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Syndicate 1971
Annual report and accounts
For the year ended 31 December 2024
Apollo Syndicate 1971 | Annual Report and Accounts 2024
Key performance indicators
2024
2023
Annual basis
$’m
$’m
Change
Gross premium written
410.8
298.6
38%
Net premium written
183.7
166.7
10%
Net premium earned
173.1
144.5
20%
Profit for the financial year
37.1
28.4
30%
Claims ratio
72%
74%
(2)%
Expense ratio
14%
13%
1%
Combined ratio
86%
87%
(1)%
Highlights:
•
Apollo’s Syndicate 1971
has reported top and bottom-line growth, as an innovator and leader in the digital
and sharing economy space;
•
The profit of $37.1m in 2024 reflects the positive contribution of earned profit from the 2023 and 2022 years
of account;
•
2022 year of account closed with a profit of 17.0% of capacity. The forecast range for the 2023 year of
account result is a profit of between 3.5% and 13.5% of capacity;
•
The business has continued to grow in 2024 through organic expansion of existing accounts, participation
on different layers of existing accounts and new business initiatives, including exploring potential new
partnerships and the use of new distribution channels; and
•
The Apollo ibott 1971 portfolio has benefited from a positive rating environment in 2024, which is expected
to continue into 2025.
“Growth is expected to accelerate in 2025 with the syndicate deploying enhanced data driven pricing accuracy and
capability, resulting in forecast rate increases. The ibott segment’s unique client
-centric partnership approach sets
the basis for deep, lasting client relationships and high retention. Going forward, growth efforts will focus on
diversifying with additional large accounts and refining risk assessments within the existing client base. These actions
support the syndicate´s competitive advantage a
s a market leader to satisfy its unique client base needs.”
David Ibeson, Group CEO
Apollo Syndicate 1971 | Annual Report and Accounts 2024
Contents
Directors and administration
..............................................................................................................................
2
Syndicate annual accounts for the year ended 31 December 2024
Report of the directors of the managing agent
.............................................................................................
3
Statement of managing
agent’s responsibilities
.........................................................................................
13
Independent auditor’s report to the members of Syndicate 1971
...............................................................
14
Profit and loss account
................................................................................................................................
18
Statement of changes in members’ balances
.............................................................................................
20
Balance sheet
.............................................................................................................................................
21
Statement of cash flows
..............................................................................................................................
23
Notes to the annual accounts
.....................................................................................................................
24
Syndicate underwriting year accounts for the 2022 year of account
Report of the directors of the managing agent
...........................................................................................
56
Statement of managing agent’s responsibilities
.........................................................................................
58
Independent auditor’s report to the members of Syndicate 1971 –
2022 closed year of account
.............
59
Profit and loss account
................................................................................................................................
63
Statement of changes in members’ balances
.............................................................................................
65
Balance sheet
.............................................................................................................................................
66
Statement of cash flows
..............................................................................................................................
68
Notes to the underwriting year accounts
....................................................................................................
69
Four year summary of underwriting results
.......................................................................................................
78
2 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Directors and administration
Managing agent
Registered office
One Bishopsgate
London
EC2N 3AQ
Company registration number
09181578
Company secretary
PC Bowden
Directors
AC Winther
(Non-Executive Chair)
FA Buckley
(Non-Executive Director)
M Cramér Manhem
(Non-Executive Director)
SR Davies
(Non-Executive Director)
SE Hill
(Non-Executive Director)
RD Littlemore
(Non-Executive Director)
DCB Ibeson
(Chief Executive Officer)
TL McHarg
VVV Mistry
JR Slaughter
Active underwriter
JR Slaughter
Bankers
Citibank
NatWest
Royal Bank of Canada
Registered auditor
Deloitte LLP
Statutory Auditor
2 New Street Square
London
EC4A 3BZ
3 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Report of the directors of the managing agent
The directors of the managing agent (together,
“the Board”)
present their annual report and audited annual
accounts, which incorporates the strategic review, for Syndicate 1971
(“the syndicate”)
for the year ended 31
December 2024.
The annual accounts are 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”)
and applicable accounting standards in the United Kingdom and Republic of Ireland
including Financial Reporting Standard 102 (
“
FRS102
”
) and Financial Reporting Standard 103
(“FRS 103”) in
relation to Insurance Contracts,
and the Lloyd’s Syndicate Accounts Instructio
ns Version 2.0 as modified by the
Frequently Asked Questions Version 1.1 issued by Lloyd’s
.
Underwriting year accounts for the closed 2022 year of account of Syndicate 1971 are included following these
annual accounts.
Principal activity
This report covers the business of Syndicate 1971 which was established for the 2019 year of account and trades
as Apollo ibott (Insuring Businesses of Tomorrow, Today). The principal activity of the syndicate is writing
automotive casualty risks relating to the sharing economy in respect of its ibott Rover class of business. The
syndicate maintains a significant quota share reinsurance placement with a panel of highly rated reinsurers on all
years of account.
The syndicate traded as a Special Purpose Arrangement (“SPA”)
for the 2021 and prior years of account. Business
was written by Syndicate 1969 and then ceded as a quota share to Syndicate 1971. Under this arrangement all
transactions were undertaken by Syndicate 1969 on behalf of the syndicate, until closure of the year, when the
declared result was remitted to members. Investment income arising on the business was allocated to the funds
withheld balance.
In November 2021 the syndicate received approval from Lloyd’s to operate on a stand
-alone basis
with effect from the 2022 year of account.
During 2023 Syndicate 1971 established its own SPA, Syndicate 1925, for the 2024 year of account. Syndicate
1925 underwrites Cyber Reinsurance business only and was developed through a strategic partnership with
Envelop Risk.
Syndicate 1971 trades through the Society of
Lloyd’s (“Lloyd’s”)
worldwide licenses and has the benefit of the
Lloyd’s brand
and rating.
Lloyd’s has an A
+ (Superior) rating from A.M. Best, AA- (Very Strong) from Standard &
Poor’s and AA
- (Very Strong) from Fitch.
The syndicate
’s capacity for the
2024 year of account was £275m ($349.3
m at the Lloyd’s planning rate of
$1.27)
of which £40m ($50.8m) related to SPA Syndicate 1925. Stamp capacity for the 2025 year of account has increased
to £430m ($541.8m at
the Lloyd’s planning rate of
$1.26) of which £50m ($63m) relates to SPA Syndicate 1925.
Apollo Syndicate Management Limited (“ASML”) is approved as a
managing a
gency at Lloyd’s and is authorised by
the Prudential Regulation Authority
(“PRA”)
. ASML is regulated by the Financial Conduct Authority
(“FCA”)
and the
PRA.
Review of the business
Ibott is a global leader in the digital and sharing economy and a core growth class for the Apollo Group. In 2024,
the syndicate achieved premium growth of 38% to $410.8m (2023: $298.6m) and achieved risk adjusted rate
increases on renewals of 10% (2023: 8%).
4 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Results
Annual basis
2024
$’m
2023
$’m
Change
Gross premium written
410.8
298.6
38%
Net premium written
183.7
166.7
10%
Net premium earned
173.1
144.5
20%
Profit for the financial year
37.1
28.4
30%
Claims ratio
72%
74%
(2)%
Expense ratio
14%
13%
1%
Combined ratio
86%
87%
(1)%
Notes:
The claims ratio is the ratio of net claims incurred to net premiums earned.
The expense ratio is the ratio of net operating expenses to net premiums earned.
The combined ratio is the sum of the claims and expense ratios.
The expense and combined ratios exclude investment return and foreign exchanges gains and losses.
ASML uses the key performance indicators shown in the table above to measure the performance of the syndicate
against its objectives and overall strategy. These indicators are assessed against plan and prior year outcomes and
are subject to regular review. The syndicate predominantly writes business denominated in US Dollars and therefore
reports in that currency.
2024 calendar year result
The result for the 2024 calendar year is a profit of $37.1m (2023: profit of $28.4m) with a combined ratio of 86.3%
(2023: 87.3%). The 2024 calendar year result aggregates the performance during the year of all open years of
account (2022, 2023 and 2024) and movements from the 2019, 2020 and 2021 closed years of account.
The profit for the calendar year is split between a profit on the 2024 year of account of $6.5m and a profit on the
2023 and prior years of account of $30.6m. The 2024 calendar year underwriting result is consistent with
expectations in the plan for the year. Overall, the account has been managed within risk appetite and without major
deviations from management tolerance. During 2024 a refreshed market and client strategy was developed putting
service and innovation at the core of the syndicate product offering. This approach has supported the resilience of
the syndicate with a strong pipeline of business opportunities, strengthening the capability of the syndicate to meet
its plan.
Notified claims experience in the calendar year for the 2024, 2023 and 2022 years of account has been within
expectations. However, we recognise that a range of outcomes is possible for the ultimate result for the syndicate
and have therefore made a provision within claims that have been incurred at the reporting date but have not yet
been reported (“IBNR”) in the calendar year to allow for this reserving uncertainty. In particular, the assumptions
underlying our reserving methodology reflect additional information obtained from pricing current and prospective
business. The implications of this analysis have been incorporated into our reserving approach for all years of
account which includes a loading for inflation and a margin added over and above actuarial best estimates set with
reference to the margin policy.
Investment performance
The investment objective is to invest the premium trust funds in a manner designed primarily to preserve capital
values and provide liquidity.
The syndicate produced an investment return of $12.8m in the year (2023: Investment return of $10m). Improved
market yields and larger investment holdings have contributed to the improvement in investment return this year.
At the balance sheet date, the fixed income portfolio holdings totalled $173.6m (2023: $44.9m).
The syndicate’s investment
policy is expected to remain broadly consistent with the position at the balance sheet
date.
5 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Capital
For Syndicate 1971,
ASML assesses the syndicate’s capital requirements through a rigorous process of risk
identification and quantification using an internal capital model at a 1:200 year confidence level. The model is based
on Solvency II regulatory requirements and has bee
n approved by Lloyd’s. The ultimate Solvency Capital
Requirement (“SCR”) is subject to an uplift determined by Lloyd’s based on
its assessment of the economic capital
requirements for the Lloyd’s market in total. The SCR
, together with the Lloyd
’s
uplift, is referred to as the Economic
Capital Assessment (“ECA”). The ECA for the 202
4 underwriting year was set at 66% of capacity and for the 2025
underwriting year will be 62% of capacity.
Lloyd’s unique capital structure provides excellent financial security to policyholders and capital efficiency for
members. The Lloyd’s chain of security underlies the financial strength that ultimately backs insurance policies
written at Lloyd’s and has t
hree links:
1.
All premiums received by syndicates are held in trust as the first resource for settling policyholders’ claims;
2.
Every member is required to hold capital in trust funds at Lloyd’s which are known as Funds at Lloyd’s
(“FAL”). FAL is intended primarily to cover circumstances where syndicate assets are insufficient to meet
participating members’ underwriting liabilities
. FAL is set with reference to the ECAs of the syndicates that
the member participates on. Since member FAL is not under the control of the managing agent, it is not
shown in the syndicate accounts. The managing agent is, however, able to make a call on me
mbers’ FAL
to meet liquidity requirements or to settle underwriting losses if required; and
3.
Lloyd’s central assets are available at the discretion of the Council of Lloyd’s to meet any valid claim that
cannot be met through the resources of any member further up the chain. Lloyd’s also retains the right to
request a callable contribution equal to
5% of members’ capacity on the syndicate.
Principal risks and uncertainties
ASML has an established Enterprise Risk Management (
“
ERM
”
) function for the syndicate with clear terms of
reference from the ASML Board and its committees as part of a three lines of defence model. The ASML Board and
its committees review and approve the risk management policies and meet regularly to approve any commercial,
regulatory and organisational requirements of these policies.
The syndicate’s risk appetites are set annually as part of the
syndicate business planning and solvency capital
requirement
setting process. The ERM function is also responsible for maintaining the syndicate’s Own Risk and
Solvency Assessment (“ORSA”) processes and provides regular updates to the
ASML Board. The syndicate ORSA
report is approved by the ASML Board annually.
ASML
recognises that the syndicate’s business is to accept risk which is appropriate to enable it to meet its
objectives and that it is not realistic or possible to eliminate risk entirely. The principal risks and uncertainties facing
the syndicate have been identified as strategic risk, insurance risk, regulatory risk, operational risk, and financial
risk (comprising credit risk, liquidity risk and market risk). A risk owner has been assigned responsibility for each
risk, and it is the responsibility of that individual periodically to assess the impact of the risk and to ensure appropriate
risk mitigation procedures and controls are in place and operating effectively. External factors facing the business
and the internal controls in place are routinely reassessed and changes made when necessary. The overarching
risk framework is overseen by the ASML Risk Committee on behalf of the ASML Board. The risk culture of the
business is Board led, with new initiatives requiring an objective risk assessment and opinion prior to approval.
Strategic risk is the risk that inadequate, ineffective, or inappropriate business decisions result in negative impacts
on the ability to execute the
syndicate’s business’ objectives/strategy, and hence on the profitability of the syndicate.
The ASML Board has ultimate responsibility for overseeing the execution of the approved strategy and consequently
the associated strategic risk. All areas of the business are encouraged to identify areas of potential uncertainty that
could impact plan execution and to identify emerging risks.
Insurance risk refers to fluctuations in the timing, frequency and severity of insured events, relative to expectations
at the time of underwriting. It comprises premium risk and reserving risk. The ASML Underwriting Committee
oversees the management of premium risk and the implementation of a disciplined Underwriting Strategy with a
robust control and governance framework that is focused on writing quality business at an acceptable price, and
the purchase of a comprehensive outwards reinsurance programme. The ASML
Board sets limits to the syndicate’s
exposure to underwriting risk and accumulation events both on a gross and net of reinsurance basis and adherence
to these limits is reported monthly to the ASML Underwriting Committee. The ASML Reserving Committee oversees
the overall management of reserving risk. Reserving risk is managed through the use of proprietary and
6 Apollo Syndicate 1971 | Annual Report and Accounts 2024
standardised modelling techniques, internal and external benchmarking, review of claims development and the
ongoing oversight from an independent external reserving process. An independent Statement of Actuarial Opinion
is commissioned each year in line with Lloyd’s Valuation of Liabilities requirements. The reserving process is
overseen by and reports through the ASML Audit Committee.
Syndicate 1971 has a markedly different risk profile to Lloyd
’
s market competitors, with few readily available market
and industry comparators. Several of the
syndicate’s
larger clients have grown rapidly over the period in which they
have been insured by the syndicate, for which the syndicate has detailed underwriting and claims details to inform
risk selection and performance assessment. A risk does present for smaller clients for whom available data is
sparse, due to these clients being start-ups or being involved in a new industry segment. Several of the risks written
are genuinely new to the Lloyd’s market. Consequently, traditional approaches to pricing and reserving may not
always be appropriate in setting the price charged to clients. There are few benchmarks available for setting best
estimate reserves. Syndicate 1971 seeks to mitigate this risk by intensive analysis of the data available to develop
sophisticated pricing and reserving models and by seeking to cultivate trust and long-term mutually sustainable
relationships with clients in the segments that are defined within the syndicate’s risk a
ppetite.
Regulatory risk is the financial loss or inability to conduct normal business activities owing to a breach of regulatory
requirements or failure to respond to regulatory change. ASML is a regulated entity and therefore is required to
comply with the requirements of the PRA, FCA
and Lloyd’s. Lloyd’s requirements include those imposed on the
Lloyd’s market by overseas regulators. ASML ensures that there is an appropriate level of skilled resources in place
to meet its regulatory obligations, including compliance, risk management and internal audit functions.
A group has been formed
to review ‘contentious risks’ comprising ASML’s
Chief Underwriting Officer, Chief Risk
Officer, Chief Reinsurance Officer, Chief Engagement Officer, and Senior Sustainability Analyst. This group reviews
risks that are presented to underwriters which, while not explicitly excluded by ASML’s policies, could lead to
an
adverse reputational impact for ASML. Before the underwriter can proceed, approval must be granted by at least
three members of this contentious risks group.
All of the contentious risks and the reasonings for approval or denial, are maintained on a contentious risk log to
help develop learning and ensure consistency of approach. This log is reviewed quarterly by the ASML
Environmental, Social, and Governance (“ESG”) Committee
, and if they identify any inconsistencies, they revert to
the contentious risks group or, as appropriate, escalate to the ASML Board Risk Committee or to the ASML Board.
The contentious risk process is also used to consider instances where a risk might be excluded by existing appetites
but could have a significant social benefit, allowing the team to approve on that basis.
Operational risk is the risk of a loss resulting from inadequate or failed internal processes, people and systems or
from external events. The syndicate is constantly exposed to operational risk as this covers the uncertainties and
hazards of undertaking day-to-day business. Controls have been put in place and documented to try to ensure that
these risks are managed on a proportionate basis and within risk appetite. As operational risks apply across the
entire business, all committees have some level of oversight for operational risk. However, the ASML Operations
and Change Committee manage risks relating to changes in systems and processes, and the ASML Board Risk
Committee has oversight of any risk events which require escalation.
Financial risk for the syndicate covers all risks related to financial investment and the ability to pay creditors, and
includes credit risk, liquidity risk and market risk. In relation to assets held, an investment mandate reflecting the
syndicate’s risk appetite is in place and has been approved by the
ASML Board. Compliance with this is controlled
through the investment manager’s systems and monitored through the
ASML Investment and Treasury Oversight
Group.
Credit risk is the risk of financial loss to the syndicate if a counterparty to a financial instrument or a reinsurance
agreement fails to discharge a contractual obligation. ASML manages credit risk by placing limits on exposure to a
single counterparty by reference to the credit rating of the counterparty. On a quarterly basis the ASML Finance
Committee reviews credit exposures, reinsurer security and counterparty limits, with further oversight provided by
the ASML Board and Audit Committee.
7 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Liquidity r
isk is the risk that the syndicate’s assets are insufficient to fund the obligations arising from its insurance
contracts and financial liabilities as they fall due, or that they can only be met by incurring additional costs. ASML’s
approach to managing liquidity risk includes use of daily liquidity monitoring, quarterly cash flow forecasts and
management of asset duration. Contingency funding plans are in place to ensure that adequate liquid financial
resources are available to meet obligations as they fall due in the event of reasonably foreseeable abnormal
circumstances.
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market prices, excluding those that are caused by credit downgrades which are included under credit
risk. Market risk comprises three key components: interest rate risk, currency risk and investment risk. 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. Investment management is outsourced and an investment mandate reflecting
the syndicate’s risk appetite is in place and has been approved by the
ASML Board. Compliance with this is
controlled through the investment manager’s systems and monitored through the monthly and quarterly reporting
process.
The use of financial derivatives is governed by ASML
’s risk management policies and ASML
does not use such
instruments for speculative purposes. The ASML Board has agreed key risk indicators and approved the
corresponding risk appetite for each measure.
A quantitative analysis of the risks set out above is included in note 4 to the annual accounts. A traffic light indicator
is used for monitoring current levels of risk based upon agreed thresholds and tolerances.
Emerging risks
An emerging risk is defined as a risk that is new, unforeseen, or unfamiliar. It may result from new or increased
exposure that could pose both as an opportunity or threat to the existing business risk appetite or tolerance.
The Emerging Risk Working Group is a cross-agency forum, that enables a diverse set of practitioners to review
thematic risk considerations. The results of these reviews can lead to further deep dive assessments that in turn
are reported through the governance structures to the ASML Board Risk Committee. Examples of deep dive reviews
conducted during 2024 include:
US litigation/
“n
uclear verdicts
”
Industry research has pointed to the quantum of US claims growing exponentially since 2020, with a trend for single
plaintiff claims exceeding $100m referred to as
“nuclear verdicts”
. The trend has been assessed by the syndicate
and appropriate underwriting actions implemented to manage to a Board-agreed appetite to mitigate this risk.
Tech accelerations
The pace and acceleration of technological achievement across computer science, medicine and agriculture has
all been driven by the need to innovate, create efficiency and resilience in response to global challenges. The speed
of the change can present challenges when considering how to write and price new/evolving risk exposures.
Information bias
ASML relies on the accuracy of data/information in order to make appropriate risk based decisions. Information bias
focusses on how it is possible to identify and account for a number of different types of bias within the data and
information used. These include cognitive bias, data collection bias and media (social) influences. This could result
in inaccurate decisions being made due to bias anchoring etc. resulting in incorrect pricing being applied.
Artificial I
ntelligence (“AI”)
The ease of access to generative AI and large language models has brought this technology risk and opportunity
to greater social and commercial awareness. ASML’s position is to maintain an appropriately cautious approach to
managing the risks associated with data privacy and security, whilst also enabling staff to innovate with business
processes and analysis where this can add commercial value.
ASML has implemented several controls in appropriate use of AI within the business. This will continue to be
reviewed and developed as ASML develops a better understanding of how to utilise this in the future.
8 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Corporate governance
The ASML Board is chaired by Angus Winther, who is supported by five further non-executive directors and all
except Stuart Davies are independent. Monica Crámer Manhem was appointed as Non-Executive Director on 6
June 2024. Martin Hudson stepped down on 28 February 2025. Rob Littlemore was appointed as a Non-Executive
Director on 28 February 2025, subject to regulatory notifications. David Ibeson is the Chief Executive Officer and
there were three further executive directors as at 31 December 2024. With effect from 1 January 2024, Taryn
McHarg, the Apollo Chief Financial Officer, was appointed as an executive director and James MacDiarmid, Hayley
Spink and Simon White stepped down from the ASML Board, remaining on the Executive Committee of ASML.
With effect from 1 January 2024, James Slaughter succeeded Matthew Newman as the Active Underwriter of
Syndicate 1971. Matthew Newman has taken on the role of Chief Engagement Officer and Head of New Business
for the Managing Agent as well as the Active Underwriter of Syndicate 1100.
Defined operational and management structures are in place and terms of reference exist for the ASML Board and
all Board and Management Committees.
The ASML Board meets at least four times a year and more frequently when business needs require. The ASML
Board has a schedule of matters reserved for its decision and is supported by the Audit Committee, the Risk
Committee and the Remuneration and Nominations Committee. These supporting committees are comprised of
non-executive directors and with the exception of Stuart Davies, all members of the Audit Committee are
independent. All members of the Risk Committee and Remuneration and Nominations Committee are independent.
Section 172 statement
The directors adopt the responsibilities to promote the success of the syndicate as if s172 of the Companies Act
2006 were applicable and have acted in accordance with these responsibilities during the year. The ASML Board
has identified the following key stakeholders: capital providers to the managed syndicates, employees, the
shareholder of ASML, Lloyd’s
, regulators, policyholders and brokers.
Throughout the year the ASML Board considered the wider impact of strategic and operational decisions on its
stakeholders. Examples include the development and execution of the business plans for the syndicate; the
assessment and raising of capital; communications with capital providers; and changes to Board composition. The
ASML Board considers that the interests of all stakeholders were aligned for these decisions.
The support and engagement of capital providers of the syndicate is imperative to the future success of our
business. There are
regular meetings with capital providers and members’ agents throughout the year to discuss
the performance and future prospects for the syndicate. Feedback received during these meetings enables the
ASML Board to factor the views of these key stakeholders into the development of business plans for future years.
Developing and maintaining relationships with brokers and policyholders is central to the success of the syndicate.
Underwriters travel widely with our broking partners to visit clients and attend industry events to promote the
syndicates
and the Lloyd’s brand and to ensure we continue to provide an excellent service to our policyholders. In
developing insurance propositions, marketing them with our broking partners, and in settling claims, we always seek
to ensure fair customer outcomes and provide products that deliver value.
ASML maintains
open and transparent relationships with our regulators and Lloyd’s,
with these relationships being
managed through our compliance team. Regular meetings are held with representatives of Lloyd’s and the PRA
and significant regulatory engagements are reported to the ASML Board.
Apollo’s
stated p
urpose is “Enabling a resilient and sustainable world”. Through 202
4 we continued our work to
develop and document our ESG principles and standards and assess our current business model against these
standards. There is a defined referral process for underwriting risks to adhere to our ESG appetite and manage
potential reputational risk. ESG considerations are integrated into the design of the investment strategy and asset
allocation, and ongoing attention is given to staff engagement, particularly around Diversity, Equity & Inclusion
(‘’DEI’’)
. Further work on ESG activities will continue through 2025.
9 Apollo Syndicate 1971 | Annual Report and Accounts 2024
We have put in place arrangements to assist in managing the financial risks and opportunities associated with the
effects of climate change and to ensure adequate oversight and control of this area in relation to underwriting,
reserving, investment management and operations. The business meets the requirements for PRA Supervisory
Statement 3/19. Whilst the Chief Risk Officer retains overall accountability for coordinating the approach to
managing the risks within ASML, the responsibility is allocated to relevant managers of each business area. Further
developments to ensure appropriate management of these risks and opportunities will continue through 2025.
Staff matters
We believe that our people are our most valuable asset. Attracting, retaining, and nurturing talent is essential to our
success. We are committed to creating a work environment where employees feel engaged through communication,
acknowledgment and ongoing growth opportunities. We actively support and promote DEI as well as mental health
and wellbeing to ensure that all staff members feel appreciated, supported and can perform at their best.
We aspire to function as a team where respect and collaboration are standard practices. Our hybrid working aims
to empower employees and to encourage a culture of communication and cooperation. We have channels for staff
to express concerns and to share feedback, making our workplace safe, encouraging and innovative.
ASML’s people practices remain highly competitive in the London
insurance market, providing compensation,
benefits, and terms designed to attract and retain top talent. A key focus is on ensuring our employees perform at
their best with opportunities for skill enhancement, to develop their capabilities and advance their careers within
ASML. This is an integral focus of our succession planning strategy.
Business operations
ASML aims to maintain a lean, efficient operating model utilising technology and outsourcing arrangements enabling
flexibility and scalability to meet the demands of the business. We continue to invest in resources across the
business in order to ensure that there is an effective operating model and robust three lines of defence model.
Lloyd’s B
lueprint Two initiatives will offer several processing efficiency gains for the market, and we believe we are
well positioned to adopt the new digital services to maximise the benefit to ASML, its syndicates and its capital
providers.
ASML continues to successfully maintain a hybrid working environment with all employees able to work effectively,
both remotely and from the office, with suitable access to business systems.
Aligned with the FCA
’s
and PRA
’s
Operational Resilience and Third-Party Oversight policies, Apollo maintains a
disciplined approach to operational resilience. We continue to focus on ensuring we maintain robust and resilient
plans to prevent, respond and recover from operational disruptions with the primary objective to protect our
customers and integrity of our business.
Environmental, Social and Governance
ASML
’s
Board-approved ESG strategy was reviewed in November 2024. The ASML Board drives the strategy,
which is aligned with our vision statement and purpose,
“Enabling a resilient and sustainable world”.
ASML’s ESG Committee reports directly to the Executive Committee and coordinates ESG
-related activities within
ASML.
The ESG Committee’s mandate is set out within ASML’s ESG Policy, but at a high
-level seeks to identify
areas of improvement and to ensure progress against the ESG strategy approved by the ASML Board.
ASML is committed to a long-term sustainable approach to protecting the environment, balancing environmental
considerations and social responsibility with our overall business goals. ASML’s underwriting and investment
practices are governed by ESG risk appetites that were originally implemented in 2022 and are reviewed at least
annually. ASML is also working to identify new opportunities that support the transition to a low carbon sustainable
economy, including through Lloyd’s new Transition TCX class.
10 Apollo Syndicate 1971 | Annual Report and Accounts 2024
The ESG strategy is reviewed by the ASML Board annually. During 2024, ASML’s key achievements have included:
•
integrating climate risk formally into the ERM and governance frameworks which included enhancements
to climate related stress and scenario testing,
•
implementing new investment guidelines to avoid investing in sectors that do not align with the ESG risk
appetites,
•
joining the Partnership for Carbon Accounting Financials and commencing
work to baseline ASML’s
insurance-associated emissions, and
•
e
nhancing ASML’s approach to managing ESG risks in the underwriting process.
At Apollo our people are at the heart of everything we do. We operate a zero-tolerance policy to bullying,
harassment, and discrimination. This includes protected characteristics under the Equality Act of 2010, as well as
neurodiversity, parental and caring responsibilities, socio-economic status, and working patterns.
ASML is dedicated to fostering a diverse, equitable, and inclusive workplace, with a focus on inclusive hiring
practices. We are proud sponsors and supporters of six Lloyd’s market inclusion networks. As such, we have
implemented several inclusion initiatives and have a comprehensive DEI strategy in place. Employees have access
to mental health and wellbeing resources through independent partners, as well as additional support through
private medical services.
ASML monitors gender and racial diversity metrics, employee satisfaction, and governance related metrics. This
information is used by the ASML Board to track progress against the ESG Strategy. Several DEI related metrics at
year-end 2024 are summarised below.
2024
2023
Total
number
Proportion of
total category
(all employees,
senior
managers,
board)
Total
number
Proportion of
total category
(all employees,
senior
managers,
board)
Employees that are women
109
39%
92
39%
Senior managers that are women
14
31%
10
28%
Board directors that are women
4
40%
3
27%
Employees that are from ethnic minorities
45
16%
33
14%
Senior managers that are from ethnic minorities
3
7%
1
3%
Board directors that are from ethnic minorities
2
20%
2
18%
Notes: At the end of 2024, ASML had 281 employees in total (2023: 234), of which 45 (2023: 36) were senior managers. There were 10 board
directors (2023: 11).
From an environmental perspective, Apollo Group
’s carbon footprint is monitored across different types of emissions
sources and we have separately aligned with greenhouse gas emissions (“GHG”) protocol scopes 1 and 2 and
several scope 3 categories (which cover purchased goods and services, fuel and energy-related activities, waste
generated in operations, employee commuting, and upstream leased assets). GHG emissions currently exclude
our scope 3 underwriting emissions as we look to develop an appropriate methodology. Our Scope 1 and 2 GHG
emissions are reported to UK Companies House under the Streamline Energy and Carbon Reporting framework.
Apollo Group scope 1, 2, and 3 GHG emissions for year-end 2024 are disaggregated by source below.
11 Apollo Syndicate 1971 | Annual Report and Accounts 2024
2024
2023
Emissions source
Kg CO
₂
Proportion of total
Kg CO
₂
Proportion of total
Scope 1
Heating
31,459
4.9%
30,834
5.5%
Personal mileage
4,116
0.6%
2,180
0.4%
35,575
5.5%
33,014
5.9%
Scope 2
Electricity
53,979
8.4%
60,143
10.7%
53,979
8.4%
60,143
10.7%
Scope 3
Business travel/commuting
496,712
76.9%
426,964
76.2%
Office materials/waste
40,364
6.3%
26,708
4.8%
Fuel-related activities
18,987
2.9%
13,591
2.4%
556,063
86.1%
467,263
83.4%
Total
100%
100%
Directors
The directors who held office at the date of signing this report are shown on page 2.
Annual general meeting
The directors do not propose to hold an Annual General Meeting for the syndicate. If any members’ agent or direct
corporate supporter of the syndicate wishes to meet with them the directors are happy to do so.
Disclosure of information to the auditor
Each person who is a director of the managing agent at the date of approving this report confirms that:
•
so far as the director is aware, there is no relevant audit information of which the syndicate's auditor is
unaware; and
•
each director has taken all the steps that they ought to have taken as a director in order to make themselves
aware of any relevant audit information and to establish that the syndicate's auditor is aware of that
information.
Auditor
Deloitte LLP has indicated its willingness to continue in office as the syndicate’s auditor.
The managing agent hereby
gives formal notification of a proposal to re-appoint Deloitte LLP as auditor of Syndicate 1971 for a further year.
Events after the balance sheet date
The ASML Board has considered events after the balance sheet date which, by their nature, are material to the
syndicate. The 2022 year of account profit balance will be distributed to members in 2025, no other items have been
identified for disclosure.
Future developments
Growth is expected to accelerate in 2025 with the syndicate deploying enhanced data driven pricing accuracy and
capability, resulting in forecast rate increases. The ibott segment’s unique client
-centric partnership approach sets
the basis for deep, lasting client relationships and high retention. Going forward, growth efforts will focus on
diversifying with additional large accounts and refining risk assessments within the existing client base. These
actions support the Syndicate´s competitive advantage as a market leader to satisfy its unique client base needs.
The plan will continue to be supported by a significant quota share outwards reinsurance programme for 2025. This
is provided by a panel of well rated reinsurers.
12 Apollo Syndicate 1971 | Annual Report and Accounts 2024
In addition to Apollo’s aligned support
to the syndicate, Apollo has also received positive support from a committed
base of capital providers. A strong, diversified and knowledgeable capital base gives significant competitive
advantage and maintaining this will remain a focus. I thank them for their support.
I would like to take this opportunity to thank our staff for their hard work and commitment to the business during the
last year.
Approved by the Board.
DCB Ibeson
Chief Executive Officer
5 March 2025
13 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Statement of managing agent’s responsibilities
The Managing Agent is responsible for preparing the syndicate 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 as at 31 December each year in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 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 notes to the syndicate annual accounts; and
•
prepare the syndicate annual accounts on the basis that the syndicate will continue to write future business
unless it is inappropriate to presume that the syndicate will do so.
The Managing Agent is responsible for the preparation and review of the iXBRL tagging that has been applied to
the Syndicate Accounts in accordance with the instructions issued by Lloyd’s, including designing, implementing,
and maintaining systems, processes and internal controls to result in tagging that is free from material non-
compliance with the instructions issued by Lloyd’s, whether due to fraud or error.
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.
Legislation in the UK governing the preparation and dissemination of annual accounts may differ from legislation in
other jurisdictions.
14 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Independent auditor’s report
to the members of Syndicate 1971
Report on the audit of the syndicate annual financial statements
Opinion
In our opinion the syndicate annual financial statements of Syndicate 1971
(the ‘syndicate’):
•
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 United Kingdom Generally Accepted Accounting
Practice, including Financial Reporting Standard 102 “The Financial Reporting Standard applicable in the
UK and Republic of Ireland”; and
•
have been prepared in accordance with the requirements of The Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 and section 1 and 5 of the Syndicate Accounts
Instructions Version 2.0. as modified by the Frequently Ask
ed Questions Version 1.1 issued by Lloyd’s
(the “Lloyd’s Syndicate Accounts Instructions”).
We have audited the syndicate annual financial statements which comprise:
•
the profit and loss account;
•
the statement of changes in members’ balances;
•
the balance sheet;
•
the statement of cash flows; and
•
the notes to the annual accounts 1 to 26.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom
Accounting Standards, including Financial Reporting Standard 102 “The Financial Reporting Standard applicable
in the UK and Republic of Ireland” (
United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)), 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 audit of
the syndicate annual financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical
Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the managing agent’s use of the going 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 or
conditions that, individually or collectively, may cast significant doubt on the syndicate’s ability to continue 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.
Other information
The other information comprises the information included in the Annual Report and Accounts (the “annual report”),
other than the syndicate annual financial statements and our auditor’s report thereon. The managing agent is
responsible for the other information contained within the annual report. Our opinion on the syndicate annual
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.
15 Apollo Syndicate 1971 | Annual Report and Accounts 2024
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
As explained more fully in the managing agent’s responsibilities statement, the managing agent is responsible 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
syndicate’s ability to continue in operation, disclosing, as applicable, matters related to the syndicate’s ability to
continue in operation and to use the going concern basis of accounting unless the managing agent intends to cease
the syndicate’s operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the syndicate annual financial statements
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 on
the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities
. This description forms part of our auditor’s report.
Extent to which the audit was considered capable of detecting irregularities, including
fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
We considered the nature of the syndicate and its control environment, and reviewed the syndicate’s documentation
of their policies and procedures relating to fraud and compliance with laws and regulations. We also enquired of
management 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 statements.
These included the Insurance Accounts
Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008 and the Lloyd’s Syndicate Accounting Byelaw (no. 8 of 2005), the Lloyd’s Syndicate
Accounts Instructions; and
•
do not have a direct effect on the financial statements but compliance with which may be fundamental to
the syndicate’s ability to operate or to avoid a material penalty. These included the requirements of
Solvency II.
We discussed among the audit engagement team including actuarial specialists and IT specialists regarding the
opportunities and incentives that may exist within the organisation for fraud and how and where fraud might occur
in the financial statements.
16 Apollo Syndicate 1971 | Annual Report and Accounts 2024
As a result of performing the above, we identified the greatest potential for fraud in the following areas, and our
procedures performed to address them are described below:
•
estimation of pipeline premiums requires significant management judgement and therefore is susceptible
to management bias through manipulation of core assumptions. In response, we performed a detailed risk
assessment, focusing on the youngest year of account and classes of business and placement types with
higher risk attributes. Our testing included comparing management’s estimated premium income to
supporting documentation on a sample basis and performing substantive analytical procedures using the
prior year audited figures, adjusted for known changes, as an expectation. We reviewed the progression
of actual premium signings for the 2024 and prior years of account by class of business, investigating any
classes where the conversion of estimated premium to actual signed premium was slower than expected,
to give further assurance over the accuracy of management’s premium estimation.
•
valuation of technical provisions, and specifically IBNR, 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 performed a detailed risk assessment and focused our work on
specific classes of business based on size and complexity. We involved our actuarial specialists to make
detailed assessments of the methodologies and assumptions used, as appropriate for the specific classes
of business chosen. 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
reviewing correspondence with Lloyd’s
Report on other legal and regulatory requirements
Opinions on other matters prescribed by The Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the
managing agent’s report
for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
•
the managing agent’s report
has been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the syndicate and its environment obtained in the course of the
audit, we have not identified any material misstatements in
the managing agent’s report.
17 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Matters on which we are required to report by exception
Under The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008 we are
required to report in respect of the following matters if, in our opinion:
•
the managing agent in respect of the syndicate has not kept adequate accounting records; or
•
the syndicate annual 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
This report is made solely to the syndicate’s members, as a body, in accordance with regulation 10 of The Insurance
Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008. Our audit work has been
undertaken so that we might state to
the syndicate’s members those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the syndicate’s members as a bod
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
Electronic Format Annual Syndicate Accounts filed with the Council of Lloyd’s and published on the Lloyd’s website.
This auditors’ report provi
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 managing agent and the Council of Lloyd’s on this.
Kirstie Hanley (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
5 March 2025
18 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Profit and loss account
For the year ended 31 December 2024
2024
2023
Technical account
–
general business
Note
$’000
$’000
Gross premiums written
5
Outwards reinsurance premiums
(227,174 )
(131,873 )
Premiums written, net of reinsurance
Change in the provision for unearned premiums:
Gross amount
18
(55,983 )
(36,608 )
Reinsurers’ share
18
Net change in provisions for unearned premiums
(10,535 )
(22,237 )
Earned premiums, net of reinsurance
Allocated investment return transferred from the non-
technical account
9
Claims paid
Gross amount
18
(91,765 )
(66,595 )
Reinsurers’ share
18
Net claims paid
(46,233 )
(29,883 )
Change in the provision for claims
Gross amount
18
(146,795 )
(121,788 )
Reinsurers’ share
18
Net change in provision for claims
(77,870 )
(76,488 )
Claims incurred, net of reinsurance
(124,103 )
(106,371 )
Net operating expenses
6
(25,324 )
(19,820 )
Balance on the technical account - general business
All operations relate to continuing activities.
The accompanying notes on pages 24 to 54 form an integral part of these annual accounts.
19 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Profit and loss account
For the year ended 31 December 2024
2024
2023
Non-technical account
Note
$’000
$’000
Balance on the technical account - general business
Investment income
9
Realised gains/(losses) on investments
9
(3 )
Unrealised (losses)/gains on investments
9
(1,858 )
Investment expenses and charges
9
(404 )
(1 )
Total Investment return
Allocated investment return transferred to the technical account - general
business
(12,828 )
(10,008 )
Gain on foreign exchange
Profit for the financial year
There were no amounts recognised in other comprehensive income in the current or preceding year other than
those included in the profit and loss account.
20 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Statement of changes in members’ balances
For the year ended 31 December 2024
2024
2023
$’000
$’000
Members’ balances brought forward at 1 January
Profit for the financial year
Payments of profit to members’ personal reserve funds
(13,857 )
(287 )
Members’ agents’ fees
(307 )
(218 )
Members’ balances carried forward at 31 December
Members participate on syndicates by reference to years of account and their ultimate result, assets and liabilities
are assessed with reference to policies incepting in that year of account in respect of their membership of a particular
year.
21 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Balance sheet
As at 31 December 2024
2024
2023
Assets
Note
$’000
$’000
Investments
Financial investments
4,11
Reinsurers’ share of technical provisions
Provision for unearned premiums
18
Claims outstanding
18
Debtors
Debtors arising out of direct insurance operations
12
Debtors arising out of reinsurance operations
13
Other debtors
14
Other assets
Cash and cash equivalents
22
Other - Overseas deposits
16
Prepayments and accrued income
Accrued interest and rent
Deferred acquisition costs
15
Other prepayments and accrued income
Total assets
22 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Balance sheet
As at 31 December 2024
2024
2023
Liabilities, capital and reserves
Note
$’000
$’000
Capital and reserves
Members’ balances
Total capital and reserves
Technical provisions
Provision for unearned premiums
18
Claims outstanding
18
Creditors
Creditors arising out of direct insurance operations
19
Creditors arising out of reinsurance operations
20
Other creditors including taxation and social security
21
Accruals and deferred income
Total liabilities
Total liabilities, capital and reserves
The syndicate annual accounts on pages 18 to 54 were approved by the Board of Apollo Syndicate Management
Limited and were signed on its behalf by:
TL McHarg
Chief Financial Officer
5 March 2025
23 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Statement of cash flows
For the year ended 31 December 2024
2024
2023
Note
$’000
$’000
Cash flows from operating activities
Profit for the financial year
Adjustments for:
Increase in gross technical provisions
Increase in reinsurers' share of technical provisions
(114,100 )
(59,881 )
Increase in debtors
(2,841 )
(71,466 )
Increase in creditors
Movement in other assets/liabilities
Investment return
(12,828 )
(10,008 )
Net cash flows from operating activities
Cash flows from investing activities
Purchase of equity and debt instruments
(409,582 )
(175,209 )
Sale of equity and debt instruments
Investment income received
Other
(404 )
(1 )
Net cash flows from investing activities
(186,556 )
(78,142 )
Cash flows from financing activities
Transfer to members in respect of underwriting participations
(13,857 )
(287 )
Other
(307 )
(218 )
Net cash flows from financing activities
(14,164 )
(505 )
Net increase/(decrease) in cash and cash equivalents
(3,947 )
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
22
24 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Notes to the annual accounts
1. Basis of preparation
Syndicate 1971 comprises a group of members of the Society of Lloyd
’
s that underwrites insurance business in the
London Market. The address of the s
yndicate’s
managing agent, Apollo Syndicate Management Limited, is One
Bishopsgate, London EC2N 3AQ.
The annual accounts have been prepared in accordance with T
he Insurance Accounts Directive (Lloyd’s Syndicate
and Aggregate Accounts) Regulations 2008 and applicable accounting standards in the United Kingdom and the
Republic of Ireland, including
Financial Reporting Standard 102 (“
FRS 102
”)
and 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 annual accounts have been prepared on the historical cost basis, except for financial assets which are
measured at fair value through profit or loss.
The annual accounts are presented in US Dollars, which is also the s
yndicate’s functional currency
.
All amounts have been rounded to the nearest thousand and are stated in US Dollars 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:
Reclassification changes
Certain financial statement line items have been reclassified whilst the underlying amounts remain unchanged. The
principal change is the reclassification of overseas deposits as movement in other assets/liabilities in cash flows
from operating activities, previously it formed part of cash flows from investing activities as a separate line item. No
comparative note is affected by the realigning with the current period presentation.
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. Realised and unrealised gains and
losses on investments have been disaggregated in the non-technical account of the profit and loss account.
Note presentation changes
There have been changes to the format, presentation and order of the notes. Additional granularity has been added
to several notes including the risk disclosures in note 4 and the technical provisions in note 18. The segmental
information in note 5 has been revised to reflect the Lloyd’s classes of business.
The reclassification, aggregation and note presentation changes have been applied retrospectively and had no
impact on previously reported profit, total comprehensive income, total assets, total liabilities, or total capital and
reserves.
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 2025 year of account has opened, and the directors have concluded that the syndicate has a
reasonable expectation that it will open a 2026 year of account. The syndicate has sufficient capital for each year
of account provided by the syndicate members as FAL. There is no intention to cease underwriting or cease the
operations of the syndicate.
Accordingly, the directors of the managing agent continue to adopt the going concern basis in preparing the annual
accounts.
25 Apollo Syndicate 1971 | Annual Report and Accounts 2024
2. Critical accounting judgements and key sources of estimation uncertainty
In preparing these annual accounts, the directors of the managing agent have made judgements, estimates and
assumptions that affect the application of the syndicate’s accounting policies and the reported amounts of assets,
liabilities, income and expenses. Several of the estimates are based on actuarial assumptions underpinned by
historical experience, market data, and other factors that are considered to be relevant.
Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to estimates are recognised in the period in which they are identified where the revision affects
only that period, and in future periods where the revision affects both current and future periods.
Critical judgements in applying the syndicate’s accounting policies
There are no critical judgements, apart from those involving estimations (which are dealt with separately below), in
the process of applying the syndicate’s accounting policies.
Key sources of estimation uncertainty
The key assumptions 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 relate principally to gross written premium and claims outstanding, in particular the provision for claims
that have been incurred at the reporting date but have not yet been reported and the accrual for pipeline premium
respectively.
Gross written premium
Gross written premium comprises contractual amounts, underwriter estimates at a policy level reflecting guidance
provided by clients and cover holders and actuarial pipeline premium estimates. These include amounts due to the
syndicate not yet received or notified at a portfolio level based on historical experience.
The gross written premium payable on a policy is often variable, dependent on the volume of trading undertaken by
the insured during a coverage period. Estimates of such additional premiums are included in premiums written but
may have to be adjusted if economic conditions or other underlying trading factors differ from those expected. Gross
premiums written are disclosed in note 5.
Claims outstanding
The measurement of the provision for claims outstanding and the related reinsurance recoveries requires
assumptions to be made about the future that have a significant effect on the amounts recognised in the annual
accounts.
The provision for claims outstanding comprises the estimated cost of settling all claims incurred but unpaid at the
balance sheet date and includes IBNR and a confidence margin. This is a complex area due to the subjectivity
inherent in estimating the impact of claims events that have occurred but for which the eventual outcome remains
uncertain. The estimate of IBNR is generally subject to a greater degree of uncertainty than that for reported claims.
The amount included in respect of IBNR is based on statistical techniques of estimation applied by the managing
agent’s in
-house actuaries. These techniques normally involve projecting based on past experience the
development of claims over time, as adjusted for expected inflation, to form a view of the likely ultimate claims to
be expected and, for more recent underwriting years, the use of industry benchmarks and initial expected loss ratios
from business plans. The syndicate writes classes of business for which there is limited prior experience and
considerable use is made of information obtained in the course of pricing individual risks accepted and experience
of analogous business. Account is taken of variations in business accepted and the underlying terms and conditions.
The provision for claims also includes amounts in respect of internal and external claims handling costs.
Accordingly, the most critical assumptions as regards to claims provisions are that the past is a reasonable indicator
of the likely level of claims development, that the notified claims estimates are reasonable and that the rating,
inflation and other models used for current business are based on fair reflections of the likely level of ultimate claims
to be incurred. The level of uncertainty with regard to the estimations within these provisions generally decreases
with the length of time elapsed since the underlying contracts were on risk.
26 Apollo Syndicate 1971 | Annual Report and Accounts 2024
2. Critical accounting judgements and key sources of estimation uncertainty (continued)
The reserve setting process is integrated into Apollo’s governance framework. The proposed best estimate reserves
are reviewed in detail by the Reserving Committee on a quarterly basis and specific management margin added to
increase the probability that the reserves are sufficient to meet liabilities so far as they can reasonably be foreseen.
These reserves, including margins, are then subject to further review by the Audit Committee on behalf of the Board.
The directors consider that the provisions for gross claims and related reinsurance recoveries are fairly stated on
the basis of the information currently available. The ultimate liability will vary as a result of subsequent information
and events, which may result in significant adjustments to the amounts provided. The estimate of the provision for
claims outstanding will develop over time and the estimated claims expense will continue to change until all the
claims are paid. The historical development of claims incurred estimates is set out in the loss development triangles
by year of account in note 17. The adjustment in the current year for the revision to the prior year estimate of the
provision for claims outstanding is disclosed in note 18.
3. Significant accounting policies
The following significant accounting policies have been applied consistently in accounting for items which are
considered material in relation to the syndicate’s annual accounts.
Gross premiums written
Gross premiums written comprise premiums on contracts of insurance incepted during the financial year as well as
adjustments made in the year to premiums on policies incepted in prior accounting periods. Additional or return
premiums are treated as a re-measurement of the initial premium. Estimates are made for pipeline premiums,
representing amounts due to the syndicate not yet received or notified.
Premiums are shown gross of brokerage payable and are exclusive of taxes and duties thereon.
Outwards reinsurance premiums
Written outwards reinsurance premiums comprise the estimated premiums payable for contracts entered into during
the period. Non-proportional reinsurance contracts are recognised on the date on which the policy incepts, and
proportional reinsurance is recognised when the underlying gross premium is written.
The reported outwards reinsurance premiums include adjustments for variations in cover relating to contracts
incepting in prior accounting periods.
Under some policies, reinsurance premiums payable are adjusted retrospectively in the light of claims experience.
Where written premiums are subject to an increase retrospectively, any potential increase is recognised as soon as
there is an obligation to the reinsurer.
Provisions for unearned premiums
Written premiums are recognised as earned over the life 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 earnings patterns reflecting the risk profile of the underlying policies or time apportionment as appropriate.
Outwards reinsurance premiums are earned in the same accounting period as the premiums for the related direct
or inwards business being reinsured.
Claims provisions and related reinsurance 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.
Incurred claims outstanding are reduced by anticipated salvage and other recoveries from third parties. The amount
of any salvage and subrogation recoveries is separately identified and, where material, reported as a receivable.
The provision for claims outstanding is assessed on an individual case by 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 IBNR claims as well as claims incurred but
not enough reported (“IBNER”) and a confidence margin above best estimate.
27 Apollo Syndicate 1971 | Annual Report and Accounts 2024
3. Significant accounting policies (continued)
The reinsurers’ share of provisions for claims is based on amounts of claims outstanding 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.
Where the security rating provides an indication that the recoverable amount may be impaired a proportion of the
balance will be provided for as a provision for bad debt by applying a percentage based on historical experience.
Adjustments to the amounts of claims provisions established in prior years are reflected in the annual accounts for
the period in which the adjustments are made. The provisions are not discounted for the investment earnings that
may be expected to arise in the future on the funds retained to meet the future liabilities. The methods used, and
the estimates made, are reviewed regularly.
Unexpired risks provision
A provision for unexpired risks is made where claims and related expenses likely to arise after the end of the financial
period in respect of contracts concluded before that date are expected, in the normal course of events, to exceed
the unearned premiums and premiums receivable under these contracts after the deduction of any acquisition costs
deferred.
A provision for unexpired risks is calculated separately by reference to classes of business which are regarded as
managed together after taking into account relevant investment return. All the classes of the syndicate are
considered to be managed together.
Financial assets and liabilities
The syndicate has chosen to apply the provisions of Section 11 (Basic Financial Instruments) and Section 12 (Other
Financial Instruments Issues) of FRS 102 for the treatment and disclosure of financial assets and liabilities.
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 takes 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 when there has been a modification of contractual terms that is relevant to an assessment of the
classification.
The syndicate’s investments comprise holdings of short
-dated government and corporate bonds, collective
investment schemes and cash and cash equivalents. The syndicate may hold derivative financial instruments for
risk management purposes in line with the investment strategy. Hedge accounting is not adopted.
The syndicate does not hold any non-derivative financial assets or financial liabilities for trading purposes. When
derivatives are determined to be liabilities, they are categorised as held for trading and reported within other
creditors in the balance sheet.
Deposits with credit institutions, debtors, and accrued interest are classified as loans and receivables.
Recognition
Financial assets and liabilities are recognised when the syndicate becomes a party to the contractual provisions of
the instrument. Financial liabilities and equity instruments are classified according to the substance of the
contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the
assets of the entity after deducting all of its liabilities. The syndicate does not hold any equity instruments.
28 Apollo Syndicate 1971 | Annual Report and Accounts 2024
3. Significant accounting policies (continued)
Measurements
All financial assets and liabilities are initially measured at transaction price (including transaction costs), except for
those financial assets classified as held at fair value through profit or loss and so initially measured at fair value
(which is normally the transaction price excluding transaction costs), unless the arrangement constitutes a financing
transaction.
Investments and derivative instruments are measured at fair value through the profit or loss. All other financial
assets and liabilities are held at cost. The syndicate does not hold any non-current debt instruments and does not
classify debt instruments as payable or receivable in more than one financial year.
Realised and unrealised gains and losses arising from changes in the fair value of investments are initially presented
in the non-technical profit and loss account in the period in which they arise. Interest income is recognised as it
accrues. Investment management and other related expenses are recognised when incurred. The overall
investment return is subsequently transferred to the technical account to reflect the investment return on funds
supporting the underwriting business.
Derecognition of financial assets and liabilities
Financial assets are derecognised when and only when:
•
the contractual rights to the cash flows from the financial asset expire or are settled;
•
the syndicate transfers to another party substantially all the risks and rewards of ownership of the financial
asset; or
•
the syndicate, despite having retained some significant risks and rewards of ownership, has transferred
control of the asset to another party and the other party has the practical ability to sell the asset in its entirety
to an unrelated third party and is able to exercise that ability unilaterally and without needing to impose
additional restrictions on the transfer.
Financial liabilities are derecognised only when the obligation specified in the contract is discharged, cancelled or
expires.
Fair value measurement
The best evidence of fair value is a quoted price for an identical asset in an active market. When quoted prices are
unavailable, the price of a recent transaction for an identical asset provides evidence of fair value as long as there
has not been a significant change in economic circumstances or a significant lapse of time since the transaction
took place. If the market is not active and recent transactions of an identical asset on their own are not a good
estimate of fair value, the company estimates the fair value by using a valuation technique.
Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market
participants use to make valuation decisions, including assumptions about risk. Inputs may include price information,
volatility statistics, yield curves, credit spreads, liquidity statistics and other factors.
The use of different valuation techniques could lead to different estimates of fair value. FRS 102 section 11.27
establishes a fair value hierarchy that prioritises the inputs to valuation techniques used to measure fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities
(Level 1) and the lowest priority to unobservable inputs (Level 3). More information on the hierarchy is included in
note 11.
Impairment of financial instruments measured at historic cost
For financial assets carried at historic cost, the amount of an impairment is the difference between the asset’s
carrying amount and the
present value of estimated future cash flows, discounted at the financial asset’s original
effective interest rate.
For financial assets carried at cost less impairment, the impairment loss is the difference between the asset’s
carrying amount and the best estimate of the amount that would be received for the asset if it were to be sold at
arm’s length on the reporting date.
29 Apollo Syndicate 1971 | Annual Report and Accounts 2024
3. Significant accounting policies (continued)
Where indicators exist for a reversal in impairment loss, and the reversal can be related objectively to an event
occurring after the impairment was recognised, the prior impairment loss is tested to determine reversal. An
impairment loss is reversed on an individual impaired financial asset to the extent that the revised recoverable value
does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised. The
amount of the reversal is recognised in profit and loss.
Off-setting
Financial assets and financial liabilities are off-set, and the net amount presented in the balance sheet when, and
only when, the syndicate 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.
Debtors and creditors
Debtors and creditors are recognised when due. These include amounts due to and from agents, brokers and
insurance contract holders which are classified as insurance debtors and creditors 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. Bad debts are provided for only where specific
information is available to suggest a debtor may be unable or unwilling to settle its debt to the syndicate. The
provision is calculated on a case-by-case basis. Insurance creditors are stated at amortised cost.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from
the acquisition date that are subject to an insignificant risk of changes in fair value and are used by the syndicate in
the management of its short-term commitments.
Cash and cash equivalents are carried at amortised cost in the statement of financial position.
Bank overdrafts that are repayable on demand and form an integral part of the syndicate’s cash management are
included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
Investment return
Investment return comprises investment income, realised investment gains and losses, movements in unrealised
gains and losses, investment expenses and charges, interest payable and amounts attributable to the funds
withheld from the SPA syndicate.
Realised gains and losses represent the difference between the net proceeds on disposal and the purchase price
(net of transaction costs).
Unrealised gains and losses on investments represent the difference between the fair value at the balance sheet
date and their net purchase price. Movements in unrealised investment gains and losses comprise the
increase/decrease in the reporting period in the value of the investments held at the reporting date and the reversal
of unrealised investment gains and losses recognised in earlier reporting periods in respect of investment disposals
of the current period.
Investment return is initially recorded in the non-technical account and subsequently transferred to the technical
account to reflect the investment return on funds supporting the underwriting business.
Net operating expenses
Net operating expenses include acquisition costs, administrative expenses and members’ standard personal
expenses. Reinsurers’ commissions and profit
participations, consortia income and expenses attributable to the
SPA syndicates represent contributions towards operating expenses and are reported accordingly, in effect
reducing the net operating expense.
Costs incurred by the managing agent on behalf of the syndicate are recognised on an accruals basis. No mark-up
is applied.
30 Apollo Syndicate 1971 | Annual Report and Accounts 2024
3. Significant accounting policies (continued)
Acquisition costs
Acquisition costs represent costs arising from the conclusion of insurance contracts. They include both direct costs
such as brokerage and commission, and indirect costs such as administrative expenses connected with the
processing of proposals and the issuing of policies.
Acquisition costs are earned in line with the earning of the gross premiums to which they relate. The deferred
acquisition cost asset represents the proportion of acquisition costs which corresponds to the proportion of gross
premiums written that is unearned at the balance sheet date.
Reinsurers’ commissions and profit
participations
Under certain outwards reinsurance contracts the syndicate receives a contribution towards the expenses incurred.
The outwards reinsurance contracts may allow the ceding of acquisition costs and in certain instances an allocation
of administrative expenses. Reinsurance arrangements can also pay an overriding or profit commission.
The reinsurers’ share of expenses is included with
in operating expenses and earned in line with the related expense.
The reinsurers’ share of deferred acquisition cost liability corresponds to the gross deferred acquisition costs
at the
balance sheet date.
Managing agent’s fees
and profit commission
The managing agent charges a management fee of 0.9% of syndicate capacity. This expense is recognised over
the 12 months following commencement of the underwriting year to which it relates.
The managing agent has agreed contractual terms with the capital providers to the syndicate for the payment of
profit commission based on the performance of the individual years of account of the syndicate. Profit commission
is accrued in line with the contractual terms and the development of the result of the underlying years of account
which is reassessed regularly.
Profit commission is charged by the managing agent at a rate of 20% of the profit on a year of account basis subject
to the operation of a 2-year deficit clause. This is charged to the syndicate as incurred but does 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 commission if interim profits are released to members.
Foreign currencies
Transactions in foreign currencies are translated into US Dollars which is the functional and presentational currency
of the syndicate. Transactions in foreign currencies are translated using the exchange rates at the date of the
transaction. The syndicate
’s monetary assets and liabilities denominated in foreign currencies are translated into
the functional currency at the rates of exchange at the balance sheet date. Non-monetary assets and liabilities
denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the
exchange rate at the date that the fair value was determined. Non-monetary items denominated in foreign currencies
that are measured at historic cost are translated to the functional currency using the exchange rate at the date of
the transaction. For the purposes of foreign currency translation, unearned premiums and deferred acquisition costs
are treated as monetary items.
Foreign exchange differences arising on translation of foreign currency amounts are included in the non-technical
account.
Pension costs
Apollo operates a defined contribution pension scheme. Pension contributions relating to managing agency staff
working on behalf of the syndicate are charged to the syndicate and included within net operating expenses.
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 conseq
uently the distribution made to members or their members’ agents is gross of tax.
Capital appreciation falls within trading income and is also distributed gross of tax.
31 Apollo Syndicate 1971 | Annual Report and Accounts 2024
3. Significant accounting policies (continued)
No provision has been made for any United States Federal Income Tax payable on underwriting results or
investment earnings. Any payments on account made by the syndicate during the year on behalf of members have
been included in the balance sheet under the heading ‘other debtors’.
No provision has been made for any other overseas tax payable by members on underwriting results.
Consortia share of expenses
Under the terms of an underwriting consortia contract participants are required to pay fees to the syndicate, as
leader, in return for the business written on their behalf. These fees represent a contribution towards the expenses
incurred by the syndicate underwriting for the consortia. The syndicate accrues the consortium fee income in line
with the writing of the business for each consortium, calculated in accordance with the individual contractual
arrangements.
In addition the consortium arrangements include an entitlement to profit commission based on the performance of
the business written by the consortium leader. The syndicate accrues profit commission in accordance with the
contractual terms based on the forecast performance of each consortium. Both the accrued consortium fees and
accrued profit commission are included as a credit to administrative expenses.
Other prepayment and accrued income
Other prepayments are recognised as assets when the payment is made and the syndicate expects to receive the
economic benefit from the prepayment in future periods. They are initially recognised at cost and are amortised
over the period in which the economic benefit is consumed.
Accrued income are recognised as assets for services received whether or not billed to the syndicate. They are
initially recognised at fair value and subsequently measured at amortised cost.
Funds withheld
The underlying premiums and claims for the SPA Syndicate 1925 are settled by Syndicate 1971 with policy holders
as they fall due. Within the syndicate these are accounted for as a debtor or creditor with the SPA syndicate.
On the 2021 and prior years of account, the underlying premiums and claims are settled by Syndicate 1969 with
policy holders as they fall due. Within the syndicate these are accounted for on a funds withheld basis.
Reinsurance debtors and creditors arising between the syndicate and the SPA are not settled in full until the year
of account has closed. Claims outstanding together with other non-technical transactions are settled when the year
of account closes, including the apportioned investment return.
Cash calls made during the period are received by the syndicate and credited to the funds withheld balance. These
will reduce the amount due for payment to or from the SPA syndicate on closure of a loss making year.
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 classified as insurance contracts.
4. Risk and capital management
Introduction and overview
This note presents information about the nature and extent of insurance and financial risks to which the syndicate
is
exposed, the managing agent’s objectives, policies and processes for measuring and managing insurance and
financial risks, and for managing the syndicate’s
solvency capital.
The nature of the syndicate’s exposures to risk and its objectives and policies for managing risk have not changed
significantly from the prior year.
32 Apollo Syndicate 1971 | Annual Report and Accounts 2024
4. Risk and capital management (continued)
Enterprise Risk Management framework
The ASML ERM framework has been adopted and embedded by the syndicate. The primary objective of the ERM
framework is to protect the syndicate’s members from events that could impede sustainable growth and
achievement of consistent financial performance, including failing to maximise opportunities through informed and
appropriate risk taking. All staff providing services to the syndicate are trained to recognise the critical importance
of having efficient and effective ERM systems in place.
The ASML Board has overall responsibility for the establishment and oversight of the ERM framework. The ASML
Board has established an Audit Committee and a Board Risk Committee which oversee the operation of the
syndicate’s ERM framework and review and monitor the management of the risks to which the syndicate is exposed.
ASML has established an ERM function, together with terms of reference for the ASML Board, its committees and
the associated Executive Management Committees which identify the risk management obligations of each. The
function is supported by a clear organisational structure with documented authorities and responsibilities from the
Board t
o Executive Management Committees and senior managers using a ‘three lines of defence’ model. The
framework sets out the risk appetites for the syndicate and includes controls and business conduct standards.
Under the ERM framework, ASML’s
Board Risk Committee oversees the first line ownership of risk at an executive
level. The management of specific risk grouping is delegated to several executive committees: the Underwriting
Committee and the Reserving Committee are responsible for developing and monitoring insurance risk
management policies; the management of financial risks is the responsibility of the Finance Committee and the
Investment and Treasury Oversight Group. In addition, the syndicate is exposed to consumer and operational risks
and the management of these risks is the responsibility of the Underwriting Committee and the Operations
Committee respectively. Accordingly, the executive members responsible for these risks provide the Board Risk
Committee with a first line view of the risk, and the ERM function provides a second line challenge and oversight.
ASML’s
Internal Audit function provides assurance through their role as the third line of defence.
The ERM function reports quarterly to the ASML Board and Board Risk Committee on its activities and provides a
forward-looking view of the upcoming assurance activities. The Reserving Committee, Underwriting Committee,
Finance Committee, Investment and Treasury Oversight Group, Operations Committee and Change Committee
report regularly to the Executive Committee and work closely with the ERM function on their activities as well as
reporting to the Board and the relevant Board committees.
Climate risk relates to the range of complex physical, transition and liability risks arising from climate change. This
includes the risk of higher claims due to more frequent and more intense natural catastrophes; the financial risks
which could arise from the transition to a lower-carbon economy; and the risk that those who have suffered loss
from climate change might then seek to recover those losses from others who they believe may have been
responsible. Climate change-related risk is not considered a standalone risk, but a cross-cutting risk with potential
to amplify each existing risk type. Specific climate sub-risks are incorporated into the quarterly ERM processes to
ensure they receive appropriate attention.
Insurance risk
Insurance risk refers to fluctuations in the timing, frequency and severity of insured events, relative to expectations
at the time of underwriting. It is comprised of premium risk and reserving risk and is the principal risk the syndicate
faces in the writing of insurance contracts.
Underwriting risk
Underwriting risk is the risk that the insurance premium will not be sufficient to cover future insurance losses and
associated expenses. This includes the risks that the premium is set too low, the contract provides inappropriate
levels of cover, or that the actual frequency or severity of claims events will be significantly higher than was expected
during the underwriting process.
33 Apollo Syndicate 1971 | Annual Report and Accounts 2024
4. Risk and capital management (continued)
Reserve risk
Reserve risk is the risk that the reserves established in respect of insurance claims incurred are insufficient to settle
the claims and associated expenses in full.
Management of insurance risk
A key component of the management of insurance risk for the syndicate is a disciplined underwriting strategy that
is focused on writing quality business and not writing for premium volume. Product pricing is designed to incorporate
appropriate premiums for each type of assumed risk. The underwriting strategy includes underwriting limits on the
syndicate’s total exposure to specific risks together with limits on geographical and industry exposures to ensure
that a well-diversified book is maintained.
Contracts can contain a number of features which help to manage the insurance risk such as the use of deductibles,
or capping the maximum permitted loss, or number of claims (subject to local regulatory and legislative
requirements).
The syndicate has very low exposure to natural catastrophe events.
The syndicate limits its exposure to large individual losses based on the syndicate’s risk appetite, principally through
the use of reinsurance with a panel of well-rated counterparties.
The Reserving Committee oversees the management of reserving risk. The use of proprietary and standardised
modelling techniques, internal and external benchmarking and the review of claims development are all instrumental
in mitigating reserving risk.
ASML actuaries perform a reserving analysis on a quarterly basis, liaising closely with underwriters, claims and
reinsurance personnel. The aim of this exercise is to produce a probability-weighted average of the expected future
cash outflows arising from the settlement of incurred claims and claims on unearned premium. These projections
include an analysis of claims development compared to the previous ‘best estimate’ projections.
The Reserving Committee performs a comprehensive review of the projections, both gross and net of reinsurance.
Following this review, the Reserving Committee makes recommendations to the Audit Committee and Board as to
the claims provisions to be established.
In arriving at the level of claims provisions a margin is applied over and above the actuarial best estimate to increase
the probability that the reserves are sufficient to meet liabilities.
The level of year end reserves is validated by external consulting actuaries through their report to management and
their provision of a Statement of Actuarial Opinion to ASML and Lloyd’s on gross and net reserves by year of account
as at 31 December 2024.
The claims development table in note 17 shows the actual claims incurred to previous estimates for the last six
years.
Sensitivity to insurance risk
The liabilities established could be significantly lower or higher than the ultimate cost of settling the claims arising.
This level of uncertainty varies between the classes of business and the nature of the risk being underwritten and
can arise from developments in case reserving for attritional losses, large losses, or from changes in estimates of
IBNR claims.
The syndicate manages risk exposures within defined industry segments. The largest segments by premium volume
are the Delivery and Rideshare accounts. These include both primary and excess business that has limited claims
volumes. As such prudent assumptions have been made to account for the potential volatility in these accounts.
The following table presents the sensitivity of the value of insurance liabilities disclosed in the accounts to potential
movements in the assumptions applied within the technical provisions. A five percent increase or decrease in the
ultimate cost of settling claims arising from a change in actuarial assumptions is considered reasonably possible at
the reporting date. A five percent increase or decrease in total earned claims liabilities due to a change in
assumptions would have the following effect on pro
fit or loss and members’ balances.
34 Apollo Syndicate 1971 | Annual Report and Accounts 2024
4. Risk and capital management (continued)
Sensitivity
General insurance business sensitivities
+ 5.0%
- 5.0%
2024
$’000
$’000
Claims outstanding
–
gross of reinsurance
28,269
(28,269)
Claims outstanding
–
net of reinsurance
15,360
(15,360)
Sensitivity
General insurance business sensitivities
+ 5.0%
- 5.0%
2023
$’000
$’000
Claims outstanding
–
gross of reinsurance
20,956
(20,956)
Claims outstanding
–
net of reinsurance
11,488
(11,488)
On a net of reinsurance basis, the effects are more complex depending on the nature of the loss and its interaction
with other losses already incurred. The incidence of profit commission payable to intermediaries may also affect the
gross and net impact on results and members’ balances
.
Financial risk
The financial risk faced by the syndicate is managed by ensuring that its financial assets are sufficient to fund the
obligations arising from its insurance contracts as they fall due. The primary objective of the investment
management process is to maintain capital value, which is of particular importance in volatile financial market
conditions. A secondary objective is to optimise the risk-adjusted total return whilst being constrained by capital
preservation and liquidity requirements. ASML currently implements a relatively low-risk investment policy and the
syndicate assets have been invested in short dated fixed income government and corporate bonds and money
market funds.
The investment management of the short dated fixed income bond portfolio is outsourced to a third party. An
investment mandate reflecting ASML’s risk appetite is in place and has been approved by the Board. Compliance
with this is controlled through the in
vestment manager’s systems and monitored through the monthly and quarterly
reporting process.
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:
•
holdings in collective investment schemes;
•
short dated fixed income government and corporate bonds;
•
reinsurers’ share of insurance liabilities;
•
amounts due from intermediaries;
•
amounts due from reinsurers in respect of settled claims;
•
cash and cash equivalents; and
•
other debtors and accrued interest.
35 Apollo Syndicate 1971 | Annual Report and Accounts 2024
4. Risk and capital management (continued)
Management of credit risk
The investment portfolio is invested in securities which are rated BBB or above. The bond portfolio is managed to
single issuer limits set by credit rating and there is a limit to the overall exposure to BBB rated securities. The
syndicate limits the amount of cash and cash equivalents that can be deposited with a single counterparty and
maintains an authorised list of counterparties.
ASML manages reinsurer credit risk through outwards reinsurance purchase guidelines. The guidelines place limits
on exposure to a single counterparty based on the credit rating of the counterparty and the counterparty’s market
reputation and recent perform
ance. The syndicate’s exposure to reinsurance counterparties is monitored by the
reinsurance team as part of their credit control processes. On a quarterly basis the Finance Committee reviews the
credit exposures to reinsurance counterparties.
ASML 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. Where reinsurance
is transacted with unrated reinsurers, the reinsurer is required to fully collateralise its exposure through depositing
funds in trust for the syndicate.
ASML reviews intermediary performance against the terms of business agreements by the compliance function.
The status of intermediary debt collection is reported to the Finance Committee.
Exposure to credit risk
The carrying amount of financial and reinsurance assets represents the maximum credit risk exposure.
The following table analyses the credit rating by investment grade of financial investments, reinsurers’ share of
claims outstanding, debtors arising out of direct insurance and reinsurance operations, cash and cash equivalents
and other debtors and accrued interest.
Debtors arising out of direct and reinsurance operations are comprised of pipeline premiums and balances relating
to outstanding receipts from Lloyd’s Central Accounting. By their nature, it is not possible to classify these balances
by credit rating and therefore they are included as not rated in the following tables.
AAA
AA
A
BBB
Other
Not
rated
Total
2024
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Shares and other variable yield
securities and unit trusts
125,327
-
2,794
-
-
-
128,121
Debt securities and other fixed
income securities
74,788
1,498
43,782
53,239
297
-
173,604
Reinsurers’ share of claims
outstanding
89
194,766
63,327
-
-
-
258,182
Debtors arising out of direct
insurance operations
-
-
-
-
-
311,300
311,300
Debtors arising out of reinsurance
operations
-
7,840
174
-
-
44
8,058
Cash at bank and in hand
-
-
15,421
-
-
-
15,421
Other debtors and accrued interest
1,502
48
228
156
-
78,761
80,695
Total
201,706
204,152
125,726
53,395
297
390,105
975,381
36 Apollo Syndicate 1971 | Annual Report and Accounts 2024
4. Risk and capital management (continued)
AAA
AA
A
BBB
Other
Not
rated
Total
2023
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Shares and other variable yield
securities and unit trusts
7,024
49,318
1,101
-
-
-
57,443
Debt securities and other fixed
income securities
31,366
912
10,522
2,098
-
-
44,898
Reinsurers’ share of claims
outstanding
59
176,678
12,630
-
-
-
189,367
Debtors arising out of direct
insurance operations
-
-
-
-
-
280,131
280,131
Debtors arising out of reinsurance
operations
-
-
-
-
-
216
216
Cash at bank and in hand
-
-
6,472
-
-
-
6,472
Other debtors and accrued interest
221
4
35
25
-
113,516
113,801
Total
38,670
226,912
30,760
2,123
-
393,863
692,328
Financial assets that are past due or impaired
The syndicate has debtors arising from direct insurance and reinsurance operations that are past due but not
impaired at the reporting date. These debtors have been individually assessed for impairment by considering
information such as the occurrence of s
ignificant changes in the counterparty’s financial position, patterns of
historical payment information, disputes and compliance with ASML terms and conditions.
An analysis of the carrying amounts of past due or impaired debtors is presented in the table below. There are no
other financial assets that are considered past due or impaired.
Neither
past due
nor
impaired
assets
Past due
but not
impaired
assets
Gross
value of
impaired
assets
Impairment
allowance
Total
2024
$’000
$’000
$’000
$’000
$’000
Shares and other variable yield securities
and unit trusts
128,121
-
-
-
128,121
Debt securities and other fixed income
securities
173,604
-
-
-
173,604
Reinsurers' share of claims outstanding
258,182
-
4,422
(4,422)
258,182
Debtors arising out of direct insurance
operations
285,898
25,402
-
-
311,300
Debtors arising out of reinsurance
operations
5,429
2,629
55
(55)
8,058
Cash at bank and in hand
15,421
-
-
-
15,421
Other debtors and accrued interest
235,534
-
-
-
235,534
Total
1,102,189
28,031
4,477
(4,477)
1,130,220
37 Apollo Syndicate 1971 | Annual Report and Accounts 2024
4. Risk and capital management (continued)
Neither past
due nor
impaired
assets
Past due
but not
impaired
assets
Gross
value of
impaired
assets
Impairment
allowance
Total
2023
$’000
$’000
$’000
$’000
$’000
Shares and other variable yield securities
and unit trusts
57,443
-
-
-
57,443
Debt securities and other fixed income
securities
44,898
-
-
-
44,898
Reinsurers' share of claims outstanding
189,367
-
3,546
(3,546)
189,367
Debtors arising out of direct insurance
operations
210,994
69,137
-
-
280,131
Debtors arising out of reinsurance
operations
216
-
-
-
216
Cash at bank and in hand
6,472
-
-
-
6,472
Other debtors and accrued interest
213,649
-
-
-
213,649
Total
723,039
69,137
3,546
(3,546)
792,176
The table below sets out the age analysis of financial assets that are past due but not impaired at the balance sheet
date:
Past due but not impaired assets
0-3
months
3-6
months
6-12
months
Total
2024
$’000
$’000
$’000
$’000
Debtors arising out of direct insurance operations
5,062
6,544
13,796
25,402
Debtors arising out of reinsurance operations
1,007
1,617
5
2,629
Total
6,069
8,161
13,801
28,031
Past due but not impaired assets
0-3
months
3-6
months
6-12
months
Total
2023
$’000
$’000
$’000
$’000
Debtors arising out of direct insurance operations
50,809
10,800
7,528
69,137
Total
50,809
10,800
7,528
69,137
38 Apollo Syndicate 1971 | Annual Report and Accounts 2024
4. Risk and capital management (continued)
Impairment analysis
The table below sets out a reconciliation of changes in impairment allowance during the period for each class of
financial asset at the balance sheet date:
1 Jan
New
Impairment
charges
added in
year
Changes in
impairment
charges
Release to
profit and
loss
account
Foreign
Exchange
31 Dec
2024
$’000
$’000
$’000
$’000
$’000
$’000
Reinsurers' share of claims
outstanding
3,546
15
863
-
(2)
4,422
Debtors arising out of
reinsurance operations
-
54
-
-
1
55
Total
3,546
69
863
-
(1)
4,477
1 Jan
New
Impairment
charges
added in
year
Changes in
impairment
charges
Release to
profit and
loss
account
Foreign
Exchange
31 Dec
2023
$’000
$’000
$’000
$’000
$’000
$’000
Reinsurers' share of claims
outstanding
2,560
729
256
-
1
3,546
Total
2,560
729
256
-
1
3,546
Liquidity risk
Liquidity risk is the risk that the syndicate’s assets are insufficient to fund the obligations arising from its insurance
contracts and financial liabilities as they fall due or can only be met by incurring additional costs. The syndicate is
exposed to daily calls on its available cash resources mainly from claims arising from insurance contracts and its
ongoing expenses.
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.
Management of liquidity risk
The syndicate’s approach to managing liquidity risk is to ensure, as far as is reasonable, that it will have sufficient
liquidity to meet its liabilities when they fall due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the syndicate’s reputation.
ASML’s approach to managing liquidity risk is as follows:
•
forecasts are prepared and revised on a regular basis to predict cash outflows from insurance contracts
and overheads over the short, medium and long term;
•
the syndicate purchases assets with durations not greater than its estimated insurance contract liabilities
and expense outflows;
•
assets purchased by the syndicate are required to satisfy specified marketability requirements;
•
the syndicate maintains cash and liquid assets to meet daily outgoing payments;
•
the syndicate regularly updates its contingency funding plans to ensure that adequate liquid financial
resources are in place to meet obligations as they fall due in the event of reasonably foreseeable abnormal
circumstances; and
•
liquidity stress testing is performed for the syndicate, looking both at cash flow liquidity and shock loss
scenarios.
39 Apollo Syndicate 1971 | Annual Report and Accounts 2024
4. Risk and capital management (continued)
The syndicate holds sufficient premium trust funds in money market funds to meet daily liquidity. Holdings in money
market funds are well diversified, very liquid and generally low risk. There is, however, a risk that the fund does not
have sufficient liquidity to meet all redemptions in extreme conditions. The fixed income short-dated government
and corporate bond portfolio is relatively liquid and can be realised within a matter of days under normal market
conditions.
The syndicate is able to make cash calls from the members to fund losses in the event that funds are needed ahead
of closing the year of account. In extreme circumstances, ASML syndicates could also apply to utilise the Lloyd’s
central fund as a last resort to pay liabilities.
Maturity analysis of syndicate liabilities
The maturity analysis presented in the table below shows the remaining contractual maturities for the syndicate’s
insurance contracts and financial instruments. For insurance and reinsurance contracts, the contractual maturity is
the estimated date when the gross undiscounted contractually required cash flows will occur. For financial liabilities
it is the earliest date on which the gross undiscounted cash flows (including contractual interest payments) could
be paid assuming conditions are consistent with those at the reporting date.
Carrying
amount
Less than
1 year
1-3
years
3-5
years
More than
5 years
2024
$’000
$’000
$’000
$’000
$’000
Claims outstanding
565,378
110,896
281,138
124,304
49,040
Creditors
204,383
157,704
46,679
-
-
Other credit balances
24,334
10,800
13,534
-
-
Total liabilities
794,095
279,400
341,351
124,304
49,040
Carrying
amount
Less than
1 year
1-3
years
3-5
years
More than
5 years
2023
$’000
$’000
$’000
$’000
$’000
Claims outstanding
419,120
117,972
208,194
81,691
11,263
Creditors
116,149
97,331
18,818
-
-
Other credit balances
13,325
3,812
9,513
-
-
Total liabilities
548,594
219,115
236,525
81,691
11,263
40 Apollo Syndicate 1971 | Annual Report and Accounts 2024
4. Risk and capital management (continued)
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market prices, excluding those that are caused by credit downgrades which are included under credit
risk. 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 within the framework set by ASML’s investment policy.
Management of market risk
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 market
risk and the exposure of the syndicate at the reporting date to each major component are addressed below.
Interest rate risk
Interest rate risk arises primarily from the syndicate’s exposure to financial investments and overseas deposits.
Exposure to significant fluctuations in market value due to changes in bond yields is managed through investment
in short duration securities. Investment types include short dated fixed income bonds and money market funds.
2024
2023
Impact on
profit for the
financial year
Impact on
members'
balances
Impact on
profit for the
financial year
Impact on
members'
balances
$’000
$’000
$’000
$’000
Impact of a 50 basis point increase
(2,813)
(2,813)
(404)
(404)
Impact of a 50 basis point decrease
2,813
2,813
404
404
Currency risk
Currency risk is the risk that the fair value or future cash flows of the syndicate’s
assets and liabilities will fluctuate
because of changes in foreign exchange rates.
The syndicate writes business primarily in Sterling, Euros, US Dollars and Canadian Dollars and is therefore
exposed to currency risk arising from fluctuations in the exchange rates of its functional currency (US Dollars)
against these currencies.
The foreign exchange policy is to maintain assets in the currency in which the cash flows from liabilities are to be
settled in order to hedge the currency risk inherent in these contracts so far as is allowed by regulatory requirements
and for any profit or loss to be reflected in the net assets of the functional currency. Occasionally, the syndicate may
make limited use of foreign exchange derivative instruments to manage future currency cash flow requirements.
Regulatory capital requirements and liquidity impact the ability to match in currency. Regulatory funding
requirements are calculated on the basis of gross data and as a result a net currency asset can arise. Net assets
in currency are not a direct indication of the liquidity in a currency. The syndicate can undertake currency trades
either to help match in currency or meet liquidity needs.
41 Apollo Syndicate 1971 | Annual Report and Accounts 2024
4. Risk and capital management (continued)
The table below summarises the carrying value of the syndicate’s assets and liabilities, at the reporting date:
Sterling
US Dollar
Euro
Canadian
Dollar
Total
2024
$
’
000s
$
’
000s
$
’
000s
$
’
000s
$
’
000s
Investments
-
301,215
-
510
301,725
Reinsurers' share of technical provisions
8,839
374,284
4,627
276
388,026
Debtors
12,469
378,811
4,741
258
396,279
Other assets
5,759
9,149
2,164
309
17,381
Prepayments and accrued income
4,268
20,888
1,643
10
26,809
Total assets
31,335
1,084,347
13,175
1,363
1,130,220
Technical provisions
(26,192)
(765,658)
(6,276)
(353)
(798,479)
Creditors
(1,062)
(198,998)
(3,995)
(328)
(204,383)
Accruals and deferred income
(1,648)
(50,006)
(1,985)
(41)
(53,680)
Total liabilities
(28,902)
(1,014,662)
(12,256)
(722)
(1,056,542)
Total capital and reserves
2,433
69,685
919
641
73,678
Sterling
US Dollar
Euro
Canadian
Dollar
Total
2023
$
’
000s
$
’
000s
$
’
000s
$
’
000s
$
’
000s
Investments
-
102,264
-
77
102,341
Reinsurers' share of technical provisions
3,752
269,794
297
83
273,926
Debtors
12,752
379,680
786
220
393,438
Other assets
3,549
2,790
292
155
6,786
Prepayments and accrued income
4,855
10,767
62
1
15,685
Total assets
24,908
765,295
1,437
536
792,176
Technical provisions
(16,671)
(578,993)
(810)
(125)
(596,599)
Creditors
(156)
(115,974)
-
(19)
(116,149)
Accruals and deferred income
(10)
(28,670)
-
(3)
(28,683)
Total liabilities
(16,837)
(723,637)
(810)
(147)
(741,431)
Total capital and reserves
8,071
41,658
627
389
50,745
Sensitivity analysis to market risks
An analysis of the syndicate’s sensitivity to currency risk is presented in the table below. The table shows the effect
on profit or loss of reasonably possible changes in the relevant risk variable. The sensitivity analysis assumes that
all other variables remain constant and that the exchange rate movement occurs at the end of the reporting period.
The impact of exchange rate fluctuations could differ significantly over a longer period. The occurrence of a change
in foreign exchange rates may lead to changes in other market factors as a result of correlations.
42 Apollo Syndicate 1971 | Annual Report and Accounts 2024
4. Risk and capital management (continued)
2024
2023
Impact on
profit for the
financial year
Impact on
members'
balances
Impact on
profit for the
financial year
Impact on
members'
balances
Currency risk
$’000
$’000
$’000
$’000
10 percent strengthening of GBP against USD
270
270
897
897
10 percent weakening of GBP against USD
(221)
(221)
(734)
(734)
10 percent strengthening of Euro against USD
102
102
70
70
10 percent weakening of Euro against USD
(83)
(83)
(57)
(57)
Other price risk
The syndicate investments comprise holdings in short dated fixed income government and corporate bonds, and
money market funds. The bond portfolio is relatively low risk being both short dated and investment grade securities
and therefore it has limited sensitivity to market movements.
The money market funds are near cash and therefore have minimal exposure to market movements.
A fair value hierarchy is provided in note 11 which categorises the syndicate according to the level of judgement
exercised in valuation.
Capital management
Capital framework at Lloyd’s
Lloyd’s is a regulated undertaking and subject to supervision by the PRA under the Financial Services and
Markets
Act 2000, and in accordance with the Solvency II Framework.
Within this supervisory framework, Lloyd’s applies capital requirements at member level and centrally to ensure that
Lloyd’s complies with the Solvency II requirements, 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 respectively at overall
and member level only,
not at syndicate level. Accordingly, the capital requirement in respect of the syndicate’s
members is not disclosed in these annual accounts.
Lloyd’s capital setting process
In order to meet Lloyd’s requirements, each syndicate is required to calculate its 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 liabi
lities (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 and approval by Lloyd’s.
ASML uses an internal model developed in house to calculate the SCR for the syndicate as opposed to adopting a
standard formula. The SCR is reviewed and approved by the Board through the ORSA process and an independent
annual internal model validation process.
A syndicate may be comprised of one or more underwriting members of Lloyd’s. Each member is liable for their
own share of underwriting liabilities on the syndicates on which they participate but not for other members’ shares.
Accordingly, the capital requi
rements that Lloyd’s sets for each member; operate on a similar basis. Each member’s
SCR is based on the member’s share of the syndicate’s SCR ‘to ultimate’.
43 Apollo Syndicate 1971 | Annual Report and Accounts 2024
4. Risk and capital management (continued)
Where a member participates on more than one syndicate, Lloyd’s sums together each syndicate’s SCR but a credit
for diversification is allowed to reflect the spread of risk 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 ECA. The purpose of this uplift, which is a Lloyd’s rather
than a Solvency II requirement, is to sup
port Lloyd’s financial strength, licence and ratings objectives.
Provision of capital by members
Each member may provide capital to meet their ECA by assets held in trust by Lloyd’s specifically for that member’s
FAL, or as the member’s share of the members’ balances on each syndicate on which they participate.
Accordingly, all of the assets less liabilities of the syndicate, as represented in the members’ balances reported on
the balance sheet, represent resources available to meet members’ and Lloyd’s capital requirements.
5. Analysis of underwriting result
An analysis of the underwriting result before investment return is set out in the table below:
No Fire and damage to property that is Specialty or Third-party liability Energy business is written by the syndicate.
Gross
premiums
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underw
riting
result
2024
$’000
$’000
$’000
$’000
$’000
$’000
Direct insurance:
Accident and health
-
-
(2)
-
(8)
(10)
Motor (third party liability)
186,413
168,434
(110,890)
(30,163)
(15,823)
11,558
Motor (other classes)
4,743
4,653
(96)
(1,082)
(318)
3,157
Marine, aviation and transport
(479)
(58)
380
3
(6)
319
Third-party liability
136,013
124,151
(89,619)
(20,765)
(5,088)
8,679
Credit and suretyship
(334)
(722)
212
176
(128)
(462)
326,356
296,458
(200,015)
(51,831)
(21,371)
23,241
Reinsurance:
Reinsurance acceptances
84,472
58,387
(38,545)
(13,623)
(5,768)
451
Total
410,828
354,845
(238,560)
(65,454)
(27,139)
23,692
Gross
premiums
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underw
riting
result
2023
$’000
$’000
$’000
$’000
$’000
$’000
Direct insurance:
Accident and health
119
114
(73)
(16)
(7)
18
Motor (third party liability)
136,963
138,307
(100,752)
(22,123)
(11,002)
4,430
Motor (other classes)
-
-
-
-
-
-
Marine, aviation and transport
985
881
(548)
(179)
(12)
142
Third-party liability
111,291
84,765
(47,013)
(13,638)
(13,422)
10,692
Credit and suretyship
3,891
1,343
(544)
(213)
67
652
253,249
225,410
(148,930)
(36,169)
(24,376)
15,934
Reinsurance:
Reinsurance acceptances
45,330
36,561
(39,453)
(5,521)
10,757
2,344
Total
298,579
261,971
(188,383)
(41,690)
(13,619)
18,278
44 Apollo Syndicate 1971 | Annual Report and Accounts 2024
5. Analysis of underwriting result (continued)
Reinsurers’ commissions and profit participations are included in the reinsurance balance and disclosed in note
6,
net operating expenses.
The gross premiums written for direct insurance by destination of risk is presented in the table below:
2024
2023
Gross written premiums for direct insurance analysed by source
$’000
$’000
United States of America
325,239
246,065
Rest of the world
915
135
European Union Member States
355
18
United Kingdom
(153)
7,031
Total gross premiums written
326,356
253,249
All premiums were concluded in the United Kingdom.
Year of account development
The table below presents the annual results split by year of account. Movements in results for closed years of
account are reflected within the results for the year into which they closed by reinsurance to close.
6. Net operating expenses
2024
2023
$’000
$’000
Acquisition costs
48,015
30,124
Change in deferred acquisition costs
(9,881)
(6,155)
Gross acquisition costs
38,134
23,969
Administrative expenses
11,303
6,071
Members’ standard personal expenses
16,017
11,652
Reinsurers’ commissions and profit participation
s
(40,130)
(21,872)
Total
25,324
19,820
Commission on direct insurance gross premiums written during 2024 was $28,700,000 (2023: $18,000,000).
2024
2023
Result
before members’ agents’ fees
$’000
$’000
Year of account
2021
-
(623)
2022
12,778
21,458
2023
17,786
7,610
2024
6,533
-
Calendar year result
37,097
28,445
45 Apollo Syndicate 1971 | Annual Report and Accounts 2024
6. Net operating expenses (continued)
Administrative expenses include the following:
2024
2023
$’000
$’000
Audit fees
Fees payable to the syndicate’s auditor for the audit of the syndicate’s annual financial
statements
238
170
Non-audit fees
F
ees payable to the Syndicate’s auditor and its associates in respect of other services
pursuant to legislation
105
133
Other non
–
audit fees
33
32
Total
376
335
Impairment losses on debtors
Arising out of reinsurance operations
54
-
ASML incurred audit fees payable to the syndicate’s auditors of $
46,000 (2023: $34,000) and other assurance
services of $6,000 (2023: $4,000).
7. Emoluments of the directors of the managing agent
For the purposes of FRS 102, the directors of ASML are deemed to be the key management personnel.
For the period ending 31 December 2024, the remuneration recharged to the syndicate for the directors of ASML is
$744,000 (2023: $911,000) which is charged as a syndicate expense.
The remuneration amount recharged to the syndicate for the Active Underwriter during 2024 is $84,000 (2023:
$183,000) which is charged as a syndicate expense.
8. Staff number and costs
All staff are employed by a related company of ASML. The following amounts were incurred by the syndicate in
respect of salary costs:
2024
2023
$’000
$’000
Wages and salaries
12,234
7,878
Social security costs
1,385
1,004
Pension costs
840
518
Total
14,459
9,400
The average monthly number of employees employed by the managing agency or related companies but working
for the syndicate during the year, analysed by category, was as follows:
2024
2023
Number
Number
Underwriting
10
7
Claims and reinsurance
8
4
Management, administration and finance
47
30
Investment
1
1
Total
66
42
During 2024 there were six (2023: seven) non-executive directors on the ASML board who allocated their time to
the syndicate.
46 Apollo Syndicate 1971 | Annual Report and Accounts 2024
9. Investment income
2024
2023
$’000
$’000
Interest and similar income
From financial instruments designated at fair value through profit or loss
Interest and similar income
11,960
5,527
Interest on cash at bank
2,298
3,669
Other income from investments
From financial instruments designated at fair value through profit or loss
Gains on the realisation of investments
884
1
Losses on the realisation of investments
(52)
(4)
Unrealised gains on investments
320
818
Unrealised losses on the investments
(2,178)
(2)
Investment management expenses
(404)
(1)
Total investment return
12,828
10,008
Transferred to the technical account from the non-technical account
12,828
10,008
Impairment losses on debtors recognised in administrative expenses
(54)
-
The investment return was wholly allocated to the technical account.
Investment income is reported after an allocation of an investment return of $50,000 (2023: nil) to Syndicate 1925.
Investment income is reported after an allocation of an investment return of $3,671,000 (2023: $4,841,000) from
Syndicate 1969. See note 23.
The total annual investment yield was 4.1% (2023: 5.6%).
10. Distribution
The 2022 year of account profit balance of $42,519,000
(after members’ agents’ fees of $
156,000) will be distributed
to members in 2025. During 2024 $13,629,000
(after members’ agents’ fees of $
129,000) was distributed to the
members in respect of the 2021 year of account.
47 Apollo Syndicate 1971 | Annual Report and Accounts 2024
11. Financial Investments
The carrying values of the syndicate’s financial assets and liabilities are summarised by category below:
Carrying Value
Cost
2024
2023
2024
2023
$’000
$’000
$’000
$’000
Shares and other variable yield securities and units in unit trusts
128,121
57,443
128,121
57,443
Debt securities and other fixed income securities
173,604
44,898
174,645
44,080
Total
301,725
102,341
302,766
101,523
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 and loss
Financial investments
301,725
102,341
Total financial assets
301,725
102,341
All investments are measured at fair value through profit or loss. The valuation technique used for determination of
the fair value of financial instruments can be classified by the following hierarchy:
•
level 1
–
Quoted prices for an identical asset in an active market. Quoted in an active market in this context
means quoted prices are readily and regularly available and those prices represent actual and regularly
occurring market transactions on an arm’s
length basis.
•
level 2
–
When quoted prices are unavailable, the price of a recent transaction for an identical asset provides
evidence of fair value as long as there has not been a significant change in economic circumstances or a
significant lapse of time since the transaction took place. If it can be demonstrated that the last transaction
price is not a good estimate of fair value (e.g. because it reflects the amount that an entity would receive or
pay in a forced transaction, involuntary liquidation or distress sale), that price is adjusted.
•
level 3
–
If the market for the asset is not active and recent transactions of an identical asset on their own
are not a good estimate of fair value, the fair value is estimated by using a valuation technique. The objective
of using a valuation technique is to estimate what the transaction price would have been on the
measurement date in an arm’s length exchange motivated by normal business considerations.
The table below analyses financial instruments held at fair value in the syndicate’s balance sheet at the
reporting
date by its level in the fair value hierarchy.
48 Apollo Syndicate 1971 | Annual Report and Accounts 2024
11. Financial Investments (continued)
Level 1
Level 2
Level 3
Total
2024
$’000
$’000
$’000
$’000
Shares and other variable yield securities and units in unit trusts
-
128,121
-
128,121
Debt securities and other fixed income securities
73,248
100,356
-
173,604
Total
73,248
228,447
-
301,725
Level 1
Level 2
Level 3
Total
2023
$’000
$’000
$’000
$’000
Shares and other variable yield securities and units in unit trusts
-
57,443
-
57,443
Debt securities and other fixed income securities
31,367
13,531
-
44,898
Total
31,367
70,974
-
102,341
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.
Holdings in collective investment schemes are generally valued using prices provided by external pricing vendors.
The categorisation of the fair value by level has been determined by looking through the funds to the underlying
holdings within the collective investment schemes. 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. Where recently reported trades are not available, pricing vendors will use
modelling techniques to determine a security price.
Some government and supranational securities are listed on recognised exchanges and are generally classified as
level 1 in the fair value hierarchy. Those that are not listed on a recognised exchange are generally based on
composite prices of recent trades in the same instrument and are generally classified as level 2 in the fair value
hierarchy
Corporate bonds, including asset backed securities that are not listed on a recognised exchange or are traded in
an established over-the-counter market are also mainly valued using composite prices. Where prices are based on
multiple quotes and those quotes are based on actual recent transactions in the same instrument the securities are
classified as level 2, otherwise they are classified as level 3 in the fair value hierarchy.
Management monitor movements in the valuation of the investment portfolio on a quarterly basis and investigation
is undertaken when these are outside of expectations. The short dated fixed income portfolio valuations are provided
by the fund manager and compared with valuations provided independently by the custodian.
.
49 Apollo Syndicate 1971 | Annual Report and Accounts 2024
12. Debtors arising out of direct insurance operations
2024
2023
$’000
$’000
Due within one year
311,300
280,131
Total
311,300
280,131
13. Debtors arising out of reinsurance operations
2024
2023
$’000
$’000
Due within one year
8,058
216
Total
8,058
216
14. Other debtors
2024
2023
$’000
$’000
Inter syndicate balances
76,796
113,091
Other
125
-
Total
76,921
113,091
Amounts due from Syndicate 1969 represent the net funds withheld balance receivable under the quota share
contract. The balances attributable to each year of account are due on closure of the underlying years of account.
15. Deferred acquisition costs
The table below shows changes in deferred acquisition costs from the beginning of the period to the end of the
period.
Gross
Reinsurance
Net
2024
$’000
$’000
$’000
At 1 January
15,289
(15,358)
(69)
Incurred deferred acquisition costs
48,015
(54,199)
(6,184)
Amortised deferred acquisition costs
(38,134)
40,130
1,996
Foreign exchange adjustments
(175)
81
(94)
At 31 December
24,995
(29,346)
(4,351)
Gross
Reinsurance
Net
2023
$’000
$’000
$’000
At 1 January
8,931
(15,458)
(6,527)
Incurred deferred acquisition costs
30,124
(21,771)
8,353
Amortised deferred acquisition costs
(23,969)
21,872
(2,097)
Foreign exchange adjustments
203
(1)
202
At 31 December
15,289
(15,358)
(69)
50 Apollo Syndicate 1971 | Annual Report and Accounts 2024
16. Other assets
Overseas deposits are advanced as a condition of conducting underwriting business in certain countries and
therefore are restricted assets. The balance of the overseas deposits as at 31 December 2024 was $1,960,000
(2023: $314,000)
17. Claims development
The syndicate’s current exposure is predominantly US motor liability via the Delivery and Rideshare segments.
The following tables show the estimates of cumulative incurred claims, including both claims notified and IBNR for
each successive underwriting year at each reporting date, together with cumulative payments to date. As these
tables are on an underwriting year basis, there is an apparent large increase from amounts reported for the end of
the underwriting year to one year later as a large proportion of premiums are earned in the year of account’s second
year of development.
Balances have been translated at exchange rates prevailing at 31 December 2024 in all cases.
Gross claims development as at 31 December 2024:
2019
2020
2021
2022
2023
2024
Total
Pure underwriting year
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Estimated gross claims
At end of underwriting
year
28,044
27,722
44,847
69,233
68,791
97,345
One year later
59,279
82,951
102,168
171,184
199,683
Two years later
72,772
97,452
79,474
171,479
Three years later
83,767
119,786
80,827
Four years later
101,790
114,445
Five years later
115,538
Estimate of gross
claims reserve
115,538
114,445
80,827
171,479
199,683
97,345
779,317
Less gross claims paid
(94,257)
(61,976)
(17,436)
(27,626)
(12,383)
(261)
(213,939)
Gross claims reserve
21,281
52,469
63,391
143,853
187,300
97,084
565,378
Net claims development as at 31 December 2024:
2019
2020
2021
2022
2023
2024
Total
Pure underwriting year
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Estimated net claims
At end of underwriting
year
11,954
14,244
23,618
35,438
36,862
46,154
One year later
26,198
43,323
54,091
97,984
111,203
Two years later
33,894
50,796
43,003
109,978
Three years later
36,344
62,323
43,833
Four years later
42,921
59,113
Five years later
47,439
Estimate of net claims
reserve
47,439
59,113
43,833
109,978
111,203
46,154
417,720
Less net claims paid
(36,353)
(31,054)
(8,720)
(27,475)
(6,605)
(317)
(110,524)
Net claims reserve
11,086
28,059
35,113
82,503
104,598
45,837
307,196
All balances presented are in respect of premiums earned to the balance sheet date and therefore reflect the pattern
of earnings and risk exposed over a number of calendar years.
51 Apollo Syndicate 1971 | Annual Report and Accounts 2024
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. There has been no material change to the method of reserving during the year under review.
Included within net calendar year claims incurred of $124,103,000 (2023: $106,371,000) is a deterioration of
$9,063,000 in claims reserves established at the prior year end (2023: deterioration $10,197,000).
Gross provisions
Reinsurance assets
Net
2024 - Claims outstanding
$’000
$’000
$’000
Balance at 1 January
419,120
(189,367)
229,753
Claims paid during the year
(91,765)
45,532
(46,233)
Expected cost of current year claims
222,918
(107,878)
115,040
Change in estimates of prior year provisions
15,642
(6,579)
9,063
Effect of movements in exchange rate
(537)
110
(427)
Balance at 31 December
565,378
(258,182)
307,196
Gross provisions
Reinsurance assets
Net
2023 - Claims outstanding
$’000
$’000
$’000
Balance at 1 January
296,795
(143,860)
152,935
Claims paid during the year
(66,595)
36,712
(29,883)
Expected cost of current year claims
157,900
(61,726)
96,174
Change in estimates of prior year provisions
30,483
(20,286)
10,197
Effect of movements in exchange rate
537
(207)
330
Balance at 31 December
419,120
(189,367)
229,753
Gross provisions
Reinsurance assets
Net
2024
–
Unearned premium
$’000
$’000
$’000
Balance at 1 January
177,479
(84,559)
92,920
Premiums written during the year
410,828
(227,174)
183,654
Premiums earned during the year
(354,845)
181,726
(173,119)
Effect of movements in exchange rate
(361)
163
(198)
Balance at 31 December
233,101
(129,844)
103,257
Gross provisions
Reinsurance assets
Net
2023
–
Unearned premium
$’000
$’000
$’000
Balance at 1 January
140,831
(70,185)
70,646
Premiums written during the year
298,579
(131,873)
166,706
Premiums earned during the year
(261,971)
117,502
(144,469)
Effect of movements in exchange rate
40
(3)
37
Balance at 31 December
177,479
(84,559)
92,920
Refer to Note 4 for the sensitivity analysis performed over the value of insurance liabilities, disclosed in the accounts,
to potential movements in the assumptions applied within the technical provisions.
52 Apollo Syndicate 1971 | Annual Report and Accounts 2024
19. Creditors arising out of direct insurance operations
2024
2023
$’000
$’000
Due within one year
1,136
-
Total
1,136
-
20. Creditors arising out of reinsurance operations
2024
2023
$’000
$’000
Due within one year
188,517
116,004
Total
188,517
116,004
21. Other creditors including taxation and social security
2024
2023
$’000
$’000
Other related party balances (non-syndicates)
1,227
145
Inter syndicate balances
13,503
-
Total
14,730
145
The amounts due to Syndicate 1925 represents the net funds withheld balance payable under the SPA quota
share contract.
22. Cash and cash equivalents
2024
2023
$’000
$’000
Cash at bank and in hand
15,421
6,472
Total
15,421
6,472
23. Related parties
All business with related
parties is transacted on an arm’s length basis.
ASML is a wholly owned subsidiary of Apollo Group Holdings Limited (“AGHL”).
Metacomet LLC, a US incorporated limited company is a shareholder of AGHL with a seat on the board. Affiliated
companies of Metacomet LLC participate on the syndicate.
AGHL has provided capacity for the 2022 and subsequent years of account through Apollo No. 16 Limited
(“APL16”). APL16 is a wholly owned subsidiary of AGHL and has underwritten capacity of £
56m on the syndicate
for the 2024 year of account (2023 year of account: £54m).
53 Apollo Syndicate 1971 | Annual Report and Accounts 2024
23. Related parties (continued)
Until 31 December 2021 Syndicate 1971 was a SPA syndicate with Syndicate 1969 as the host on the 2021 and
prior years of account. A quota share reinsurance contract is in place for each year of account ceding all gross
premiums and related expenses and investment income. The 2019 year of account applies an 80% quota share,
with the 2020 and 2021 year of account applying a 90% quota share. On closure of these years of account the
syndicate distribution was settled by Syndicate 1969. With effect from 1 January 2022, Syndicate 1971 became a
stand-alone syndicate.
Syndicate 1969 has provided a quota share reinsurance contract for the run-off of the ibott Rover class 2021 and
prior year of account liabilities. This has the effect of maintaining the Syndicate 1969 and Syndicate 1971 share of
risk that existed under the SPA relationship.
The related party transactions and amounts outstanding at the balance sheet date are shown below:
2024
2023
Syndicate 1969
$’000
$’000
Gross written premium receivable
3
(669)
Gross claims payable
(53,162)
(64,933)
Expenses payable
2
455
Allocated investment income
3,671
4,841
Other debtors
76,796
113,091
Syndicate 1925 was established for the 2024 YOA as an SPA Syndicate to provide a single 80% quota share
reinsurance contract for the Cyber Reinsurance class including all related expenses and investment income for
each underwriting year. Syndicate 1925 operates on a funds withheld basis and the syndicate undertakes all
transactions on its behalf. On closure of a year of account the Syndicate 1925 distribution will be settled by the
syndicate. The related party transactions and amounts outstanding at the balance sheet date are shown below:
2024
2023
Syndicate 1925
$’000
$’000
Reinsurance premiums payable
(41,717)
-
Reinsurance paid recoveries receivable
2
-
Expense recharge
(1,586)
-
Allocated investment return
(50)
-
Other creditors
(13,503)
-
In accordance with the Managing Agent’s Agreement, ASML accrued managing agent’s fees (0.9% of syndicate
capacity) and profit commission (20% of profit). A two year deficit clause is in place which requires losses to be
offset by future profits before further profit commission becomes payable.
54 Apollo Syndicate 1971 | Annual Report and Accounts 2024
23. Related parties (continued)
Apollo Partners LLP (“
APL
”) is a wholly owned subsidiary of AGHL which
employs all Apollo group staff, including
underwriters, claims and reinsurance staff. APL provides the services of these staff to ASML to enable it to function
as managing agent for the syndicate. APL is an appointed representative of ASML APL also incurs a large proportion
of the expenses in respect of operating the syndicate. The cost of these services and expenses is recharged to
ASML which in turn recharges these to the syndicate on a basis that reflects its usage of resources, all recharges
being without any mark up on cost. The transactions and amounts outstanding at the balance sheet date are shown
below:
2024
2023
ASML
$’000
$’000
Managing agent’s fee
3,632
2,794
Expense recharges
17,550
6,873
Managing agent’s profit commission
9,406
12,571
Other creditors
(1,227)
(128)
24. Post balance sheet events
The amounts that are proposed to be transferred to members are disclosed in note 10.
25. Foreign exchange rates
The following foreign exchange rates have been used for the
syndicate’s principal foreign currencies. The average
of the spot rates applied is disclosed.
2024
2023
Start of
period
rate
End of
period
rate
Average
rate
Start of
period
rate
End of
period
rate
Average
rate
Sterling
US Dollar
Euro
Canadian Dollar
26.
Funds at Lloyd’s
Every member is required to hold capital at Lloyd’s which is held in trust and known as Funds at Lloyd’s
(“FAL”)
.
These funds are intended primarily to cover circumstances where syndicate assets prove insufficient to meet
participating members’ underwriting liabilities. The level of FAL that Lloyd’s requires a member to maintain is
determined by Lloyd’s based on
PRA requirements and resource criteria. The determination of FAL has regard to
a number of factors including the nature and amount of risk to be underwritten by the member and the assessment
of the reserving risk in respect of business that has been underwritten. Since FAL is not under the management of
the Managing Agent, no amount has been shown in these annual accounts by way of such capital resources.
However, the Managing Agent is able to make a call on the Member’s FAL to meet liquidity requirements or to settle
losses.
55 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Syndicate underwriting year of
accounts for the 2022 year of
account
Closed at 31 December 2024
56 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Report of the directors of the managing agent
The directors of the managing agent present their report for the 2022 year of account of Syndicate 1971 for the
cumulative result to 31 December 2024.
The syndicate underwriting year accounts have been prepared under The Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 in accordance with the Lloyd’s Syndicate Accounting Bylaw
(no. 8 of 2005) and applicable accounting standards in the United Kingdom.
Principal activity
This report covers the business of Syndicate 1971 which was established for the 2019 year of account as a Special
Purpose Arrangement (“SPA”).
For the 2022 year of account the syndicate graduated from an SPA to operate as a
stand-alone syndicate. The syndicate maintains a significant quota share reinsurance placement with a panel of
highly rated reinsurers
During 2023 Syndicate 1971 established its own SPA, Syndicate 1925, for the 2024 year of account. Syndicate
1925 underwrites Cyber Reinsurance business only and was developed through a strategic partnership with
Envelop Risk.
Syndicate 1971 trades through Lloyd’s worldwide licenses and has the benefit of the Lloyd’s brand
and rating.
Lloyd’s
has an A+ (Superior) rating from A.M. Best, AA- (Very
Strong) from Standard & Poor’s and AA
- (Very Strong)
from Fitch.
The syndicate’s capacity for the 202
2 year of account was £200.0m ($276.0m
at the Lloyd’s planning rate of $
1.38).
Apollo Syndicate Management Limited (“ASML”) is approved as a managing agency at Lloyd’s and is authorised by
the Prudential Regulation Authority (‘’PRA’’). ASML is regulated by the Financial Conduct Authority (‘’FCA’’) and
the
PRA.
Review of the business
The syndicate had three open years of account during 2024. The 2022 year of account is closing at 36 months.
2023 and 2024 are expected to close at the end of 2025 and 2026 respectively.
2022 closed year result
We are now closing the 2022 year of account at a profit of $42.7m, which is 17.0% on stamp capacity of $250.4m
(£200.0m). This comprises profits of $43.8m on the 2022 pure year of account and a loss of $1.1m on the
development of the prior years of account during the 2024 calendar year.
The 2022 portfolio was split across several different subclasses, with much of the portfolio being either Delivery,
Ride Sharing or Vehicle Leasing. Our focus has been on building long-term partnerships with our clients, which
includes a range of new and established Autonomous Vehicle, Peer to Peer Car Sharing, Ridesharing and E-
Scooter providers. Apollo saw further premium growth in the 2022 portfolio, which also benefited from a positive
rating environment, resulting in written premium income being higher than the previous year of account.
The 2022 pure year benefitted from favourable investment return, materially more than plan assumptions. The
underwriting performance has achieved the original forecast set out in the business plan. The assumptions
underlying our reserving methodology reflect additional information obtained from pricing current and prospective
business. The implications of this analysis have been incorporated into our reserving approach for all years of
account which, together with margin added over and above actuarial best estimates, have been factored into the
higher than planned profit declared on the 2022 year of account.
2023 year of account
The syndicate has seen further premium growth in the class in the 2023 underwriting year compared to 2022, with
growth through new business, participation on different layers of existing risks and organic growth. The 2023
portfolio is split across several different subclasses, consistent with the 2022 portfolio, the largest being Delivery &
Rideshare. The 2023 year of account was expanded to underwrite Cyber Reinsurance through a strategic
partnership with Envelop Risk. The class has written gross premium income for the year of $12m, compared to plan
of $20m.
57 Apollo Syndicate 1971 | Annual Report and Accounts 2024
The 2023 portfolio benefited from a positive rating environment, which is driven by wider insurance market
conditions rather than any loss experience. The syndicate achieved overall rate increases of 7.3% for the year.
We continued to be highly selective regarding the new opportunities we have underwritten for the 2023 underwriting
year. We consider this is the appropriate approach and, whilst at this stage forecasting a profit for the 2023 year of
account, we remain cautious about the range of outcomes possible, reflected in the use of a range of 3.5% to 13.5%
of capacity.
2024 and future years
For 2024 and onwards, the existing product lines for ibott have
been reorganised into ‘industry verticals’. This is to
orient around the customer, to better reflect the profile of the underlying business, and to position ibott to lead in
emerging industries. The new class of business breakdown will be Human Logistics, Human & Asset Capital, and
Autonomy & Electrics.
The underlying performance of the portfolio in the 2024 year of account has been positive and has been broadly in
line with the plan for the year. In 2024, the syndicate focused on consolidating its operational capabilities, setting
the stage for further scalable growth. The forecast gross written premium income (net of acquisition costs) for the
syndicate is expected to be $337.8m, which is 98.1% of stamp capacity. We achieved positive rate change of 10.4%
across our entire renewal portfolio. The Cyber Reinsurance class has written gross premium income for the year of
$66m, compared to plan of $90m. For 2024, 80% of the Cyber Reinsurance class was ceded to SPA Syndicate
1925 under a quota share reinsurance agreement. At this early stage of development of the year of account, we
are optimistic that the forecast profit for the syndicate will be satisfactory.
The approved 2025 plan for the syndicate is to underwrite $611.8m of gross written premium income, which equates
to $546.3m of gross net written premium. For 2025, 80% of the Cyber Reinsurance class will be ceded to SPA
Syndicate 1925 under a quota share reinsurance agreement. The approved 2025 plan for the SPA is to underwrite
$81m of gross written premium income, which equates to $60m of gross net written premium, with a stamp capacity
of $63.0m (£50.0m). The stamp capacity of the syndicate, which excludes the SPA share of gross net written
premium, has increased to $541.8m (£430m) which allows sufficient headroom should we wish to take advantage
of new opportunities that may arise in 2025.
Directors
The directors who held office at the date of signing this report are shown on page 2.
Disclosure of information to the auditor
Each person who is a director of the managing agent at the date of approving this report confirms that:
•
so far as the director is aware, there is no relevant audit information of which the syndicate's auditor is
unaware; and
•
each director has taken all the steps that they ought to have taken as a director in order to make themselves
aware of any relevant audit information and to establish that the syndicate's auditor is aware of that
information.
Auditor
Deloitte LLP has indicated its willingness to continue in office as the syndicate’s auditor. The managing agent hereby
gives formal notification of a proposal to re-appoint Deloitte LLP as auditor of Syndicate 1971 for a further year.
Approved by the Board.
DCB Ibeson
Chief Executive Officer
5 March 2025
58 Apollo Syndicate 1971 | Annual Report and Accounts 2024
S
tatement of managing agent’s responsibilities
Apollo Syndicate Management Limited, as managing agent, is responsible for preparing syndicate underwriting year
accounts in accordance with applicable law and the Lloyd’s Syndicate Accounting Byelaw.
The Insurance Accounts Directive (Lloyd’s Syndicates and Aggregate Accounts) Regulation 2008 (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 as at 31 December 2024. These
syndicate underwriting year accounts must give a true and fair view of the result of the closed year of account.
In preparing the syndicate underwriting year of 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;
•
take into account all income and charges relating to a closed year of account without regard to the date of
receipt or payment;
•
make judgements and estimates that are reasonable and prudent; and
•
state whether applicable accounting standards have been followed, subject to any material departures
disclosed and explained in these accounts.
The managing agent is responsible for keeping proper accounting records that disclose with reasonable accuracy
at any time the financial position of the syndicate and enable it to ensure that the syndicate underwriting year of
accounts comply with the Lloyd’s Regulations and Syndicate Accounting Byelaw. 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.
59 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Independent auditors report to the members of Syndicate 1971
–
2022 closed year of
account
Report on the audit of the syndicate underwriting year accounts for the 2022 closed year
of account for the three years ended 31 December 2024
Opinion
In our opinion the syndicate underwriting year accounts of Syndicate 1971 (the ‘syndicate’):
•
give a true and fair view of the profit for the 2022 closed year of account;
•
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice
including Financial Reporting Standard 102 “The Financial Reporting Standard applicable in the UK and
Republic of Ireland”; and
•
have been prepared in accordance with the requirements of The Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 and in accordance with the Lloyd’s Syndicate
Accounting Byelaw (no. 8 of 2005) and sections 4 and 5 of the Syndicate Accounts Instructions Version 2.0
as modified by the Frequently Asked Questions Version 1.1 issued by Lloyd’s (the “Lloyd’s Syndicate
Accounts Instructions”).
We have audited the syndicate underwriting year accounts which comprise:
•
the profit and loss account;
•
the statement of changes in member’s balances;
•
the balance sheet;
•
the statement of cash flows; and
•
the notes to the annual accounts 1 to 18.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom
Accounting Standards, including Financial Reporting Standard 102 “the Financial Reporting Standard applicable in
the UK and Republic of Irelan
d”, the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008 and 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)), 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 underwriting year accounts section of our report.
We are independent of the syndicate in accordance with the ethical requirements that are relevant to our audit of
the syndicate underwriting year accounts in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical
Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other information
The other information comprises the information included in the Syndicate underwriting year of accounts for the
2022 year of account (the “annual report”), other than the syndicate underwriting year accounts and our auditor’s
report thereon. The managing agent is responsible for the other information contained within the annual report. Our
opinion on the syndicate underwriting year accounts does not cover the other information and 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 underwriting year accounts or our knowledge obtained in the course of
the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this gives rise to a material misstatement themselves.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
60 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Responsibilities of managing agent
As explained more fully in the managing agent’s responsibilities statement, the managing agent is responsible for
the preparation of the syndicate underwriting year accounts under the Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts)
Regulations 2008 and in accordance with the Lloyd’s Syndicate Accounting
Byelaw (no. 8 of 2005), and for being satisfied that they give a true and fair view of the result, and for such internal
control as the managing agent determines is necessary to enable the preparation of syndicate underwriting year
accounts that are free from material misstatement, whether due to fraud or error.
In preparing the syndicate underwriting accounts, the managing agent is responsible for assessing the syndicate’s
ability to realise its assets and discharge its liabilities in the normal course of business, disclosing, as applicable,
any matters that impact its ability to do so.
Auditor’s responsibilities for the audit of the syndicate underwriting year accounts
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 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 underwriting year
accounts.
A further description of our responsibilities for the audit of the syndicate underwriting year accounts is located on
the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities
. This description forms part of our auditor’s report.
Extent to which the audit was considered capable of detecting irregularities, including
fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
We considered the nature of the syndicate and its control environment, and reviewed the syndicate’s documentation
of their policies and procedures relating to fraud and compliance with laws and regulations. We also enquired of
management, 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 underwriting year
accounts. These included the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008 and the Lloyd’s Syndicate Accounting
Byelaw (no. 8 of 2005), the Lloyd’s Syndicate
Accounts Instructions; and
•
do not have a direct effect on the underwriting year accounts but compliance with which may be fundamental
to the syndicate’s ability to operate or to avoid a material penalty. These included
.
the requirements of
Solvency II.
We discussed among the audit engagement team including actuarial specialists and IT specialists
regarding the
opportunities and incentives that may exist within the organisation for fraud and how and where fraud might occur
in the underwriting year accounts.
61 Apollo Syndicate 1971 | Annual Report and Accounts 2024
As a result of performing the above, we identified the greatest potential for in the following area, and our procedures
performed to address it are described below:
•
valuation of technical provisions, and specifically IBNR, 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 performed a detailed risk assessment and focused our work on
specific classes of business based on size and complexity. We involved our actuarial specialists to make
detailed assessments of the methodologies and assumptions used, as appropriate for the specific classes
of business chosen. 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 underwriting year accounts disclosures by testing to supporting documentation to assess
compliance with provisions of relevant laws and regulations described as having a direct effect on the
underwriting year accounts;
•
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
reviewing correspondence with Lloyd’s.
Report on other legal and regulatory requirements
Opinions on other matters prescribed by The Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the managing agent’s report for the financial year for which the syndicate
underwriting year accounts are prepared is consistent with the syndicate underwriting year accounts; and
•
the managing agent’s report has been prepared in accordance with the Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008.
In the light of the knowledge and understanding of the syndicate and its environment obtained in the course of the
audit, we have not identified any material misstatements in the managing agent’s report.
Matters on which we are required to report by exception
Under the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and Lloyd’s
Syndicate Accounting Byelaw (no.8 of 2005) we are required to report in respect of the following matters if, in our
opinion:
•
the managing agent in respect of the syndicate has not kept adequate or proper accounting records; 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; or
•
the syndicate underwriting year accounts are not in compliance with the requirements of paragraph 5 of
Schedule 1 of the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations
2008.
We have nothing to report in respect of these matters.
62 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Use of our report
This report is made solely to the syndicate’s members, as a body, in accordance with regulation 6 of the Insurance
Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008. Our audit work has been
undertaken so that we might state to
the syndicate’s members those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the syndicate’s members as a body
, for our audit work, for this report, or for the
opinions we have formed.
Kirstie Hanley (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
5 March 2025
63 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Profit and loss account
2022 year of account
For the 36 months ended 31 December 2024
Technical account
–
general business
Note
$’000
Syndicate allocated capacity
276,000
Gross premiums written
3
268,881
Outward reinsurance premiums
(121,599)
Earned premiums, net of reinsurance
147,282
Reinsurance to close premium receivable, net of reinsurance
4
96,288
243,570
Allocated investment return transferred from the non-technical account
9
14,177
Claims paid
Gross amount
(80,799)
Reinsurers’ share
39,973
Net claims paid
(40,826)
Reinsurance to close premium, net of reinsurance
5
(156,701)
Claims incurred, net of reinsurance
(197,527)
Net operating expenses
6
(18,229)
Balance on the technical account - general business
41,991
64 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Profit and loss account
2022 year of account
For the 36 months ended 31 December 2024
Non-technical account
Note
$’000
Balance on the technical account
–
general business
41,991
Investment income
9
14,367
Realised gains on investments
9
386
Unrealised losses on investments
9
(331)
Investment expenses and charges
9
(245)
Total investment return
14,177
Allocated investment return transferred to the technical account
–
general business
(14,177)
Gain on foreign exchange
684
Profit for the 2022 closed year of account
42,675
There are no recognised gains or losses in the accounting period other than those dealt with in the technical and
non-technical accounts.
65 Apollo Syndicate 1971 | Annual Report and Accounts 2024
S
tatement of changes in members’ balances
2022 year of account
For the 36 months ended 31 December 2024
Note
$’000
Profit for the 2022 closed year of account
11
42,675
Members’ agents’ fees
(156)
Amounts due to members at 31 December 2024
11
42,519
Members participate on syndicates by reference to years of account and their ultimate result, assets and liabilities
are determined by reference to policies incepting in that year of account in respect of their membership of a particular
year.
66 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Balance sheet
2022 year of account
For the 36 months ended 31 December 2024
Assets
Note
$’000
Investments
Financial investments
10
117,314
Reinsurance recoveries anticipated on gross reinsurance to close premium
5
124,233
Debtors
Debtors arising out of direct insurance operations
12
15,028
Debtors arising out of reinsurance operations
13
3,553
Other debtors
14
76,799
95,380
Other assets
Cash and cash equivalents
7,130
Overseas deposits
15
1,483
8,613
Prepayments and accrued income
Accrued interest and rent
371
Other prepayments and accrued income
2
373
Total assets
345,913
67 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Balance sheet
2022 year of account
For the 36 months ended 31 December 2024
Liabilities
and members’ balances
Note
$’000
Amounts due to members
11
42,519
Total members’ balance
42,519
Reinsurance to close premium payable to close the account
–
gross amount
5
281,012
Creditors
Creditors arising out of direct insurance operations
16
1,024
Creditors arising out of reinsurance operations
17
10,558
11,582
Accruals and deferred income
10,800
Total liabilities
303,394
Total liabilities and members’ balances
345,913
The syndicate underwriting year accounts on pages 63 to 77 were approved by the Board of Apollo Syndicate
Management Limited and were signed on its behalf by:
TL McHarg
Chief Financial Officer
5 March 2025
68 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Statement of cash flows
2022 year of account
For the 36 months ended 31 December 2024
$’000
Cash flows from operating activities
Profit for the 2022 closed year of account
42,675
Adjustments for:
Increase in gross technical provisions
281,012
Increase in reinsurers' share of technical provisions
(124,233)
Increase in debtors
(95,380)
Increase in creditors
11,582
Movement in other assets/liabilities
8,944
Investment return
(14,177)
Net cash flows from operating activities
110,423
Cash flows from investing activities
Purchase of equity and debt instruments
(242,742)
Sale of equity and debt instruments
125,097
Investment income received
14,753
Other
(245)
Net cash flows from investing activities
(103,137)
Cash flows from financing activities
Members' agents’ fees paid on behalf of members
(156)
Net cash flows from financing activities
(156)
Net increase in cash and cash equivalents
7,130
Cash and cash equivalents at 1 January 2022
-
Cash and cash equivalents at 31 December 2024
7,130
69 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Notes to the underwriting year accounts
1. Basis of preparation
These underwriting year 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 Republic of Ireland, including Financial Reporting Standard 102
(“FRS 102”)
and Financial Reporting
Standard (“
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 Lloy
d’s.
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 at 31 December 2024. Consequently, the balance sheet represents the assets and liabilities of the 2022
year of account at the date of closure. The profit and loss account and cash flow statement reflect the transactions
for that year of account during the three-year period until closure.
These underwriting year 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 comparative amounts are not shown.
As a consequence of the 2022 year of account reinsuring to close into the 2023 year of account, the residual risks
to the members on the closed year have been minimised. Accordingly, the members are no longer exposed to
changes in the estimates and judgements made after the balance sheet date. The risk disclosure requirements of
FRS 102 and FRS 103 are therefore deemed not applicable to these underwriting year accounts. However, it should
be noted that a reinsurance contract does not extinguish the primary liability of the original underwriter.
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.
Gross premiums written
Gross premiums are allocated to years of account based on the inception date of the policy. Premiums in respect
of insurance contracts underwritten under a binding authority, lineslip or consortium arrangement are allocated to
the year of account corresponding to the calendar year of inception of the arrangement.
Premiums are shown gross of brokerage payable and are exclusive of taxes and duties thereon.
Outward reinsurance premiums
Outwards reinsurance premiums are allocated to a year of account in accordance with the underlying risks being
protected.
Claims paid and related recoveries
Gross claims paid include internal and external claims settlement expenses and, together with reinsurance
recoveries less amounts provided for in respect of doubtful reinsurers, are attributed to the same year of account
as the original premium for the underlying policy.
Reinstatement premiums payable in the event of a claim being made are charged to the same year of account as
that to which the recovery is credited.
70 Apollo Syndicate 1971 | Annual Report and Accounts 2024
2. Accounting policies (continued)
Reinsurance to close premium payable
A reinsurance to close is a contract of insurance which, in return for a premium paid by the closing year of account,
transfers, normally to the following year of account, all known and unknown liabilities arising out of transactions
connected with insurance business underwritten by the closing year of account. A reinsurance to close can be
payable to the next year of account of the syndicate or a third party syndicate. However, it should be noted that a
reinsurance contract does not extinguish the primary liability of the original underwriter.
Where the reinsurance to close is payable to the next year of account it is determined on the basis of estimated
outstanding liabilities and related claims settlement costs (including claims incurred but not reported), net of
estimated collectable reinsurance recoveries and net of future net premiums relating to the open year of account
and all previous years of account reinsured therein. No credit is taken for investment earnings which may be
expected to arise in the future on the funds representing the reinsurance to close.
The techniques used and assumptions made in determining outstanding claims reserves, both gross and net of
reinsurance, are described within the “Key sources of estimation uncertainty” and in the accounting policy for
“Claims provisions and related recoveries” section of the syndicate annual accounts.
The calculation of the reinsurance to close premium payable is determined by the directors on the basis of the
information available to them at the time. However, it is implicit in the estimation procedure that the ultimate liabilities
will be at a variance from the reinsurance to close so determined.
Where a reinsurance to close premium is payable to a third party syndicate, the net premium payable represents
the amount agreed with the third party. The only judgement involved is whether or not to accept the third party’s
price for taking on the underlying obligations, net of associated reinsurance. As a reinsurance to close, the contract
is deemed to be effective on closure.
Investment return
Investment return comprises investment income, realised investment gains and losses, movements in unrealised
gains and losses, investment expenses and charges and interest payable. The investment return arising in each
calendar year is allocated to years of account in proportion to the average funds available for investment attributable
to those years. Investment returns in respect of overseas deposits are allocated to the year of account which funded
these deposits.
Net operating expenses
Net operating expenses include acquisition costs, administrative
expenses and members’ standard personal
expenses. Reinsurers’ commissions and profit participations and consortia income represent contributions towards
operating expenses and are reported accordingly, in effect reducing the net operating expense.
Costs incurred by the managing agent on behalf of the syndicate are recognised on an accruals basis. No mark-up
is applied.
Net operating expenses are charged to the year of account to which they relate.
Acquisition costs
Acquisition costs represent costs arising from the conclusion of insurance contracts. They include both direct costs
such as brokerage and commission, and indirect costs such as administrative expenses connected with the
processing of proposals and the issuing of policies. Acquisition costs include fees paid to consortium leaders in
return for business written on behalf of the syndicate as a consortium member.
Acquisition costs are earned in line with the earning of the gross premiums to which they relate. The deferred
acquisition cost asset represents the proportion of acquisition costs which corresponds to the proportion of gross
premiums written that is unearned at the balance sheet date.
71 Apollo Syndicate 1971 | Annual Report and Accounts 2024
2. Accounting policies (continued)
Reinsurers’ commissions and profit participations
Under certain outwards reinsurance contracts the syndicate receives a contribution towards the expenses incurred.
The outwards reinsurance contracts may allow the ceding of acquisition costs and in certain instances an allocation
of administrative expenses. Reinsurance arrangements can also pay an overriding or profit commission.
The reinsurers’ share of expenses is included with operating expenses and earned in line with the related expense.
The reinsurers’ share of deferred acquisition cost liability corresponds to the gross deferred acquisition costs at the
balance sheet date.
Managing agent’s fees
and profit commission
The managing agent charges a management fee of 0.9% of syndicate capacity. This expense is recognised over
the 12 months following commencement of the underwriting year to which it relates.
The managing agent has agreed contractual terms with the capital providers to the syndicate for the payment of
profit commission based on the performance of the year of account.
Profit commission is charged by the managing agent at a rate of 20% of the profit on a year of account basis subject
to the operation of a 2-year deficit clause. Amounts charged to the syndicate become payable on closure of the
year of account although the managing agent may receive payments on account of anticipated profit commission if
interim profits are released to members.
Foreign currencies
Transactions in foreign currencies are translated into US Dollars which is the functional and presentational currency
of the syndicate. Transactions in foreign currencies are translated using the exchange rates at the date of the
transactions. The syndicat
e’s monetary assets and liabilities denominated in foreign currencies are translated into
the functional currency at the rates of exchange at the balance sheet date. Non-monetary assets and liabilities
denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the
exchange rate at the date that the fair value was determined. Non-monetary items denominated in foreign currencies
that are measured at historic cost are translated to the functional currency using the exchange rate at the date of
the transaction.
Foreign exchange differences arising on translation of foreign currency amounts are included in the non-technical
account.
72 Apollo Syndicate 1971 | Annual Report and Accounts 2024
3. Segmental analysis
An analysis of the balance on the technical account before investment return is set out below:
Gross
RITC
*
received
Gross
Gross
*
Reinsurance
balance
Total
premiums
written
claims
incurred
operating
expenses
2022 year of account after three
years
$’000
$’000
$’000
$’000
$’000
$’000
Direct insurance:
Motor (third party liability)
119
-
(54)
(19)
(18)
28
Motor (other classes)
150,257
-
(82,469)
(24,099)
(14,781)
28,908
Marine, aviation and transport
3,953
-
(2,883)
(634)
(41)
395
Third-party liability
83,867
-
(61,442)
(13,451)
(5,340)
3,634
Credit and suretyship
99
-
(22)
(16)
9
70
238,295
-
(146,870)
(38,219)
(20,171)
33,035
Reinsurance
30,586
96,288
(214,897)
(5,015)
87,817
(5,221)
268,881
96,288
(361,767)
(43,234)
67,646
27,814
*RITC received of $96,288,000 (net of anticipated reinsurance recoveries of $84,322,000) was received from the
2021 year of account.
The geographical analysis of gross written premiums by situs of the risk is as follows:
$’000
United States of America
258,076
Rest of the world
4,245
European Union Member States
227
United Kingdom
6,333
Total
268,881
All premiums were concluded in the United Kingdom.
4. Reinsurance to close premium receivable
Reported
IBNR
Total
$’000
$’000
$’000
Gross reinsurance to close premium receivable
40,634
139,976
180,610
Reinsurance recoveries anticipated
(20,898)
(63,424)
(84,322)
Reinsurance to close premium receivable, net of reinsurance
19,736
76,552
96,288
The 2022 year of account accepted 80% and 90% quota shares of the run-off of the 2019, 2020 and 2021 years of
account respectively for the ibott classes from Syndicate 1969 under the quota share agreement for the 2022 year
of account.
73 Apollo Syndicate 1971 | Annual Report and Accounts 2024
5. Reinsurance to close premium payable
$’000
Gross reinsurance to close premium payable
280,966
Reinsurance recoveries anticipated
(124,265)
Reinsurance to close premium, net of reinsurance (at average exchange rates)
156,701
Foreign exchange
78
Reinsurance to close premium payable, net of reinsurance (at closing exchange rates)
156,779
Reported
IBNR
Total
$’000
$’000
$’000
Gross reinsurance to close premium payable
71,213
209,799
281,012
Reinsurance recoveries anticipated
(36,395)
(87,838)
(124,233)
Reinsurance to close premium payable, net of reinsurance
34,818
121,961
156,779
6. Net operating expenses
$’000
Gross acquisition costs
23,826
Administrative expenses
4,554
Members’ standard personal expenses
14,854
Reinsurers’ commissions and profit participations
(25,005)
Total
18,229
Administrative expenses include:
$’000
Audit Fees
Fees
payable to the syndicate’s auditor for the audit of the syndicate’s annual financial
statements
145
Non-audit fees
Fees payable to the Syndicate’s auditor and its associates in respect of other services
pursuant to legislation
125
Other non-audit fees
24
Total
294
74 Apollo Syndicate 1971 | Annual Report and Accounts 2024
7. Staff number and costs
All staff are employed by a related company of ASML. The following amounts were incurred by the syndicate in
respect of salary costs:
$’000
Wages and salaries
7,118
Social security costs
958
Other pension costs
468
Total
8,544
The average monthly number of employees employed by the managing agency or related companies but working
for the syndicate each year and aggregated for the three years was as follows:
Number
Underwriting
6
Claims and reinsurance
3
Management, administration and finance
25
Investment
1
Total
35
There have been nine non-executive directors on the ASML board who have allocated their time to the syndicate
during the period from 1 January 2022 to 31 December 2024.
8. Emoluments of the directors of the managing agent
For the purposes of FRS 102, the directors of ASML are deemed to be the key management personnel.
The directors received remuneration recharged to the syndicate of $884,000
for the syndicate’s 20
22 year of
account charged as a syndicate expense.
Included in the total above are emoluments paid to the highest paid director amounting to $318,000. The
remuneration amount recharged to the syndicate for the Active Underwriter is $368,000 which is charged as a
syndicate expense.
75 Apollo Syndicate 1971 | Annual Report and Accounts 2024
9. Investment Income
$’000
Interest and similar income
From financial instruments designated at fair value through profit or loss
Interest and similar income
9,385
Interest on cash at bank
4,982
Other income from investments
From financial instruments designated at fair value through profit or loss
Gains on the realisation of investments
509
Losses on the realisation of investments
(123)
Unrealised gains on investments
988
Unrealised losses on the investments
(1,319)
Investment management expenses
(245)
Total investment return
14,177
Transferred to the technical account from the non-technical account
14,177
10. Financial investments
Market
value
$’000
Cost
$’000
Holdings in collective investment schemes
59,894
59,894
Debt securities and other fixed income securities
57,420
56,083
Total
117,314
115,977
11. Balance on technical account
.
$’000
Technical account balance before investment return & net operating
expenses
46,043
Acquisition costs
1,179
47,222
Allocated investment return transferred from the non-technical account
14,177
Net operating expenses other than acquisition costs
(19,408)
Profit on foreign exchange
684
Profit for the 2022 closed year of account
42,675
Members’ agents’ fees
(156)
Amounts due to members at 31 December 2024
42,519
The 2022 year of account profit balance will be distributed to members in 2025.
76 Apollo Syndicate 1971 | Annual Report and Accounts 2024
12. Debtors arising out of direct operations
$’000
Due within one year
15,028
13. Debtors arising out of reinsurance operations
$’000
Due within one year
3,553
14. Other debtors
$’000
Amounts due from Syndicate 1969
76,799
15. Overseas deposits
Overseas deposits are advanced as a condition of conducting underwriting business in certain countries and
therefore are restricted assets.
16. Creditors arising out of direct insurance operations
$’000
Due within one year
–
intermediaries
1,024
17. Creditors arising out of reinsurance operations
$’000
Due within one year
10,558
77 Apollo Syndicate 1971 | Annual Report and Accounts 2024
18. Related parties
All business with related parties is transacted on an arm’s length basis.
ASML is a
wholly owned subsidiary of Apollo Group Holdings Limited (“AGHL”).
Metacomet LLC, a US incorporated limited company, is a shareholder of AGHL with a seat on the board. Affiliated
companies of Metacomet LLC participate on the syndicate.
AGHL provided capacity for the 2022 year of account through Apollo No. 16 Limited (“APL16”). APL16 is a wholly
owned subsidiary of AGHL which has underwritten capacity of £47m on Syndicate 1971 for the 2022 year of
account.
Until 31 December 2021 the syndicate was a SPA with Syndicate 1969 as the host for the 2019 to 2021 years of
account. A quota share reinsurance contract was in place for each year of account ceding all gross premiums and
related expenses and investment income on the ibott Rover class. The quota share was 80% on the 2019 year of
account and 90% on the 2020 and 2021 year of account. The syndicate operated on a funds withheld basis and
Syndicate 1969 undertook all transactions on its behalf.
The syndicate has provided a quota share reinsurance contract for the run-off of the ibott Rover class 2021 and
prior year of account liabilities. This has the effect of maintaining the Syndicate 1969 and Syndicate 1971 share of
risk that existed under the SPA relationship.
The related party transactions and amounts outstanding at the balance sheet date are shown below:
Syndicate 1969
$’000
Gross written premium receivable
3
Gross Claims payable
(53,162)
Expenses payable
2
Allocated investment return
3,671
Other debtors
76,799
In accordance with the Managing Agent’s Agreement, ASML accrued managing agent’s fees (0.9% of syndicate
capacity) and profit commission (20% of profit). A two-year deficit clause is in place which requires losses to be
offset by future profits before further profit commission becomes payable.
APL is a wholly owned subsidiary of AGHL which employs all Apollo group staff, including underwriters, claims and
reinsurance staff. APL provides the services of these staff to ASML to enable it to function as managing agent for
the syndicate. APL is an appointed representative of ASML. APL also incurs a large proportion of the expenses in
respect of operating the syndicate. The cost of these services and expenses are recharged to ASML which in turn
recharges these to the syndicate on a basis that reflects its usage of resources, all recharges being without any
mark up on cost.
The transactions and amounts outstanding at the balance sheet date are shown below:
ASML
$’000
Managing agent’s fee
2,238
Expense recharges
11,614
Managing agent’s profit commission
10,800
Other debtor/(creditor)
-
78 Apollo Syndicate 1971 | Annual Report and Accounts 2024
Four year summary of underwriting results
As at 31 December 2024 (unaudited)
Notes to the summary:
1.
the summary has been prepared from the audited accounts of the syndicate.
2.
syndicate allocated capacity is expressed in US Dollars at the foreign exchange rate at the date the year of
account was closed.
3. i
llustrative personal expenses comprise the managing agent’s fee, contributions to the Central Fund, Lloyd’s
Annual Subscription incurred by a Name writing the illustrative share, irrespective of any minimum charge
applicable to the managing agent’s fee, an
d profit commission payable to the managing agent. This amount
excludes members’ agents’ fees.
4.
capacity utilised represents gross premium written net of acquisition costs expressed as a percentage of
allocated capacity using business planning foreign exchange rates.
5.
net capacity utilised represents written premium net of acquisition costs net of reinsurance expressed as a
percentage of allocated capacity using business planning foreign exchange rates.
6.
the underwriting profit ratio represents the balance on technical account expressed as a percentage of
gross premiums written.
2019
2020
2021
2022
Syndicate allocated capacity (£’000)
130,000
115,000
115,000
200,000
Syndicate allocated capacity ($’000) (note 2)
175,959
139,157
146,407
250,418
Number of underwriting members
50
12
14
15
Aggregate net premiums ($’000)
40,833
56,429
73,203
147,282
Result for a name with an illustrative share of
£10,000
$
$
$
$
Gross premiums
7,433
9,987
13,032
13,444
Net premiums
3,141
4,907
6,365
7,364
Premium for reinsurance to close an earlier year of
account
-
2,465
5,605
4,814
Net claims
(439)
(1,471)
(2,556)
(2,041)
Reinsurance to close the year of account
(2,177)
(5,623)
(8,365)
(7,835)
Syndicate operating expenses
(85)
26
205
(169)
(Loss)/Profit on exchange
(22)
36
59
36
Balance on technical account
418
340
1,313
2,169
Investment return
60
(77)
393
709
Profit before personal expenses
478
263
1,706
2,878
Illustrative personal expenses (note 3)
(231)
(229)
(510)
(743)
Profit after illustrative personal expenses
247
34
1,196
2,135
Capacity utilised (note 4)
49.3%
77.0%
97.2%
101.2%
Net capacity utilised (note 5)
17.6%
35.0%
44.8%
52.7%
Underwriting profit ratio (note 6)
5.6%
3.4%
10.1%
16.1%
Result as a percentage of stamp capacity
1.8%
0.3%
9.4%
17.0%