502
39,918
36,502
39,918
Determination of fair value hierarchy
The Syndicate classifies its financial instruments held at fair value in its balance sheet using a fair value
hierarchy based on the inputs used in the valuation techniques as follows:
• Level 1 – financial assets that are measured by reference to published quotes in an active market. A
financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly
available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those
prices represent actual and regularly occurring market transactions on an arm’s length basis.
• Level 2 – financial assets measured using a valuation technique based on assumptions that are supported
by prices from observable current market transactions. For example, assets for which pricing is obtained
via pricing services but where prices have not been determined in an active market, financial assets with
fair values based on broker quotes, investments in private equity funds with fair values obtained via fund
managers and assets that are valued using the Syndicate’s own models whereby the significant inputs
into the assumptions are market observable.
• Level 3 – financial assets measured using a valuation technique (model) based on assumptions that are
neither supported by prices from observable current market transactions in the same instrument nor are
they based on available market data. Therefore, unobservable inputs reflect the Syndicate's own
assumptions about the assumptions that market participants would use in pricing the asset or liability
(including assumptions about risk). These inputs are developed based on the best information available,
which might include the Syndicate’s own data.
The following table presents the Syndicate’s assets measured at fair value at 31 December 2024 and at 31
December 2023.
Level 1
Level 2
Level 3
Total
£000
£000
£000
£000
Shares and other variable yield securities and unit trusts
7,634
-
-
7,634
Debt securities and other fixed income securities
-
28,496
-
28,496
Syndicate loans to central fund
-
-
372
372
At 31 December 2024
7,634
28,496
372
36,502
Shares and other variable yield securities and unit trusts
4,125
-
-
4,125
Debt securities and other fixed income securities
-
35,307
-
35,307
Syndicate loans to central fund
-
-
486
486
At 31 December 2023
4,125
35,307
486
39,918
Information on the methods and assumptions used to determine fair values for each major category of financial
instrument measured at fair value is provided below.
Debt securities are generally valued using prices provided by external pricing vendors. Pricing vendors will
often determine prices by consolidating prices of recent trades for identical or similar securities obtained from
a panel of market makers into a composite price. The pricing service may make adjustments for the elapsed
time from a trade date to the valuation date to take into account available market information. Lacking recently
reported trades, pricing vendors will use modelling techniques to determine a security price.
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
40
12. Financial investments (continued)
Some government and supranational securities are listed on recognised exchanges and are generally
classified as level 1 in the fair value hierarchy. Those that are not listed on a recognised exchange are generally
based on composite prices of recent trades in the same instrument and are generally classified as level 2 in
the fair value hierarchy.
Corporate bonds, including asset backed securities, that are not listed on a recognised exchange or are traded
in an established over-the-counter market are also mainly valued using composite prices. Where prices are
based on multiple quotes and those quotes are based on actual recent transactions in the same instrument
the securities are classified as level 2, otherwise they are classified as level 3 in the fair value hierarchy.
Lloyd’s introduced Syndicate loans to the Central Fund. The proceeds from these loans were used to
strengthen Lloyd’s central resources and to inject capital into Lloyd’s Insurance Company SA (Lloyd’s
Brussels). Loans will not be repaid before 5 years have elapsed. Interest thereon is determined by reference
to the risk-free yield plus a credit spread, and will normally be paid annually on an anniversary of the loan.
These investments have been classified as an equity share for which the fair value cannot be determined using
direct or indirect observable inputs, therefore these have been classified as Level 3.
At the reporting date Level 1 and Level 2 financial assets and liabilities were valued using valuation techniques
based on observable market data. All of the investments categorised as level 3 are fair valued based on the
inputs to the valuation technique used.
13. Debtors arising out of direct insurance operations
2024
2023
£000
£000
Restated
Due within one year
9,529
10,021
9,529
10,021
14. Debtors arising out of reinsurance operations
2024
2023
£000
£000
Due within one year
28,132
28,489
Due after one year
3,024
3,018
31,156
31,507
15. Other debtors
2024
2023
£000
£000
Other debtors
343
331
343
331
Other debtors primarily relate to overseas taxes.
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
41
16. Other
This represents overseas deposits which are lodged as a condition of conducting underwriting business in
certain countries. The funds are required in order to protect policyholders and enable the Syndicate to operate
in these markets. The Syndicate has only restricted access to these funds and no influence over their
investment.
17. Deferred acquisition costs
The table below shows changes in gross deferred acquisition costs assets from the beginning of the period
to the end of the period.
2024
2023
£000
£000
Balance at 1 January
791
844
Incurred deferred acquisition costs
(1,016)
(1,036)
Amortised deferred acquisition costs
1,094
1,022
Foreign exchange movements
2
(39)
Balance at 31 December
871
791
18. Technical provisions
The table below shows changes in the insurance contract liabilities and assets from the beginning of the period
to the end of the period.
2024
2023 (Restated)
Gross
provisions
Reinsurance
Assets
Net
Gross
provisions
Reinsurance
assets
Net
£000
£000
£000
£000
£000
£000
Claims outstanding
Balance at 1 January
41,426
(895)
40,531
38,646
(379)
38,267
Claims paid during the
year
(721)
-
(721)
(136)
-
(136)
Expected cost of
current year claims
18,885
75
18,961
10,169
(629)
9,540
Change in estimates of
prior year provisions
(7,852)
113
(7,739)
(7,149)
113
(7,036)
Effect of movements in
exchange rate
(174)
-
(174)
(104)
-
(104)
Balance at 31
December
51,564
(707)
50,858
41,426
(895)
40,531
2024
2023 (Restated)
Gross
provisions
Reinsurance
assets
Net
Gross
provisions
Reinsurance
assets
Net
£000
£000
£000
£000
£000
£000
Unearned premiums
Balance at 1 January
16,845
(299)
16,546
14,739
(191)
14,548
Premiums written
during the year
34,153
(931)
33,222
36,962
(1,954)
35,008
Premiums earned
during the year
(34,119)
899
(33,220)
(34,529)
1,846
(32,683)
Effect of movements in
exchange rate
43
-
43
(327)
-
(327)
Balance at 31
December
16,922
(331)
16,591
16,845
(299)
16,546
Refer to Note 31 for further details on the restatement.
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
42
19. Insurance risk
The Syndicate’s managing agent board has set out policies, processes and controls arising from insurance
contracts. The key summary of these are as follows:
Underwriting risk
The Managing Agent separately defines underwriting risk appetite in respect of market losses and syndicate-
specific losses, with appetite for the former being greater.
Underwriting risk appetite is expressed at the highest level, as a maximum event-specific net underwriting loss
as a percentage of Syndicate capacity for an annual year of account. Where appropriate, stochastic modelling
of underwriting risk using dynamic financial analysis techniques supports this approach.
The Managing Agent Board approves the risk appetite limit, after considering the relativity between ‘willing to
lose’ and potential forecast profitability for each year of account. The risk appetite will therefore reflect the view
of forecast profitability, utilising the Syndicate’s latest business plan assumptions.
Managing risk aggregation
Underwriting exposure is controlled via risk policy coding systems, setting of maximum lines, setting of
jurisdiction limits, strict underwriter authority limits, Realistic Disaster Scenario monitoring, reinsurance
programme design, policy limitations and exclusions, imposed deductibles and policy wording and coverage
clauses. The Managing Agent records and monitors individual risk exposures on a regular basis to ensure
these remain within the policies and guidelines set.
Concentration of insurance risk
Please refer to Note 3 Segmental analysis which provides split of gross written premium by region.
The following table shows the impact of a 5% variation in the loss ratio on profit or loss and members' balances:
2024
2023
+5.0%
-5.0%
+5.0%
-5.0%
£000
£000
£000
£000
Claims outstanding – gross of reinsurance
(2,578)
2,578
(2,071)
2,071
Claims outstanding – net of reinsurance
(2,543)
(2,543)
(2,027)
2,027
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
43
20. Claims development tables
The development of insurance liabilities provides a measure of the Managing Agent’s ability to estimate the ultimate value of claims.
Pure underwriting year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
Estimate of gross claims incurred
At end of underwriting year
7,586
10,529
7,516
6,635
6,650
7,550
6,305
8,326
7,398
7,524
One year later
9,983
13,620
8,727
9,157
10,309
8,629
7,438
12,258
17,535
-
Two years later
5,976
10,872
6,092
6,834
6,339
5,342
5,131
8,873
-
-
Three years later
5,415
6,864
4,250
5,914
5,798
4,344
5,588
-
-
-
Four years later
4,959
6,324
3,541
3,931
3,780
3,740
-
-
-
-
Five years later
3,838
5,779
2,977
3,008
3,034
-
-
-
-
-
Six years later
3,462
5,355
2,560
2,453
-
-
-
-
-
-
Seven years later
2,955
4,989
1,952
-
-
-
-
-
-
-
Eight years later
2,720
4,526
-
-
-
-
-
-
-
-
Nine years later
2,338
-
-
-
-
-
-
-
-
-
Estimate of gross claims reserve
2,338
4,526
1,952
2,453
3,034
3,740
5,588
8,873
17,535
7,524
57,563
Provision in respect of prior years
549
Less gross claims paid
1,900
3,270
52
493
294
34
76
38
389
2
6,548
Gross reserves
438
1,256
1,900
1,960
2,740
3,706
5,512
8,835
17,146
7,522
51,564
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
44
20. Claims development tables (continued)
Pure underwriting year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
Estimate of net claims incurred
At end of underwriting year
7,586
10,517
7,516
6,635
6,605
7,361
6,146
8,180
7,053
7,282
One year later
9,983
13,608
8,727
9,157
10,283
8,456
7,290
11,856
17,319
-
Two years later
5,976
10,871
6,092
6,834
6,338
5,257
5,055
8,687
-
-
Three years later
5,415
6,863
4,250
5,914
5,797
4,272
5,526
-
-
-
Four years later
4,959
6,324
3,541
3,931
3,780
3,739
-
-
-
-
Five years later
3,838
5,779
2,977
3,008
3,034
-
-
-
-
-
Six years later
3,462
5,355
2,560
2,453
-
-
-
-
-
-
Seven years later
2,955
4,989
1,952
-
-
-
-
-
-
-
Eight years later
2,720
4,526
-
-
-
-
-
-
-
-
Nine years later
2,338
-
-
-
-
-
-
-
-
-
Estimate of net claims reserve
2,338
4,526
1,952
2,453
3,034
3,739
5,526
8,687
17,319
7,282
56,856
Provision in respect of prior years
549
Less net claims paid
1,900
3,270
52
493
294
34
76
38
389
2
6,548
Net reserves
438
1,256
1,900
1,960
2,740
3,705
5,450
8,649
16,930
7,280
50,857
Gross and net claims incurred that are denominated in non-functional currency are converted to Pound Sterling as of 31 December 2024, the most recent balance
sheet date, for all years presented.
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
45
21. Creditors arising out of direct insurance operations
2024
2023
£000
£000
Due within one year
13
-
13
-
22. Creditors arising out of reinsurance operations
2024
2023
£000
£000
Restated
Due within one year
973
1,439
973
1,439
23. Other creditors including taxation and social security
2024
2023
£000
£000
Other related party balances
18
395
Other liabilities
-
16
18
411
24. Cash and cash equivalents
2024
2023
£000
£000
Cash at bank and in hand
10,045
7,257
Short term debt instruments presented within financial investments
7,634
4,126
17,679
11,383
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 relate to restricted accounts aligned to trust funds.
2024
2023
£000
£000
Short term debt instruments presented within financial investments
6,334
3,868
6,334
3,868
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
46
25. Analysis of net debt
At 1 January
2024
Cash
flows
Fair value and
exchange
movements
At 31
December
2024
£000
£000
£000
£000
Cash and cash equivalents
11,383
6,469
(173)
17,679
11,383
6,649
(173)
17,679
The Syndicate does not have any borrowings, related derivatives and obligations under finance leases.
26. Related parties
Chaucer Syndicates Limited and Chaucer Underwriting Services Limited, wholly owned subsidiaries of China
Reinsurance (Group) Corporation, act as Managing Agent and service company respectively for the Syndicate.
Chaucer Syndicates Limited and Chaucer Underwriting Services Limited charged the Syndicate with the
following expenses during the year along with the outstanding balance at the year end:
2024
2023
£000
£000
Managing agency fees
2,483
2,333
Profit commission
2,899
4,125
Expenses recharged
38
146
Year-end balance due to Chaucer Syndicates Limited at 31 December
2,775
4,498
Year-end balance due to Chaucer Underwriting Services Limited at 31 December
18
146
Amounts are unsecured and are expected to be settled in cash and cash equivalents within one year.
A subsidiary of China Reinsurance (Group) Corporation supports the underwriting capacity of the Syndicate
as follows:
Year of account
2024
2023
2022
£000
£000
£000
Chaucer Corporate Capital (No. 3) Limited
26,484
26,484
26,484
These transactions are subject to the Managing Agent’s internal controls, which ensure that all are compliant
with Lloyd’s Related Party Bylaw provisions.
27. Foreign exchange rates
The following currency exchange rates have been used for principal foreign currency transactions:
| 2024 | 2023 | |||||
Start of Period Rate | End of Period Rate | Average Rate | Start of Period Rate | End of Period Rate | Average Rate | |
| US dollar | ||||||
| Euro | ||||||
Sterling | ||||||
Canadian dollar | ||||||
Australian dollar | ||||||
Japanese Yen |
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
47
28. 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 Prudential
Regulatory Authority 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 an 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 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.
29. Capital
Capital framework at Lloyd’s
The Society of Lloyd’s (Lloyd’s) is a regulated undertaking and subject to the supervision of the Prudential
Regulatory Authority (PRA) under the Financial Services and Markets Act 2000 and in accordance with
Solvency II legislation.
Within this supervisory framework, Lloyd’s applies capital requirements at member level and centrally to ensure
that Lloyd’s complies with Solvency II, and beyond that to meet its own financial strength, licence and ratings
objectives.
Although, as described below, Lloyd’s capital setting processes use a capital requirement set at syndicate
level as a starting point, the requirement to meet Solvency II and Lloyd’s capital requirements apply at overall
and member level only respectively, not at syndicate level. Accordingly, the capital requirement in respect of
Syndicate 1176 is not disclosed in these accounts.
Lloyd’s capital setting process
In order to meet Lloyd’s requirements, each syndicate is required to calculate its Solvency Capital Requirement
(SCR) for the prospective underwriting year. This amount must be sufficient to cover a 1 in 200 year loss,
reflecting uncertainty in the ultimate run-off of underwriting liabilities (SCR ‘to ultimate’). The syndicate must
also calculate its SCR at the same confidence level but reflecting uncertainty over a one year time horizon
(one year SCR) for Lloyd’s to use in meeting Solvency II requirements. The SCRs of each syndicate are subject
to review by Lloyd’s and approval by the Lloyd’s Capital and Planning Group.
A syndicate may comprise one or more underwriting members of Lloyd’s. Each member is liable for its own
share of underwriting liabilities on the syndicate(s) on which it is participating but not other members’ shares.
Accordingly, the capital requirement that Lloyd’s sets for each member operates on a similar basis. Each
member’s SCR shall thus be determined by the sum of the member’s share of the syndicate SCR ‘to ultimate’.
Where a member participates on more than one syndicate, a credit for diversification is provided to reflect the
spread of risk, but consistent with determining an SCR which reflects the capital requirement to cover a 1 in
200 year loss ‘to ultimate’ for that member. Over and above this, Lloyd’s applies a capital uplift to the member’s
capital requirement, known as the Economic Capital Assessment (ECA). The purpose of this uplift, which is a
Lloyd’s not Solvency II requirement, is to meet Lloyd’s financial strength, licence and ratings objectives. The
capital uplift applied for 2024 was 35% (2023: 35%) of the member’s SCR ‘to ultimate’.
Provision of capital by members
Each member may provide capital to meet its ECA either by assets held in trust by Lloyd’s specifically for that
member (funds at Lloyd’s), held within and managed within a syndicate (funds in syndicate) or as the member’s
share of the members’ balances on each syndicate on which it participates. Accordingly, all of the assets less
liabilities of the Syndicate, as represented in the members’ balances reported on the Statement of Financial
Position on page 21, represent resources available to meet members’ and Lloyd’s capital requirements.
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
48
30. Ultimate parent company
The Managing Agent’s immediate parent company is Chaucer Capital Investments Limited. The largest and
smallest group of undertakings for which group financial statements are prepared, and in which the results of the
Managing Agent are included, is China Reinsurance (Group) Corporation. The Company considers China
Reinsurance (Group) Corporation to be its ultimate parent company. A copy of the most recent consolidated
financial statements is available from the website of China Reinsurance (Group) Corporation
(www.chinare.com.cn).
31. Restatement of comparatives
Following a review of underlying source data in respect of interpool reinsurance arrangements that were put
into place following Brexit through the Lloyd’s Brussels platform, the Syndicate has restated outward
reinsurance balances in the Statement of Comprehensive Income, Statement of Financial Position, Statement
of Changes in Members’ Balances, Statement of Cashflows and associated disclosure notes. The impact of
these changes is shown below:
Statement of Comprehensive Income
Reported
Restatement
Restated
£000
£000
£000
Outward reinsurance premium
(673)
(1,281)
(1,954)
Premiums written, net of reinsurance
36,289
(1,281)
35,008
Change in the provision for unearned premiums reinsurers’ share
39
69
108
Earned premiums, net of reinsurance
33,895
(1,212)
32,683
Change in the provision for claims reinsurers’ share
126
390
516
Claims incurred, net of reinsurance
(2,894)
390
(2,504)
Administrative expenses
(9,799)
123
(9,676)
Total comprehensive income for the year
24,073
(699)
23,374
Syndicate 1176
Notes to the Accounts for the year ended 31 December 2024
49
31. Restatement of comparatives (continued)
Statement of Financial Position
Reported
Restatement
Restated
£000
£000
£000
Assets
Reinsurers’ share of technical provisions
Provision for unearned premiums
230
69
299
Claims outstanding
505
390
895
Debtors
Debtors arising out of direct insurance operations - intermediaries
10,839
(818)
10,021
Total assets
92,250
(359)
91,891
Capital and reserves
Members’ balances
28,346
699
27,647
Liabilities
Creditors
Creditors arising out of reinsurance operations
976
(463)
1,439
Accruals and deferred income
4,246
123
4,123
Total liabilities
63,904
340
64,244
Total liabilities, capital and reserves
92,250
(359)
91,891
Statement of Changes in Members’ Balances
Reported
Restatement
Restated
£000
£000
£000
Total comprehensive income for the year
24,073
(699)
23,374
Members’ balance carried forward at 31 December
28,346
(699)
27,647
Statement of Cashflow
Reported
Restatement
Restated
£000
£000
£000
Total comprehensive income
24,073
(699)
23,374
Adjustments:
Increase in reinsurers' share of technical provisions
(165)
(459)
(624)
Decrease in debtors
(10,946)
818
(10,128)
Increase in creditors
951
340
1,291
Net cash flows from operating activities
17,075
-
17,075
SYNDICATE 1176 – 2022 Year of Account
Underwriting Year Accounts
31 December 2024
Syndicate 1176
Managing Agent’s Report
52
The Managing Agent presents its report at 31 December 2024 for the 2022 closed year of account.
This report is prepared in accordance with the Lloyd’s Syndicate Accounting Byelaw (No 8 of 2005). It
accompanies the underwriting year accounts prepared on an underwriting year basis of accounting as required
by Statutory Instrument No 1950 of 2008, the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate
Accounts) Regulations (“the 2008 Regulations”).
A list of Directors of the Managing Agent who held office during the year ended 31 December 2024 is on page
1 of the Syndicate Annual Reports and Accounts.
Review of the business
The gross premiums written for the 2022 year of account were £32.3m compared to the Syndicate’s 2021 year
of account’s gross premiums written of £28.7m.
The plan was for a premium income of £31.5m, the closing result shows premium gross of acquisition costs of
£32.3m. The surplus against plan is mainly due to new liability business, particularly from UK government-
backed indemnity related to the revised liability convention. There have been a few smaller losses which have
been reserved at the year end, within loss expectations. These were slightly higher than in the most recent
years. The final profit achieved on the 2022 year of account is £18.5m, representing a return on capacity of
39.8%.
Disclosure of information to the auditors
The directors each confirm that:
• So far as they are aware, there is no relevant audit information of which the Syndicate's auditors are
unaware, and
• They have taken all the steps that they ought to have taken as a director in order to make themselves
aware of any relevant audit information and to establish that the Syndicate's auditors are aware of that
information.
Approved by order of the Board of Chaucer Syndicates Limited
J Wright
Chief Financial Officer
4 March 2025
Syndicate 1176
Statement of Managing Agent’s Responsibilities
53
The Managing Agent is responsible for preparing Syndicate Underwriting Year Accounts in accordance with
applicable law and Lloyd’s Syndicate Accounting Byelaw.
The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the
Syndicate Accounting Byelaw (No. 8 of 2005) (the “Lloyd’s Regulations”) require the Managing Agent to
prepare Syndicate Underwriting Year Accounts for each Syndicate in respect of any underwriting year which
is being closed by reinsurance to close at 31 December.
The Managing Agent must prepare Syndicate Underwriting Year Accounts which give a true and fair view of
the result of the closed year of account.
In preparing the Syndicate underwriting year accounts, the Managing Agent is required to:
• select suitable accounting policies which are applied consistently and where there are items which affect
more than one year of account, ensure a treatment which is equitable as between the members of the
Syndicate affected. In particular, the amount charged by way of premium in respect of the reinsurance
to close shall, where the reinsuring members and reinsured members are members of the same
Syndicate for different years of account, be equitable as between them, having regard to the nature and
amount of the liabilities reinsured;
• make judgements and estimates that are reasonable and prudent;
• take into account all income and charges relating to a closed year of account in the underwriting account
prepared in respect of that year of account, without regard to the date of receipt or payment; and
• state whether applicable accounting standards have been followed, subject to any material departures
disclosed and explained in the underwriting year accounts.
The Managing Agent is responsible for keeping proper accounting records which disclose with reasonable
accuracy at any time the financial position of the Syndicate and enable it to ensure that the Syndicate
underwriting year accounts comply with the 2008 Regulations. It is also responsible for safeguarding the assets
of the Syndicate and hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
Syndicate 1176
Independent auditors’ report to the members of the 2022 closed year of
account of Syndicate 1176
54
Opinion
We have audited the Syndicate underwriting year accounts for the 2022 year of account of Syndicate 1176 for
the three year period ended 31 December 2024 which comprise the Statement of Comprehensive Income, the
Statement of Financial Position and related notes, including the accounting policies in Note 2.
In our opinion the Syndicate underwriting year accounts:
• give a true and fair view of the Syndicate’s profit for the 2022 closed year;
• have been properly prepared in accordance with UK accounting standards, including FRS 102 The
Financial Reporting Standard applicable in the UK and Republic of Ireland; and
• have been properly prepared in accordance with the requirements of the Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and in accordance with the requirements
of the Lloyd’s Syndicate Accounting Byelaw (No. 8 of 2005).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and
applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under,
and are independent of the Syndicate in accordance with, UK ethical requirements including the Financial
Reporting Council (“FRC”) Ethical Standard as applied to other entities of public interest. We believe that the
audit evidence we have obtained is a sufficient and appropriate basis for our opinion.
Emphasis of matter – non-going concern basis of preparation
We draw attention to the disclosure made in Note 1 to the Syndicate underwriting year accounts which explains
that the Syndicate underwriting year accounts have not been prepared on the going concern basis for the
reasons set out in that note. Our opinion is not modified in respect of this matter.
Fraud and breaches of laws and regulations – ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that
could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk
assessment procedures included:
• Enquiring of directors, the audit committee, internal audit, legal, risk and compliance, management and
inspection of policy documentation as to the Syndicate and Managing Agent’s high-level policies and
procedures to prevent and detect fraud including the internal audit function, and the Syndicate and
Managing Agent’s channel for “whistleblowing”, as well as whether they have knowledge of any actual,
suspected or alleged fraud.
• Reading board, audit committee and other relevant meeting minutes.
• Considering remuneration incentive schemes.
• Using analytical procedures to identify any unusual or unexpected relationships.
We communicated identified fraud risks throughout the audit team and remained alert to any indications of
fraud throughout the audit.
As required by auditing standards, and our overall knowledge of the control environment, we perform
procedures to address the risk of management override of controls, in particular the risk that management may
be in a position to make inappropriate accounting entries and the risk of bias in accounting estimates and
judgements such as incurred but not reported (“IBNR”) reserves. On this audit, there is a fraud risk related to
revenue recognition because of the significant estimates and subjective judgements involved in the
assessment of revenue recognition.
We did not identify any additional fraud risks.
Syndicate 1176
Independent auditors’ report to the members of the 2022 closed year of
account of Syndicate 1176
55
We performed procedures including:
• Identifying journal entries to test based on risk criteria and comparing the identified entries to supporting
documentation. These included entries posted with key words or with no description, entries with no User
ID, entries posted to accounts that contain significant estimates, entries posted or approved by
unauthorised users, entries posted by and approved by the same individual, entries to seldom used
accounts, post-closing entries and entries containing unusual debits and credits.
• Assessing whether the judgements made in making accounting estimates are indicative of a potential bias
including assessing the appropriateness and consistency of the methods and assumptions used for
reserving.
Identifying and responding to risks of material misstatement related to compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the
Syndicate underwriting year accounts from our general commercial and sector experience, and through
discussion with the directors and others management (as required by auditing standards), and from inspection
of the Syndicate and Managing Agent’s regulatory and legal correspondence. We discussed with the directors
and other management the policies and procedures regarding compliance with laws and regulations.
As the Syndicate is regulated, our assessment of risks involved gaining an understanding of the control
environment including the entity’s procedures for complying with regulatory requirements. We communicated
identified laws and regulations throughout our team and remained alert to any indications of non-compliance
throughout the audit.
The potential effect of these laws and regulations on the Syndicate underwriting year accounts varies
considerably. Firstly, the Syndicate is subject to laws and regulations that directly affect the Syndicate
underwriting year accounts including financial reporting legislation (such as the Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the Lloyd’s Syndicate Accounts
Instructions) and we assessed the extent of compliance with these laws and regulations as part of our
procedures on the related Syndicate underwriting year accounts’ items.
Secondly, the Syndicate is subject to many other laws and regulations where the consequences of non-
compliance could have a material effect on amounts or disclosures in the Syndicate underwriting year
accounts, for instance through the imposition of fines or litigation or the loss of the Syndicate’s capacity to
operate. We identified the following areas as those most likely to have such an effect: regulatory capital
requirements, corruption and bribery, recognising the regulated nature of the Syndicate’s activities and its legal
form. Auditing standards limit the required audit procedures to identify non-compliance with these laws and
regulations to enquiry of the directors and other management and inspection of regulatory and legal
correspondence, if any. Therefore, if a breach of operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some
material misstatements in the Syndicate underwriting year accounts, even though we have properly planned
and performed our audit in accordance with auditing standards. For example, the further removed non-
compliance with laws and regulations is from the events and transactions reflected in the Syndicate
underwriting year accounts, the less likely the inherently limited procedures required by auditing standards
would identify it.
In addition, as with any audit, there remained a higher risk of non-detection of fraud, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit
procedures are designed to detect material misstatement. We are not responsible for preventing non-
compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.
Report of the directors of the Managing Agent
The directors of the Managing Agent are responsible for the Report of the Directors of the Managing Agent.
Our opinion on the Syndicate underwriting year accounts does not cover that report and we do not express an
audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.
Syndicate 1176
Independent auditors’ report to the members of the 2022 closed year of
account of Syndicate 1176
56
Our responsibility is to read the Report of the Directors of the Managing Agent and, in doing so, consider
whether, based on our Syndicate underwriting year accounts audit work, the information therein is materially
misstated or inconsistent with the Syndicate underwriting year accounts or our audit knowledge. Based solely
on that work we have not identified material misstatements in the Report of the Directors of the Managing
Agent.
Matters on which we are required to report by exception
Under the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and
the Lloyd’s Syndicate Accounting Byelaw (no. 8 of 2005), we are required to report to you if, in our opinion:
• adequate accounting records have not been kept on behalf of the Syndicate; or
• the Syndicate underwriting year 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 these respects.
Responsibilities of the Directors of the Managing Agent
As explained more fully in their statement set out on page 53, the directors of the Managing Agent are
responsible for: the preparation of the Syndicate underwriting year accounts and for being satisfied that they
give a true and fair view; such internal control as they determine is necessary to enable the preparation of
Syndicate underwriting year accounts that are free from material misstatement, whether due to fraud or error;
assessing the Syndicate’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern; and using the going concern basis of accounting unless they either intend to cease operations,
or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the Syndicate underwriting year accounts
as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an
auditor’s report. Reasonable assurance is a high level of assurance, but does not 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 aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of the Syndicate
underwriting year accounts.
A fuller description of our responsibilities is provided on the FRC’s website at
www.frc.org.uk/auditorsresponsibilities.
The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the members of the 2022 closed year of account of the Syndicate (“the Syndicate’s
Members”), as a body, in accordance with the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate
Accounts) Regulations 2008 and Lloyd’s Syndicate Accounting Byelaw. Our audit work has been undertaken
so that we might state to the Syndicate’s Members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Syndicate and the Syndicate’s Members, as a body, for our audit work,
for this report, or for the opinions we have formed.
Timothy Butchart (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London
E14 5GL
04 March 2025
Syndicate 1176
Statement of Comprehensive Income for the closed 2022 year of
account for the 36 months ended 31 December 2024
57
Note
£000
Syndicate allocated capacity
46,500
Technical account – General Business
Gross premiums written
3
32,270
Outward reinsurance premiums
(1,257)
Earned premiums, net of reinsurance
31,013
Reinsurance to close premium received, net of reinsurance
4
21,626
52,639
Allocated investment return transferred from the non-technical account
1,744
Claims incurred, net of reinsurance
Gross claims paid
(336)
Reinsurance to close premium payable, net of reinsurance
(26,677)
(27,013)
Net operating expenses
5
(8,515)
Balance on the technical account - General Business
9
18,855
Non-technical account – General Business
Balance on the technical account - General Business
18,855
Investment income
8
1,458
Investment expenses and charges
8
(477)
Net unrealised gains on investments
8
763
Total investment return
1,744
Allocated investment return transferred to the Technical Account – General Business
(1,744)
Foreign exchange loss
(352)
Total comprehensive income for the 2022 closed year of account
18,503
There is no other comprehensive income in the accounting period other than those dealt with in the Statement
of Comprehensive Income.
Syndicate 1176
Statement of Financial Position as at 31 December 2024
58
Note
£000
Assets
Investments
10
29,279
Cash and cash equivalents
8,036
Debtors arising out of direct insurance operations
5,119
Debtors arising out of reinsurance operations
10,461
Other debtors
225
Overseas deposits
319
Prepayments and accrued income
267
Total Assets
53,706
Liabilities
Amounts due to members
11
10,341
Reinsurance to close premiums payable to close the account – net amount
4
26,728
Other creditors
12
15,346
Accruals and deferred income
1,291
Total Liabilities
53,706
The notes on pages 58 to 65 form an integral part of these underwriting year accounts.
The underwriting year accounts on pages 56 to 65 were approved by the Board of Chaucer Syndicates Limited
on 4 March 2025 and were signed on its behalf by:
J Wright
Chief Financial Officer
Syndicate 1176
Notes to the Underwriting Year Accounts
59
1. Basis of preparation
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 52 Lime Street, London, EC3M 7AF.
These accounts have been prepared in accordance with the Insurance Accounts Directive (Lloyd’s Syndicate
and Aggregate Accounts) Regulations 2008, the Lloyd’s Syndicate Accounting Byelaw (No. 8 of 2005) and
applicable Accounting Standards in the United Kingdom, comprising Financial Reporting Standard 102 “The
Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland” (“FRS102” and
“FRS 103”) as modified by the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008 and the Lloyd’s Syndicate Accounting Byelaw (No. 8 of 2005).
Members participate on a syndicate by reference to a year of account and each syndicate year of account is
a separate annual venture. These accounts relate to the 2022 year of account which has been closed by
reinsurance to close as at 31 December 2024. Consequently, the Statement of Financial Position represents
the assets and liabilities of the 2022 year of account at the date of closure. The underwriting account reflects
the transactions for that year of account during the three-year period until closure. The Statement of
Comprehensive Income reflect the transactions for that year of account during the three year period until
closure.
These accounts cover the three years from the date of inception of the 2022 year of account to the date of
closure. Accordingly, this is the only reporting period and so corresponding amounts are not shown. As these
underwriting year accounts relate to a closed underwriting year of account, matters relating to going concern
are not relevant to these underwriting year accounts.
2. Accounting policies
The accounts for each year of account are normally kept open for three years before the result on that year is
determined. At the end of the three year period, outstanding liabilities can normally be determined with
sufficient accuracy to permit the year of account to be closed by payment of a reinsurance to close premium
to the successor year of account.
a) Insurance contracts
Insurance contracts are those contracts that transfer significant insurance risk. Such contracts may also
transfer financial risk.
i) Premiums written
Premiums written comprise premiums on contracts attaching to the 2022 underwriting year. Premiums are
shown gross of brokerage payable and exclude taxes and duties levied on them. Premium written is initially
based on the estimated premium income (‘EPI’) of each contract. Judgement is involved in determining the
ultimate estimates in order to establish the appropriate premium value and, ultimately, the cash to be received.
EPI estimates are updated to reflect changes in an underwriter’s expectation through consultation with brokers,
changes in market conditions, historic experience and to reflect actual cash received for a contract.
ii) Unearned premiums
Written premiums are recognised as earned according to the risk profile of the policy. Unearned premiums
represent the proportion of premiums written that relate to unexpired terms of policies in force at the balance
sheet date, calculated on the basis of established earnings patterns or time apportionment as appropriate.
iii) Reinsurance premium ceded
Outwards reinsurance premiums are accounted for in the same accounting period as the premiums for the
related direct or inwards business being reinsured.
iv) Claims paid and related recoveries
Gross claims paid include internal and external claims settlement expenses and are attributed to the same
year of account as the original premium for the underlying policy.
Syndicate 1176
Notes to the Underwriting Year Accounts
60
2. Accounting policies (continued)
v) Reinsurance to close premium payable
The net reinsurance to close premium is determined on the basis of estimated outstanding liabilities and related
claims settlement costs, including claims incurred but not reported, net of estimated collectible reinsurance
recoveries relating to the closed year of account and all previous years of account reinsured therein.
The provision for claims outstanding is assessed on an individual case basis and is based on the estimated
ultimate cost of all claims notified but not settled by the balance sheet date. It also includes the estimated cost
of claims incurred but not reported (‘IBNR’) at the balance sheet date based on statistical methods.
These methods generally involve projecting from past experience the development of claims over time to form
a view of the likely ultimate claims to be experienced for more recent underwriting, having regard to variations
in the business accepted and the underlying terms and conditions. For the most recent years, where a high
degree of volatility arises from projections, estimates may be based in part on output from rating and other
models of the business accepted and assessments of underwriting conditions. The amount of salvage and
subrogation recoveries is separately identified and, where material, reported as an asset.
The two most critical assumptions as regards claims estimates 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.
Finally, the Actuarial Function applies a bespoke approach for allowing for excess IBNR where existing
methods would not otherwise adequately allow for future inflation expectations. In particular, where future
calendar year inflation is forecast to be different to past experience. This approach considers both frequency
and severity and expectations of economic and excess inflation (including social inflation) applied to the
specific drivers of loss for classes written by the Syndicate.
The Directors consider that the estimates of gross claims 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 reinsurance to close premium amount. Adjustments
to the amounts of reinsurance to close premium established in prior years are reflected in the accounts for the
period in which the adjustments are made. The methods used, and the estimates made, are reviewed regularly.
b) Foreign currencies
The functional and presentation currency of the Syndicate is Pound Sterling.
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the
dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. For this purpose all
assets and liabilities arising from insurance contracts are monetary items. Non-monetary items measured at
historical cost are translated using the exchange rate at the date of the transaction and non-monetary items
measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at
period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised
in the non-technical account where the gain is required to be recognised within profit or loss.
c) Financial assets
In applying FRS 102, the Syndicate has chosen to apply the recognition and measurement provisions of IAS
39 Financial Instruments: Recognition and Measurement (as adopted for use in the UK). .
i. Classification
The accounting classification of financial assets and liabilities determines the way in which they are measured
and changes in those values are presented in the statement of profit or loss and other comprehensive income.
Financial assets and liabilities are classified on their initial recognition.
Syndicate 1176
Notes to the Underwriting Year Accounts
61
2. Accounting policies (continued)
The initial classification of a financial instrument shall take into account contractual terms including those
relating to future variations. Once the classification of a financial instrument is determined at initial recognition,
re assessment is only required subsequently when there has been a modification of contractual terms that is
relevant to an assessment of the classification.
All investments are classified as fair value through profit and loss and are measured at fair value.
The Syndicate does not hold any derivative / non derivative financial assets or financial liabilities for trading
purposes.
ii. Recognition
Financial instruments are recognised when the Syndicate becomes a party to the contractual provisions of the
instrument. Financial assets are derecognised if the Syndicate’s contractual rights to the cash flows from the
financial assets expire or if the Syndicate transfers the financial asset to another party without retaining control
of substantially all risks and rewards of the asset. A financial liability is derecognised when its contractual
obligations are discharged, cancelled or expired.
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.
iii. Measurement
A financial asset or financial liability is measured initially at fair value plus, for a financial asset or financial
liability not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or
issue.
Financial assets at fair value through profit or loss are measured at fair value with fair value changes
recognised immediately in profit or loss. Net gains or net losses on financial assets measured at fair value
through profit or loss includes foreign exchange gains/losses arising on their translation to the functional
currency but excludes interest and dividend income.
Loans and receivables are measured at amortised cost using the effective interest method, except Syndicate
loans to the Central Fund which are measured at fair value through profit or loss.
Fair value is determined using published bid price quotations of each security. The Directors consider the fair
value through profit and loss option to be appropriate as financial assets are managed and their performance
evaluated on a fair value basis, in accordance with a documented investment strategy and information is
provided internally on that basis to key management personnel. In addition, investment risk is assessed on a
total return basis, which is consistent with the adoption of fair value through profit and loss. Deposits with credit
institutions are stated at cost and overseas deposits are stated at market value (per Lloyd’s valuation).
Net gains or losses arising from changes in the fair value of financial assets at fair value through profit or loss
are presented in the Statement of Comprehensive Income within ‘Unrealised gains on investments’ or
‘Unrealised losses on investments’.
Identification and measurement of impairment
At each reporting date the Syndicate assesses whether there is objective evidence that financial assets not
at fair value through profit or loss are impaired. Financial assets are impaired when objective evidence
demonstrates that a loss event has occurred after the initial recognition of an asset, and that the loss event
has an impact on the future cash flows 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 recognised on an amortised cost asset reduces directly the carrying amount of the impaired
asset. All impairment losses are recognised in profit or loss. 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 profit or loss.
Syndicate 1176
Notes to the Underwriting Year Accounts
62
2. Accounting policies (continued)
iv. Off-setting
Financial assets and financial liabilities are offset, and the net amount presented in the balance sheet when,
and only when, the Syndicate currently has a legal right to set off the amounts and intends either to settle on
a net basis or to realise the asset and settle the liability simultaneously.
d) Financial liabilities
Creditors are financial liabilities and are recognised initially at fair value, net of directly attributable transaction
costs. Creditors are subsequently stated at amortised cost, using the effective interest method.
e) Investment return
Investment return comprises all investment income, realised investment gains and losses and movements in
unrealised gains and losses, net of investment expenses, charges and interest. The returns on the overseas
deposits are allocated to the year of account as notified by Lloyd’s. The returns on other assets arising in a
calendar year are apportioned to years of account open during the calendar year in proportion to the average
funds available for investment on each year of account.
Realised gains and losses on investments carried at market value are calculated as the difference between
sale proceeds and purchase price. Unrealised gains and losses on investments represent the difference
between the valuation at the balance sheet date and their valuation at the previous balance sheet date, or
purchase price, if acquired during the three years, together with the reversal of unrealised gains and losses
recognised during the three years in respect of investment disposals in the current period.
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. Investment return has been wholly allocated to the technical
account as all investments relate to the technical account.
f) 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.
g) Net operating expenses
Net operating expenses are recognised on an accruals basis. These comprise the Syndicate’s operating
expenses such as remuneration, office and administrative costs, acquisition costs, Managing Agency costs,
the costs of membership of Lloyd’s and other expenses attributable to the Syndicate’s underwriting.
h) 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.
No provision has been made for any United States or Canadian Federal Income Tax payable on underwriting
results or investment earnings. Any payments on account made by the Syndicate during the year are included
in the Statement of Financial Position under the heading ‘members’ balances’.
No provision has been made for any overseas tax payable by members on underwriting results.
i) Pension costs
Chaucer Underwriting Services Limited (CUSL) operates a defined contribution scheme. Pension contributions
relating to CUSL staff working for the Syndicate are charged to the Syndicate and included within net operating
expenses.
j) Profit commission
Profit commission is charged by the Managing Agent at a rate of 15% of profit subject to the operation of a
deficit clause. Where profit commission is charged, it is included in members’ standard personal expenses
within administrative expenses.
Syndicate 1176
Notes to the Underwriting Year Accounts
63
2. Accounting policies (continued)
k) Debtors and creditors
Insurance debtors and creditors include amounts due to and from agents, brokers and insurance contract
holders. These are classified as debt instruments as they are non-derivative financial assets with fixed or
determinable payments that are not quoted on an active market. Insurance debtors are measured at amortised
cost less any provision for impairments. Insurance creditors are stated at amortised cost. The Syndicate does
not have any debtors directly with policyholders, all transactions occur via an intermediary.
Reinsurance debtors and creditors include amounts due to and from reinsurers. These are classified as debt
instruments as they are non-derivative financial assets with fixed or determinable payments that are not quoted
on an active market. Reinsurance debtors are measured at amortised cost less any provision for impairments.
Reinsurance creditors are stated at amortised cost. Reinsurance debtors principally relate to claims recoveries
where the underlying claim has been settled and the recovery is due. Reinsurance creditors are primarily
premiums payable for reinsurance contracts and are recognised as an expense when due.
Other debtors principally consist of amounts due from sundry debtors and are carried at amortised cost less
any impairment losses.
Other creditors principally consist of amounts due to related entities and taxation. These are stated at
amortised cost determined using the effective interest rate method.
l) Classification of insurance and reinsurance contracts
Insurance and reinsurance contracts are classified as insurance contracts where they transfer significant
insurance risk. If a contract does not transfer significant insurance risk, it is classified as a financial instrument.
All of the Syndicate’s written contracts and purchased reinsurance contracts transfer significant insurance risk
and therefore are recognised as insurance contract.
m) Key judgements and uncertainty
In preparing these financial statements, the Directors of the Managing Agent have made judgements,
estimates and assumptions that affect the application of the Syndicate’s accounting policies and the reported
amounts of assets, liabilities, income and expenses. In applying the accounting policies described in Note 2,
the following estimates that have had the most significant impact on the accounts are:
• Valuation of general insurance contract liabilities (page 59)
• Measurement of reinsurance premium to close (page 60)
Syndicate 1176
Notes to the Underwriting Year Accounts
64
3. Segmental analysis
An analysis of the underwriting result by class of business is set out below:
Gross
premiums
written
3
Gross
premiums
earned
Gross
claims
incurred
1
Net
operating
expenses
Reinsurance
balance
2
Total
£000
£000
£000
£000
£000
£000
Direct insurance:
Marine, Aviation and Transport
1
1
2
1
-
4
Fire and Other damage
6,981
6,981
(661)
(1,632)
(818)
3,870
Third Party Liability
2,395
2,395
(927)
(897)
(11)
560
9,377
9,377
(1,586)
(2,528)
(829)
4,434
Reinsurance acceptances:
Reinsurance
22,206
22,206
(7,605)
(5,661)
(515)
8,425
Movements in respect of RITC
received
22,461
22,461
(18,072)
(326)
189
4,252
Total
54,044
54,044
(27,263)
(8,515)
(1,155)
17,111
1. Gross claims incurred comprise gross claims paid and gross reinsurance to close premium payable.
2. The reinsurance balance comprises reinsurance premiums ceded less reinsurance recoveries on claims
paid and reinsurance recoveries anticipated on reinsurance to close (RITC) payable.
3. Movement in 2021 & prior year of account premium of £687k has been included within Movements in
respect of RITC received.
All premiums were concluded in the UK.
4. Reinsurance premium to close the 2022 and prior years of account
Reported
IBNR
Total
£000
£000
£000
Reinsurance to close premium received (restated)
Gross reinsurance to close premium receivable
2,347
19,427
21,774
Reinsurance to close premium receivable, reinsurers’ share
-
(149)
(149)
Reinsurance to close premium received, net of reinsurance
2,347
19,279
21,626
Reinsurance to close premium payable
Gross reinsurance to close premium payable
3,561
23,417
26,978
Reinsurance to close premium payable, reinsurer’s share
-
(250)
(250)
Reinsurance to close premium payable, net of reinsurance
3,561
23,167
26,728
The reinsurance to close is effected with the 2023 year of account of Syndicate 1176.
Following a review of the reinsurance to close premium payable disclosed in the 2021 underwriting year
accounts, it was identified that the balance was not presented appropriately. Accordingly, the reinsurance to
close premium received in the 2022 underwriting year accounts have been restated.
5. Net operating expenses
£000
Acquisition costs – brokerage and commissions
640
Administrative expenses
2,065
Members’ standard personal expenses
5,810
8,515
Syndicate 1176
Notes to the Underwriting Year Accounts
65
6. Auditors’ remuneration
£000
Audit of the Syndicate 2022 underwriting year accounts
20
7. Emoluments of the Directors of the Managing Agent and Active Underwriter of the Syndicate
The Directors of Chaucer Syndicates Limited were not remunerated in respect of their services to the
Syndicate.
The Active Underwriter received the following consultancy fees, incurred by a related group undertaking and
recharged to the Syndicate within Managing Agency fees in relation to the 2022 year of account.
£000
Active Underwriter
245
8. Investment return
£000
Interest and similar income
Interest on cash and cash equivalents
286
Other interest and similar income
1,002
Other income from investments
From financial assets designated at fair value through profit or loss
Gains on the realisation of investments
170
Unrealised gains on investments
763
Losses on realisation of investments
(445)
Investment management expenses, including interest
(32)
Total investment return
1,744
Transferred to the technical account from the non-technical account
1,744
9. Balance on technical account
£000
Balance excluding investment return and operating expenses (other than acquisition costs):
Total comprehensive income attributable to business allocated to the 2022 pure year of account
20,255
Total comprehensive income attributable to business reinsured into the 2022 year of account
4,731
24,986
Allocated investment return transferred from the non-technical account
1,744
Net operating expenses other than acquisition costs
(7,875)
18,855
10. Investments
Cost
Market
Value
£000
£000
Shares and other variable yield securities at fair value through profit and loss
7,125
6,479
Debt securities and other fixed income securities at fair value through profit and loss
23,024
22,796
Deposits with ceding undertakings
4
4
30,153
29,279
Syndicate 1176
Notes to the Underwriting Year Accounts
66
11. Amounts due to members
£000
Total comprehensive income for the 2022 closed year of account
18,503
Transfers to members’ personal reserve funds
(8,162)
10,341
12. Other creditors
£000
Inter year loans
15,346
15,346
13. Related Parties
Chaucer Syndicates Limited, a wholly owned subsidiary of China Reinsurance (Group) Corporation, is the
Managing Agent of the Syndicate. Chaucer Syndicates Limited has charged the Syndicate with the following
expenses during the year along with the outstanding balances at the year end:
£000
Managing Agency fees
2,218
Profit commission
1,913
A subsidiary of China Reinsurance (Group) Corporation supports the 2022 Year of Account underwriting
capacity of the Syndicate as follows:
£000
Chaucer Corporate Capital (No. 3) Limited
26,484
Syndicate 1176 is the leading participant of the British Nuclear Pool, NRI Limited, and owns a share of the
associated management company in proportion to its share (approximately 47%) of the Pool. Any profit or loss
from these operations is paid to the Syndicate. The Pool underwrote premium of £25.7m on behalf of the
Syndicate. The year-end balance due from the Pool is £1.4m and is included within debtors arising out of direct
insurance operations.
14. Ultimate parent company
The Managing Agent’s immediate parent company is Chaucer Capital Investments Limited.
The largest and smallest group of undertakings for which group financial statements are prepared, and in
which the results of the Managing Agent are included, is China Reinsurance (Group) Corporation. The
Company considers China Reinsurance (Group) Corporation to be its ultimate parent company. A copy of the
most recent consolidated financial statements is available from the website of China Reinsurance (Group)
Corporation (www.chinare.com.cn)
Syndicate 1176
Seven Year Summary (unaudited)
67
at 31 December 2024
2016
2017
2018
2019
2020
2021
2022
Syndicate allocated capacity (£000)
34,931
37,480
46,500
46,470
46,403
46,476
46,500
Number of underwriting members
233
274
307
311
315
325
325
Aggregate net premiums (£000)
29,857
30,976
28,044
28,494
30,102
28,088
31,013
Results for an illustrative share of
£10,000
£
£
£
£
£
£
£
Gross premiums
8,547
8,265
6,026
6,170
6,646
6,174
6,940
Net premiums
8,547
8,267
6,031
6,132
6,487
6,044
6,669
Premium for the reinsurance to close
an earlier year of account
7,373
6,483
4,365
4,497
4,911
4,894
4,651
Net claims
(2,360)
(745)
(84)
(71)
49
(28)
(72)
Premium for the reinsurance to close
the year of account
(6,898)
(5,447)
(4,495)
(4,904)
(4,994)
(4,541)
(5,737)
Syndicate operating expenses
(694)
(567)
(531)
(577)
(499)
(565)
(609)
Balance on technical account
5,968
7,991
5,286
5,077
5,954
5,804
4,902
Investment return
53
299
284
32
(317)
330
375
Other income/(charges)
151
34
82
(110)
325
(41)
(76)
Total comprehensive income for the
closed year
6,172
8,324
5,652
4,999
5,962
6,093
5,201
Illustrative profit commission
-Managing Agent’s share
(847)
(1,164)
(779)
(689)
(824)
(840)
(706)
Illustrative personal expenses
1,2
(539)
(583)
(457)
(473)
(488)
(510)
(517)
Total comprehensive income after
illustrative profit commission and
illustrative personal expenses
4,786
6,577
4,416
3,837
4,650
4,743
3,979
Percentage applicable for an
illustrative share of £10,000
%
%
%
%
%
%
%
Gross premiums
85.5
82.7
60.3
61.7
66.5
61.7
69.4
Net premiums
85.5
82.7
60.3
61.3
64.9
60.4
66.7
Balance on technical account to gross
premiums
69.8
96.7
87.7
82.3
89.6
94.0
70.6
1. Illustrative personal expenses comprise managing agent's fee, Lloyd's subscription, and contribution to Lloyd’s Central
Guarantee Fund. The managing agent's fee, where applicable, has been calculated so as to disregard the minimum charge
to any member underwriting for less than a certain premium limit.
2. Illustrative personal expenses have been shown for individual Names and MAPAs.
Under the standard agency agreements in force an underwriting member who dies prior to 31 December in any year does not
participate in that year; if death occurs on 31 December the underwriting member participates fully in that year.
