Important information about Syndicate Reports and Accounts
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Syndicate Accounting Byelaw (No. 8 of 2005), are being provided for
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Syndicate Reports and Accounts is
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Syndicate 2358
Annual Report and Financial Statements
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Syndicate 2358
Annual Report and Financial Statements
31 December 2024
Contents
Directors and administration
Profit and loss account
Statement of changes in members
balances
Balance sheet
Statement of cash flows
Notes to the financial statements
3
4
9
10
14
15
16
18
19
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2024 Annual Report and Financial Statements
Directors and administration
Managing agent
Executive directors
A G Beatty
J A H G Cartwright
S G Drysdale
Appointed 5 January 2024
A J Wilkinson
Appointed 8 February 2024
Non-executive directors
R J S Bucknall
W A Guffey
T A Riddell
J E Street
L Taylor
Walsingham House
35 Seething Lane
London
EC3N 4AH
11103467
Active underwriter
R J Louden
Bankers
Citibank N.A.
Investment managers
Amundi UK Limited
41 Lothbury
London
EC2R 7HF
Registered auditor
Deloitte LLP
1 New Street Square
London
EC4A 3HQ
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2024 Annual Report and Financial Statements
Introduction
The directors of Nephila Syndicate Management Limited
present their annual report, which
incorporates the strategic review, together with the audited financial statements for the year ended 31
December 2024.
Syndicate and Aggregate Accounts) Regulation 2008 and FRS 102 and FRS 103, being applicable Accounting
Standards in the United Kingdom, and in accordance with the provisions of Schedule 3 of the Large and
Medium-sized Companies and Groups (Accounts and Reports) Regulations relating to insurance companies.
Principal activity and review of the business
NSML is the managing agent for Syndicate 2358
whose principal activity is underwriting
. The Syndicate, which
commenced underwriting with capacity of £50.0m ($62.5m) on the 2022 year of account growing to £150.0m
($187.5m) for the 2024 year of account, writes a portfolio of specialty risks.
Results
The Syndicate reported a $4.6m profit for the 2024 financial year (2023: profit of $5.5m). The calendar year
combined ratio was 98.5% (2023: 94.4%).
Gross premiums written by class of business for the calendar year were as follows:
2024
2023
Accident & Health
2,790
(63)
Motor (Third party liability)
52
3,755
Motor (Other Classes)
8,829
10,785
Marine, aviation, and transport
29,864
14,752
Fire and other damage to property
64,244
41,729
Third party liability
45,983
29,746
Credit and suretyship
5,711
2,052
Legal expenses
3,061
3,335
Inwards reinsurance
61,680
14,740
Total
222,214
120,831
The Syndicate's key performance indicators for the financial year were as follows:
2024
2023
Gross premiums written
222,214
120,831
Profit for the financial year
4,565
5,464
Loss ratio
61.8%
59.7%
Expense ratio
36.7%
34.7%
Combined ratio
98.5%
94.4%
The combined ratio is the ratio of net claims incurred and net operating expenses to net premiums earned.
Lower ratios represent better performance.
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2024 Annual Report and Financial Statements
continued
Results - continued
the forecast
result for the 2023 year of account are as follows:
2022
YOA
Closed
2023
YOA
Open
2024
YOA
Open
1
62,500
112,500
187,500
8,034
9,392
*
Return on capacity (%)
12.9%
8.3%
*
1
Capacity, a GBP measure, has been converted to USD at the 2024 year end foreign exchange rate.
* A formal forecast range for the 2024 year of account is not released at the time of publishing.
2024 represents the third financial year for Syndicate 2358.
Notwithstanding the distribution of large loss events
falling into the 2024 calendar year, the 2023 and 2024 years of account are currently projected to be
profitable with a forecast ultimate net combined ratio of 94.7% for the 2023 year of account and the 2024
year of account tracking closely to plan.
We are pleased to close our first year of account (2022) with a net
combined ratio of 88.7%, a return on stamp of 12.9%.
While reporting a profit for each of those years is pleasing for a new syndicate, the 2024 calendar year result
in isolation remains disappointing.
The past 12 months have been impacted by a significant level of space
market losses, predominantly from the 2023 underwriting year, and the Francis Scott Key Bridge event on the
2024 underwriting year.
The unsatisfactory calendar year should not cloud the substantial efforts of the Nephila team to build and
scale a truly differentiated specialty (re)insurance proposition. As the market cycle and enhanced
underwriting models evolve, Syndicate 2358 will continue to refine its offering to best serve its capital providers
and be a valuable source of capacity to underwriting partners. We have made significant progress during
2024 (and into 2025) to create the sound foundations from which to succeed during the
Principal risks and uncertainties
The NSML Board has overall responsibility and accountability for the establishment and oversight of the
risk management framework.
The Board has responsibility for identifying and assessing all material
The
principal risks and uncertainties to which the Syndicate is exposed are set out below.
Insurance risk
Insurance risk includes the risk associated with inaccurate or inadequate pricing of insurance policies,
inappropriate or poorly controlled underwriting guidelines or authority limits (underwriting risk), higher
frequency or severity of claims experience (claims risk), or inadequate or insufficient loss reserving (reserving
risk).
The NSML Board manages insurance risk through the approved business plan, which sets out targets for
volumes, pricing, line sizes and exposure metrics by class of business. The Board has in place controls and
governance processes designed to monitor performance against the business plan through the year.
Credit risk
Credit risk is the risk of financial loss to the Syndicate if a counterparty fails to discharge a contractual
obligation.
The notable exposure for the Syndicate is reinsurance counterparty risk which is the risk of default
by one or more of the Syndicate
policy is that the Syndicate will
reinsure with approved reinsurers, either of high credit rating (rating of A- or better from an external credit
rating agency) or supported by collateralisation, where required. Where a reinsurer does not meet these
criteria, t
he Syndicate Management Committee
is required to approve them individually before business can
be placed with them.
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2024 Annual Report and Financial Statements
continued
Principal risks and uncertainties
- continued
Market risk
The Syndicate is exposed to market risk through fluctuations in interest rates or exchange rates. Exposure to
foreign exchange movements arises where there are mismatches between assets and liabilities within the
currencies in which the Syndicate transacts
expenditure in the core currencies in which they are received or paid. Any surplus or deficit arising as a result
of this policy is subject to review by the Executive Committee and where required currency trades are
performed with the aim of eliminating currency mismatches.
rough its investment portfolio.
NSML seeks to
minimise this risk by investing only in fixed interest securities or high-quality floating rate notes.
Liquidity risk
Liquidity risk is the risk that the Syndicate will not be able to meet its obligations as they fall due, owing to a
shortfall in cash.
To mitigate this risk, all funds are held in cash or in highly liquid money market funds or short
duration US treasury bills. Cash flow projections, under both normal and stressed conditions, are reviewed on
a regular basis to identify potential liquidity strains to allow timely remedial action to be taken.
Operational risk
This is the risk that errors caused by people, processes, systems and external events lead to losses to the
Syndicate.
NSML seeks to manage this risk using an operational risk and control framework throughout the
Syndicate, detailed procedures manuals and a structured programme of testing of processes and systems by
Risk Management and Internal Audit.
Business continuity and disaster recovery and succession plans are in
place and are regularly updated and tested.
Regulatory risk is the risk that regulatory requirements are not identified and/or implemented or are
misinterpreted and/or not complied with resulting in regulatory penalties. NSML is required to comply with the
requirements of the Financial Conduct Autho
monitoring business
activity and regulatory developments and assesses any impact on NSML.
The Syndicate has no appetite for failing to treat customers fairly.
The Syndicate manages and monitors its
conduct risk through a suite of risk indicators and reporting metrics as part of its documented conduct risk
framework.
Group / Strategic risks
Group Risk is the risk of contagion that arises from being associated with key stakeholders and the impact that
activities and events that occur within other connected or third parties have on the business.
Strategic risk covers the risks faced by the Syndicate due to changes in underlying strategy of the business or
that of its key stakeholders (including strategic conflicts of interest).
These risks are mitigated through robust challenge of business plans and ongoing monitoring of the
its sub-committees.
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2024 Annual Report and Financial Statements
report
continued
Principal risks and uncertainties
- continued
Environment, Social & Governance
The Syndicate has limited exposure to the two major categories of climate change risk, physical risk and
transition risk, which aligns with the overarching syndicate strategy and business model.
Physical risks are
those relating to the physical impacts of climate change such as increased frequency and severity of climate
related events or longer-term shifts in climate patterns.
Transition risks are those relating to the transition to a
lower carbon economy and include risks such as policy and legal/litigation risk, technology risk and reputation
risk.
The Syndicate accesses business via consortia, quota share or binding authorities, with no direct open
market deals. Climate change and ESG factors are considered as part of partner selection as well as within
their underwriting product offerings and the S
supporting portfolios which:
are not reliant on carbon intensive industries or sectors, unless partners can demonstrate their
customers have clear and credible transition plans;
demonstrate consideration for environmental, societal and governance concerns; and
comply with ESG mandates or guidance from our regulators
There is a robust governance framework in place to ensure that this ambition is maintained.
The syndicate business planning process includes a qualitative assessment specifically for physical and
transitional climate risk for each class of business which is discussed by the appropriate management
committee(s) before being presented to the Board.
In addition, the Syndicate has articulated its climate risk appetite and there are clear tolerances in place to
actively manage risk exposures, with regular Board monitoring and reporting. Transition risk exposures on the
mate change is limited given the composition of the
S
Future developments
The Syndicate will continue to transact the current classes of general direct insurance and reinsurance
business. If opportunities arise to write new classes of business, these will be investigated at the appropriate
time.
The capacity for the 2025 year of account is $375.0m (£300.0m).
Post balance sheet events
Details of post balance sheet events are disclosed in note 17 of the financial statements.
Going concern
In assessing going concern for the Syndicate, the Directors reviewed the budgets and forecasts as well as the
available sources of capital and the uses of that capital and associated cash flow for the Syndicate. After
consideration of these factors, the Directors have concluded that there are no material uncertainties that
months from the date of signing the Syndicate annual accounts. Accordingly, they continue to adopt the
going concern basis of accounting when preparing the Syndicate annual accounts.
Directors
Details of the Directors of the Managing Agent that were serving at the year end and up to the date of signing
of the Syndicate annual accounts are provided on page 3.
Changes to directors were as follows:-
S G Drysdale
Appointed 5 January 2024
A J Wilkinson
Appointed 8 February 2024
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report
continued
Disclosure of information to the auditor
So far as each person who was a director of the Managing Agent at the date of approving the report is
aware, there is no relevant audit information, being information needed by the Syndicate auditor in
connection with the auditor's report, of which the auditor is unaware. Having made enquiries of fellow
directors of the Managing Agent and the Syndicate's auditor, each director has taken all the steps that he or
she ought to have taken as a director to become aware of any relevant audit information and to establish
that the Syndicate's auditor is aware of that information.
Auditor
hereby gives formal notification of a proposal to reappoint Deloitte LLP as auditor of syndicate 2358 for a
further year.
Syndicate Annual General Meeting
The directors do not propose to hold an Annual General Meeting for the syndicate. If any
direct corporate supporter of the syndicate wishes to meet with them, the directors are happy to do so.
Approved by and signed on behalf of the board:
A G Beatty
CEO
06 March 2025
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2024 Annual Report and Financial Statements
responsibilities
The managing agent is responsible for preparing the Syndicate annual accounts in accordance with
applicable law and regulations.
Syndicate
Syndicate annual financial statements as at 31
December each year in accordance with the United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards and applicable law) including FRS 102 and FRS 103. The Financial
Reporting Standard applicable in the UK and Republic of Ireland. The Syndicate 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 financial statements, the managing agent is required to:
select suitable accounting policies, which are applied consistently, subject to changes arising on the
adoption of new accounting standards in the year;
make judgements and accounting 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 financial statements; and
prepare the annual financial statements on the going concern basis unless it is inappropriate to presume
that the Syndicate will continue in business.
The managing agent is responsible for keeping adequate accounting records which disclose with reasonable
accuracy at any time the financial position of the Syndicate and enable it to comply with the Insurance
Syndicate and Aggregate Accounts) Regulations 2008. It is also responsible for
safeguarding the assets of the Syndicate and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities. Similarly, the managing agent is responsible for the preparation
and review of the iXBRL tagging that has been applied to the Syndicate Accounts in accordance with the
internal controls to result in tagging that is free from material non-compliance with the instructions issued by
The managing agent is responsible for the maintenance and integrity of the corporate and financial
information included on the business' website. Legislation in the United Kingdom governing the preparation
and dissemination of annual accounts may differ from legislation in other jurisdictions.
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to the members of Syndicate 2358
Report on the audit of the syndicate annual financial statements
Opinion
In our opinion the syndicate annual financial statements of
4 and of its profit
for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
have been prepared in accordance with the requirements of The Insurance Accounts Directive
and section 1 of the Syndicate
Accounts Instructions Version 2.0 as modified by the Frequently Asked Questions Version 1.1 issued by
We have audited the syndicate annual financial statements which comprise:
the profit and loss account;
the balance sheet;
the cash flow statement;
the statement of accounting policies; and
the related notes 1 to 18.
The financial reporting framework that has been applied in their preparation is applicable law and United
gdom Generally Accepted Accounting
Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law and the Syndicate Accounts Instructions. Our responsibilities under those standards are further
described in the auditor's responsibilities for the audit of the syndicate annual financial statements section of
our report.
We are independent of the syndicate in accordance with the ethical requirements that are relevant to our
ulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Conclusions relating to going concern
concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events
in operations for a period of at least twelve months from when the syndicate financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the managing agent with respect to going concern are
described in the relevant sections of this report.
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- continued
Other information
The other information comprises the information included in the annual report, other than the syndicate
information contained within the annual report. Our opinion on the syndicate annual financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the syndicate annual financial statements or our knowledge obtained in the
course of the audit, or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a
material misstatement themselves. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of managing agent
for the preparation of the syndicate annual financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the managing agent determines is necessary to enable the
preparation of syndicate annual financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the syndicate annual financial statements, the managing agent is responsible for assessing the
to continue in operation and to use the going concern basis of accounting unless the managing agent
Our objectives are to obtain reasonable assurance about whether the syndicate annual financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
syndicate annual financial statements.
A further description of our responsibilities for the audit of the syndicate annual financial statements is located
report.
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Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below.
documentation of their policies and procedures relating to fraud and compliance with laws and regulations.
We also enquired of management, about their own identification and assessment of the risks of irregularities.
We obtained an understanding of the legal and regulatory frameworks that the syndicate operates in, and
identified the key laws and regulations that:
had a direct effect on the determination of material amounts and disclosures in the financial
w (no. 8 of 2005)
Syndicate Accounts Instructions; and
do not have a direct effect on the financial statements but compliance with which may be
requirements of Solvency II.
We discussed among the audit engagement team including relevant internal specialists such as actuarial, IT
and fraud specialists regarding the opportunities and incentives that may exist within the organisation for
fraud and how and where fraud might occur in the financial statements.
As a result of performing the above, we identified the greatest potential for fraud in the following areas, and
our specific procedures performed to address them are described below:
Estimation of accrued premium requires significant management judgement and therefore there is
potential for management bias through manipulation of core assumptions. In response our testing
pipeline premium accrual
provided by the third parties as well as against the actual premiums received to date.
Valuation of technical provisions includes assumptions and methodology requiring significant
management judgement and involves complex calculations, and therefore there is potential for
management bias. There is also a risk of overriding controls by making late adjustments to the
technical provisions. In response to these risks we involved our actuarial specialists to evaluate the
methodology and assumptions used by management to estimate the technical provisions and we
tested the late journal entries to technical provisions.
In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to
the risk of management override. In addressing the risk of fraud through management override of controls,
we tested the appropriateness of journal entries and other adjustments; assessed whether the judgements
made in making accounting estimates are indicative of a potential bias; and evaluated the business rationale
of any significant transactions that are unusual or outside the normal course of business.
In addition to the above, our procedures to respond to the risks identified included the following:
reviewing financial statement disclosures by testing to supporting documentation to assess
compliance with provisions of relevant laws and regulations described as having a direct effect on
the financial statements;
performing analytical procedures to identify any unusual or unexpected relationships that may
indicate risks of material misstatement due to fraud;
enquiring of management, concerning actual and potential litigation and claims, and instances of
non-compliance with laws and regulations; and
reading minutes of meetings of those charged with governance, reviewing internal audit reports and
.
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Report on other legal and regulatory requirements
Accounts) Regulations 2008
In our opinion, based on the work undertaken in the course of the audit:
the information given in the
statements are prepared is consistent with the financial statements; and
In the light of the knowledge and understanding of the syndicate and its environment obtained in the course
Matters on which we are required to report by exception
are required to report in respect of the following matters if, in our opinion:
the managing agent in respect of the syndicate has not kept adequate accounting records; or
the syndicate annual financial statements are not in agreement with the accounting records; or
we have not received all the information and explanations we require for our audit.
We have nothing to report in respect of these matters.
Use of our report
has been undertaken so that we might state to
y, for our audit
work, for this report, or for the opinions we have formed.
As required by the Syndicate Accounts Instructions Version 2.0, these financial statements will form part of the
des no assurance over whether the Electronic Format Annual Syndicate
Accounts have been prepared in compliance with Section 2 of the Syndicate Accounts Instructions Version
2. We have been engaged to provide assurance on whether the Electronic Format Annual Syndicate
Accounts has been prepared in compliance with Section 2 of the Syndicate Accounts Instructions Version 2
and will privately report to the directors of the management agent and the
Adam Knight (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
06 March 2025
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Profit and loss account
For the year ended 31 December 2024
Technical account
general business
Notes
2024
2023
Gross premiums written
4
Outward reinsurance premiums
(6,945 )
(2,628 )
Premiums written, net of reinsurance
Change in provision for unearned premiums
gross amount
5
(60,017 )
(41,455 )
5
Change in provision for unearned premiums, net of reinsurance
(58,580 )
(41,137 )
Earned premiums, net of reinsurance
Claims paid
gross amount
(24,567 )
(7,211 )
Claims paid, net of reinsurance
(24,185 )
(7,205 )
Change in the provision for claims:
gross amount
5
(74,335 )
(39,375 )
5
Change in provision for claims paid, net of reinsurance
(72,602 )
(38,798 )
Claims incurred, net of reinsurance
(96,787 )
(46,003 )
Net operating expenses
6
(57,579 )
(26,728 )
Balance on the technical account
general business
The notes 1 to 18 form an integral part of these financial statements.
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Profit and loss account
continued
For the year ended 31 December 2024
Non-technical account
Notes
202
4
2023
Balance on the technical account
general business
Investment income
Unrealised gains on investments
(Loss) / profit on foreign exchange
(1,003 )
Profit for the financial year
All of the amounts above are in respect of continuing operations.
There is no other comprehensive income in the accounting period. Accordingly, a separate statement of
comprehensive income has not been presented.
The notes 1 to 18 form an integral part of these financial statements.
For the year ended 31 December 2024
Notes
202
4
20
2
3
Balance at start of year
Total comprehensive income for the year
personal reserve funds
Losses collected in relation to distribution on closure of underwriting
year
Balance at end of year
The notes 1 to 18 form an integral part of these financial statements.
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2024 Annual Report and Financial Statements
Balance sheet
As at 31 December 2024
Assets
Notes
202
4
20
2
3
Investments - financial investments
8, 10
Reinsurers' share of provision for unearned premiums
5
Reinsurers' share of claims outstanding
5
Reinsurers' share of technical provisions
Debtors arising out of direct insurance operations
9
Debtors arising out of reinsurance operations
9
Other debtors
Debtors
amounts falling due within one year
Cash at bank and in hand
10
Other assets
Deferred acquisition costs
11
Other prepayments and accrued income
Prepayments and accrued income
Total assets
The notes 1 to 18 form an integral part of these financial statements.
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2024 Annual Report and Financial Statements
Balance sheet
continued
As at 31 December 2024
Liabilities
Notes
202
4
20
2
3
Members
balances
Provision for unearned premiums
5
Claims outstanding
5
Technical provisions
Creditors arising out of reinsurance operations
12
Other creditors
13
Creditors
Accruals and deferred income
Total liabilities
Total liabilities
The notes 1 to 18 form an integral part of these financial statements.
These financial statements were approved by the Board of Nephila Syndicate Management Limited on
6
th
March 2025 and signed on its behalf by:
J A H G Cartwright
Finance Director
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2024 Annual Report and Financial Statements
Statement of cash flows
For the year ended 31 December 2024
Notes
2024
20
23
Operating activities
Profit for the financial year
Adjustments for:
Increase/ (decrease) in gross technical provisions
(Increase)
(3,121 )
(1,020 )
(Increase)/ decrease in debtors
(55,736 )
(24,480 )
Increase/ (decrease) in creditors
(3,666 )
(Increase)/ decrease in other assets/ liabilities
(21,383 )
(12,027
)
Exchange gains/ (losses)
(296
)
Investment return
(3,245 )
(985 )
Net cash flows from operating activities
Investing activities
Purchase of equity and debt instruments
(17,212 )
(8,760 )
Sale of equity and debt instruments
Investment income
Net cash flows from investing activities
(5,264 )
(6,235 )
Net cash flows from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Effect of exchange rates on opening cash and cash equivalents
(683
)
Cash and cash equivalents at 31 December
10
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2024 Annual Report and Financial Statements
Notes to the financial statements
1.
Basis of preparation
Statement of compliance
The financial statements have been prepared in accordance with the Insurance
Syndicate and Aggregate Accounts) Regulations 2008, applicable Accounting Standards in the United
Kingdom and the Republic of Ireland, including Financial Reporting Standard 102 (FRS 102), Financial
Reporting Standard 103 (FRS 1
Instructions Version 2.0
being applicable UK GAAP accounting standards, and in accordance with the provisions of Schedule 3 of
the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations relating to
insurance companies.
The principal accounting policies are summarised below. They have all been applied consistently throughout
the year and the preceding year.
Having taken into account the risks and uncertainties and the performance of the Syndicate as disclosed in
directors
have a reasonable expectation that continued capital support will be in place such that the Syndicate will
continue to write business for at least twelve months after signing the Syndicate annual accounts. Accordingly,
the financial statements continue to adopt the going concern basis of accounting.
The financial statements are prepared under the historical cost convention except for certain financial
instruments which are measured at fair value.
The financial statements are prepared in US dollars which is the functional and presentational currency of the
Syndicate and rounded to the nearest $'000.
Walsingham House, 35 Seething
Lane, London EC3N 4AH.
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 represented to
ensure consistency with current year presentation and compliance with the Lloyd's Syndicate Accounts
Instructions. There have been no other restatements made to prior year disclosures.
The changes comprise:
i.
Reclassification changes
Certain financial statement line items have been reclassified whilst the underlying amounts remain
unchanged. Principal changes include the starting point of the statement of cashflow now commencing from
profit for the financial year, previously profit on ordinary activities and the reclassification of overseas deposits
and short-term deposits with financial institutions as financial investments on the balance sheet, although short
term deposits with financial institutions remain as cash equivalents in the statement of cashflow, as disclosed
in note 10.
ii.
Aggregation changes
To align with Lloyd's reporting requirements whilst maintaining FRS 102 compliance, certain items have been
aggregated or disaggregated within the financial statements and related notes. This includes the added
subtotals of change in provision for unearned premiums, net of reinsurance and change in provision for claims
paid, net of reinsurance on the profit and loss account.
The reclassification and aggregation changes have been applied retrospectively and had no impact on
previously reported profit or (loss), total comprehensive income/(loss), total assets, total liabilities, or total
capital and reserves.
20
of
42
2024 Annual Report and Financial Statements
Notes to the financial statements
continued
2.
Accounting policies
Critical accounting judgements and key sources of estimation uncertainty
In the preparation of the financial statements, the directors of NSML have made judgements, estimates and
assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the accounts, and the reported amounts of income and expenses during the reporting
period. Actual results may differ from those estimates.
There are no critical judgements, apart from those involving estimations in the process of applying the
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance
sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are discussed below.
i.
Provision for claims outstanding
The provision for claims comprises amounts set aside for reported claims and
IBNR
claims. The estimate of IBNR is subject to a greater degree of uncertainty than reported claims as it is based
on statistical techniques of estimation applied by actuaries as outlined below. Provision for claims outstanding
is disclosed in note 5.
ii.
Premium recognition
accrued premium
Gross written premiums are a key estimate for the syndicate. Estimates are made for pipeline premium,
representing amounts due to the syndicate not yet notified or received. Gross written premium is disclosed in
note 4.
Significant accounting policies
The following principal accounting policies have been applied consistently in dealing with items which are
considered material in relation to the Syndicate
Premiums
Premiums written comprise premiums on contracts incepted during the financial year.
Premiums are shown
gross of brokerage payable and exclude taxes and duties levied on them.
Estimates are made for pipeline
premium, representing amounts due to the syndicate not yet notified.
Outwards reinsurance premiums are accounted for in the same accounting period as the premiums for the
related direct inwards business.
Unearned premiums
Premiums written are recognised as earned over the period of the policy on a time apportionment basis
having regard to the incidence of risk. In some cases a non-linear earnings pattern is considered appropriate
due to the timing in incidence of risk. Unearned premiums represent the proportion of premiums written in the
year that relate to the unexpired period of policies in force at the balance sheet date.
Unearned reinsurance premiums are deferred over the term of the underlying policies for risks-attaching
contracts and over the term of the reinsurance contract for losses-occurring contracts.
Claims
Claims incurred represent the cost of claims and settlement expenses paid during the financial year, together
with the movement in provisions for outstanding claims and claims incurred but not reported ('IBNR').
Reinsurance recoveries are accounted for in the same period as the incurred claims for the related business.
21
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42
2024 Annual Report and Financial Statements
Notes to the financial statements
continued
2. Accounting policies
continued
Claims - continued
The provision for claims comprises amounts set aside for claims notified and IBNR. The amount included in
respect of IBNR is based on statistical techniques of estimation applied by actuaries, on a best estimate basis,
and reviewed annually by external consulting actuaries.
These techniques generally use projections, based
on past experience of the development of claims over time, to form a view of the likely ultimate claims to be
experienced.
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.
projections for IBNR, net of estimated irrecoverable amounts, having regard to the reinsurance programme
in place for the class of business and the claims experience for the year.
The Syndicate uses a number of
statistical techniques to assist in making these estimates.
Accordingly, the two most critical assumptions as regards claims provisions are that the past is a reasonable
predictor of the likely level of claims development and that the rating and other models used for current
business are fair reflections of the likely level of ultimate claims to be incurred.
The directors consider that the provisions for gross claims and related reinsurance recoveries are fairly stated
on the basis of the information currently available to them.
However, ultimate liability will vary as a result of
subsequent information and events and this may result in significant adjustments to the amounts provided.
Adjustments to the amounts of claims provisions established in prior years are reflected in the financial
statements for the period in which the adjustments are made.
The methods used, and the estimates made,
are reviewed regularly.
Sensitivities of claims incurred and claims development table are included in note 3 of the financial
statements.
Deferred acquisition costs
Acquisition costs comprise the direct expenses of concluding insurance contracts written during the financial
year. Acquisition costs are accrued over a period equivalent to that over which the underlying business is
underwritten and are charged to the accounting periods in which the related premiums are earned. Deferred
acquisition costs represent the proportion of acquisition costs incurred in respect of unearned premiums at
the balance sheet date.
Liability adequacy testing
At each reporting date, liability adequacy tests are performed to ensure the adequacy of the claims liabilities
net of deferred acquisition costs and unearned premium reserves.
If that assessment shows that the carrying
amount of insurance liabilities is inadequate in the light of estimated future cash flows, the entire deficiency
is immediately recognised in the profit and loss account.
A provision for unexpired risks is made where anticipated claims and related expenses arising after the end
of the financial year in respect of contracts concluded before that date, are expected to exceed the
unearned premiums under these contracts, after the deduction of any deferred acquisition costs. The
provision for unexpired risks is calculated separately by reference to classes of business which are managed
together, after taking into account relevant investment return.
At 31 December 2024 and 31 December 2023 the Syndicate did not have an unexpired risk provision.
Reinsurance assets
The Syndicate cedes insurance and reinsurance risk in the normal course of business. Reinsurance assets
represent balances due from reinsurance companies. Amounts recoverable from reinsurers are estimated in
a manner consistent with the outstanding claims provision or settled claims associated with the reinsurer's
policies and are in accordance with the related reinsurance contract.
22
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42
2024 Annual Report and Financial Statements
Notes to the financial statements
continued
2. Accounting policies
continued
Reinsurance assets are reviewed for impairment at each reporting date, or more frequently, when an
indication of impairment arises during the reporting year. Impairment occurs when there is objective evidence
as a result of an event that occurred after initial recognition of the reinsurance asset that the Syndicate may
not receive all outstanding amounts due under the terms of the contract and the event has a reliably
measurable impact on the amounts that the Syndicate will receive from the reinsurer. The impairment loss is
recorded in the profit and loss account.
Gains or losses on buying reinsurance are recognised in the profit and loss account immediately at the date
of purchase and are not amortised. There were no such gains recognised in 2024 or 2023.
Ceded reinsurance arrangements do not relieve the Syndicate from its obligations to policyholders.
Insurance and reinsurance receivables
Insurance and reinsurance receivables are recognised when due and measured on initial recognition at the
fair value of the consideration received or receivable. Subsequent to initial recognition, insurance and
reinsurance receivables are measured at amortised cost, using the effective interest rate method. The
carrying value of insurance and reinsurance receivables is reviewed for impairment whenever events or
circumstances indicate that the carrying amount may not be recoverable, with the impairment loss recorded
in the profit and loss account.
Insurance and reinsurance receivables are not recognised when the derecognition criteria for financial assets
have been met.
Insurance payables
Insurance payables are recognised when due and measured on initial recognition at the fair value of the
consideration received less directly attributable transaction costs. Subsequent to initial recognition, they are
measured at amortised cost using the effective interest rate method. Insurance payables are derecognised
when the obligation under the liability is settled, cancelled or expired.
Investment return
All investment return is recognised in the non-technical account.
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 or losses represent the difference between the net sales proceeds and purchase price.
Unrealised gains and losses represent the difference between the valuation of investments held at the
balance sheet date and their purchase price. The movement in unrealised gains and losses therefore includes
the reversal of previously recognised unrealised gains and losses on investments disposed of in the current
year.
Investments
All financial assets are designated as fair value through the profit or loss account upon initial recognition
because they are managed and their performance is evaluated on a fair value basis. These financial assets
are initially recognised at fair value with any transaction costs being expensed through the profit and loss
account.
For quoted investments where there is an active market, the fair value is the quoted bid price at the balance
sheet date. For quoted investments where there is no active market, the fair value is determined by reference
to prices for similar assets in active markets. For investments where there is no active market and no similar
assets in active markets, a fair value is derived from inputs that are not based on observable market data.
Realised and unrealised gains and losses arising from changes in the fair value of financial assets at fair value
through profit and loss are included in the profit and loss account in the period in which they arise.
23
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42
2024 Annual Report and Financial Statements
Notes to the financial statements
continued
2. Accounting policies
continued
Cash and cash equivalents
Cash and cash equivalents represent cash balances, money market deposits with banks and other short-term
highly liquid investments purchased within three months of maturity.
Financial liabilities
The Syndicate's financial liabilities include trade and other payables, borrowings and insurance payables,
where applicable. All financial liabilities are recognised initially at fair value and, in the case of loans and
borrowings, net of directly attributable transaction costs.
A financial liability is derecognised when the obligation under the liability is discharged or expires.
Foreign currencies
Foreign currency transactions are converted to the presentational and functional currency of the Syndicate
(US dollar) using the exchange rates prevailing at the date of the transactions. Assets and liabilities
denominated in foreign currency are revalued to functional currency at year end exchange rates and the
resultant differences are recognised as gains and losses in the non-technical account.
The currency exchange rates that have been used for principal foreign currency transactions are available
in note 18.
Tax
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 the members is gross
of tax. Capital appreciation falls within trading income and is also distributed gross of tax.
No provision has been made for any other overseas tax payable by members on underwriting results or
investment earnings.
Profit commission
NSML has agreed contractual terms with the capital providers to the Syndicate for the payment of profit
commissions based on the performance of the individual years of account of the Syndicate subject to certain
conditions. Profit commissions are accrued in line with the contractual terms and the development of the
result of the underlying years of account.
Amounts charged to the Syndicate do not become payable until after the appropriate year of account
closes, normally at 36 months, although the Managing Agent may receive payments on account of
anticipated profit commissions in line with interim profits released to members.
3.
Risk management
Governance framework
The NSML Board is responsible for managing the risks of the Syndicate and has a comprehensive governance
structure and risk management framework in place.
The risk management framework enables risks to be
identified, assessed, managed and reported.
The Board also has a suite of comprehensive risk appetite
statement
of its business and that the model is used to improve both the understanding of risk and the quality of the
decision making at all levels across the business.
-making and routine management and is
incorporated within the strategic and operational planning processes. As part of the risk management
framework, NSML has comprehensive policies and procedures in place which outline controls and business
conduct standards for day to day operations.
Employees are expected to manage risk as defined through
their roles. This ensures that an assessment of risk remains central to decision-making.
24
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42
2024 Annual Report and Financial Statements
Notes to the financial statements
continued
3. Risk management
continued
Governance framework - continued
The Governance, Risk and Compliance Function maintains the risk and governance frameworks and this
understanding or management of risk.
Risk assessments are conducted on new projects, processes, systems and commercial activities to ensure that
assessments are identified, analysed and reported to the Board or appropriate committee.
Capital management objectives, policies and approach
The Society of Lloyd's (Lloyd's) is a regulated undertaking and subject to the supervision of the Prudential
Regulatory Authority (PRA) under the Financial Services and Markets Act 2000.
Within the supervisory framework, Lloyd's applies capital requirements at member level and centrally to ensure
that Lloyd's complies with Solvency II capital requirements, and beyond that to meet its own financial strength,
licence and ratings objectives.
Although Lloyd's capital setting processes use a capital requirement set at Syndicate level as a starting point,
the requirement to meet Solvency II and Lloyd's capital requirements apply at overall and member level only
respectively, not at Syndicate level. Accordingly the capital requirement in respect of Syndicate 2358 is not
disclosed in these financial statements.
Lloyd's capital setting process
In order to meet Lloyd's requirements, each Syndicate is required to calculate its Solvency Capital
Requirement (
SCR
) for the prospective underwriting year. This amount must be sufficient to cover a 1 in 200
year loss, reflecting uncertainty in the ultimate run-off of underwriting liabilities (SCR 'to ultimate'). The
Syndicate must also calculate its SCR at the same confidence level but reflecting uncertainty over a one year
time horizon (one year SCR) for Lloyd's to use in meeting Solvency II requirements. The SCRs of each Syndicate
are subject to review by Lloyd's and approval by the Lloyd's Capital and Planning Group.
A Syndicate may be comprised of one or more underwriting members of Lloyd's. Each member is liable for its
own share of underwriting liabilities of the Syndicate on which it is participating but not on other members
shares. Accordingly, the capital requirement that Lloyd's sets for each member operates on a similar basis.
Each member's SCR shall thus be determined by the sum of the member's share of the Syndicate SCR 'to
ultimate'. Where a member participates on more than one Syndicate, a credit for diversification is provided
to reflect the spread of risk, but consistent with determining an SCR which reflects the capital requirement to
cover a 1 in 200 year loss 'to ultimate' for that member.
Over and above this, Lloyd's applies a capital uplift to
the member's capital requirement, known as the Economic Capital Assessment (
ECA
). The purpose of this
uplift, which is a Lloyd's not a Solvency II requirement, is to meet Lloyd's financial strength, licence and ratings
objectives. The capital uplift applied for 2024 was 35% (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
Syndicate on which it participates.
Insurance risk
The principal risk the Syndicate faces under insurance contracts is that the actual claims and benefit
payments or the timing thereof, differ from expectations. This is influenced by the frequency of claims, severity
of claims, actual benefits paid and subsequent development of long-term claims. Therefore, the objective of
the Syndicate is to ensure that sufficient reserves are available to cover these liabilities.
The risk exposure is mitigated by diversification across a large portfolio of insurance contracts and
geographical areas. The variability of risks is also improved by careful selection and implementation of
underwriting strategy guidelines, as well as the use of reinsurance arrangements.
25
of
42
2024 Annual Report and Financial Statements
Notes to the financial statements
continued
3. Risk management
continued
The Syndicate purchases reinsurance as part of its risk mitigation programme. Amounts recoverable from
reinsurers are estimated in a manner consistent with the outstanding claims provision and are in accordance
with the reinsurance contracts.
The Reserve Committee oversees the management of reserving risk.
The use of standardised and internal
modelling techniques, as well as benchmarking and the review of claims development are key in mitigating
reserving risk.
The purpose of these underwriting, reinsurance and reserving strategies is to limit exposure to catastrophes or
large losses based on the Syndicate's risk appetite as decided by the Board.
The Syndicate uses both its own and commercially available risk management software to assess catastrophe
exposure.
However, there is always a risk that the assumptions and techniques used in these models are unreliable or
that claims arising from an unmodelled event are greater than those arising from a modelled event.
Key assumptions
The principal assumption underlying the liability estimates is that the future claims development will follow a
similar pattern to past claims development experience.
This includes assumptions in respect of average claim
costs, claim handling costs and claim numbers for each underwriting year.
Additional qualitative judgements are used to assess the extent to which past trends may not apply in the
future, for example: one-off occurrence, changes in market factors such as public attitude to claiming,
economic conditions, claim inflation factors, as well as internal factors such as portfolio mix, policy conditions
and claims handling procedures. Judgement is further used to assess the extent to which external factors such
as judicial decisions and government legislation affect the estimates.
Other key circumstances affecting the reliability of assumptions include variation in interest rates, delays in
settlement and changes in foreign currency rates.
Sensitivities
The claim liabilities are sensitive to the key assumptions that follow. It has not been possible to quantify the
sensitivity of certain assumptions such as legislative changes or uncertainty in the estimation process.
The following analysis is performed for reasonably possible movements in key assumptions with all other
assumptions held constant, showing the impact on gross and net liabilities, profit and members
balances.
The correlation of assumptions will have a significant effect in determining the ultimate claims liabilities, but to
demonstrate the impact due to changes in assumptions, assumptions had to be changed on an individual
basis.
It should be noted that movements in these assumptions are non-linear and that the level of reinsurance
recoveries arising from changes in gross claims will not be proportional to the gross losses.
Gross
of
reinsurance
Net
of
reinsurance
Gross of
reinsurance
Net of
reinsurance
202
4
202
4
2023
2023
Impact of a:
5%
increase
in
C
laims liability
6,079
5,960
2,460
2,428
5%
decrease
in
C
laims liability
(6,079)
(5,960)
(2,460)
(2,428)
The method used for deriving sensitivity information and significant assumptions did not change from the
previous period.
26
of
42
2024 Annual Report and Financial Statements
Notes to the financial statements
continued
3. Risk management
continued
Claims development table
The following tables show the Syndicate's cumulative incurred claims development, including both claims
notified and IBNR for each underwriting year, together with the cumulative payments to date on a gross and
net of reinsurance basis at the balance sheet date.
Claims development is expected when the underwriting year is at an early stage of development as the
premiums to which the claims relate are earned.
The Syndicate has elected to translate estimated claims and claims payments at a consistent rate of
exchange as determined at the balance sheet date.
The uncertainty associated with the ultimate claims experience of an underwriting year is greatest when the
underwriting year is at an early stage of development and when the risk margin for future experience
potentially being more adverse than has been assumed is at its highest. As claims develop, and the ultimate
cost of the claims becomes more certain, the relative level of margin should decrease. Due, however, to the
uncertainty inherent in the claims estimation process, initial reserves may not always be in a surplus.
Claims development table gross of reinsurance
Underwriting year
2022
2023
2024
Estimate of gross claims incurred:
At end of
first year
9,280
27,981
47,565
One year later
27,337
71,297
Two years later
34,231
Gross i
ncurred claims
34,231
71,297
47,565
Less cumulative gross claims paid
(11,305)
(18,714)
(1,494)
Liability for gross claims outstanding
22,926
52,583
46,071
Total gross claims outstanding
121,580
Claims development table net of reinsurance
Underwriting year
2022
$
000
2023
2024
Estimate of
net
claims incurred:
At end of first year
9,213
27,849
47,155
One year later
26,816
69,329
Two years later
33,844
Net i
ncurred claims
33,844
69,329
47,155
Less cumulative
net
claims paid
(10,918)
(18,713)
(1,494)
Liability for net claims outstanding
22,926
50,616
45,661
Total
net
claims outstanding
21,028
119,203
27
of
42
2024 Annual Report and Financial Statements
Notes to the financial statements
continued
3. Risk management
continued
Financial risk
Credit risk
Credit risk is the risk of loss if a counterparty fails to meet its contractual obligations resulting in a financial loss
to the Syndicate. The Syndicate is exposed to credit risk primarily through its investment and insurance
activities.
The following policies and procedures are in place to mitigate the exposure to credit risk:
Investment guidelines are established setting out the quality of investments to be included within the
Syndicate
s portfolio. The policy is monitored by the Executive Committee.
-
credit rating agency or, where reinsurance is placed with unrated reinsurers, exposure is required to be
100% collateralised through the depositing of funds held in trust to the Syndicate. Concentration of risk is
avoided by following policy guidelines in respect of counterparties' limits. If the counterparty is
downgraded or does not have the required credit rating, then collateral is sought to mitigate any risk
where required. This is monitored by the Syndicate Management Committee, which may approve
exceptions in certain circumstances.
The tables below show the maximum exposure to credit risk (including an analysis of financial assets exposed
to credit risk) for the components of the balance sheet. The maximum exposure is shown gross, before the
effect of mitigation through collateral agreements.
As at 31 December 2024:
Neither past
due or
impaired
Past due
Impaired
Total
2024
2024
2024
2024
Debt securities and other fixed income securities
17,269
-
-
17,269
2,377
-
-
2,377
Debtors arising out of direct insurance operations
69,253
-
-
69,253
Debtors arising out of reinsurance operations
28,304
28,304
Other debtors and accrued interest
113
113
Cash and cash equivalents
99,851
-
-
99,851
Total assets
1
217,167
-
-
217,167
As at 31 December 2023:
Neither past
due or
impaired
Past due
Impaired
Total
2023
2023
2023
2023
Debt securities and other fixed income securities
8,760
-
-
8,760
651
-
-
651
Debtors arising out of direct insurance operations
37,704
-
-
37,704
Debtors arising out of reinsurance operations
4,230
4,230
Cash and cash equivalents
53,623
-
-
53,623
Total assets
1
104,968
-
-
104,968
1
Total assets excludes non-monetary items including deferred acquisition costs and reinsurers' share of unearned premiums.
28
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42
2024 Annual Report and Financial Statements
Notes to the financial statements
continued
3. Risk management
continued
Financial risk
- continued
Credit risk - continued
The tables below provide information regarding the credit risk exposure of the Syndicate by classifying assets
according to independent credit ratings of the counterparties. AAA is the highest possible rating. Assets that
fall outside the range of AAA to BBB have not been rated.
Debtors, other than amounts due from reinsurers, have been excluded from the tables as these are not rated.
As at 31 December 2024:
AAA
AA
A
BBB
Less than
BBB
Other
Not
Rated
Total
2024
2024
2024
2024
2024
2024
2024
2024
Shares and other variable yield
securities and units in unit trusts
60,352
-
-
-
-
-
-
60,352
Debt
s
ecurities and other fixed
income securities
14,051
516
607
558
710
-
827
17,269
outstanding
-
83
2,294
-
-
-
-
2,377
Debtors arising out of direct
insurance operations
-
-
-
-
-
-
69,253
69,253
Debtors arising out of reinsurance
operations
-
61
326
-
-
27,917
-
28,304
Cash at bank and in hand
-
-
39,499
-
-
-
-
39,499
Other debtors and accrued
interest
-
-
-
-
-
-
5,265
5,265
Total assets
1
74,403
660
42,726
558
710
27,917
75,345
222,319
As at 31 December 2023:
AAA
AA
A
BBB
Less than
BBB
Other
Not Rated
Total
2023
2023
2023
2023
2023
2023
2023
2023
Shares and other variable yield
securities and units in unit trusts
30,781
-
-
-
-
-
-
30,781
Debt Securities and other fixed
income securities
7,366
194
247
236
188
-
529
8,760
outstanding
-
116
535
-
-
-
-
651
Debtors arising out of direct
insurance operations
-
-
-
-
-
-
37,704
37,704
Debtors arising out of reinsurance
operations
-
1
5
-
-
4,224
-
4,230
Cash at bank and in hand
-
-
22,842
-
-
-
-
22,842
Other debtors and accrued
interest
-
-
-
-
-
-
1,800
1,800
Total assets
1
38,147
311
23,629
236
188
4,224
40,033
106,768
1
Total assets excludes non-monetary items including deferred acquisition costs and reinsurers' share of unearned premiums.
29
of
42
2024 Annual Report and Financial Statements
Notes to the financial statements
continued
3. Risk management
continued
Financial risk
Credit risk
Maximum credit exposures
It is the Syndicate's policy to maintain accurate and consistent risk ratings across its credit portfolio. This
enables management to focus on the applicable risks and the comparison of credit exposures across all lines
of business.
Liquidity risk
Liquidity risk is the risk that cash may not be available, or that assets cannot be liquidated at a reasonable
price, to pay obligations when they fall due.
The Syndicate is exposed to daily calls on its available cash
resources mainly from claims arising through insurance and reinsurance contracts.
In respect of business
underwritten in certain international regions there is a requirement to collateralise exposure through regulated
trust funds in respect of gross insurance liabilities. This puts an additional burden on the Syndicate
The Syndicate tries to reduce this risk by reviewing its expected cash obligations on a quarterly basis and
keeping adequate cash on deposit to meet those obligations.
The tables below summarise the maturity profile of the Syndicate's financial liabilities based on remaining
undiscounted contractual obligations, including interest payable and outstanding claim liabilities based on
the estimated timing of claim payments resulting from recognised insurance and reinsurance liabilities.
Repayments which are subject to notice are treated as if notice were to be given immediately.
Within 1
year
1
-
3
years
3
-
5 years
Over 5
years
Total
Claims outstanding
(47,666)
(44,125)
(15,533)
(14,256)
(121,580)
Reinsurance creditors
(1,517)
-
-
-
(1,517)
As at 31 December 2024
(49,183)
(44,125)
(15,533)
(14,256)
(123,097)
Within 1
year
1
-
3
years
3
-
5 years
Over 5
years
Total
Claims outstanding
(21,027)
(17,414)
(5,228)
(5,539)
(49,208)
Reinsurance creditors
(508)
-
-
-
(508)
As at 31 December 2023
(21,535)
(17,414)
(5,228)
(5,539)
(49,716)
30
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42
2024 Annual Report and Financial Statements
Notes to the financial statements
continued
3. Risk management
continued
Market risk
Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in foreign exchange rates.
The Syndicate transacts insurance business in Pound Sterling, Euro, US Dollar, Australian Dollar, Canadian Dollar,
Japanese Yen and New Zealand Dollar.
Assets are held in each of these currencies to generally match the
corresponding liabilities.
The Syndicate is exposed to movements in foreign exchange where there is a mismatch between assets and
operations.
When a mismatch occurs the Syndicate looks to limit this mismatch exposure, wherever possible.
The following tables summarise the exposure of the financial assets and liabilities to foreign currency
exchange risk at the reporting date.
As at 31 December 2024:
GBP
EUR
USD
CAD
AUD
JPY
NZD
Total
2024
2024
2024
2024
2024
2024
2024
2024
Financial investments
1,532
-
71,572
2,923
1,594
-
-
77,621
4
-
5,
4
03
-
-
-
-
5,407
Insurance and reinsurance receivables
21,829
2,982
65,632
6,278
(192)
66
962
97,557
Cash at bank and in hand
1,231
7,999
1,575
20,394
7,428
872
-
39,499
Prepayments, accrued income and
other debtors
6,783
4,201
24,783
5,733
1,930
112
151
43,693
Total assets
31
,
379
15,182
168,965
35,328
10,760
1,050
1,113
263,777
Technical provisions
(
33,307
)
(17,040)
(
163,546
)
(24,487)
(8,930)
(840)
(936)
(249,086)
Insurance and reinsurance payables
240
29
(1,771)
11
-
(26)
-
(1,517)
Accruals and deferred income and
other creditors
(124)
-
(739)
-
-
-
-
(863)
Total liabilities
(
33,191
)
(17,011)
(
166,056
)
(24,476)
(8,930)
(
866)
(936)
(251,466)
Net Assets / (liabilities)
(1,812)
(1,829)
2,909
10,852
1,830
184
177
12,3
11
GBP
EUR
USD
CAD
AUD
JPY
NZD
Total
2024
2024
2024
2024
2024
2024
2024
2024
Total assets
31,379
15,182
168,965
35,328
10,760
1,050
1,113
263,77
7
Total liabilities
(33,191)
(17,011)
(
166,056
)
(24,476)
(8,930)
(
866
)
(936)
(251,46
6
)
Net Assets / (liabilities)
(1,812)
(
1,829
)
2,909
10,852
1,830
184
177
12,3
11
31
of
42
2024 Annual Report and Financial Statements
Notes to the financial statements
continued
3. Risk management
continued
Market risk
continued
Currency risk
continued
As at 31 December 2023:
GBP
EUR
USD
CAD
AUD
JPY
NZD
Total
2023
2023
2023
2023
2023
2023
2023
2023
Financial investments
716
-
36,261
1,548
1,016
-
-
39,54
1
technical
provisions
984
33
1,263
-
-
6
-
2,286
Insurance and reinsurance
receivables
6,234
4,306
27,190
1,897
1,811
123
373
41,934
Cash at bank and in hand
2,761
3,221
776
12,241
3,414
429
-
22,842
Prepayments, accrued income
and other debtors
4,192
1,538
12,539
2,317
1,260
91
85
22,022
Total assets
14,887
9,098
78,029
18,003
7,501
649
458
128,62
5
Technical provisions
(
13,604)
(9,888)
(
75,556)
(12,897)
(6,469)
(50
3
)
(414)
(119,331)
Insurance and reinsurance
payables
(224)
25
(291)
12
-
(30)
-
(508)
Accruals and deferred income
and other creditors
(758)
472
(1,430)
526
149
1
-
(1,040)
Total liabilities
(
14,586
)
(9,391)
(
77,277
)
(12,359)
(6,320)
(53
2
)
(414)
(120,879)
Net Assets / (liabilities)
301
(293)
752
5,644
1,181
11
7
44
7,74
6
GBP
EUR
USD
CAD
AUD
JPY
NZD
Total
2023
2023
2023
2023
2023
2023
2023
2023
Total assets
14,887
9,098
78,029
18,003
7,501
649
458
128,62
5
Total liabilities
(
14,586)
(9,391)
(
77,277
)
(12,359)
(
6,320
)
(
532
)
(
414
)
(
120,8
79
)
Net Assets / (liabilities)
301
(293)
752
5,644
1,181
117
44
7,746
32
of
42
2024 Annual Report and Financial Statements
Notes to the financial statements
continued
3. Risk management
continued
Market risk
continued
Currency risk - continued
Sensitivity to changes in foreign exchange rates
The tables below give an indication of the impact on profit of a percentage change in the relative strength
of US Dollar against the value of the Syndicate
on the information as at 31st December 2024.
Net
assets
Net
p
rofit
2024
2023
2024
2023
US Dollar strengthens 10%
(940)
(699)
(940)
(699)
US Dollar strengthens 20%
(1,880)
(1,399)
(1,880)
(1,399)
A weakening of US Dollar against the above currencies at 31 December 2024 would have had an equal but
opposite effect to the amounts shown above, on the basis that all other variables remain constant.
Interest rate risk
Interest rate risk is the risk that the value of future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. Floating rate instruments expose the Syndicate to cash flow interest risk,
whereas fixed rate instruments expose the Syndicate to fair value interest risk.
The Syndicate has no significant concentration of interest rate risk. Insurance liabilities are not discounted and
therefore are not exposed to interest rate risk.
balances
Results before tax
2024
2023
2024
2023
Impact of 50 basis point increase
(7)
(39)
(7)
(27)
Impact of 50 basis point
decrease
7
39
7
27