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ANNUAL REPORT AND
ACCOUNTS 2024
SYNDICATE 609
ANNUAL REPORT AND
ACCOUNTS 2024
SYNDICATE 609
CONTENTS
ATRIUM SYNDICATE 609 – ANNUAL ACCOUNTS
1 Report of the Directors of the Managing Agent
10 Statement of the Managing Agent’s Responsibilities
11 Independent Auditor’s Report
14 Statement of Comprehensive Income
15 Balance Sheet
17 Statement of Changes in Members’ Balances
18 Statement of Cash Flows
19 Notes to the Financial Statements
ATRIUM SYNDICATE 609 – UNDERWRITING YEAR ACCOUNTS
43 Report of the Directors of the Managing Agent
48 Statement of the Managing Agent’s Responsibilities
49 Independent Auditor’s Report 2021 year of account
52 Independent Auditor’s Report 2022 year of account
55 Underwriter’s Report
58 Statement of Comprehensive Income 2021 year of account
59 Balance Sheet 2021 year of account
60 Statement of Cash Flows 2021 year of account
61 Statement of Comprehensive Income 2022 year of account
62 Balance Sheet 2022 year of account
63 Statement of Cash Flows 2022 year of account
64 Notes to the Financial Statements
78 Seven Year Summary of Results
DIRECTORS
Christopher Stooke Non-Executive Chair
Nicole Coll Non-Executive Director
James Cox Executive Director
John Fowle Chief Executive Officer
Stephen Hearn Non-Executive Director
Peter Laidlaw Active Underwriter
Samit Shah Executive Director
Kirsty Steward Executive Director
ADVISORS
Auditor
KPMG LLP
Investment Manager
Wellington Management International Limited
Company Secretary
SGH Company Secretaries Limited
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SYNDICATE 609 ANNUAL ACCOUNTS 2024
REPORT OF THE DIRECTORS
OF THE MANAGING AGENT
The Directors of the managing agent present their report for the year
ended 31 December 2024 .
This Annual Report is prepared using the annual basis of accounting
as required by Statutory Instrument No. 1950 of 2008, the Insurance
Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008 (Lloyd’s Regulations 2008) and applicable United
Kingdom Accounting Standards, including Financial Reporting
Standard 102: The Financial Reporting Standard applicable in the
United Kingdom and Republic of Ireland (FRS102), Financial
Reporting Standard 103: Insurance Contracts (FRS103) and the Lloyd’s
Syndicate Accounts Instructions Version 2.0 as modified by the
Frequently Asked Questions Version 1.1 issued by Lloyd’s.
Separate underwriting year accounts for the 2021 year of account,
which has been left open as at 31 December 2024, and the 2022 year
of account, which closed on 31 December 2024, can be found on
pages 43 to 78.
RESULTS
The Board of Directors (the Board) are pleased to announce total
comprehensive income of £62.0m for syndicate 609 (the syndicate)
for calendar year 2024 (2023 – total comprehensive income of
£78.7m).
PRINCIPAL ACTIVITY AND REVIEW BUSINESS
The syndicate’s principal activity during the year continued to be the
transaction of general insurance and reinsurance business at Lloyd’s.
BUSINESS AND PERFORMANCE EVALUATION
The syndicate writes a diversified portfolio of classes of business that
include Accident & Health, Aviation, Liability, Marine, Non Marine
Direct & Facultative, Property & Casualty Binding Authorities,
Reinsurance, Upstream Energy and Terrorism. The syndicate is
managed in three distinct business groups – Property, Casualty and
Specialty.
In underwriting a diversified portfolio of classes, using their skill,
knowledge and historic claims data to evaluate the potential claims
costs and to determine the appropriate premium, and also by taking
a limited amount of market and credit risk in investing the cash flows
generated by this activity, the syndicate aims to reward its capital
providers with results that are considered attractive relative to the
risks assumed.
The key performance measure for the syndicate is return on adjusted
Economic Capital Assessment (ECA). This is determined by
comparing the total comprehensive income to the syndicate’s ECA
set by the Corporation of Lloyd’s on agreement of the syndicate’s
Solvency Capital Requirement (SCR) derived from its Internal Model,
including Solvency II balance sheet adjustments. Return on Capital
and the following Key Performance Indicators (KPl’s) are monitored
regularly by the Directors.
2024 2023
£m £m
Gross premiums written 1,026.5 971.6
Net earned premiums 846.3 804.8
Total comprehensive income 62.0 78.7
Loss ratio 57.5% 55.6%
Combined ratio 99.5% 96.8%
Investment return 59.4 56.5
Adjusted ECA 353.4 386.5
Return on adjusted ECA 17.5% 20.4%
During 2024 the syndicate continued to grow the underwriting
portfolio in line with the planned strategy taking advantage of strong
market conditions and rate rises. The classes experiencing the most
growth were Aviation War, Property Direct USA, Non Marine Direct &
Facultative and Property Reinsurance due to new business
opportunities, and by taking advantage of the current rating
environment by writing increased levels of business at higher pricing
levels. These increases were partially offset by the International
Liability classes due to the non renewal of certain accounts.
The syndicate has exposure to the fate of the western leased aircraft
in Russia. The situation remains complex and continues to develop
with multiple ongoing litigation in a number of different jurisdictions.
Key factors including underlying peril, date of loss, and whether any
form of negotiated settlement is feasible, all result in considerably
different ultimate outcomes to the syndicate.
In arriving at the reserving position for this loss, the financial
implications of various scenarios have been modelled, taking
account of the uncertainties listed above. In arriving at the reserving
position, the likelihood of the scenarios occurring was established
using expert judgement. A similar probabilistic approach was
employed at 31 December 2023, however, for this update we have
reduced and re-focused the number of scenarios under
consideration, in line with our evolving knowledge and expectations
of the situation.
The updates have resulted in ultimate gross reserves of £393.4m,
£113.8m net of reinsurance (31 December 2023 – £264.5m gross,
£84.5m net of reinsurance) as at 31 December 2024. The classes
impacted are Aviation Reinsurance, Aviation War and Marine XL. The
net loss reserve is split 3% to the 2020 YOA, 88% to the 2021 YOA and
9% to the 2022 YOA.
The Directors, in conjunction with the relevant subject matter
experts, continue to monitor the situation closely, taking legal advice
and meeting with market participants on a regular basis to ensure
that the most up to date information is reflected within the syndicate
reserves.
Due to the nature of the circumstances mentioned above, the
potential for variation to the booked reserves is considerably greater
than the normal level of reserve sensitivity to downside risk and the
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SYNDICATE 609 ANNUAL ACCOUNTS 2024
actual outcome of the loss could be in a particularly wide range with
greater than usual variability. As a result, the 2021 year of account will
continue to remain open until the level of reserve sensitivity to
downside risk normalises.
The specialty business group has been affected by the Dali loss
whereby a cargo ship collided with the Francis Scott Key Bridge in
Baltimore causing it to collapse on 26 March 2024. The syndicate has
exposure of £64.1m gross and £7.3m net of reinsurance contributing
7.6% and 1.1% to the gross and net loss ratios respectively. This loss is
across the Marine and Energy Liability, Non Gulf of Mexico Wind,
Marine Hull and Cargo Fine Art & Specie classes.
In the latter half of the year the property business group was affected
by Hurricanes Milton and Helene with gross and net losses of £29.0m
and £10.0m respectively contributing 3.4% and 1.2% to the gross and
net loss ratios. These losses are across the Property Reinsurance, Non
Marine Direct & Facultative, Property Direct USA and Cargo Fine Art &
Specie classes.
The casualty business group experienced deterioration to the prior
year reserves as a result of construction defect claims in Florida. The
syndicate has seen an increase in the frequency of lawsuits relating to
issues on its Florida based contractors book arising from construction
defects. Due to the continued adverse development seen during the
year additional gross reserves of £52.7m and £52.3m net of
reinsurance were recorded bringing the overall gross reserves for this
class to £132.0m (2023 – £79.4m) and net reserves to £131.3m
(2023 – £79.0m).
On 13 January 2025, the syndicate entered into a Loss Portfolio
Transfer (LPT) agreement with syndicate 2008, managed by Enstar
Managing Agency Ltd, the reinsurer.
The transaction covers the discontinued portfolios in Marine Treaty
Reinsurance, Property Treaty Reinsurance and US Contractors General
Liability. The cover relates to business underwritten in 2023 and
earlier (the majority relates to the 2021 year of account and earlier).
The LPT is a reinsurance contract by nature. The syndicate ceded net
loss reserves of $196.1m with a loss limit of $304.2m. All claims
handling responsibilities relating to the ceded policies have been
transferred to the reinsurer.
The premium payable associated with the transfer was $188.9m.
There were further acquisition costs and interest charges associated
with the transaction. After allowing for these costs the net impact to
the statement of comprehensive income was a profit of $2.3m. This
will be recorded in the 2025 results of the syndicate and has no
impact on the results as recorded for 31 December 2024.
The syndicate reserves comprise the best estimate plus a reserve
margin which is applied over and above the actuarial best estimate.
The level of reserve margin held above the best estimate is reviewed
annually and remains within the risk appetite that has been set by the
Board of Directors.
The higher combined ratio in 2024 is primarily driven by the reserve
movements discussed above.
As a result of the adverse prior year loss development arising from
the Russia/Ukraine losses and the Artisans sub class, the 2021 year of
account is in a cumulative loss as at 31 December 2024. The outcome
of the most recent modelling, as described earlier in this report, has
been factored in to the latest forecast range for the 2021 year of
account which is a result of between 0.0% and +10.0% of capacity
upon closure.
The overall performance of the syndicate in 2024 was adversely
affected by the high level of catastrophe losses in addition to the
deterioration on the prior years. This was offset by good underwriting
results on the open years of account as well as the expected positive
investment return contribution. The syndicate remains well
positioned to deliver on its underwriting strategy.
INVESTMENT PERFORMANCE
With effect from 1 January 2024 the syndicate changed its core
investment manager from New England Asset Management Limited
to Wellington Management International Limited. There have not
been any material changes to the overall asset allocation or
investment philosophy as a result of this change.
The investment portfolio returned a profit of £59.4m (2023 – £56.5m)
or 4.8% (2023 – 5.8%) on assets held. The fixed income market in
2024 saw a continuation of strong performance, particularly in higher
yielding assets. Interest rates experienced some volatility but
ultimately moved higher in intermediate and long maturities. The US
10 year Treasury yield rose to 4.58%. Shorter duration bonds
outperformed, as the Federal Reserve ultimately cut rates
cumulatively by 100 basis points, leading to shorter maturity
securities posting strong returns. Central banks’ efforts to engineer a
soft landing appeared more likely, contributing to positive sentiment
in the fixed income market.
The main sectors invested in are Investment Grade Corporates, US
Government bonds, Taxable Municipal bonds and Agency Mortgage
Backed Securities.
The table below compares the actual investment performance with
the 2023 calendar year based on profits returned by holdings in each
currency based on the average funds held in underlying investments,
excluding overseas deposits.
2024 2023
% %
US Dollars 4.8% 6.0%
Canadian Dollars 4.9% 4.4%
Euro 4.0% 4.9%
Sterling 5.7% 5.6%
REPORT OF THE DIRECTORS
OF THE MANAGING AGENT CONTINUED
3
SYNDICATE 609 ANNUAL ACCOUNTS 2024
RISK STRATEGY
Understanding its Risk Universe, the range of risks to which it is
exposed, quantification and management of those risks enable the
syndicate to determine the capital required to provide suitable
security to its policyholders and to ensure that syndicate capital
providers are delivered returns appropriate for the risk they assume.
Management of risk and return is the core discipline of the business,
against which all significant strategic and operational decisions are
evaluated.
The Directors are responsible for setting the risk strategy for the
syndicate and for oversight of its implementation. The syndicate’s risk
strategy is to actively take on underwriting risks across a balanced
range of (re)insurance classes where the expected margins more
than compensate for the risk to the syndicate and/or the costs of risk
mitigation e.g. reinsurance. In addition, the syndicate seeks
investment risk where it is adequately rewarded and the level of risk
does not constrain the syndicate’s underwriting.
As part of the annual business planning process, the Board
determines a Risk Policy Statement, which sets out the levels of
planned risk taking, sometimes referred to as Risk Appetite, the basis
on which these risk levels will be monitored, and the actions to be
taken in the event of deviations from the planned levels. The
Managing Agency has a comprehensive governance framework
within which the syndicate’s exposures to these risks are managed.
The governance framework is discussed further below.
PRINCIPAL RISKS AND UNCERTAINTIES
Governance
The Board recognises the critical importance of having efficient and
effective risk management systems in place but also recognises that
it can only mitigate risks, and not eliminate them entirely. The Board
has developed its Own Risk and Solvency Assessment (ORSA),
comprising the entirety of the processes that it uses to identify,
assess, monitor and report the risks faced by the syndicate and to
evaluate the amount of funds necessary to cover these risks taking
into consideration the business profile and risk appetite of the
syndicate. Critical to the efficacy of the ORSA is the effective
operation of the Risk Management Framework (RMF), the
Governance Structure and the syndicate Internal Model. The RMF
incorporates the so-called “Three Lines of Defence” approach to risk
management and reporting.
The RMF is the mechanism through which the syndicate ensures it is
implementing effective and enterprise wide risk management
practices across its business. Key to the business is the management
of risk, return and capital, against which all significant strategic and
operational business decisions are evaluated. The syndicate has
established systems of governance and risk management that enable
it to manage its business prudently.
The RMF is the articulation of these systems of risk management and
governance and how the various elements interact.
The RMF encompasses the broad range of activities undertaken
across the organisational hierarchy to ensure that risks are managed
appropriately, spanning from the high level strategy set by the Board
to the day-to-day underwriting decisions being made by syndicate
staff and the controls in place to govern these. The RMF can be
illustrated as follows:
Strategy: This describes the strategy setting process and explains
how this filters down through the organisation; incorporating the
syndicate’s Business Strategy, Business Plan, Risk Policy Statement and
Risk Policies.
Business Activities: All business units are responsible for
implementing the strategy and business plans in accordance with
the framework set out in the risk policies.
The people, controls, management information, processes and senior
management oversight in place across the business units serve as
the “First Line of Defence” in the RMF.
Risk Governance Structure: The Board has established a Risk
Governance Structure in order to ensure that risk is appropriately
identified, monitored, managed and reported across the
organisation; to review the activities of the business units; and to
ensure that the RMF is effectively designed, implemented and
governed.
The Risk Governance Structure is comprised of the Risk Committee
(RC), which fulfils the role of the syndicate’s Risk Management
Function, the Executive Risk Committee (ERC) and its three Risk
Sub-Committees, discussed further, below.
Independent Assurance: The syndicate has in place a Compliance
Function and an Actuarial Function in addition to the Risk
Management Function (fulfilled by the RC, the ERC and the Risk
Management Team). These functions have specific responsibilities
documented in their terms of reference and are staffed by fit and
proper individuals with suitable qualifications, expertise and
experience. The activities of these functions seek to provide the
Board with assurance as to the appropriateness and effectiveness of
the various elements of the RMF, the internal control environment,
and the calculation of capital.
There are a number of risk management tools which support
independent assessment and reporting of risk. Taken together this
Independent Assurance comprises the “Second Line of Defence”.
Independent Oversight: The RMF provides for independent
oversight and challenge via the operation of the Internal Audit
Function as well as the Audit Committee, which is a Committee of
the Board with membership comprised of Non-Executive Directors.
Together, these two groups provide the “Third Line of Defence”. The
Audit Committee, along with its broader responsibilities for the
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SYNDICATE 609 ANNUAL ACCOUNTS 2024
financial statements and financial reporting process, has oversight of
internal controls and the Internal Audit Function.
Risk Committee (RC)
The RC fulfils the Risk Management Function, in conjunction with the
ERC and the Risk Management Team, and coordinates the risk
management activities conducted for the syndicate. The RC has its
membership comprised of Non-Executive Directors though is attended
by various Executives to ensure that the RC is provided with the
information it requires to perform its role. It is responsible for ensuring
that the RMF and Internal Model operate effectively, and for
maintaining an aggregated and holistic view of risks to the syndicate
and reporting on them to the Board, committees and management as
appropriate. It also ensures that there is robust and effective
management, governance and oversight of the syndicate Internal
Model which is used to set capital and is also widely used within the
business.
Due to overarching considerations of climate change and
Environmental, Corporate and Social Governance (ESG) in strategy
setting and risk profile changes, this committee is also responsible for
oversight of the climate change and sustainability frameworks.
To support delivery of the RC’s responsibilities, there is the ERC and its
three Risk Sub-Committees, each being responsible for oversight,
review and challenge of the activities of the syndicate and in particular,
ensuring activities are within risk policies, that risks are suitably
identified, monitored and reported, and that appropriate contingency
plans are in place.
The principal risks to which the syndicate is exposed are discussed
below, together with the mitigation techniques adopted. For clarity,
the risks are analysed by reference to the Risk Sub-Committees that
have responsibility for the relevant risk area.
The ERC exists to support the RC and ensure that it can focus on key
issues and also to ensure that there is the scope for executive
discussion on risk issues and aggregation across the Risk Sub-
Committees prior to the RC. During 2025 this support to the RC will be
enhanced by bifurcating the ERC’s role into 2 separate committees –
Internal Model Governance Committee (IMGC) to focus on ensuring
the operational effectiveness of the Internal Model, and Risk
Governance and Oversight Committee (RGOC).
Insurance Risk Sub-Committee (IRSC)
The IRSC is responsible for oversight of insurance risk which includes
underwriting, claims, reserving, and reinsurance.
Underwriting risk is the risk that future losses are greater than
allowed for within premiums. This could be due to natural
fluctuations in claims frequencies and severities, changes in
economic and judicial environments, anti-selection, inappropriate
premium estimation or catastrophic loss activity.
Underwriting risk is mitigated through numerous controls including
underwriter peer review, authority limits, independent review of risks
written, and purchase of an appropriate reinsurance programme. The
Syndicate Business Forecast is completed annually and stipulates
those classes of business and concentration by class that will be
written during the forthcoming year. It is reviewed by the IRSC and
approved by the Board prior to being submitted to Lloyd’s for
approval. Actual performance during the year is monitored by
reference to the Syndicate Business Forecast.
The risk of catastrophic claims is mitigated by the syndicate having a
defined risk appetite which determines the net loss that it intends to
retain for major catastrophe events and where deemed appropriate,
reinsurance is purchased to limit the impact of losses. Although the
likelihood of occurrence is considered to be remote, there may be
circumstances where the loss from a particular catastrophe event
exceeds the net risk appetite perhaps due to the occurrence of a loss
that has not been considered or where the reinsurance purchased
proves to be insufficient. In addition climate change can affect the
occurrence and severity of weather related events. Whilst the impact
of these is researched, there is significant uncertainty to the impact
climate change has on events in the tail of distributions which
increases uncertainty in this area.
Reserving risk is the risk that there is insufficient provision for losses
that have already occurred.
Reserving risk is mitigated by the robust reserve adequacy exercise
that is performed on a quarterly basis by the Actuarial Function and
approved by the Board. The quarterly exercise involves a review of
the paid and outstanding claims and an assessment of the
appropriate provision for incurred but not reported (IBNR) claims. The
reserves are considered by the IRSC and approved by the Board. The
reserving is carried out based on historical development data, the
claims environment and information provided by lawyers and third
party claims adjusters.
Although a thorough review process is carried out, the reserves
carried may be more or less than adequate to meet the final cost of
claims.
The IRSC also reviews the proposed reinsurance programme that is
used to protect capital from the frequency and severity of losses that
may be sustained through underwriting the varied lines of business
written. The review includes analysis of the reinsurance cover being
purchased and assessment of the proposed counterparties.
Financial Risk Sub-Committee (FRSC)
The FRSC is responsible for oversight of financial risks and the steps
taken to mitigate them as they arise from investments, asset/liability
management, credit, liquidity and concentration risks. These risks are
discussed further below.
Investment risk is the risk that the syndicate’s earnings are affected by
changes in the value of the investment portfolio, such changes in
REPORT OF THE DIRECTORS
OF THE MANAGING AGENT CONTINUED
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SYNDICATE 609 ANNUAL ACCOUNTS 2024
value may be driven by changes in the economic and political
environment and by movements in interest and foreign exchange
rates. The syndicate’s investments are managed in accordance with
investment guidelines established by the Board and are reviewed on
a regular basis. The FRSC monitors the performance of the external
investment managers and the custodians responsible for the
safekeeping of the investments, and reports regularly to the Board.
Asset/liability mismatch is the risk that the syndicate could incur a
loss through inadequate matching of its investments with its
insurance liabilities. Due to the short tail nature of the majority of
these liabilities, the syndicate does not seek to achieve a precise
matching with the investment portfolio, instead developing an
investment duration guideline that is broadly in line with the average
payment profile of the liabilities. However, the syndicate substantially
mitigates exposures to currency mismatch by investing premiums in
the currency in which subsequent claims are most likely to be
incurred and periodic rebalancing to ensure that these remain
appropriate for the liabilities. The majority of the syndicate’s business
is denominated in US Dollars and accordingly the substantial part of
the investment portfolio is in US Dollar denominated investments.
The key aspect of credit risk is the risk of default by one or more of
the syndicate’s reinsurers, their investment counterparties, or
insurance intermediaries. Reinsurance is placed with security that
adheres to the reinsurance policy. The exposure to credit risk in the
investment portfolio is mitigated through adherence to the
investment guidelines which require the syndicate’s core investment
portfolios to be held in government and corporate debt with a high
credit quality rating and with a relatively short duration, thus
substantially mitigating the risk of sustaining losses from default.
Exposure to intermediaries is mitigated by rigorous review of new
intermediaries, contractual terms of business, regulated or
segregated client accounts, monitoring of balances and credit
control procedures.
Liquidity risk is the risk that the syndicate will not be able to meet its
short term liabilities as they fall due, owing to a shortfall in cash. This
risk is mitigated through holding invested funds in high credit quality
and short duration investments. Cash flow projections are also
reviewed on a regular basis. The need for overdraft facilities in case of
an unprojected cash flow deficit is also reviewed regularly.
Concentration risk is the exposure to loss that could arise if the bulk
of the amounts recoverable by the syndicate were dependent on a
limited number of reinsurers, or if investments were restricted to
limited numbers of counterparties or sectors. The risk is mitigated by
restricting the permitted cessions to individual reinsurers for any one
underwriting year and through the investment guidelines which limit
exposure to individual investment counterparties and sectors.
In 2024 the Board approved a revised Responsible Investment Policy.
The syndicate has not made any new investments in thermal
coal-fired power plants, thermal coal mines, oil sands or new Arctic
energy exploration activities since 1 January 2022. The syndicate aims
to reduce its exposure to carbon intensive industries where issuers
do not have defined transition strategies.
Operational Risk Sub Committee (ORSC)
The ORSC is responsible for oversight of the syndicate’s exposures to
operational and regulatory risks.
Operational risk is the risk of loss due to inadequate or failed
processes and procedures, people and systems, or external events.
The syndicate seeks to manage these risks by operating a control
based environment which consists of documented procedures,
segregation of duties and appropriate levels of review.
Regulatory risk is the risk of loss owing to a breach of regulatory
requirements or failure to respond to regulatory change. The
Managing Agency has a Compliance Officer and team who monitor
regulatory developments and assess the impact on agency policy
and maintain an ongoing open dialogue with both regulators and
Lloyd’s. They also carry out a compliance monitoring programme.
Regular reviews are performed by the Internal Audit department to
ensure that deviations from the agency’s policies, and control
weaknesses, are identified and reported to the appropriate level of
management and the Audit Committee when considered necessary.
Customer Oversight Group
The Customer Oversight Group is responsible for oversight of the
syndicate’s exposure to conduct risk and ensuring that the syndicate
is providing good outcomes to customers as set out in the Financial
Conduct Authority’s (FCA) Consumer Duty. The Consumer Oversight
Group report directly to the Board.
Conduct risk is the risk that, as part of writing and servicing insurance
policies, the syndicate fails to pay due regard to the interests of its
customers. This is mitigated through the application of a conduct risk
policy and procedures and through staff’s adherence to a Code of
Business Principles and Ethics. The syndicate is committed to
conducting its activities and stakeholder relationships in a fair and
honest manner and the highest standard of conduct, professionalism
and integrity is expected from all of its employees, with due regard
paid at all levels of the organisation to ensuring good outcomes for
customers. Key controls include training of staff, embedding of the
consideration of conduct risk as part of the business planning process
and through the product life-cycle and Board and governance
oversight and reporting. The Customer Oversight Group fulfils the role
of a “product oversight group” providing customer challenge and
perspective to the syndicate’s products. Stephen Hearn (Independent
Non-Executive Director) was appointed by the Board as Consumer
Duty Champion from July 2024 following the retirement of Stephen
Riley who had previously held this appointment.
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SYNDICATE 609 ANNUAL ACCOUNTS 2024
Executive Committee (XCo)
The XCo deals with the day-to-day activities of the Managing Agent
and is responsible for delivering the annually agreed priorities,
developing and implementing business plans, policies, procedures
and budgets that have been recommended and approved by the
Board, monitoring the operating and financial performance of the
syndicate, prioritising and allocating investment and resources, and
managing the risk profile of the syndicate. The XCo is responsible for
the people strategy and establishment of the culture, values and
behaviours of the organisation. The XCo implements policy and
strategy adopted by the Board and deals with all operational matters
affecting the syndicate.
XCo is an executive committee of the Board and is the overall
decision-making body for performance and delivery, under
delegated authority from the Board. Members of XCo include the
Executive Directors of the Managing Agent, the Chief Strategy Officer
and the Head of Culture and Strategy Integration with the Chair
being the Chief Executive Officer of the Managing Agent or, in their
absence, any other member of the committee.
Culture Committee
The Culture Committee is a sub-committee of the XCo which reviews
and provides formal governance over all areas relating to culture,
namely the creation of a work environment that reflects the XCo
approved values and enables its people to achieve their full potential
and do their best work. It has a diverse membership from across the
business, of different levels of seniority, which is refreshed annually.
Lloyd’s Europe Operating Model
As part of Lloyd’s Brexit arrangements, Atrium Underwriters Limited
(the Company) has entered into an outsourcing agreement and a
secondment agreement with Lloyd’s Insurance Company S.A. (LIC)
and reinsurance contracts between the syndicate and LIC. This
structure covers business underwritten by the Company on behalf of
LIC since 1 January 2019 as well as legacy EEA business transferred to
LIC under the Lloyd’s Part VII Transfer, which had a scheme effective
date of 30 December 2020. The outsourcing agreement covers the
activities performed by the Company on behalf of LIC in writing and
servicing the relevant business. The secondment agreement
(effective 1 January 2022) covers the provision of seconded Atrium
underwriters to LIC under the Lloyd’s European Operating Model. The
reinsurance contracts cede 100% of the business written by, or
transferred to, LIC back to the syndicate.
CLIMATE CHANGE AND SUSTAINABILITY
Governance
Having introduced the role of Head of Sustainability in 2023, 2024
saw the increased importance placed on assessing climate change
and associated sustainability risks and opportunities, as well as
ensuring the syndicate meets applicable regulatory requirements.
This role reports directly into the Chief Risk Officer who is the
Executive Director with responsibility for sustainability and managing
the financial risks from climate change risk. The Head of Sustainability
also communicates regularly with the XCo to ensure sustainability
and climate change are incorporated into strategic decisions.
In terms of formal governance, the RC is responsible for reviewing
updates to the sustainability strategy and framework prior to Board
approval, as well as assessing other sustainability-related risks. This is
due to the overarching ramifications of climate change and other
sustainability factors in strategy setting and risk profile changes.
Sustainability is a standing agenda item for this Committee.
Strategy
Climate risk can be broadly divided into three categories: physical,
transition and liability. Physical risk relates to the change in climate and
weather events which have the potential to directly affect the economy.
Transition risk can occur when moving towards a lower carbon economy
and how the speed of the transition may affect certain sectors and affect
financial stability. Liability risk refers to potential increased litigation against
policyholders from individuals or businesses who have experienced losses
because of physical or transition risk.
The syndicate has a dedicated sustainability strategy to manage
physical, transition and liability aspects. Strategic objectives have
been mapped to, and integrated with, the overall group strategy to
ensure risks and opportunities from climate change and other
sustainability aspects are fully embedded within the business.
The syndicate has always been fully focused on managing the
physical risks of the business it writes and it has a formalised
framework specifically for managing physical climate risk. This
addresses potential, current and future climate impacts on the
natural catastrophe exposed portfolio by regional peril combinations
and identifies potential risk mitigation strategies.
An assessment of transition risk is made as part of the syndicate’s
ORSA process and further analysis is performed during the business
planning process. This allows the syndicate to identify areas of the
portfolio with more material exposures as well as providing some
metrics to our categorisations. The percentage of overall estimated
premium income deemed at risk from a transition to a lower carbon
economy decreased over the year due to a change in the portfolio
mix. The transition risk from our investment portfolio is limited due to
the short duration of the portfolio and the lack of investment in
equities.
In terms of liability risk, the syndicate assesses its exposures on
high-risk classes via risk assessments looking at potential litigation
risks. This is included in its Internal Model but is currently not deemed
material in the short term. In addition, the risk team review current
trends in climate risk litigation and their applicability to the
underwriting portfolios. The syndicate is focused on taking
advantage of the new opportunities that a shift to a low carbon
REPORT OF THE DIRECTORS
OF THE MANAGING AGENT CONTINUED
7
SYNDICATE 609 ANNUAL ACCOUNTS 2024
economy might bring, whilst being mindful of the commerciality of
these and managing the associated risks encountered with new
technology, scarcity of data, uncertainty of forward-looking scenarios
and the potential of systemic risk.
Sustainability considerations are incorporated into the annual business
planning submissions, with each class of business factoring in both the
risks and opportunities posed to them. The IRSC use this information, with
input from the Head of Sustainability, as part of its role in recommending
the plan for approval to the Board. This is an iterative process which will be
enhanced year-on-year to help shape the strategy.
Risk Management
The aim of risk management is to ensure durability and value for
stakeholders by managing the risks and opportunities presented by
climate change in a holistic and balanced manner, embracing the
values of an integrated governance structure. The syndicate’s
collaborative culture and relative agility in the Lloyd’s market means it
is well placed to achieve this ideal. The Head of Sustainability works
with almost all areas of the business including the Board and XCo,
Underwriting, Claims, Actuarial, Finance, Internal Audit, Exposure
Management and Operations to ensure a joined-up approach in
driving strategic and everyday decisions. In addition, working groups
are formed across the business as required to tackle various topical
subjects, such as underwriting portfolio measurement, litigation risk,
responsible investing and underwriting opportunities.
The syndicate has formal sustainable underwriting rules and
guidelines which state its appetite for certain risks. These rules and
guidelines incorporate the syndicate’s stance on areas which it
deems not to be conducive with its wider sustainability strategy, as
well as formalising compliance with Lloyd’s guidance regarding no
new cover for thermal coal-fired power plants, thermal coal mines, oil
sands and Arctic energy exploration activities. This is an evolving
document which sits alongside the business principles and ethics
policy. In addition, the syndicate has a comprehensive responsible
investment policy which covers its governance framework, risk
appetite, metrics and ESG integration. The syndicate has processes in
place to help ensure underwriters and investment managers comply
with these.
The syndicate continues to build on existing data and metrics related
to climate risk, conduct tests of existing models, systems and
processes to ensure they are adequate and relevant, build on
scenario analysis and stress testing, review new opportunities
(underwriting and technological) and increase knowledge and
education. Third party data is used on a measured basis, ensuring
that both the advantages and disadvantages are understood. The
syndicate endeavours to incorporate climate risk and sustainability
concerns across all decision-making processes and act as a
responsible business.
Metrics and Targets
The syndicate has estimated its carbon emissions which are shown in
the table below. Our 2024 emissions are not available yet and the
syndicate has not estimated the Scope 3 disclosures with respect to
underwriting and investment portfolios.
Energy and greenhouse gas disclosures 2023 2022
Scope 1 (natural gas, other fuels,
refrigerants) tCO
2
e: 147.4 49.5
Scope 2 (purchased electricity –
location-based) tCO
2
e: 68.7 73.8
Scope 3:
Business travel tCO
2
e: 941.7 522.2
Commuting/WFH, paper services,
tech/hardware, data centres, waste, water tCO
2
e: 732.0 164.5
Total tCO
2
e: 1,889.8 810.0
Number of full-time employees 182 174
Carbon intensity – Total tCO
2
e/FTE 10.4 4.7
The increase in emissions from 2022 to 2023 was mainly due to a
resumption to more normal working patterns post-COVID. The
syndicate offsets all calculated emissions on an annual basis. The
syndicate’s carbon price for 2023 was $41.6 per tonne, slightly down
from $45.2 per tonne in 2022 but the proportion of credits which
remove carbon from the atmosphere (e.g. through reforestation)
increased from 55% to 65% for 2023. The remaining credits are
avoidance credits which prevent additional carbon from entering the
atmosphere e.g. by providing more efficient cookstoves.
From mid-2024, the syndicate has been able to access its waste data.
It is currently monitoring this and making improvements to
operations where it can, with a view to improving the recycling rates.
From an investment perspective, the investment managers monitor
and report ESG ratings, weighted average carbon intensity (WACI),
science-based targets (SBTs) summary and implied temperature rise
(ITR) summary for the portfolio where available. Typically this is only
for corporate bonds which are the largest asset class. In 2025 the
syndicate has set targets around all of these metrics for the first time.
The investment managers also report how they are engaging with
companies on ESG matters and this is reviewed quarterly.
8
SYNDICATE 609 ANNUAL ACCOUNTS 2024
DIRECTORS AND OFFICERS
The Directors & Officers of the managing agent who served during
the year ended 31 December 2024 and to the date of signing these
financial statements were as follows:
Martha Bruce, Shakespeare Martineau LLP (Company Secretary;
Resigned 31 March 2024)
Nicole Coll
James Cox
John Fowle
Stephen Hearn (Appointed 31 July 2024)
Peter Laidlaw (Active Underwriter 609)
James Lee (Resigned 31 December 2024)
Stephen Riley (Resigned 31 July 2024)
SGH Company Secretaries Limited (Company Secretary; Appointed
31 March 2024)
Samit Shah
Kirsty Steward
Christopher Stooke
DIRECTORS’ INTERESTS
Details of Directors’ interests may be found in note 17 to the
accounts.
GOING CONCERN
The Directors have performed an assessment of the syndicate’s ability
to continue as a going concern, including indirect impacts of the war
in Ukraine.
The syndicate has exposure to the fate of the western leased aircraft
in Russia. The situation remains complex and continues to develop
with multiple ongoing litigation in a number of different jurisdictions.
Key factors including underlying peril, date of loss, and whether any
form of negotiated settlement is feasible, all result in considerably
different ultimate outcomes to the syndicate.
In arriving at the reserving position for this loss, the financial
implications of various scenarios have been modelled, taking
account of the uncertainties listed above. In arriving at the reserving
position, the likelihood of the scenarios occurring was established
using expert judgement. A similar probabilistic approach was
employed at 31 December 2023. However, for this update we have
reduced and re-focused the number of scenarios under
consideration, in line with our evolving knowledge and expectations
of the situation.
The updates have resulted in ultimate gross reserves of £393.4m,
£113.8m net of reinsurance (31 December 2023 – £264.5m gross,
£84.5m net of reinsurance) as at 31 December 2024. The classes
impacted are Aviation Reinsurance, Aviation War and Marine XL. The
net loss reserve is split 3% to the 2020 YOA, 88% to the 2021 YOA and
9% to the 2022 YOA.
The Directors, in conjunction with the relevant subject matter
experts, continue to monitor the situation closely, taking legal advice
and meeting with market participants on a regular basis to ensure
that the most up to date information is reflected within the syndicate
reserves.
Due to the nature of the circumstances mentioned above, the
potential for variation to the booked reserves is considerably greater
than the normal level of reserve sensitivity to downside risk and the
actual outcome of the loss could be in a particularly wide range with
greater than usual variability. As a result, the 2021 year of account will
continue to remain open until the level of reserve sensitivity to
downside risk normalises.
The syndicate has a documented Stress & Scenario Testing
Framework which sets out the stress, scenario and reverse stress tests
conducted during the year and the governance, reporting and
escalation procedures around these. As per its role to oversee and
coordinate the stress testing process, the ERC has reviewed this
framework and the RC has also reviewed and challenged the
Framework tests.
The purpose of scenario testing is to assess the financial impact
caused by a series of major detrimental events within one scenario.
The total financial impact is then used as a check of the Internal
Model’s robustness and the syndicate’s overall capital adequacy. The
scenarios used by management are informed by the syndicate
business plan, making them bespoke to the business. As part of the
stress testing work, reverse stress tests were also completed. Reverse
stress tests assess scenarios and circumstances that would render the
syndicate’s business model unviable, thereby identifying potential
business vulnerabilities.
The Board’s long term strategy is to support the syndicate in
managing the market cycle and providing long term sustainable
returns to capital providers and shareholders, which may include
increasing stamp capacity in order to take advantage of rising rates
and new business opportunities. The syndicate continues to take
advantage of the current rating environment by writing increased
levels of business at higher pricing levels in 2024. The syndicate was
able to open the 2025 year of account with increased stamp capacity
of £983.0m and at the current time there is an expectation that the
syndicate will open a 2026 year of account.
As at 31 December 2024, the Board considers that the syndicate has
more than adequate liquidity to pay its obligations as they fall due.
The syndicate held cash and cash equivalents of £21.1m and fixed
maturity investments with maturity dates of less than one year of
£495.8m.
Based on the going concern assessment performed as at
31 December 2024, the Directors have formed a judgment that there
is a reasonable expectation that the syndicate has adequate
resources to continue in operational existence in the foreseeable
future, a period of at least 12 months from the date of signing these
REPORT OF THE DIRECTORS
OF THE MANAGING AGENT CONTINUED
9
SYNDICATE 609 ANNUAL ACCOUNTS 2024
financial statements. The 2025 year of account has opened and
based on the Directors assessment that the syndicate has sufficient
resources to do so, they have a reasonable expectation to be in a
position to open a 2026 year of account. Accordingly, the Directors
continue to adopt the going concern basis in preparing the annual
report and financial statements.
RE-APPOINTMENT OF AUDITORS
The Board of Directors have re -appointed KPMG LLP as the syndicate
auditor for the year ending 31 December 2025. KPMG LLP have indicated
their willingness to continue in office as the syndicate auditor.
SYNDICATE ANNUAL GENERAL MEETING
As permitted under the Syndicate Meetings (Amendment No.1)
Byelaw (No.18 of 2000) AUL does not propose to hold a Syndicate
Annual General Meeting of the members of the syndicate. Members
may object to this proposal or the intention to reappoint auditors
within 21 days of the issue of these financial statements. Any such
objection should be addressed to James Smith, Compliance Officer,
at the registered office.
DISCLOSURE OF INFORMATION TO THE AUDITORS
So far as each person who was a Director of the managing agent at
the date of approving this report is aware, there is no relevant audit
information, being information needed by the auditor in connection
with its report, of which the auditor is unaware. Having made
enquiries of fellow Directors of the agency and the syndicate’s
auditor, each Director has taken all the steps that he/she is obliged to
take as a Director in order to make himself/herself aware of any
relevant audit information and to establish that the auditor is aware
of that information.
By order of the Board
John Fowle
Chief Executive Officer
4 March 2025
10
SYNDICATE 609 ANNUAL ACCOUNTS 2024
The Directors of the managing agent are responsible for preparing
the syndicate annual accounts in accordance with applicable law and
regulations.
Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate
Accounts) Regulations 2008 requires the directors of the managing
agent to prepare their syndicate’s annual accounts for each financial
year. Under that law they have elected to prepare the annual
accounts in accordance with UK Accounting Standards and
applicable law (UK Generally Accepted Accounting Practice),
including FRS 102 The Financial Reporting Standard applicable in the
UK and Republic of Ireland. The financial statements are also
prepared in accordance with Lloyd’s Syndicate Accounts Instructions
Version 2.0 as modified by the Frequently Asked Questions Version
1.1 issued by Lloyd’s.
Under Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008 the directors of the managing
agent must not approve the annual accounts unless they are satisfied
that they give a true and fair view of the state of affairs of the
syndicate and of the profit or loss of the syndicate for that period. In
preparing these annual accounts, the directors of the managing
agent are required to:
• Select suitable accounting policies and then apply them
consistently;
• Make judgements and estimates that are reasonable and
prudent;
• State whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the annual accounts;
• Assess the syndicate’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and
• Use the going concern basis of accounting unless they either
intend to cease trading, or have no realistic alternative but to
do so.
The Directors of the managing agent are responsible for keeping
adequate accounting records that are sufficient to show and explain
the syndicate’s transactions and disclose with reasonable accuracy at
any time the financial position of the syndicate and enable them to
ensure that the annual accounts comply with the Insurance
Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008. They are responsible for such internal control as
they determine is necessary to enable the preparation of syndicate
annual accounts that are free from material misstatement, whether
due to fraud or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the
syndicate and to prevent and detect fraud and other irregularities.
The Directors of the managing agent are responsible for the
maintenance and integrity of the syndicate and financial information
included on the syndicate’s website. Legislation in the UK governing
the preparation and dissemination of syndicate annual accounts may
differ from legislation in other jurisdictions.
STATEMENT OF THE MANAGING
AGENT’S RESPONSIBILITIES
11
SYNDICATE 609 ANNUAL ACCOUNTS 2024
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF SYNDICATE 609
OPINION
We have audited the syndicate annual accounts of syndicate 609
(“the syndicate”) for the year ended 31 December 2024 which
comprise the Statement of Comprehensive Income: Technical
account – General business, Statement of Comprehensive Income:
Non-technical account, Balance Sheet – Assets, Balance Sheet –
Liabilities, Statement of Changes in Members’ Balances, Statement of
Cash Flows, and related notes, including the accounting policies in
note 3.
In our opinion the syndicate annual accounts:
• give a true and fair view of the state of the syndicate’s affairs as at
31 December 2024 and of its profit for the year then ended;
• have been properly prepared in accordance with UK accounting
standards, including FRS 102 The Financial Reporting Standard
applicable in the UK and Republic of Ireland; and
• have been prepared in accordance with the requirements of the
Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate
Accounts) Regulations 2008, and Sections 1 and 5 of the
Syndicate Accounts Instructions Version 2.0 issued by Lloyd’s, as
modified by the Syndicate Accounts Frequently Asked Questions
Version 1.1 dated 18 February 2025 issued by Lloyd’s (together
“the Syndicate Accounts Instructions”).
BASIS FOR OPINION
We conducted our audit in accordance with International Standards
on Auditing (UK) (“ISAs (UK)”), applicable law, and, under the terms of
our engagement letter dated 14 November 2022, the Syndicate
Account Instructions. Our responsibilities are described below. We
have fulfilled our ethical responsibilities under, and are independent
of the syndicate in accordance with, UK ethical requirements
including the FRC Ethical Standard as applied to other entities of
public interest. We believe that the audit evidence we have obtained
is a sufficient and appropriate basis for our opinion.
EMPHASIS OF MATTER – LEVEL OF UNCERTAINTY
IN RUSSIAN AVIATION EXPOSURES
We draw attention to Note 2 of the syndicate annual accounts,
concerning the significant level of uncertainty in relation to the
possible claims arising out of the syndicate’s Russian aviation
exposures. This matter results in more potential variability than would
ordinarily be the case in the potential outcomes regarding technical
provisions.
Our opinion is not modified in respect of this matter.
GOING CONCERN
The Directors of the Managing Agent (“the Directors”) have prepared
the syndicate annual accounts on the going concern basis as they do
not intend to cease underwriting or to cease its operations, and as
they have concluded that the syndicate’s financial position means
that this is realistic. They have also concluded that there are no
material uncertainties that could have cast significant doubt over its
ability to continue as a going concern for at least a year from the date
of approval of the syndicate annual accounts (“the going concern
period”).
In our evaluation of the Directors’ conclusions, we considered the
inherent risks to the syndicate’s business model and analysed how
those risks might affect the syndicate’s financial resources or ability to
continue operations over the going concern period, including
reviewing correspondence with Lloyd’s to assess whether there were
any known impediments to establishing a further year of account.
Our conclusions based on this work:
• we consider that the Directors’ use of the going concern basis of
accounting in the preparation of the syndicate annual accounts
is appropriate; and
• we have not identified, and concur with the Directors’
assessment that there is not, a material uncertainty related to
events or conditions that, individually or collectively, may cast
significant doubt on the syndicate’s ability to continue as a going
concern for the going concern period.
However, as we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent with
judgements that were reasonable at the time they were made, the
above conclusions are not a guarantee that the syndicate will
continue in operation.
FRAUD AND BREACHES OF LAWS AND
REGULATIONS – ABILITY TO DETECT
Identifying and responding to risks of material
misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”)
we assessed events or conditions that could indicate an incentive or
pressure to commit fraud or provide an opportunity to commit fraud.
Our risk assessment procedures included:
• Enquiring of directors, the audit committee, internal audit and
inspection of policy documentation as to the syndicate and
Managing Agent’s high-level policies and procedures to prevent
and detect fraud, including the internal audit function, and the
syndicate and Managing Agent’s channel for “whistleblowing”, as
well as whether they have knowledge of any actual, suspected or
alleged fraud.
• Reading Board and audit committee minutes.
• Considering remuneration incentive schemes and performance
targets for management and directors.
12
SYNDICATE 609 ANNUAL ACCOUNTS 2024
• Using analytical procedures to identify any unusual or
unexpected relationships.
• We communicated identified fraud risks throughout the audit
team and remained alert to any indications of fraud throughout
the audit.
As required by auditing standards, and taking into account possible
pressures to meet profit targets and our overall knowledge of the
control environment we perform procedures to address the risk of
management override of controls, in particular the risk that
management may be in a position to make inappropriate accounting
entries and the risk of bias in accounting estimates and judgements
related to the valuation of claims reserves.
Valuation of these liabilities, especially in respect of the incurred but
not reported (IBNR) component, is highly judgmental as it requires a
number of assumptions to be made such as initial expected loss
ratios and claim development patterns all of which carry high
estimation uncertainty and are difficult to corroborate creating
opportunity for management to commit fraud.
On this audit we do not believe there is a fraud risk related to revenue
recognition because of the limited estimation involved in accruing
premium income. We did not identify any additional fraud risks.
In determining the audit procedures, we took into account the
results of our evaluation and testing of the operating effectiveness of
some of the fraud risk management controls.
We performed procedures including:
• Identifying potential journal entries to test based on risk criteria
and comparing these entries to supporting documentation.
These included entries consisting of unusual double entries to
cash accounts or journals posted by individuals who typically do
not make journal entries.
• We assessed the appropriateness and consistency of the
methods and assumptions used for reserving. For a selection of
classes of business we considered to be higher risk, we
performed alternative projections to the actuarial best estimate
using our own gross loss ratios and compared these to the
syndicate’s results, assessing the results for evidence of bias.
Identifying and responding to risks of material
misstatement related to compliance with laws and
regulations
We identified areas of laws and regulations that could reasonably be
expected to have a material effect on the financial information from
our general commercial and sector experience, through discussion
with the directors and other management (as required by auditing
standards), from inspection of the Managing Agent’s regulatory and
legal correspondence and discussed with the directors and other
management the policies and procedures regarding compliance
with laws and regulations.
As the syndicate is regulated, our assessment of risks involved
gaining an understanding of the control environment including the
entity’s procedures for complying with regulatory requirements.
We communicated identified laws and regulations throughout our
team and remained alert to any indications of non-compliance
throughout the audit.
The potential effect of these laws and regulations on the financial
information varies considerably.
Firstly, the syndicate is subject to laws and regulations that directly
affect the financial information including financial reporting
legislation (such as the Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008, and the
Lloyd’s Syndicate Accounts Instructions), and we assessed the extent
of compliance with these laws and regulations as part of our
procedures on the related financial information items.
Secondly, the syndicate is subject to many other laws and regulations
where the consequences of non-compliance could have a material
effect on amounts or disclosures in the financial information, for
instance through the imposition of fines or litigation or the loss of the
syndicate’s capacity to operate. We identified the following areas as
those most likely to have such an effect: corruption and bribery,
compliance with regulations relating to sanctions due to the nature
of the business written by the syndicate, financial products and
services regulation and the Solvency II regime including capital
requirements, recognising the financial and regulated nature of the
syndicate’s activities. Auditing standards limit the required audit
procedures to identify non-compliance with these laws and
regulations to enquiry of the directors and other management and
inspection of regulatory and legal correspondence, if any. Therefore, if
a breach of operational regulations is not disclosed to us or evident
from relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or
breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable
risk that we may not have detected some material misstatements in
the financial information, even though we have properly planned
and performed our audit in accordance with auditing standards. For
example, the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the
financial information, the less likely the inherently limited procedures
required by auditing standards would identify it.
In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal
controls. Our audit procedures are designed to detect material
misstatement. We are not responsible for preventing non-
compliance or fraud and cannot be expected to detect non-
compliance with all laws and regulations.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF SYNDICATE 609 CONTINUED
13
SYNDICATE 609 ANNUAL ACCOUNTS 2024
OTHER INFORMATION – REPORT OF THE
DIRECTORS OF THE MANAGING AGENT
The Directors are responsible for the Report of the Directors of the
Managing Agent. Our opinion on the syndicate annual accounts
does not cover that report and we do not express an audit opinion
or, except as explicitly stated below, any form of assurance
conclusion thereon.
Our responsibility is to read the Report of the Directors of the
Managing Agent and, in doing so, consider whether, based on our
syndicate annual accounts audit work, the information therein is
materially misstated or inconsistent with the syndicate annual
accounts or our audit knowledge. Based solely on that work:
• we have not identified material misstatements in the Report of
the Directors of the Managing Agent;
• in our opinion the information given in the Report of the
Directors of the Managing Agent is consistent with the syndicate
annual accounts; and
• in our opinion the Report of the Directors of the Managing Agent
has been prepared in accordance with the requirements of the
Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate
Accounts) Regulations 2008.
MATTERS ON WHICH WE ARE REQUIRED TO
REPORT BY EXCEPTION
Under the Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008, we are required to report to
you if, in our opinion:
• adequate accounting records have not been kept on behalf of
the syndicate; or
• the syndicate annual accounts are not in agreement with the
accounting records; or
• certain disclosures of Managing Agent’s emoluments specified
by law are not made; or
• we have not received all the information and explanations we
require for our audit.
We have nothing to report in these respects.
RESPONSIBILITIES OF THE DIRECTORS OF THE
MANAGING AGENT
As explained more fully in their statement set out on page 10, the
Directors of the Managing Agent are responsible for: the preparation
of the syndicate annual accounts in accordance with the
requirements of the Insurance Accounts Directive (Lloyd’s Syndicate
and Aggregate Accounts) Regulations 2008 and the Syndicate
Accounts Instructions, and for being satisfied that they give a true
and fair view; such internal control as they determine is necessary to
enable the preparation of syndicate annual accounts that are free
from material misstatement, whether due to fraud or error; assessing
the syndicate’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern; and using the going
concern basis of accounting unless they either intend to cease
operations, or have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES
Our objectives are to obtain reasonable assurance about whether the
syndicate annual accounts as a whole are free from material
misstatement, whether due to fraud or error, and to issue our opinion
in an auditor’s report. Reasonable assurance is a high level of
assurance, but does not guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of the syndicate annual accounts.
A fuller description of our responsibilities is provided on the FRC’s
website at www.frc.org.uk/auditorsresponsibilities.
The Directors of the Managing Agent are required, under the
Syndicate Accounts Instructions, to include these financial
statements within a document to which XBRL tagging has been
applied. This auditor’s report provides no assurance over whether the
XBRL tagged document has been prepared in accordance with those
requirements.
THE PURPOSE OF OUR AUDIT WORK AND TO
WHOM WE OWE OUR RESPONSIBILITIES
This report is made solely to the syndicate’s members, as a body, in
accordance with the Insurance Accounts Directive (Lloyd’s Syndicate
and Aggregate Accounts) Regulations 2008 and the terms of our
engagement letter by the Managing Agent. Our audit work has been
undertaken so that we might state to the syndicate’s members those
matters we are required to state to them in an auditor’s report and
the further matters we are required to state to them in accordance
with the terms agreed with the Managing Agent and for no other
purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the syndicate and the
syndicate’s members, as a body, for our audit work, for this report, or
for the opinions we have formed.
Elizabeth Cox (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London E14 5GL
4 March 2025
14
SYNDICATE 609 ANNUAL ACCOUNTS 2024
STATEMENT OF COMPREHENSIVE INCOME
TECHNICAL ACCOUNT – GENERAL BUSINESS
FOR THE YEAR ENDED 31 DECEMBER 2024
2024 2023
Notes £’000 £’000 £’000 £’000
Earned premiums, net of reinsurance
Gross premiums written 5 1,026,490 971,622
Outward reinsurance premiums (162,915 ) (134,627 )
Net premiums written 863,575 836,995
Change in the provision for unearned premiums:
Gross amount (24,604 ) (29,910 )
Reinsurer’s share 7,361 (2,253 )
Change in the net provision for unearned premiums (17,243 ) (32,163 )
Earned premiums, net of reinsurance 846,332 804,832
Allocated investment return transferred from the non-technical account 59,393 56,532
Claims incurred, net of reinsurance
Claims paid:
Gross amount (363,232 ) (370,512 )
Reinsurer’s share 50,191 49,285
Net claims paid (313,041 ) (321,227 )
Change in the provision for claims:
Gross amount (292,665 ) (165,398 )
Reinsurer’s share 119,219 39,151
Change in the net provision for claims (173,446 ) (126,247 )
Claims incurred, net of reinsurance (486,487 ) (447,474 )
Net operating expenses 7 (355,440 ) (331,286 )
Balance on the technical account for general business 63,798 82,604
All operations relate to continuing activities.
NON-TECHNICAL ACCOUNT – GENERAL BUSINESS
FOR THE YEAR ENDED 31 DECEMBER 2024
2024 2023
Notes £’000 £’000
Balance on the general business technical account 63,798 82,604
Investment income 10 35,024 29,394
Net realised gains/(losses) on investments 10 16,569 (2,425 )
Net unrealised gains on investments 10 8,554 30,203
Investment expenses and charges 10 (754 ) (640 )
Total investment return 59,393 56,532
Allocated investment return transferred to general business technical account (59,393 ) (56,532 )
Foreign exchange losses (4,995 ) (545 )
Profit for the financial year 58,803 82,059
Other comprehensive income
Currency translation differences 3,167 (3,377 )
Total comprehensive income for the year 61,970 78,682
All operations relate to continuing activities.
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SYNDICATE 609 ANNUAL ACCOUNTS 2024
BALANCE SHEET:
ASSETS
AT 31 DECEMBER 2024
2024 2023
Notes £’000 £’000 £’000 £’000
Investments
Financial investments 11 1,337,744 1,107,611
Deposits with ceding undertakings 2,795 3,290
Reinsurers’ share of technical provisions
Provision for unearned premiums 37,950 30,969
Claims outstanding 406,847 281,387
Debtors
Debtors arising out of direct insurance operations 12 390,409 336,422
Debtors arising out of reinsurance operations 43,456 45,154
Other debtors 1,966 906
Other assets
Cash at bank and in hand 21,073 20,368
Prepayments and accrued income
Prepayments and accrued interest 3,680 2,746
Deferred acquisition costs 13 120,989 114,058
Total assets 2,366,909 1,942,911
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BALANCE SHEET:
LIABILITIES
AT 31 DECEMBER 2024
2024 2023
Notes £’000 £’000 £’000 £’000
Capital and reserves
Members’ balances 154,380 98,356
Technical provisions
Provision for unearned premiums 445,243 419,761
Claims outstanding 1,590,827 1,285,324
Creditors
Creditors arising out of direct insurance operations 16 32,323 34,490
Creditors arising out of reinsurance operations 74,579 59,218
Other creditors 31,402 10,699
Accruals and deferred income 38,155 35,063
Total liabilities 2,212,529 1,844,555
Total liabilities, capital and reserves 2,366,909 1,942,911
The Annual Report and Accounts were approved at a meeting of the Board of Directors of Atrium Underwriters Limited, on 4 March 2025 and
were signed on its behalf by:
Kirsty Steward John Fowle
Agency Finance Director Chief Executive Officer
4 March 2025 4 March 2025
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SYNDICATE 609 ANNUAL 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 | ( | ( |
| Members’ agent fees | ( | ( |
| Members’ balances carried forward at 31 December | | |
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STATEMENT OF
CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2024
| 2024 2023 £’000 £’000 | ||
Cash flows from operating activities | ||
| Profit for the financial year | | |
| Increase in gross technical provisions | | |
| Increase in reinsurers’ share of gross technical provisions | ( | ( |
| Increase in debtors | ( | ( |
| Increase in creditors | | |
| Investment return | ( | ( |
| Other | | |
| Net cash flows from operating activities | | |
| Cash flows from investing activities | ||
| Purchase of debt instruments | ( | ( |
| Sale of debt instruments | | |
| Investment income received | | |
| Other | | |
| Net cash flows from investing activities | ( | ( |
| Cash flows from financing activities | ||
| Transfer to members in respect of underwriting participations | | ( |
| Other | ( | ( |
| Net cash flows from financing activities | ( | ( |
| Net increase/(decrease) in cash and cash equivalents | | ( |
| Cash and cash equivalents at beginning of financial year | | |
| Effect of foreign exchange rates on cash and cash equivalents | ( | ( |
| Cash and cash equivalents at end of financial year | | |
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SYNDICATE 609 ANNUAL ACCOUNTS 2024
1. BASIS OF PREPARATION
The syndicate is managed by Atrium Underwriters Limited (AUL) which is incorporated in the United Kingdom. The address of its registered
office is Level 20, 8 Bishopsgate, London, EC2N 4BQ and the company registration number of the managing agent is 1958863.
The syndicate’s principal activity during the year continued to be the transaction of general insurance and reinsurance business at Lloyd’s.
These financial statements have been prepared in accordance with the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate
Accounts) Regulations 2008 and applicable Accounting Standards in the United Kingdom and the Republic of Ireland, including Financial
Reporting Standard 102 (FRS 102). FRS 102 requires the application of Financial Reporting Standard 103 (FRS 103) in relation to insurance
contracts. The financial statements are also prepared in accordance with Lloyd’s Syndicate Accounts Instructions Version 2.0 as modified by the
Frequently Asked Questions Version 1.1 issued by Lloyd’s.
The financial statements have been prepared on the historical cost basis with the exception of financial assets which are measured at fair value
through profit or loss.
The Directors of the Managing Agent have prepared these financial statements on the basis that the syndicate will continue to write future
business. The ability of the syndicate to meet its obligations as they fall due is underpinned by the support provided by the Lloyd’s solvency
process and its chain of security for any members who are not able to meet their underwriting liabilities.
Reclassification 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 reclassified to ensure consistency with current year presentation and
compliance with the Lloyd’s Syndicate Accounts Instructions. The changes comprise:
a) Reclassification changes
Overseas deposits have been reclassified while the underlying amounts remain unchanged. These were previously shown as a separate
balance sheet item to form part of other assets. The comparative balances in the affected notes 4 and 11 have also been represented to align
with the current period presentation.
b) Aggregation changes
To align with Lloyd’s reporting requirements whilst maintaining FRS 102 compliance, certain items have been aggregated or disaggregated
within the financial statements and related notes. This includes the presentation of realised and unrealised gains and losses on investments,
which are now shown on a disaggregated basis in the statement of comprehensive income and non-technical account.
The reclassification and aggregation changes have been applied retrospectively and had no impact on previously reported total
comprehensive income, total assets and total liabilities.
Going Concern
The Directors have performed an assessment of the syndicate’s ability to continue as a going concern, including the indirect impacts of the
war in Ukraine, as detailed in note 2.
The syndicate has a documented Stress & Scenario Testing Framework which sets out the stress, scenario and reverse stress tests conducted
during the year and the governance, reporting and escalation procedures around these. As per its role to oversee and coordinate the stress
testing process, the ERC has reviewed this framework and the RC has also reviewed and challenged the Framework and tests.
The purpose of scenario testing is to assess the financial impact caused by a series of major detrimental events within one scenario. The total
financial impact is then used as a check of the Internal Model’s robustness and the syndicate’s overall capital adequacy. The scenarios used by
management are informed by the syndicate business plan, making them bespoke to the business. As part of the stress testing work, reverse
stress tests were also completed. Reverse stress tests assess scenarios and circumstances that would render the syndicate’s business model
unviable, thereby identifying potential business vulnerabilities.
The Board’s long term strategy is to support the syndicate in managing the market cycle and providing long term sustainable returns to capital
providers and shareholders, which may include increasing stamp capacity in order to take advantage of rising rates and new business
opportunities. The syndicate continues to take advantage of the current rating environment by writing increased level of business at higher
pricing levels in 2024. The syndicate was able to open the 2025 year of account with increased stamp capacity of £983.0m and at the current
time there is an expectation that the syndicate will open a 2026 year of account.
NOTES TO THE
FINANCIAL STATEMENTS
AT 31 DECEMBER 2024
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1. BASIS OF PREPARATION CONTINUED
As at 31 December 2024, the Board considers that the syndicate has more than adequate liquidity to pay its obligations as they fall due. The
syndicate held cash and cash equivalents of £21.1m and fixed maturity investments with maturity dates of less than one year of £495.8m.
Based on the going concern assessment performed as at 31 December 2024, the Directors have formed a judgment that there is a reasonable
expectation that the syndicate has adequate resources to continue in operational existence in the foreseeable future, a period of at least 12
months from the date of signing these financial statements. The 2025 year of account has opened and based on the Directors assessment that
the syndicate has sufficient resources to do so, they have a reasonable expectation to be in a position to open a 2026 year of account.
Accordingly, the Directors continue to adopt the going concern basis in preparing the annual report and financial statements.
2. USE OF JUDGEMENTS AND ESTIMATES
In preparing these financial statements, the directors of the managing agent have made judgements, estimates and assumptions that affect
the application of the syndicate’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may
differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised
prospectively.
The measurement of the provision for claims outstanding involves judgments and assumptions about the future that have the most
significant effect on the amounts recognised in the financial statements.
The provision for claims outstanding comprises the estimated cost of settling all claims incurred but unpaid at the balance sheet date,
whether reported or not. This is a judgemental and complex area due to the subjectivity inherent in estimating the impact of claims events
that have occurred but for which the eventual outcome remains uncertain. In particular, judgment is applied when estimating the value of
amounts that should be provided for claims that have been incurred at the reporting date but have not yet been reported to the syndicate.
The amount included in respect of IBNR is based on statistical techniques of estimation applied by the in-house actuaries and reviewed by
external consulting actuaries. These techniques generally involve projecting from past experience the development of claims over time in
view of the likely ultimate claims to be experienced and for more recent underwriting, having regard to 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.
For the most recent years, where a high degree of volatility arises from projections, estimates may be based in part on output from rating and
other models of business accepted and assessments of underwriting conditions.
The best estimate reserves include the expected impact of inflationary pressures on the claims. The impact of inflation is assessed on a class by
class basis with reference to available forward looking inflation forecasts and relevant indices as applicable to each class. The capital setting
process for 2024 took account of the expectation of the inflationary environment that currently exists as well as the volatility around when
inflation will peak and what the new normal run rate of inflation may be in the future.
The syndicate has exposure to the fate of the western leased aircraft in Russia. The situation remains complex and continues to develop with
multiple ongoing litigation in a number of different jurisdictions. Key factors including underlying peril, date of loss, and whether any form of
negotiated settlement is feasible, all result in considerably different ultimate outcomes to the syndicate.
In arriving at the reserving position for this loss, the financial implications of various scenarios have been modelled, taking account of the
uncertainties listed above. In arriving at the reserving position, the likelihood of the scenarios occurring was established using expert
judgement. A similar probabilistic approach was employed at 31 December 2023. However, for this update we have reduced and re-focused
the number of scenarios under consideration, in line with our evolving knowledge and expectations of the situation.
The updates have resulted in ultimate gross reserves of £393.4m, £113.8m net of reinsurance (31 December 2023 – £264.5m gross, £84.5m net
of reinsurance) included in the financial results as at 31 December 2024. The classes impacted are Aviation Reinsurance, Aviation War and
Marine XL. The net loss reserve is split 3% to the 2020 YOA, 88% to the 2021 YOA and 9% to the 2022 YOA.
The Directors, in conjunction with the relevant subject matter experts, continue to monitor the situation closely, taking legal advice and
meeting with market participants on a regular basis to ensure that the most up to date information is reflected within the syndicate reserves.
Due to the nature of the circumstances mentioned above, the potential for variation to the booked reserves is considerably greater than the
normal level of reserve sensitivity to downside risk and the actual outcome of the loss could be in a particularly wide range with greater than
usual variability. As a result, the 2021 year of account will remain open until the level of reserve sensitivity to downside risk normalises.
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
AT 31 DECEMBER 2024
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SYNDICATE 609 ANNUAL ACCOUNTS 2024
2. USE OF JUDGEMENTS AND ESTIMATES CONTINUED
In arriving at the level of claims provisions, a margin is applied over and above the actuarial best estimate so no adverse run-off deviation is
envisaged. Further information about the risk that the provision for claims outstanding could be materially different from the ultimate cost of
claims settlement, is included in note 4.
The calculation of estimated premium income is inherently subjective and attained through underwriters’ best estimates at a policy level.
3. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of the syndicate financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated.
The areas involving a higher degree or judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements are disclosed in note 2.
Insurance Classification
The syndicate’s contracts are classified at inception, for accounting purposes, as insurance contracts. A contract that is classified as an
insurance contract remains an insurance contract until all rights and obligations are extinguished or expire. Insurance contracts are those
contracts that transfer significant insurance risk, if and only if, an insured event could cause an insurer to pay significant additional benefits
above premiums received and interest earned thereon, excluding scenarios that lack commercial substance. Such contracts may also transfer
financial risk.
Gross Premiums Written
Gross written premiums comprise the total premiums receivable for the whole period of cover under contracts incepting during the financial
year, together with adjustments arising in the financial year to premiums receivable in respect of business written in previous financial years.
All gross premiums are shown gross of commission payable to intermediaries and are exclusive of taxes and duties levied thereon.
Unearned Premiums
Written premiums are recognised as earned income over the period of the policy on a time apportionment basis, having regard, where
appropriate, to the incidence of the risk. Unearned premiums represent the proportion of premiums written that relate to unexpired terms of
policies in force at the balance sheet date.
Reinsurance Premium Ceded
Outwards reinsurance premiums are accounted for in the same accounting period as the premiums for the related direct or inwards business
being reinsured.
Claims Provisions and Related Recoveries
Gross claims incurred comprise the estimated cost of all claims occurring during the year, whether reported or not, including related direct
and indirect claims handling costs and adjustments to claims outstanding from previous years.
The provision for claims outstanding is assessed on an individual case basis and is based on the estimated ultimate cost of all claims notified
but not settled by the balance sheet date, together with the provision for related claims handling costs. The provision also includes the
estimated cost of IBNR at the balance sheet date based on statistical methods.
These methods generally involve projecting from past experience of the development of claims over time to form a view of the likely ultimate
claims to be experienced for more recent underwriting, having regard to variations in the business accepted and the underlying terms and
conditions. For the most recent years, where a high degree of volatility arises from projections, estimates may be based in part on output from
rating and other models of the business accepted and assessments of underwriting conditions. The amount of salvage and subrogation
recoveries is separately identified and, where material, reported as an asset.
The reinsurers’ share of provisions for claims is based on the amounts of outstanding claims and projections for IBNR, net of estimated
irrecoverable amounts, having regard to the reinsurance programme in place for the class of business, the claims experience for the year and the
current security rating of the reinsurance companies involved. A number of statistical methods are used to assist in making these estimates.
The two most critical assumptions as regards claims provisions are that the past is a reasonable predictor of the likely level of claims development
and that the rating and other models used for current business are fair reflections of the likely level of ultimate claims to be incurred.
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SYNDICATE 609 ANNUAL ACCOUNTS 2024
3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED
The Directors consider that the provisions for gross claims and related reinsurance recoveries are fairly stated on the basis of the information
currently available to them. However, the ultimate liability will vary as a result of subsequent information and events and this may result in
significant adjustments to the amounts provided. Adjustments to the amounts of claims provisions established in prior years are reflected in
the financial statements for the period in which the adjustments are made. The methods used, and the estimates made, are reviewed regularly.
Deferred Acquisition Costs
Acquisition costs, comprising commission and other costs related to the acquisition of insurance contracts, are deferred to the extent that they
are attributable to premiums unearned at the balance sheet date.
Unexpired Risks Provision
A provision for unexpired risks is made where claims and related expenses arising after the end of the financial period in respect of contracts
concluded before that date, are expected to exceed the unearned premiums and premiums receivable under these contracts, after the
deduction of any acquisition costs deferred. The provision for unexpired risks is calculated by reference to the classes of business which are
managed together, after taking into account relevant investment returns.
Investment Return
Investment return comprises all investment income, realised investment gains and losses and movements in unrealised gains and losses, net
of investment expenses, charges and interest.
Realised gains and losses on investments are calculated as the difference between sale proceeds and purchase price.
Unrealised gains and losses on investments represents the difference between the valuation at the balance sheet date and the valuation at the
previous balance sheet date, or purchase price, if acquired during the year, together with the reversal of unrealised gains and losses recognised
in earlier accounting periods in respect of investment disposals in the current period.
Investment return is initially recorded in the non-technical account. A transfer is made from the non-technical account to the general business
technical account. Investment return has been wholly allocated to the technical account as all investments support the underwriting business.
Foreign Currencies
The syndicate’s functional currency is US Dollars, being the primary economic environment in which it operates. The syndicate’s presentational
currency is Sterling.
Transactions in foreign currencies are translated at the average rates of exchange for the period. Assets and liabilities denominated in foreign
currencies are translated at the rate of exchange at the balance sheet date. Differences arising on translation of foreign currency amounts
relating to the insurance operations of the syndicate are included in the non-technical account.
In translating its results and financial position into the presentational currency, the syndicate translates all assets and liabilities at the closing
rates of exchange and translates all income and expense items at average rates, with all resulting exchange gains and losses being recognised
in other comprehensive income.
Financial Instruments
The syndicate has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments.
Basic financial assets, including deposits with credit institutions, debtors arising out of direct insurance and reinsurance operations, cash and
cash equivalents and other debtors, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction,
where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Such assets are
subsequently carried at fair value.
Investments are stated at current value at the balance sheet date. For this purpose, listed investments are stated at fair value and deposits with
credit institutions are stated at cost. Unlisted investments for which a market exists are stated at the average price at which they are traded on the
balance sheet date or the last trading day before that date. Any surplus or deficit on any revaluation is recognised in the non-technical account.
Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all
the risks and rewards of the ownership of the asset are transferred to another party or (c) control of the asset has been transferred to another
party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
AT 31 DECEMBER 2024
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SYNDICATE 609 ANNUAL ACCOUNTS 2024
3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Basic financial liabilities, including creditors arising from insurance operations that are classified as debt, are initially recognised at transaction
price, unless the arrangement constitutes a financing transaction, where the debt instrument is then measured at the present value of the
future receipts discounted at a market rate of interest.
Financial liabilities are derecognised when the liability is extinguished, that is, when the contractual obligation is discharged, cancelled or
expires.
Financial assets and liabilities are off set and the net amounts presented in the financial statements when there is a legally enforceable right to
set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability, simultaneously.
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 syndicate estimates the fair value by using a valuation technique. See note 11 for
further information on the syndicate’s valuation techniques.
At each reporting date the syndicate assesses whether there is objective evidence that financial assets not at fair value through profit or loss,
are impaired. Financial assets are impaired when objective evidence demonstrates that a loss event has occurred after the initial recognition of
an asset, and that the loss event has an impact on the future cash flows on the asset that can be estimated reliably.
An impairment loss recognised reduces directly the carrying amount of the impaired asset. All impairment losses are recognised in profit or
loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised.
Deposits with Ceding Undertakings
Deposits with ceding undertakings relate to the payment of advance funds by the syndicate under the reinsurance agreement with LIC into
segregated Part VII settlement bank accounts managed by the managing agent on behalf of LIC to settle Part VII claims. Amounts are
denominated in multiple currencies, primarily Sterling (GBP), US Dollar (USD) and Euros (Euro). Deposits with ceding undertakings are
measured at cost less allowance for impairment.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily
convertible to a known amount of cash and are subject to only an insignificant risk of change in value.
Taxation
Under Schedule 19 of the Finance Act 1993 managing agents are not required to deduct basic rate income tax from trading income. In
addition, all UK basic rate income tax deducted from syndicate investment income is recoverable by managing agents and consequently the
distribution made to members or their members’ agents is gross of tax. Capital appreciation falls within trading income and is also distributed
gross of tax.
No provision has been made for any United States federal income tax payable on underwriting results or investment earnings. Any payments
on account made by the syndicate during the year are included in the balance sheet under the heading ‘other debtors’.
No provision has been made for any overseas tax payable by members on underwriting results.
Pension Costs
The Atrium Group operates a defined contribution pension scheme. Pension contributions relating to syndicate staff are charged to the
syndicate and included within net operating expenses.
Profit Commission
Profit commission is charged by the managing agent at a rate of 20% of profit subject to the operation of a deficit clause. Where profit
commission is charged it is included within members’ standard personal expenses within administrative expenses.
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SYNDICATE 609 ANNUAL ACCOUNTS 2024
4. RISK AND CAPITAL MANAGEMENT
This note presents information about the nature and extent of insurance and financial risks to which the syndicate is exposed.
Risk Management Framework
The Board of Directors of the managing agent has overall responsibility for the establishment and oversight of the syndicate’s risk
management framework. The Board has established a Risk Governance Structure in order to ensure that risk is appropriately identified,
monitored, managed and reported across the organisation; to review the activities of the business units; and to ensure that the Risk
Management Framework is effectively designed, implemented and governed. The Risk Governance Structure is comprised of the RC and ERC,
which fulfils the role of Atrium’s Risk Management Function, in conjunction with the Risk Management Team, and its three Risk Sub-
Committees. These are the IRSC, the FRSC and the ORSC. The RC reports regularly to the Board on its activities.
Insurance Risk Management
The syndicate accepts insurance risk through its insurance contracts where it assumes the risk of loss from persons or organisations that are
directly subject to the underlying loss. The syndicate is exposed to the uncertainty surrounding the timing, frequency and severity of claims
under these contracts. The actual number and value of claims will vary from year to year and from the level estimated, possibly significantly.
The syndicate manages its risk via its underwriting and reinsurance strategy within an overall risk management framework. Pricing is based on
assumptions which have regard to trends and past experience. Exposures are managed by having documented underwriting limits and
criteria. Reinsurance is purchased to mitigate the effect of potential loss to the syndicate from individual large or catastrophic events and also
to provide access to specialist risks and to assist in managing capital. Reinsurance policies are written with approved reinsurers on either a
proportional or excess of loss treaty basis. Where an individual exposure is deemed surplus to the syndicate’s risk appetite additional facultative
reinsurance is also purchased.
The IRSC 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.
The syndicate’s in-house actuaries perform a reserving analysis on a quarterly basis liaising closely with underwriters, claims and reinsurance
technicians. 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. These projections include an analysis of claims development compared to the previous ‘best estimate’
projections. The output of the reserving analysis is reviewed by external consulting actuaries.
The IRSC performs a comprehensive review of the projections, both gross and net of reinsurance. Following this review the IRSC makes
recommendations to the Board of 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.
Concentration of insurance risk:
A concentration of risk may also arise from a single insurance contract issued to a particular demographic type of policyholder, within a
geographical location or to types of commercial business. The relative variability of the outcome is mitigated if there is a large portfolio of
similar risks.
The concentration of insurance by the geographical location of the underlying risk is summarised below by reference to liabilities.
Reinsurers’ share of Net claims
Gross claims outstanding claims outstanding outstanding
2024 2023 2024 2023 2024 2023
£’000 £’000 £’000 £’000 £’000 £’000
UK 77,738 74,783 19,884 16,372 57,854 58,411
EU Countries 315,912 150,746 80,803 33,002 235,109 117,744
US 935,558 803,486 239,244 175,900 696,314 627,586
Asia 10,150 9,974 2,596 2,184 7,554 7,790
Canada 93,950 102,479 24,030 22,435 69,920 80,044
Australia 59,257 51,821 15,157 11,345 44,100 40,476
Other 98,262 92,035 25,133 20,149 73,129 71,886
1,590,827 1,285,324 406,847 281,387 1,183,980 1,003,937
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
AT 31 DECEMBER 2024
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SYNDICATE 609 ANNUAL ACCOUNTS 2024
4. RISK AND CAPITAL MANAGEMENT
The concentration of insurance by type of contract is summarised below by reference to liabilities.
Reinsurers’ share of Net claims
Gross claims outstanding claims outstanding outstanding
2024 2023 2024 2023 2024 2023
£’000 £’000 £’000 £’000 £’000 £’000
Accident and health 34,066 34,097 2,718 4,999 31,348 29,098
Motor (third party liability) 5,004 2,072 – – 5,004 2,072
Motor (other classes) 4,774 6,246 – 10 4,774 6,236
Marine, aviation and transport 453,102 324,700 252,649 172,826 200,453 151,874
Fire and other damage to property 287,018 249,703 10,592 12,928 276,426 236,775
Third party liability 625,906 495,852 100,804 44,644 525,102 451,208
Credit and suretyship 11,271 25,448 799 885 10,472 24,563
Legal expenses 7,244 5,413 3 8 7,241 5,405
1,428,385 1,143,531 367,565 236,300 1,060,820 907,231
Reinsurance 162,442 141,793 39,282 45,087 123,160 96,706
1,590,827 1,285,324 406,847 281,387 1,183,980 1,003,937
Assumptions and Sensitivities:
The risks associated with the insurance contracts are complex and subject to a number of variables which complicate quantitative sensitivity
analysis. The syndicate uses several statistical and actuarial techniques based on past claims development experience. This includes indications
such as average claims cost, ultimate claims numbers and expected loss ratios.
The syndicate considers that the liability for insurance claims recognised in the balance sheet is adequate. However, actual experience will
differ from the expected outcome.
A 5% increase or decrease in the loss ratios would have the following impact on total comprehensive income. For each sensitivity the impact
of a change in a single factor is shown, with other assumptions unchanged.
Total Comprehensive
Income Impact
2024 2023
£’000 £’000
5% increase in net loss ratios (24,324) (22,374)
5% decrease in net loss ratios 24,324 22,374
Financial Risk Management
The syndicate is exposed to financial risk through its financial assets, reinsurance assets and policyholder liabilities. In particular the key
financial risk is that proceeds from, or the valuation of, financial assets are not sufficient to fund the obligations arising from policies as they fall
due. The syndicate monitors and manages the financial risks relating to the operations of the syndicate through internal risk reports which
analyse exposures by degree and magnitude of risks. These risks include market risk (currency risk, interest rate risk and price risk), credit risk
and liquidity risk.
Market risk: Market risk is the risk of adverse financial impact as a consequence of market movements such as currency exchange rates,
interest rates and other price changes. Market risk arises due to fluctuations in both the value of assets held and the value of liabilities. The
objective of the syndicate in managing its market risk is to ensure that risk is managed in line with the syndicate’s risk appetite.
The syndicate has established policies and procedures in order to manage market risk and methods to measure it.
There were no material changes in the syndicate’s market risk exposure in the financial year nor to the objectives, policies or processes for
managing market risk.
Foreign currency risk management
The syndicate undertakes certain transactions denominated in foreign currencies hence, exposures to exchange rate fluctuations arise.
26
SYNDICATE 609 ANNUAL ACCOUNTS 2024
4. RISK AND CAPITAL MANAGEMENT CONTINUED
The syndicate has minimal exposure to currency risk as the syndicate’s financial assets are primarily matched to the same currencies as its
insurance contract liabilities. As a result, foreign exchange risk arises from other recognised assets and liabilities denominated in other
currencies.
The table below summarises the carrying value of the syndicate’s assets and liabilities at the reporting date:
Sterling Euro US Dollar Can Dollar Other Total
As at 31 December 2024 £’000 £’000 £’000 £’000 £’000 £’000
Investments 117,403 62,845 1,036,376 121,120 – 1,337,744
Deposits with ceding undertakings 247 660 1,860 28 – 2,795
Reinsurer’s share of technical provisions 17,498 11,243 412,480 3,576 – 444,797
Debtors 51,666 15,545 351,728 16,892 – 435,831
Other assets 5,166 8,708 4,900 1,965 334 21,073
Prepayments and accrued income 28,507 6,569 77,454 12,139 – 124,669
Total assets 220,487 105,570 1,884,798 155,720 334 2,366,909
Technical provisions 218,014 101,820 1,585,343 130,893 – 2,036,070
Creditors 15,655 4,226 117,863 558 2 138,304
Accruals and deferred income 1,066 331 36,347 411 - 38,155
Total liabilities 234,735 106,377 1,739,553 131,862 2 2,212,529
Net (liabilities)/assets (14,248) (807) 145,245 23,858 332 154,380
Sterling Euro US Dollar Can Dollar Other Total
As at 31 December 2023 £’000 £’000 £’000 £’000 £’000 £’000
Investments 92,462 61,984 820,664 132,501 – 1,107,611
Deposits with ceding undertakings 499 815 1,946 30 – 3,290
Reinsurers’ share of technical provisions 15,968 7,762 283,785 4,841 – 312,356
Debtors 48,621 32,996 281,140 19,725 – 382,482
Other assets 6,614 5,542 5,423 2,448 341 20,368
Prepayments and accrued income 28,051 6,864 69,013 12,876 – 116,804
Total assets 192,215 115,963 1,461,971 172,421 341 1,942,911
Technical provisions 214,933 87,761 1,259,816 142,575 – 1,705,085
Creditors 17,171 5,701 80,378 1,155 2 104,407
Accruals and deferred income 59 366 34,065 573 – 35,063
Total liabilities 232,163 93,828 1,374,259 144,303 2 1,844,555
Net (liabilities)/assets (39,948) 22,135 87,712 28,118 339 98,356
The following table details the syndicate’s sensitivity to a 10% increase and decrease in GBP against USD, Euro and CAD. For each sensitivity the
impact of change in a single factor is shown, with other assumptions unchanged.
Total Comprehensive
Income Impact
2024 2023
£’000 £’000
10% increase in GBP/USD exchange rate (14,283) (8,771)
10% decrease in GBP/USD exchange rate 14,283 8,771
10% increase in GBP/Euro exchange rate 85 (2,214)
10% decrease in GBP/Euro exchange rate (85) 2,214
10% increase in GBP/CAD exchange rate (2,552) (2,812)
10% decrease in GBP/CAD exchange rate 2,552 2,812
The syndicate’s method for measuring sensitivity to currency rate fluctuations has not changed significantly over the financial year.
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
AT 31 DECEMBER 2024
27
SYNDICATE 609 ANNUAL ACCOUNTS 2024
4. RISK AND CAPITAL MANAGEMENT CONTINUED
Interest rate risk management
Interest rate risk is the risk that the value of future cash flows of a financial instrument will fluctuate because of changes in market interest
rates.
Interest rate risk arises primarily from the syndicate’s financial investments, including overseas deposits, and cash and cash equivalents. The
risk of changes in the fair value of these assets is managed by primarily investing in short-duration financial investments and cash and cash
equivalents. The FRSC monitors the duration of these assets on a regular basis. The syndicate has no significant concentration of interest rate
risk. The syndicate manages this risk by adopting close asset/liability matching criteria, to minimise the impact of mismatches between asset
and liability values arising from interest rate movements.
The following table details the syndicate’s sensitivity to a 50 basis point increase and decrease in the yield curves. For each sensitivity the
impact of change in a single factor is shown, with other assumptions unchanged.
Total Comprehensive
Income Impact
2024 2023
£’000 £’000
50 basis point increase (14,476) (11,243)
50 basis point decrease 14,478 11,446
The syndicate’s method for measuring sensitivity to interest rate fluctuations has not changed significantly over the financial year.
Credit risk: Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the syndicate.
The key areas of exposure to credit risk for the syndicate are in relation to its investment portfolio, reinsurance programme and amounts due
from policyholders and intermediaries.
The objective of the syndicate in managing its credit risk is to ensure risk is managed in line with the syndicate’s risk appetite. The syndicate
has established policies and procedures in order to manage credit risk and methods to measure it.
There were no material changes in the syndicate’s credit risk exposure in the financial year nor to the objectives, policies and processes for
managing credit risk.
The syndicate has adopted a policy of dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a
means of mitigating the risk of financial loss from defaults. The syndicate seeks to transact with entities that are rated the equivalent to
investment grade and above.
This information is supplied by independent rating agencies where available and if not available the syndicate uses other publicly available
financial information and its own trading records to rate its major policyholders and reinsurers.
The syndicate’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions
concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved
by the FRSC annually. Furthermore, in certain instances, the syndicate receives deposits from its reinsurers which it holds under the terms of
the reinsurance agreements.
Receivables consist of a large number of policyholders, spread across diverse industries and geographical areas. Ongoing credit evaluation is
performed on the financial condition of accounts receivable.
The syndicate does not have any significant credit risk exposure to any single counterparty or any group of counterparties. Concentration of
credit did not exceed 10% of gross monetary assets at any time during the financial year. The credit risk on liquid funds is limited because the
counterparties are banks with high credit-ratings assigned by international credit-rating agencies.
The carrying amount of financial assets and reinsurance assets recorded in the financial statements represents the syndicate’s maximum
exposure to credit risk without taking account of the value of any collateral obtained.
The syndicate monitors the credit risk in relation to its investment portfolio and reinsurance programme by monitoring external credit ratings
for the investments and reinsurance assets held by the syndicate on a quarterly basis.
28
SYNDICATE 609 ANNUAL ACCOUNTS 2024
The following table shows aggregated credit risk exposure for assets with external credit ratings. Reinsurance assets are reinsurers’ share of
outstanding claims and IBNR and reinsurance receivables. They are allocated in the table below on the basis of ratings for claims paying ability.
AAA AA A BBB <BBB Not rated Total
As at 31 December 2024 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Investments 553,627 202,672 442,051 125,436 2,552 11,406 1,337,744
Deposits with ceding undertakings – – 2,795 – – – 2,795
Reinsurers’ share of technical provisions – 318,349 85,307 – – 41,141 444,797
Debtors – 15,580 420,251 – – – 435,831
Other assets – – 21,073 – – – 21,073
Prepayments and accrued income – – 3,680 – – – 3,680
Total 553,627 536,601 975,157 125,436 2,552 52,547 2,245,920
AAA AA A BBB <BBB Not rated Total
As at 31 December 2023 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Investments 433,151 201,088 334,656 54,381 83,979 356 1,107,611
Deposits with ceding undertakings – – 3,290 – – – 3,290
Reinsurers’ share of technical provisions – 215,687 58,772 139 – 37,758 312,356
Debtors – 7,169 374,937 – – 376 382,482
Other assets – – 20,368 – – – 20,368
Prepayments and accrued income – – 2,746 – – – 2,746
Total 433,151 423,944 794,769 54,520 83,979 38,490 1,828,853
Not rated investments represent cash awaiting investment within our Lloyd’s overseas deposits.
The following table shows the carrying value of debtors that are neither past due nor impaired, the aging of assets that are past due but not
impaired and assets that have been impaired. The factors considered in determining that the value of the assets have been impaired were:
analysis of impairment, ageing of balances, past loss experience, current economic conditions and other relevant circumstances.
Neither past Up to Three Six Greater Past due
due nor three to six months to than and Carrying
impaired months months one year one year impaired amount
As at 31 December 2024 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Debtors arising out of direct insurance operations 390,409 – – – – – 390,409
Debtors arising out of direct reinsurance operations 24,105 7,973 609 7,644 3,125 – 43,456
Total 414,514 7,973 609 7,644 3,125 – 433,865
Neither past Up to Three Six Greater Past due
due nor three to six months to than and Carrying
impaired months months one year one year impaired amount
As at 31 December 2023 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Debtors arising out of direct insurance operations 336,422 – – – – – 336,422
Debtors arising out of direct reinsurance operations 35,811 3,657 2,996 1,994 696 – 45,154
Total 372,233 3,657 2,996 1,994 696 – 381,576
Liquidity Risk Management
Liquidity risk is the risk that the syndicate cannot meet its obligations associated with financial liabilities as they fall due. The syndicate has
adopted an appropriate liquidity risk management framework for the management of the syndicate’s liquidity requirements. The syndicate
manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profiles of assets and liabilities.
The syndicate is exposed to liquidity risk arising from clients on its insurance and investment contracts. In respect of catastrophic events there
is liquidity risk from a difference in timing between claim payments and recoveries thereon from reinsurers. Liquidity management ensures
that the syndicate has sufficient access to funds necessary to cover insurance claims, surrenders, withdrawals and maturing liabilities. In
practice, most of the syndicate’s assets are marketable securities which could be converted into cash when required.
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
AT 31 DECEMBER 2024
29
SYNDICATE 609 ANNUAL ACCOUNTS 2024
4. RISK AND CAPITAL MANAGEMENT CONTINUED
There were no material changes in the syndicate’s liquidity risk exposure in the financial year nor to the objectives, policies and processes for
managing liquidity risk.
In relation to the financial assets, the tables below are presented based on the undiscounted contractual maturities of the assets including
interest that will be earned on those assets except where the syndicate anticipates that the cash flow will occur in a different period.
The table also shows the expected maturity profile of the syndicate’s undiscounted obligations with respect to its financial liabilities and
estimated cash flows of recognised insurance and participating investment contract liabilities. The table includes both interest and principal
cash flows.
Less than 1 – 3 3 – 5 More than
1 year years years 5 years Total
As at 31 December 2024 £’000 £’000 £’000 £’000 £’000
Investments 495,751 310,913 271,214 259,866 1,337,744
Deposits with ceding undertakings – 2,795 – – 2,795
Reinsurers’ share of technical provisions 159,198 154,649 74,242 56,708 444,797
Debtors 435,441 390 – – 435,831
Other assets 21,073 – – – 21,073
Prepayments and accrued income 3,680 – – – 3,680
Total 1,115,143 468,747 345,456 316,574 2,245,920
Technical provisions 919,337 604,700 290,296 221,737 2,036,070
Creditors 138,052 252 – – 138,304
Accruals and deferred income 2,030 36,125 – – 38,155
Total 1,059,419 641,077 290,296 221,737 2,212,529
Less than 1 – 3 3 – 5 More than
1 year years years 5 years Total
As at 31 December 2023 £’000 £’000 £’000 £’000 £’000
Investments 362,796 325,063 214,193 205,559 1,107,611
Deposits with ceding undertakings – 3,290 – – 3,290
Reinsurers’ share of technical provisions 120,841 90,771 47,449 53,295 312,356
Debtors 382,171 311 – – 382,482
Other assets 20,368 – – – 20,368
Prepayments and accrued income 2,746 – – – 2,746
Total 888,922 419,435 261,642 258,854 1,828,853
Technical provisions 830,284 414,624 216,736 243,441 1,705,085
Creditors 104,281 126 – – 104,407
Accruals and deferred income 1,092 33,971 – – 35,063
Total 935,657 448,721 216,736 243,441 1,844,555
Climate Change Risk
Climate risk can be broadly divided into 3 categories: physical, transition and liability. Physical risk relates to the change in climate and weather
events which have the potential to directly affect the economy. Transition risk can occur when moving towards a lower carbon economy and
how the speed of the transition may affect certain sectors and affect financial stability. Liability risk refers to potential increased litigation
against policyholders from individuals or businesses who have experienced losses because of physical or transition risk.
The syndicate has a formal framework for managing physical climate change risk. This addresses potential, current and future climate impacts
on the natural catastrophe exposed portfolio by region peril combinations and identifies potential risk mitigation strategies.
30
SYNDICATE 609 ANNUAL ACCOUNTS 2024
4. RISK AND CAPITAL MANAGEMENT CONTINUED
An assessment of transition risk is made as part of the syndicate’s ORSA process. The transition risk from the investment portfolio is limited due
to the short duration of the portfolio and the lack of investment in equities. However, there is more notable exposure from several sections of
the underwriting portfolio such as Aviation and Marine.
In terms of liability risk, the syndicate periodically assesses its exposures on high-risk classes via risk assessments looking at potential litigation
risks. In addition, the risk team review current trends in climate risk litigation and their applicability to the underwriting portfolios.
ESG Strategy
The ESG strategy encompasses climate change risk but also considers a wider range of effects that may cause uncertainty to the financial
performance of the syndicate. There are separate Diversity and Inclusion and Corporate Social Responsibility working groups. The RC maintains
oversight for climate change and ESG risk as both can have significant effects on other insurance risks.
The syndicate produced their first ESG Framework in 2022 in accordance with Lloyd’s requirements. The Framework was created in a bespoke
manner but using the Task Force on Climate-related Financial Disclosures (TCFD) principles and those set out in the PRA’s SS3/19. The
framework is reviewed regularly and updated annually, with recognition that the risks posed may be long term and across different areas of
the business.
In 2024, the syndicate continued to identify and mitigate against climate change risk, as well as progress on other ESG-related aspects. During
the year it integrated ESG into its business planning process to help identify key areas of ESG risk in its portfolio and also improve awareness of
areas of potential reputational risk within the portfolios. The syndicate is improving its data and metrics related to climate risk, conducting tests
of existing models, systems and processes to ensure they are adequate and relevant, building on scenario analysis and stress testing, reviewing
new opportunities (underwriting and technological) and increasing knowledge and education. The syndicate endeavours to incorporate
climate risk and ESG concerns across all decision-making processes and act as a responsible business.
Capital Management
Capital framework at Lloyd’s
The Society of Lloyd’s (Lloyd’s) is a regulated undertaking and subject to supervision by the Prudential Regulatory Authority (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 at overall and member level only respectively, not at syndicate level.
Accordingly, the capital requirement in respect of the syndicate is not disclosed in these financial statements.
Lloyd’s capital setting process
In order to meet Lloyd’s requirements, each syndicate is required to calculate its SCR for the prospective underwriting year. This amount must
be sufficient to cover a 1 in 200 year loss, reflecting uncertainty in the ultimate run-off of underwriting liabilities (SCR ‘to ultimate’). The
syndicate must also calculate its SCR at the same confidence level but reflecting uncertainty over a one year time horizon (one year SCR) for
Lloyd’s to use in meeting Solvency II requirements. The SCRs of each syndicate are subject to review by Lloyd’s and approval by the Lloyd’s
Capital and Planning Group.
A syndicate may be comprised of one or more underwriting members of Lloyd’s. Each member’s SCR is determined by the sum of the
member’s share of the syndicate SCR ‘to ultimate’. Where a member participates on more than one syndicate, a credit for diversification is
provided to reflect the spread of risk, but consistent with determining an SCR which reflects the capital requirement to cover a 1 in 200 loss ‘to
ultimate’ for that member. Over and above this, Lloyd’s applies a capital uplift to arrive at the member’s capital requirement, known as the ECA.
The purpose of this uplift, which is a Lloyd’s not a Solvency II requirement, is to ensure capital is sufficient to meet Lloyd’s financial strength,
licence and ratings objectives. The capital uplift applied for 2024 was 35% of the member’s SCR ‘to ultimate’.
Provision of capital by members
Each member may provide capital to meet its ECA either by assets held in trust by Lloyd’s specifically for that member (funds at Lloyd’s), assets
held and managed within a syndicate (funds in syndicate), or as the member’s share of the members’ balances on each syndicate on which it
participates.
Accordingly all of the assets less liabilities of the syndicate, as represented in the members’ balances reported on the balance sheet, represent
resources available to meet members’ and Lloyd’s capital requirements.
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
AT 31 DECEMBER 2024
31
SYNDICATE 609 ANNUAL ACCOUNTS 2024
5. ANALYSIS OF UNDERWRITING RESULT
An analysis of the underwriting result before investment return is set out below:
Gross Gross Gross Gross Net
premiums premiums claims operating Reinsurance technical
written earned incurred expenses balance Total provisions
2024 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Direct insurance:
Accident & Health 33,777 34,852 15,121 17,903 (1,838) (10) 41,575
Motor (third party liability) 4,096 4,037 1,981 1,655 (302) 99 7,962
Motor (other classes) 18,431 17,399 8,139 12,926 311 (3,355) 14,147
Marine, Aviation and Transport 246,826 244,585 197,874 91,073 35,377 (8,985) 283,669
Fire and other damage to property 419,651 409,969 156,812 140,731 (30,031) 82,395 456,782
Third party liability 211,741 215,388 225,125 86,067 26,068 (69,736) 589,106
Credit and suretyship 12,899 12,304 (4,625) 5,148 4,007 15,788 14,458
Legal expenses 3,832 3,697 2,189 3,056 (2) (1,550) 10,406
951,253 942,231 602,616 358,559 33,590 14,646 1,418,105
Reinsurance 75,237 59,655 53,281 20,777 4,162 (10,241) 173,168
Total 1,026,490 1,001,886 655,897 379,336 37,752 4,405 1,591,273
Gross Gross Gross Gross Net
premiums premiums claims operating Reinsurance technical
written earned incurred expenses balance Total provisions
2023 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Direct insurance:
Accident & Health 32,313 32,178 10,762 15,451 (494) 5,471 40,508
Motor (third party liability) 6,057 5,562 2,189 1,877 – 1,496 4,985
Motor (other classes) 15,774 14,818 7,794 5,563 8 1,469 14,340
Marine, Aviation and Transport 233,395 229,811 230,689 78,302 57,409 (21,771) 251,975
Fire and other damage to property 396,119 379,406 139,112 143,072 (44,087) 53,135 397,222
Third party liability 228,503 223,380 141,496 89,404 (9,272) (16,792) 510,203
Credit and suretyship 10,169 9,542 6,416 4,307 (1,635) (2,816) 37,910
Legal expenses 6,291 5,790 2,934 2,524 (57) 275 8,417
928,621 900,487 541,392 340,500 1,872 20,467 1,265,560
Reinsurance 43,001 41,225 (5,482) 10,448 (30,654) 5,605 127,169
Total 971,622 941,712 535,910 350,948 (28,782) 26,072 1,392,729
Commission on direct insurance gross premiums earned during 2024 was £252,436,000 (2023 – £244,788,000).
All premiums are concluded in the UK.
The geographical analysis of premiums by destination is as follows:
2024 2023
% %
UK 5.8 6.1
Other EU Countries 12.5 12.5
US 55.8 54.3
Asia 2.5 2.6
Canada 9.0 10.4
Australia 4.0 4.1
Other 10.4 10.0
Total 100.0 100.0
32
SYNDICATE 609 ANNUAL ACCOUNTS 2024
6. CLAIMS OUTSTANDING
Reassessment of claims outstanding on underwriting years 2021 & prior (2023 – 2020 & prior) resulted in a strengthening of £81.0m (2023 -
strengthening of £31.7m).
7. NET OPERATING EXPENSES
2024 2023
£’000 £’000
Acquisition costs:
Brokerage & commission 270,203 250,151
Other acquisition costs 28,762 26,995
Change in deferred acquisition costs (8,568) (8,598)
Administrative expenses 88,939 82,400
379,336 350,948
Reinsurance commissions receivable (23,896) (19,662)
355,440 331,286
Members’ standard personal expenses (Lloyd’s subscriptions, central fund contributions, managing agent’s fees and profit commission) are
included within administrative expenses and amount to £32,781,000 (2023 – £33,389,000).
Variable compensation, included within administrative expenses, amounts to £20,762,000 (2023 – £21,167,000).
Auditor’s remuneration
Auditor’s remuneration is included as part of the administrative expenses within the financial statements as disclosed above.
2024 2023
£’000 £’000
Auditor’s remuneration:
Audit of the syndicate annual accounts 25 23
Other services pursuant to Regulations and Lloyd’s Byelaws 356 322
Other non-audit services 111 79
Total 492 424
8. STAFF NUMBERS AND COSTS
All staff are employed by Atrium Group Services Limited (AGSL). The following amounts were recharged to the syndicate in respect of staff
costs:
2024 2023
£’000 £’000
Wages and salaries 24,306 21,286
Variable compensation 20,762 21,167
Social security costs 5,869 5,655
Other pension costs 3,567 3,236
54,504 51,344
The average number of employees employed by AGSL, but working for the syndicate during the year, analysed by category, was as follows:
2024 2023
Number Number
Management 4 4
Underwriting 90 86
Claims 15 15
Administration 99 85
208 190
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
AT 31 DECEMBER 2024
33
SYNDICATE 609 ANNUAL ACCOUNTS 2024
9. REMUNERATION OF THE DIRECTORS OF ATRIUM UNDERWRITERS LIMITED
The ten (2023 – twelve) directors of AUL who served during 2024 received the following aggregate remuneration charged to the syndicate
and included within net operating expenses:
2024 2023
£’000 £’000
Directors’ emoluments 1,352 1,228
Pensions 63 46
1,415 1,274
No other compensation was payable to key management personnel and charged to the syndicate.
The Active Underwriter who served during the year received the following remuneration charged as a syndicate expense and included within
directors’ emoluments above:
2024 2023
£’000 £’000
Emoluments 272 246
10. INVESTMENT RETURN
2024 2023
£’000 £’000
Investment income:
Income from investments 35,024 29,394
Net realised gains/(losses) on investments:
Realised gains on investments 18,751 957
Realised losses on investments (2,182) (3,382)
16,569 (2,425)
Net unrealised gains on investments:
Unrealised gains on investments 23,076 36,376
Unrealised losses on investments (14,522) (6,173)
8,554 30,203
Investment expenses and charges:
Investment managers expenses, including interest (754) (640)
Allocated investment return transferred to general business technical account 59,393 56,532
34
SYNDICATE 609 ANNUAL ACCOUNTS 2024
10. INVESTMENT RETURN CONTINUED
Calendar Year Investment Return
The table below presents the average amount of funds in the year per currency and analyses by currency the average investment yields in the
year.
2024 2023
£’000 £’000
Average syndicate funds available for investment during year
Sterling 62,934 51,047
US Dollars 902,734 719,492
Canadian Dollars 105,039 104,596
Euro 62,414 54,771
Combined 1,133,121 929,906
Aggregate gross investment return for the year 55,145 54,284
Gross calendar year investment return: % %
Sterling 5.7 5.6
US Dollars 4.9 6.1
Canadian Dollars 4.9 4.4
Euro 4.1 5.0
Combined 4.9 5.8
11. INVESTMENTS
Fair value Cost
2024 2023 2024 2023
£’000 £’000 £’000 £’000
Shares and other variable yield securities and units in unit trusts 144,883 95,820 144,883 95,820
Debt securities and other fixed income securities 1,192,845 1,011,775 1,115,935 1,018,971
Loans and deposits with credit institutions 16 16 16 16
1,337,744 1,107,611 1,260,834 1,114,807
Shares and other variable yield securities and units in unit trusts represents the syndicate’s holdings in collective investment schemes.
Included within debt securities and other fixed income securities in the current and prior year are Lloyd’s overseas deposits which were
reclassified to be consistent with the new filing requirements under Lloyd’s guidelines.
Using Standard & Poor’s and Moody’s as rating sources, the credit ratings of the debt and other fixed income securities are set out below:
2024 2024 2023 2023
£’000 % £’000 %
Government/Government Agency 392,643 33.0 279,011 27.6
AAA/Aaa 220,043 18.4 178,762 17.7
AA/Aa 147,851 12.4 140,751 13.9
A 294,757 24.7 274,533 27.1
BBB 125,436 10.5 54,381 5.4
<BBB 12,115 1.0 84,337 8.3
1,192,845 100.0 1,011,775 100.0
The syndicate’s core investment manager throughout 2024 was Wellington Management International Limited headquartered in Boston,
Massachusetts, United States. Conning Asset Management Ltd managed a fund of bank loans in US Dollars until 31 December 2024 when the
syndicate fully divested from the fund.
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
AT 31 DECEMBER 2024
35
SYNDICATE 609 ANNUAL ACCOUNTS 2024
11. INVESTMENTS CONTINUED
Fair value methodology
Fair value is the amount for which an asset or liability could be exchanged between willing parties in an arm’s length transaction. Fair values
are determined at prices quoted in active markets. In some instances, such price information is not available for all instruments and the
syndicate applies valuation techniques to measure such instruments. These valuation techniques make maximum use of market observable
data but in some cases management estimate other than observable market inputs within the valuation model. There is no standard model
and different assumptions would generate different results.
To provide an indication about the reliability of the inputs used in determining fair value, the syndicate has classified its financial instruments
into the three levels. Investments carried at fair value have been categorised using a fair value hierarchy. An explanation of each level and the
value hierarchy is provided below.
Fair value hierarchy
Level 1 – Inputs to level 1 fair value are quoted prices (unadjusted) in active markets for identical assets. An active market is one in which
transactions for the asset occurs with sufficient frequency and volume to provide pricing information on an on-going basis.
Level 2 – The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is
determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity- specific
estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3 – Inputs to level 3 fair values are based on unobservable inputs for the assets at the last measurement date. If all significant inputs
required to fair value an instrument are observable then the instrument is included in level 2, if not it is included in level 3.
The table below shows financial instruments carried at fair value through profit or loss grouped into the level in the fair value hierarchy into
which each fair value measurement is categorised.
Level 1 Level 2 Level 3 Total
As at 31 December 2024 £’000 £’000 £’000 £’000
Shares and other variable yield securities and units in unit trusts – 137,859 7,024 144,883
Debt securities and other fixed income securities 7,125 1,185,720 – 1,192,845
Loans and deposits with credit institutions 16 – – 16
7,141 1,323,579 7,024 1,337,744
Level 1 Level 2 Level 3 Total
As at 31 December 2023 £’000 £’000 £’000 £’000
Shares and other variable yield securities and units in unit trusts – 87,093 8,727 95,820
Debt securities and other fixed income securities 126,566 885,209 – 1,011,775
Loans and deposits with credit institutions 16 – – 16
126,582 972,302 8,727 1,107,611
Lloyd’s introduced syndicate loans to the Central Fund in relation to the 2019 year of account and 2020 year of account, with two tranches
collected from the syndicate on the 2020 year of account. The proceeds from these loans are used to strengthen Lloyd’s central resources and
to inject capital into LIC. These loans will not be repaid before 5 years have elapsed. Interest thereon will be determined by reference to the
risk-free yield plus a credit spread, and will normally be paid annually on an anniversary of the loan. Interest on these loans has been received.
The first tranche relating to the 2019 year of account was fully repaid by Lloyd’s during 2024. These investments for which the fair value cannot
be determined using direct or indirect observable inputs, with this, syndicate loans to the central fund have been categorised as level 3.
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SYNDICATE 609 ANNUAL ACCOUNTS 2024
12. DEBTORS ARISING OUT OF DIRECT INSURANCE OPERATIONS
2024 2023
£’000 £’000
Due from intermediaries:
Due within one year 390,407 336,422
Due after one year 2 -
390,409 336,422
13. DEFERRED ACQUISITION COSTS
The table below shows changes in deferred acquisition costs from the beginning of the period to the end of the period.
2024 2023
£’000 £’000
Balance at 1 January 114,058 108,759
Incurred costs deferred 242,607 152,283
Amortisation (235,734) (143,079)
Effect of movements in exchange rates 58 (3,905)
Balance at 31 December 120,989 114,058
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
AT 31 DECEMBER 2024
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SYNDICATE 609 ANNUAL ACCOUNTS 2024
14. CLAIMS DEVELOPMENT
The following tables show the development of claims over a period of time on both a gross and a net of reinsurance basis. FRS 103 requires
that claims development shall go back to the period when the earliest material claim arose for which there is still uncertainty about the
amount and timing of the claims payment, but need not go back more than ten years. The top half of the table shows how the estimates of
total claims for each underwriting year develop over time. The lower half of the table reconciles the cumulative claims to the amount
appearing in the balance sheet.
The cumulative claims estimates and payments for each underwriting year are translated into pounds sterling at the exchange rates prevailing
at 31 December 2024 in all cases.
Analysis of claims development 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Total
– gross £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Estimate of ultimate gross claims:
at end of underwriting year 281,931 288,937 378,650 321,377 341,726 357,017 416,114 484,774 474,089 584,427
one year later 268,601 266,269 360,219 314,909 342,052 307,421 503,886 415,075 401,129
two years later 241,449 241,826 347,562 306,532 329,875 293,128 593,675 420,357
three years later 228,159 229,976 343,751 302,539 326,656 289,095 681,739
four years later 218,339 227,748 333,246 314,465 337,272 313,926
five years later 215,535 224,946 344,511 326,675 361,380
six years later 216,736 229,131 351,186 346,487
seven years later 219,836 240,169 372,733
eight years later 225,659 245,474
nine years later 231,333
Less gross claims paid 207,847 215,528 313,973 273,467 263,832 227,197 254,958 213,405 112,352 14,483
Gross ultimate claims reserve 23,486 29,946 58,760 73,020 97,548 86,729 426,781 206,952 288,777 569,944 1,861,943
Gross ultimate claims reserve for
2014 & prior 52,734
Gross unearned portion of
ultimate claims (323,850)
Gross claims reserve 1,590,827
Analysis of claims development 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Total
– net £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Estimate of ultimate net claims:
at end of reporting year 250,048 249,586 312,102 285,298 302,873 310,173 366,779 407,012 437,848 479,036
one year later 246,321 238,320 308,287 289,145 310,198 284,864 375,059 386,764 378,631
two years later 223,471 221,279 302,344 279,714 301,364 273,404 398,801 374,631
three years later 212,654 212,458 297,959 277,156 295,380 271,750 420,196
four years later 204,275 209,180 286,801 276,526 302,731 285,499
five years later 200,066 206,372 293,317 288,169 321,884
six years later 200,427 209,854 298,878 302,386
seven years later 203,404 219,985 319,788
eight years later 207,726 226,053
nine years later 214,286
Less net claims paid 191,138 197,911 264,355 242,387 233,173 212,723 226,890 193,075 108,925 13,762
Net ultimate claims reserve 23,148 28,142 55,433 59,999 88,711 72,776 193,306 181,556 269,706 465,274 1,438,051
Net ultimate claims reserve for
2014 & prior 36,600
Net unearned portion of
ultimate claims (290,671)
Net claims reserve 1,183,980
Amounts recognised in foreign currencies have been restated at the closing rates of exchange at the end of the reporting year.
38
SYNDICATE 609 ANNUAL ACCOUNTS 2024
15. TECHNICAL PROVISIONS
The table below shows changes in the insurance contract liabilities and assets from the beginning of the period to the end of the period.
2024 2023
Gross Reinsurance Gross Reinsurance
provisions assets Net provisions assets Net
Claims outstanding £’000 £’000 £’000 £’000 £’000 £’000
Balance at 1 January 1,285,324 281,387 1,003,937 1,171,381 254,964 916,417
Claims and claims adjustment expenses for the year 655,897 169,409 486,488 535,910 88,436 447,474
Cash paid for claims settled in the year (363,232) (50,191) (313,041) (370,512) (49,285) (321,227)
Effect of movements in exchange rates 12,838 6,242 6,596 (51,455) (12,728) (38,727)
Balance at 31 December 1,590,827 406,847 1,183,980 1,285,324 281,387 1,003,937
Claims reported and claim adjustment expenses 381,109 33,167 347,942 379,237 42,562 336,675
Claims incurred but not reported 1,209,718 373,680 836,038 906,087 238,825 667,262
Balance at 31 December 1,590,827 406,847 1,183,980 1,285,324 281,387 1,003,937
2024 2023
Gross Reinsurance Gross Reinsurance
provisions assets Net provisions assets Net
Unearned premiums £’000 £’000 £’000 £’000 £’000 £’000
Balance at 1 January 419,761 30,969 388,792 406,431 34,972 371,459
Premiums written during the year 1,026,490 162,915 863,575 971,622 134,627 836,995
Premiums earned during the year (1,001,886) (155,554) (846,332) (941,712) (136,880) (804,832)
Effect of movements in exchange rates 878 (380) 1,258 (16,580) (1,750) (14,830)
Balance at 31 December 445,243 37,950 407,293 419,761 30,969 388,792
16. CREDITORS ARISING OUT OF DIRECT INSURANCE OPERATIONS
2024 2023
£’000 £’000
Due from Intermediaries:
Due within one year 32,321 34,490
Due after one year 2 –
32,323 34,490
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
AT 31 DECEMBER 2024
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SYNDICATE 609 ANNUAL ACCOUNTS 2024
17. DISCLOSURES OF INTEREST
Atrium Underwriting Group Limited (AUGL) is a wholly owned subsidiary of Alopuc Limited (a UK holding company) and Alopuc Limited is in
turn a wholly owned subsidiary of Northshore Holdings Limited (Northshore), a Bermudan company. The ultimate beneficial owners of
Northshore are affiliates of Stone Point Capital LLC (Stone Point) who hold approximately 88% economic interest. The balance of the
shareholding in Northshore is held by Atrium management and staff (9.9%), Dowling Capital Partners (1.8%) and Capital City Partners LLC
(0.3%).
AUGL is the holding company of the following wholly owned subsidiaries; AUL, Atrium Insurance Agency Limited (AIAL), AGSL, Atrium Risk
Management Services (Washington) Ltd (ARMS), Atrium Corporate Capital Limited (ACCL) and Atrium 5 Limited. AGSL is the holding company
of Atrium Nominees Limited. AUL is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and
the Prudential Regulation Authority and is the managing agent of the syndicate.
The Atrium corporate underwriting capacity is provided by ACCL, with its capacity noted in the table below:
2022 2023 2024 2025
Capacity Capacity Capacity Capacity
£m £m £m £m
Syndicate 609 165.0 221.6 234.9 250.1
ACCL’s participations on the managed syndicate as a % of syndicate capacity:
Year of account
2022 2023 2024 2025
% % % %
Syndicate 609 25.4 25.4 25.4 25.4
AIAL is a registered Lloyd’s UK coverholder and is authorised and regulated by the Financial Conduct Authority. The syndicate leads a binding
authority granted to AIAL to underwrite space business. Under the terms of the binding authority, fees and profit commission are payable by
the syndicate to AIAL. Fee income of US$388,000 (2023 – US$699,000) is payable by the syndicate to AIAL in relation to premium earned in
calendar year 2024. Profit commission of US$2,000 has been incurred by the syndicate (2023 – US$209,000) during the calendar year 2024.
For the 2023 YOA onwards the small volume of EEA business written by AIAL will be written by the syndicate on its Lloyd’s Europe stamp,
reinsured back to the syndicate from Lloyd’s Europe (as is consistent with the Lloyd’s Europe underwriting model) and then reinsured back to
AIAL from the syndicate to allow each participant to benefit from their existing share of the business. This is to ensure regulatory compliance
of the model for EEA business post Lloyd’s implementing its updated operating model in 2022. Given the de minimis income associated with
AIAL’s EEA business the treatment of fees and PC associated with this business will continue to be accounted for under AIAL’s binding authority
(to the benefit of AIAL).
AGSL is a group service company. All UK employee contracts and, where possible, all material service provider contracts are held by AGSL. A
service agreement is in place whereby AGSL provides management services to all Atrium group companies. Under the service agreement
AGSL will charge the costs to each Atrium group company, including AUL, for the respective services provided.
ARMS is incorporated in Washington State, United States, and was established to support the syndicate strategy to maintain and grow its
North American direct portfolio and distribution network. ARMS charges fees to the syndicate equal to its operating costs plus a small margin
for tax reasons. Fees of US$3,547,000 were incurred by the syndicate in the calendar year 2024 (2023 – US$2,567,000).
With effect from 1 January 2025 ARMS fee charging structure will transition to a new model whereby fees for claims handling services and
digital management services will be charged on a similar basis as a third party provider of similar services. This change will have no detrimental
impact on the financial results of the syndicate in 2025.
40
SYNDICATE 609 ANNUAL ACCOUNTS 2024
The Directors’ participations on the syndicate via Nomina No. 207 LLP (the staff LLP) are as follows (this includes any director of AUL that served
during 2024 and was a partner in the LLP):
2021 2022 2023 2024 2025
£ £ £ £ £
James Cox 313,317 472,886 473,168 580,834 508,412
John Fowle - - - 207,246 181,285
Peter Laidlaw 232,067 429,178 432,146 424,653 372,298
James Lee 194,879 259,220 258,156 257,682 –
Samit Shah 432,970 680,306 688,180 842,376 736,932
Kirsty Steward 77,680 105,362 103,262 127,973 112,250
AUL has made no loans to directors of the company during 2024 (2023 – nil). There were no loans outstanding at the balance sheet date.
Managing agency fees of £6,399,000 (2023 – £6,058,000) were paid by the syndicate to AUL. Profit commission of £19,879,000 (2023 –
£22,530,000) is payable by the syndicate to AUL in relation to the 2024 calendar year result. The managing agents agreement was amended in
2007 to enable managing agents to make payments on account of profit commission, prior to the closure of a year of account. Payments on
account can be made when the syndicate transfers open year surpluses from the syndicate level premium trust funds to the members’
personal reserve fund. No such payment was made in 2024 (2023 – £nil). The 2021 year of account is in a cumulative loss position, as a result
there is no profit commission. Profit commission of £24,772,000 on the 2022 year of account is included within creditors as this year of account
closed on 31 December 2024.
The Stone Point managed Trident V Funds (acting in concert) became majority owners of Northshore from 1 January 2021. Stone Point has
investments in a wide range of companies and sectors, including the global insurance industry and as such as part of ordinary business and
operations AUL and the syndicate might enter into transactions with other Stone Point affiliates from time to time. This could include
transactions relating to inwards and outwards reinsurance, insurance intermediation, provision of insurance services, or other non-insurance
related services. Any such related party transactions are entered into by the syndicate on a commercial basis and managed in accordance with
the protocols set out in Atrium’s Conflicts of Interest Policy.
Currently no Stone Point representatives sit on the AUL Board.
As part of Lloyd’s Brexit arrangements, AUL has entered into an outsourcing agreement and a secondment agreement with LIC and
reinsurance contracts between the syndicate and LIC. This structure covers business underwritten by AUL on behalf of LIC since 1 January
2019 as well as legacy EEA business transferred to LIC under the Lloyd’s Part VII Transfer, which had a Scheme Effective Date of 30 December
2020. The outsourcing agreement covers the activities performed by AUL on behalf of LIC in writing and servicing the relevant business. The
secondment agreement (effective 1 January 2022) covers provision of seconded AUL underwriters to LIC under the Lloyd’s European
Operating Model. The reinsurance contracts cede 100% of the business written by, or transferred to, LIC back to the syndicate. Since 1 January
2022, Atrium has had a number of underwriters who are seconded to LIC’s UK branch (LIC UK) via tripartite secondment agreements to
perform Insurance Distribution Directive (IDD) activities as secondees of LIC UK.
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
AT 31 DECEMBER 2024
41
SYNDICATE 609 ANNUAL ACCOUNTS 2024
18. FOREIGN EXCHANGE RATES
The effects of exchange rate movements are recorded in two elements. Transactions during the year, translated at each quarter’s average rate,
and the translation of closing balances into the functional currency of USD gave rise to foreign exchange losses which are identified within the
non-technical account. Revaluation of all functional currency balances to the presentational currency of GBP, at the closing rate of exchange
on 31 December 2024, resulted in a foreign exchange loss and is included within Other Comprehensive Income.
The rates of exchange used in preparing the financial statements are as follows:
2024 2023
Opening Average Closing Opening Average Closing
£ Sterling : £ Sterling 1.00 1.00 1.00 1.00 1.00 1.00
US Dollar: £ Sterling 1.27 1.28 1.25 1.17 1.24 1.27
Euro: £ Sterling 1.15 1.18 1.21 1.15 1.15 1.15
Canadian Dollar: £ Sterling 1.69 1.74 1.80 1.59 1.69 1.69
19. POST BALANCE SHEET EVENTS
On 13 January 2025, the syndicate entered into a Loss Portfolio Transfer (LPT) agreement with syndicate 2008, managed by Enstar Managing
Agency Ltd, the reinsurer.
The transaction covers the discontinued portfolios in Marine Treaty Reinsurance, Property Treaty Reinsurance and US Contractors General
Liability. The cover relates to business underwritten in year of account 2023 and earlier (the majority relates to the 2021 year of account and
earlier). The LPT is a reinsurance contract by nature. The syndicate ceded net loss reserves of $196.1 million with a loss limit of $304.2 million.
All claims handling responsibilities relating to the ceded policies have been transferred to the reinsurer.
The premium payable associated with the transfer was $188.9 million. There were further acquisition costs and interest charges associated
with the transaction. After allowing for these costs the net impact to the statement of comprehensive income was a profit of $2.3m. This will
be recorded in the 2025 results of the syndicate and has no impact on the results as recorded for 31 December 2024.
Additionally, in January 2025, a series of destructive wildfires affected the Los Angeles metropolitan area and San Diego County in California.
The wildfires have caused extensive damage to insured homes and structures. At the time of writing the overall loss quantum to the syndicate
is still to be determined however industry loss estimates are currently in the range of between $30bn to $50bn. This loss is a 2025 event and
does not impact the 2024 financial statements.
ANNUAL REPORT AND
ACCOUNTS 2024
SYNDICATE 609
UNDERWRITING YEAR ACCOUNTS
THE 2021 AND 2022 YEARS OF
ACCOUNT
SYNDICATE 609
43
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
REPORT OF THE DIRECTORS
OF THE MANAGING AGENT
The Directors of the managing agent present their report at
31 December 2024 for the 2021 and 2022 years of account of
Syndicate 609 (the syndicate).
This report is prepared in accordance with the Lloyd’s Syndicate
Accounting Byelaw (No 8 of 2006). It accompanies the underwriting
year accounts prepared on an underwriting year basis of accounting
as required by Statutory Instrument No 1950 of 2008, the Insurance
Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations (the 2008 Regulations) and applicable United Kingdom
Accounting Standards, including Financial Reporting Standard 102:
The Financial Reporting Standard applicable in the United Kingdom
and Republic of Ireland (FRS102), Financial Reporting Standard 103:
Insurance Contracts (FRS103).
REVIEW OF THE 2021 YEAR OF ACCOUNT
The Directors have determined that the 2021 year of account will
remain open as at 31 December 2024 due to the level of reserve
sensitivity over the reserves that have been established in relation to
the western leased aircraft in Russia. The cumulative loss to date is
£22.3m. Further details on the underwriting results are included
within the Underwriter’s Report.
REVIEW OF THE 2022 CLOSED YEAR OF ACCOUNT
The 2022 year of account closed with a profit of £121.4m after
standard personal expenses (18.6% of capacity). There was no
business reinsured into the 2022 year of account as the 2021 year of
account remains open. Further details on the underwriting results are
included within the Underwriter’s Report.
PRINCIPAL RISKS AND UNCERTAINTIES
Governance
The Board recognises the critical importance of having efficient and
effective risk management systems in place but also recognises that
it can only mitigate risks, and not eliminate them entirely. The Board
has developed its Own Risk and Solvency Assessment (ORSA),
comprising the entirety of the processes that it uses to identify,
assess, monitor and report the risks faced by the syndicate and to
evaluate the amount of funds necessary to cover these risks taking
into consideration the business profile and risk appetite of the
syndicate. Critical to the efficacy of the ORSA is the effective
operation of the Risk Management Framework (RMF), the
Governance Structure and the syndicate Internal Model. The RMF
incorporates the so-called “Three Lines of Defence” approach to risk
management and reporting.
The RMF is the mechanism through which Atrium ensures it is
implementing effective and enterprise-wide risk management
practices across its business. Key to the business is the management
of risk, return and capital, against which all significant strategic and
operational business decisions are evaluated. The syndicate has
established systems of governance and risk management that enable
it to manage its business prudently.
The RMF is the articulation of these systems of risk management and
governance and how the various elements interact.
The RMF encompasses the broad range of activities undertaken
across the organisational hierarchy to ensure that risks are managed
appropriately, spanning from the high-level strategy set by the Board
to the day-to-day underwriting decisions being made by syndicate
staff and the controls in place to govern these. The RMF can be
illustrated as follows:
Strategy: This describes the strategy setting process and explains
how this filters down through the organisation; incorporating the
syndicate’s Business Strategy, Business Plan, Risk Policy Statement and
Risk Policies.
Business Activities: All business units are responsible for
implementing the strategy and business plans in accordance with
the framework set out in the risk policies.
The people, controls, management information, processes and senior
management oversight in place across the business units serve as
the “First Line of Defence” in the RMF.
Risk Governance Structure: The Board has established a Risk
Governance Structure in order to ensure that risk is appropriately
identified, monitored, managed and reported across the
organisation; to review the activities of the business units; and to
ensure that the RMF is effectively designed, implemented and
governed.
The Risk Governance Structure is comprised of the Risk Committee
(RC), which fulfils the role of the syndicate’s Risk Management
Function, the Executive Risk Committee (ERC) and its three Risk
Sub-Committees, discussed further below.
Independent Assurance: The syndicate has in place a Compliance
Function and an Actuarial Function in addition to the Risk
Management Function (fulfilled by the RC, the ERC and the Risk
Management Team). These functions have specific responsibilities
documented in their terms of reference and are staffed by fit and
proper individuals with suitable qualifications, expertise and
experience. The activities of these functions seek to provide the
Board with assurance as to the appropriateness and effectiveness of
the various elements of the RMF, the internal control environment,
and the calculation of capital.
There are a number of risk management tools which support
independent assessment and reporting of risk. Taken together this
Independent Assurance comprises the “Second Line of Defence”.
Independent Oversight: The RMF provides for independent
oversight and challenge via the operation of the Internal Audit
Function as well as the Audit Committee, which is a Committee of
the Board with membership comprised of Non-Executive Directors.
Together, these two groups provide the “Third Line of Defence”. The
Audit Committee, along with its broader responsibilities for the
44
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
financial statements and financial reporting process, has oversight of
internal controls and the Internal Audit Function.
Risk Committee (RC)
The RC fulfils the Risk Management Function, in conjunction with the
ERC and the Risk Management Team, and coordinates the risk
management activities conducted for the syndicate. The RC has its
membership comprised of Non-Executive Directors though is
attended by various Executives to ensure that the RC is provided with
the information it requires to perform its role. It is responsible for
ensuring that the RMF and Internal Model operate effectively, and for
maintaining an aggregated and holistic view of risks to the syndicate
and reporting on them to the Board, committees and management
as appropriate. It also ensures that there is robust and effective
management, governance and oversight of the syndicate Internal
Model which is used to set capital and is also widely used within the
business.
Due to overarching considerations of climate change and
Environmental, Corporate and Social Governance (ESG) in strategy
setting and risk profile changes, this committee is also responsible for
oversight of the climate change and sustainability frameworks.
To support delivery of the RC’s responsibilities, there is the ERC and its
three Risk Sub-Committees, each being responsible for oversight,
review and challenge of the activities of the syndicate and in
particular, ensuring activities are within risk policies, that risks are
suitably identified monitored and reported, and that appropriate
contingency plans are in place.
The principal risks to which the syndicate is exposed are discussed
below together with the mitigation techniques adopted. For clarity,
the risks are analysed by reference to the Risk Sub-Committees that
have responsibility for the relevant risk area.
The ERC exists to support the RC and ensure that it can focus on key
issues and also to ensure that there is the scope for executive
management discussion on risk issues and aggregation across the
Risk Sub-Committees prior to the RC. During 2025 this support to the
RC will be enhanced by bifurcating the ERC’s role into 2 separate
committees – Internal Model Governance Committee (IMGC) to focus
on ensuring the operational effectiveness of the Internal Model, and
Risk Governance and Oversight Committee (RGOC).
Insurance Risk Sub-Committee (IRSC)
The IRSC is responsible for oversight of insurance risk which includes
underwriting, claims, reserving, and reinsurance.
Underwriting risk is the risk that future losses are greater than allowed
for within premiums. This could be due to natural fluctuations in
claims frequencies and severities, changes in economic and judicial
environments, anti-selection, inappropriate premium estimation or
catastrophic loss activity.
Underwriting risk is mitigated through numerous controls including
underwriter peer review, authority limits, independent review of risks
written, and purchase of an appropriate reinsurance programme. The
Syndicate Business Forecast is completed annually and stipulates
those classes of business and concentration by class that will be
written during the forthcoming year. It is reviewed by the IRSC and
approved by the Board prior to being submitted to Lloyd’s for
approval. Actual performance during the year is monitored by
reference to the Syndicate Business Forecast.
The risk of catastrophic claims is mitigated by the syndicate having a
defined risk appetite which determines the net loss that it intends to
retain for major catastrophe events and where deemed appropriate
reinsurance is purchased to limit the impact of losses. Although the
likelihood of occurrence is considered to be remote, there may be
circumstances where the loss from a particular catastrophe event
exceeds the net risk appetite, perhaps due to the occurrence of a loss
that has not been considered, or where the reinsurance purchased
proves to be insufficient. In addition climate change can affect the
occurrence and severity of weather related events. Whilst the impact
of these is researched, there is significant uncertainty to the impact
climate change has on events in the tail of distributions which
increases uncertainty in this area.
Reserving risk is the risk that there is insufficient provision for losses
that have already occurred.
Reserving risk is mitigated by the robust reserve adequacy exercise
that is performed on a quarterly basis by the Actuarial Function and
approved by the Board. The quarterly exercise involves a review of
the paid and outstanding claims and an assessment of the
appropriate provision for incurred but not reported (IBNR) claims. The
reserves are considered by the IRSC and approved by the Board. The
reserving is carried out based on historical development data, the
claims environment and information provided by lawyers and third
party claims adjusters.
Although a thorough review is carried out the reserves carried may
be more or less than adequate to meet the final cost of claims.
The IRSC also reviews the proposed reinsurance programme that is
used to protect capital from the frequency and severity of losses that
may be sustained through underwriting the varied lines of business
written. The review includes analysis of the reinsurance cover being
purchased and assessment of the proposed counterparties.
Financial Risk Sub-Committee (FRSC)
The FRSC is responsible for oversight of financial risks and the steps
taken to mitigate them as they arise from investments, asset/liability
management, credit, liquidity and concentration risks. These risks are
discussed further below.
Investment risk is the risk that the syndicate’s earnings are affected by
changes in the value of the investment portfolio, such changes in
value may be driven by changes in the economic and political
REPORT OF THE DIRECTORS
OF THE MANAGING AGENT CONTINUED
45
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
environment and by movements in interest and foreign exchange
rates. The syndicate’s investments are managed in accordance with
investment guidelines established by the Board and are reviewed on
a regular basis. The FRSC monitors the performance of the external
investment managers and the custodians responsible for the
safekeeping of the investments, and reports regularly to the Board.
Asset/liability mismatch is the risk that the syndicate could incur a
loss through inadequate matching of its investments with its
insurance liabilities. Due to the short tail nature of the majority of
these liabilities, the syndicate does not seek to achieve a precise
matching with the investment portfolio, instead developing an
investment duration guideline that is broadly in line with the average
payment profile of the liabilities. However, the syndicate substantially
mitigates exposures to currency mismatch by investing premiums in
the currency in which subsequent claims are most likely to be
incurred and periodic rebalancing to ensure that these remain
appropriate for the liabilities. The majority of the syndicate’s business
is denominated in US dollar and accordingly the substantial part of
the investment portfolio is in US dollar denominated investments.
The key aspect of credit risk is the risk of default by one or more of
the syndicate’s reinsurers, their investment counterparties, or
insurance intermediaries. Reinsurance is placed with security that
adheres to the reinsurance policy. The exposure to credit risk in the
investment portfolio is mitigated through adherence to the
investment guidelines which require the syndicate’s core investment
portfolios to be held in government and corporate debt with a high
credit quality rating and with a relatively short duration, thus
substantially mitigating the risk of sustaining losses from default.
Exposure to intermediaries is mitigated by rigorous review of new
intermediaries, contractual terms of business, regulated or
segregated client accounts, monitoring of balances and credit
control procedures.
Liquidity risk is the risk that the syndicate will not be able to meet its
short term liabilities as they fall due owing to a shortfall in cash. This
risk is mitigated through holding invested funds in high credit quality
and short duration investments. Cash flow projections are also
reviewed on a regular basis. The need for overdraft facilities, in case of
an unprojected cash flow deficit, is also reviewed regularly.
Concentration risk is the exposure to loss that could arise if the bulk
of the amounts recoverable by the syndicate were dependent on a
limited number of reinsurers, or if investments were restricted to
limited numbers of counterparties or sectors. The risk is mitigated by
restricting the permitted cessions to individual reinsurers for any one
underwriting year and through the investment guidelines which limit
exposure to individual investment counterparties and sectors.
Operational Risk Sub-Committee (ORSC)
The ORSC is responsible for oversight of the syndicate’s exposures to
operational and regulatory risks.
Operational risk is the risk of loss due to inadequate or failed
processes and procedures, people and systems, or external events.
The syndicate seeks to manage these risks by operating a control
based environment which consists of documented procedures,
segregation of duties and appropriate levels of review.
Regulatory risk is the risk of loss owing to a breach of regulatory
requirements or failure to respond to regulatory change. The
Managing Agency has a Compliance Officer and team who monitor
regulatory developments and assess the impact on agency policy
and maintain an ongoing open dialogue with both regulators and
Lloyd’s. They also carry out a compliance monitoring programme.
Regular reviews are performed by the Internal Audit department to
ensure that deviations from the agent’s policies, and control
weaknesses, are identified and reported to the appropriate level of
management and the Audit Committee when considered necessary.
Customer Oversight Group
The Customer Oversight Group is responsible for oversight of the
syndicate’s exposure to conduct risk and ensuring that the syndicate
is providing good outcomes to customers as set out in the Financial
Conduct Authority’s (FCA) Consumer Duty. The Consumer Oversight
Group reports directly to the Board.
Conduct risk is the risk that as part of writing and servicing insurance
policies the syndicate fails to pay due regard to the interests of its
customers. This is mitigated through the application of a conduct risk
policy and procedures and through staff’s adherence to a Code of
Business Principles and Ethics. The syndicate is committed to
conducting its activities and stakeholder relationships in a fair and
honest manner and the highest standard of conduct, professionalism
and integrity is expected from all of its employees, with due regard
paid at all levels of the organisation to ensuring fair outcomes for
customers. Key controls include training of staff, embedding of the
consideration of conduct risk as part of the business planning
process and through the product life-cycle and Board and
governance oversight and reporting. The Customer Oversight Group
fulfils the role of a “product oversight group” providing customer
challenge and perspective to the syndicate’s products. Stephen
Hearn (Independent Non-Executive Director) was appointed by the
Board as Consumer Duty Champion from July 2024 following the
retirement of Stephen Riley who had previously held this
appointment.
Executive Committee (XCo)
The XCo deals with the day-to-day activities of the Managing Agent
and is responsible for delivering the annually agreed priorities,
developing and implementing business plans, policies, procedures
and budgets that have been recommended and approved by the
Board, monitoring the operating and financial performance of the
syndicate, prioritising and allocating investment and resources, and
managing the risk profile of the syndicate. The XCo is responsible for
46
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
the people strategy and establishment of the culture, values and
behaviours of the organisation. The XCo implements policy and
strategy adopted by the Board and deals with all operational matters
affecting the syndicate.
XCo is an executive committee of the Board and is the overall
decision making body for performance and delivery, under
delegated authority from the Board. Members of the XCo include the
Executive Directors of the Managing Agent, the Chief Strategy Officer
and the Head of Culture and Strategy Integration, with the Chair
being the Chief Executive Officer of the Managing Agent or, in their
absence, any other member of the committee.
Culture Committee
The Culture Committee is a sub-committee of the XCo which reviews
and provides formal governance over all areas relating to culture,
namely the creation of a work environment that reflects the
managing agent’s values and enables its people to achieve their full
potential and do their best work. It has a diverse membership from
across the business, of different levels of seniority, which is refreshed
annually.
Lloyd’s Europe Operating Model
As part of Lloyd’s Brexit arrangements, Atrium Underwriters Limited
(the Company) has entered into an outsourcing agreement and a
secondment agreement with Lloyd’s Insurance Company (LIC) and
reinsurance contracts between the syndicate and LIC. This structure
covers business underwritten by the Company on behalf of LIC since
1 January 2019 as well as legacy EEA business transferred to LIC
under the Lloyd’s Part VII Transfer, which had a scheme effective date
of 30 December 2020. The outsourcing agreement covers the
activities performed by the Company on behalf of LIC in writing and
servicing the relevant business. The secondment agreement
(effective 1 January 2022) covers the provision of seconded Atrium
underwriters to LIC under the Lloyd’s European Operating Model. The
reinsurance contracts cede 100% of the business written by, or
transferred to, LIC back to the syndicate.
CLIMATE CHANGE AND SUSTAINABILITY
Governance
Having introduced the role of Head of Sustainability in 2023, 2024
saw the importance placed on assessing climate change and
associated sustainability risks and opportunities, as well as ensuring
the syndicate meets applicable regulatory requirements.
This role reports directly into the Chief Risk Officer who is the
Executive Director with responsibility for sustainability and managing
the financial risks from climate change risk. The Head of Sustainability
also communicates regularly with the XCo to ensure sustainability
and climate change are incorporated into strategic decisions.
In terms of formal governance, the RC is responsible for reviewing
updates to the sustainability strategy and framework prior to Board
approval, as well as assessing other sustainability-related risks. This is
due to the overarching ramifications of climate change and other
sustainability factors in strategy setting and risk profile changes.
Sustainability is a standing agenda item for this Board Committee.
Strategy
Climate risk can be broadly divided into 3 categories: physical,
transition and liability. Physical risk relates to the change in climate
and weather events which have the potential to directly affect the
economy. Transition risk can occur when moving towards a lower
carbon economy and how the speed of the transition may affect
certain sectors and affect financial stability. Liability risk refers to
potential increased litigation against policyholders from individuals
or businesses who have experienced losses because of physical or
transition risk.
The syndicate has a dedicated sustainability strategy to manage
physical, transition and liability aspects. Strategic objectives have
been mapped to, and integrated with, the overall group strategy to
ensure risks and opportunities from climate change and other
sustainability aspects are fully embedded within the business.
The syndicate has always been fully focused on managing the
physical risks of the business it writes and it has a formalised
framework specifically for managing physical climate risk. This
addresses potential, current and future climate impacts on the
natural catastrophe exposed portfolio by region peril combinations
and identifies potential risk mitigation strategies.
An assessment of transition risk is made as part of the syndicate’s
ORSA process and further analysis is performed during the business
planning process. This allows us to identify areas of the portfolio with
more material exposures as well as providing some metrics to the
categorisations used. The percentage of overall estimated premium
income deemed at risk from a transition to a lower carbon economy
decreased over the year due to a change in the portfolio mix. The
transition risk from our investment portfolio is limited due to the
short duration of the portfolio and the lack of investment in equities.
In terms of liability risk, the syndicate assesses its exposures on
high-risk classes via risk assessments looking at potential litigation
risks. This is included in its Internal Model but is currently not deemed
material in the short term. In addition, the risk team review current
trends in climate risk litigation and their applicability to our
underwriting portfolios.
The syndicate is focused on taking advantage of the new
opportunities that a shift to a low carbon economy might bring,
whilst being mindful of the commerciality of these and managing
the associated risks encountered with new technology, scarcity of
data, uncertainty of forward-looking scenarios and the potential of
systemic risk.
Sustainability considerations are incorporated into the annual
business planning submissions, with each class of business factoring
REPORT OF THE DIRECTORS
OF THE MANAGING AGENT CONTINUED
47
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
in both the risks and opportunities posed to them. The IRSC use this
information, with input from the Head of Sustainability, as part of its
role in recommending the plan for approval to Board. This is an
iterative process which will be improved year-on-year to help shape
the strategy.
Risk Management
The aim of risk management is to ensure durability and value for
stakeholders by managing the risks and opportunities presented by
climate change in a holistic and balanced manner, embracing the
values of an integrated governance structure. The syndicate’s
collaborative culture and relative agility in the Lloyd’s market means it
is well placed to achieve this ideal. The Head of Sustainability works
with almost all areas of the business including the Board and XCo,
Underwriting, Claims, Actuarial, Finance, Internal Audit, Exposure
Management and Operations to ensure a joined-up approach in
driving strategic and everyday decisions. In addition, working groups
have been formed across the business to tackle various topical
subjects, such as underwriting portfolio measurement, litigation risk,
responsible investing and underwriting opportunities.
The syndicate has formal sustainable underwriting rules and
guidelines which state the syndicate’s appetite for certain risks. These
rules and guidelines incorporate the stance on areas which are
deemed not to be conducive with the syndicate’s wider sustainability
strategy, as well as formalising compliance with Lloyd’s guidance
regarding no new cover for thermal coal-fired power plants, thermal
coal mines, oil sands and Arctic energy exploration activities. This is
an evolving document which sits alongside the business principles
and ethics policy. In addition, the syndicate has a comprehensive
responsible investment policy which covers its governance
framework, risk appetite, metrics and ESG integration. The syndicate
has processes in place to help ensure underwriters and investment
managers comply with these.
The syndicate continues to build on existing data and metrics related
to climate risk, conduct tests of existing models, systems and
processes to ensure they are adequate and relevant, build on
scenario analysis and stress testing, review new opportunities
(underwriting and technological) and increase knowledge and
education. It uses third party data on a measured basis, ensuring that
both the advantages and disadvantages are understood. The
syndicate endeavours to incorporate climate risk and sustainability
concerns across all decision-making processes and act as a
responsible business.
DIRECTORS AND OFFICERS
The Directors & Officers of the managing agent who served during
the year ended 31 December 2024 and to the date of signing these
financial statements were as follows:
Martha Bruce, Shakespeare Martineau LLP (Company Secretary;
Resigned 31 March 2024)
Nicole Coll
James Cox
John Fowle
Stephen Hearn (Appointed 31 July 2024)
Peter Laidlaw (Active Underwriter 609)
James Lee (Resigned 31 December 2024)
Stephen Riley (Resigned 31 July 2024)
SGH Company Secretaries Limited (Company Secretary; Appointed
31 March 2024)
Samit Shah
Kirsty Steward
Christopher Stooke
DIRECTORS’ INTERESTS
Details of Directors’ interests may be found in note 17 to the
accounts.
RE-APPOINTMENT OF AUDITORS
The Board of Directors have re-appointed KPMG LLP as the syndicate
auditor for the year ending 31 December 2025. KPMG LLP have
indicated their willingness to continue in office as the syndicate
auditor.
By order of the Board
John Fowle
Chief Executive Officer
4 March 2025
48
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
STATEMENT OF THE MANAGING
AGENT’S RESPONSIBILITIES
The Directors of the managing agent are responsible for preparing
the syndicate underwriting year accounts in accordance with the
Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate
Accounts) Regulations 2008 and the Lloyd’s Syndicate Accounting
Byelaw. They have elected to prepare the accounts in accordance
with FRS 102 The Financial Reporting Standard applicable in the UK
and Republic of Ireland.
Under Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008 the directors of the managing
agent must not approve the underwriting year accounts unless they
are satisfied that they give a true and fair view of the result of the
underwriting year at closure. In preparing these accounts, the
directors of the managing agent are required to:
• Select suitable accounting policies and then apply them
consistently and where there are items which affect more than
one year of account, ensure a treatment which is equitable
between the members of the syndicate;
• 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 accounts;
• Assess the syndicate’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and
• Use the going concern basis of accounting unless they either
intend to cease trading, or have no realistic alternative but to do
so. As explained in note 1 the Directors of the managing agent
have not prepared the underwriting year accounts on a going
concern basis.
The Directors of the managing agent are responsible for keeping
adequate and proper accounting records that are sufficient to show
and explain the syndicate’s transactions and disclose with reasonable
accuracy at any time the financial position of the syndicate and
enable them to ensure that the underwriting year accounts comply
with the Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008. They are responsible for such
internal control as they determine is necessary to enable the
preparation of accounts that are free from material misstatement,
whether due to fraud or error, and have general responsibility for
taking such steps as are reasonably open to them to safeguard the
assets of the company and to prevent and detect fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the syndicate’s
website. Legislation in the UK governing the preparation and
dissemination of underwriting year accounts may differ from
legislation in other jurisdictions.
49
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
SYNDICATE 609 2021 YEAR OF ACCOUNT
OPINION
We have audited the syndicate underwriting year accounts for the
2021 open year of account of syndicate 609 for the four year period
ended 31 December 2024, which comprise the Statement of
Comprehensive Income: Technical Account – General Business for
the 2021 Year of Account; Statement of Comprehensive Income –
Non Technical Account for the 2021 Year of Account; Balance Sheet
for the 2021 Year of Account; Statement of Cash Flows for the 2021
Year of Account and related notes which relate to the 2021 open year
of account, including the accounting policies in Note 3.
In our opinion the syndicate underwriting year accounts for the 2021
open year of account:
• give a true and fair view of the syndicate’s state of the syndicate’s
affairs as at 31 December 2024 and of the syndicate’s loss for the
2021 open year then ended;
• have been properly prepared in accordance with UK accounting
standards, including FRS 102 The Financial Reporting Standard
applicable in the UK and Republic of Ireland; and
• have been properly prepared in accordance with the
requirements of the Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 and in
accordance with the requirements of the Lloyd’s Syndicate
Accounting Byelaw (No. 8 of 2005).
BASIS FOR OPINION
We conducted our audit in accordance with International Standards
on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
are described below. We have fulfilled our ethical responsibilities
under, and are independent of the syndicate in accordance with, UK
ethical requirements including the Financial Reporting Council
(“FRC”) Ethical Standard as applied to other entities of public interest.
We believe that the audit evidence we have obtained is a sufficient
and appropriate basis for our opinion.
EMPHASIS OF MATTER – NON-GOING CONCERN
BASIS OF PREPARATION
We draw attention to the disclosure made in Note 1 to the syndicate
underwriting year accounts for the 2021 open year of account which
explains that the syndicate underwriting year accounts for the 2021
open year of account have not been prepared on the going concern
basis for the reasons set out in that note. Our opinion is not modified
in respect of this matter.
EMPHASIS OF MATTER – SYNDICATE RESERVES
We draw attention to the disclosure made in Note 6 to the syndicate
underwriting year accounts for the 2021 open year of account
concerning the significant level of uncertainty in relation to the
possible claims arising out of the syndicate’s Russian aviation
exposures. This matter results in more potential variability than would
ordinarily be the case in the potential outcomes regarding technical
provisions. This uncertainty has resulted in the Board deciding not to
close the 2021 year of account.
Our opinion is not modified in respect of this matter.
FRAUD AND BREACHES OF LAWS AND
REGULATIONS – ABILITY TO DETECT
Identifying and responding to risks of material
misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”)
we assessed events or conditions that could indicate an incentive or
pressure to commit fraud or provide an opportunity to commit fraud.
Our risk assessment procedures included:
• Enquiring of directors, the audit committee, internal audit and
inspection of policy documentation as to the syndicate and
Managing Agent’s high-level policies and procedures to prevent
and detect fraud, including the internal audit function, and the
syndicate and Managing Agent’s channel for “whistleblowing”, as
well as whether they have knowledge of any actual, suspected or
alleged fraud.
• Reading Board and audit committee minutes.
• Considering remuneration incentive schemes and performance
targets for management and directors.
• Using analytical procedures to identify any unusual or
unexpected relationships.
We communicated identified fraud risks throughout the audit team
and remained alert to any indications of fraud throughout the audit.
As required by auditing standards and taking into account possible
pressures to meet profit targets and our overall knowledge of the
control environment we perform procedures to address the risk of
management override of controls, in particular the risk that
management may be in a position to make inappropriate accounting
entries and the risk of bias in accounting estimates and judgements
related to the valuation of claims reserves.
Valuation of these liabilities, especially in respect of the incurred but
not reported (‘IBNR’) component, is highly judgmental as it requires a
number of assumptions to be made such as initial expected loss
ratios and claim development patterns all of which carry high
estimation uncertainty and are difficult to corroborate, creating
opportunity for management to commit fraud.
On this audit we do not believe there is a fraud risk related to revenue
recognition because of the limited estimation involved in accruing
premium income. We did not identify any additional fraud risks.
50
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
In determining the audit procedures, we took into account the
results of our evaluation and testing of the operating effectiveness of
some of the fraud risk management controls.
We performed procedures including:
• Identifying potential journal entries to test based on risk criteria
and comparing these entries to supporting documentation.
These included entries consisting of unusual double entries to
cash accounts or journals posted by individuals who typically do
not make journal entries.
• We assessed the appropriateness and consistency of the
methods and assumptions used for reserving. For a selection of
classes of business we considered to be higher risk, we
performed alternative projections to the actuarial best estimate
using our own gross loss ratios and compared these to the
syndicate’s results, assessing the results for evidence of bias.
Identifying and responding to risks of material
misstatement related to compliance with laws and
regulations
We identified areas of laws and regulations that could reasonably be
expected to have a material effect on the syndicate underwriting
year accounts for the 2021 open year of account from our general
commercial and sector experience, through discussion with the
directors and other management (as required by auditing standards),
from inspection of the Managing Agent’s regulatory and legal
correspondence and discussed with the directors and other
management the policies and procedures regarding compliance
with laws and regulations.
As the syndicate is regulated, our assessment of risks involved
gaining an understanding of the control environment including the
entity’s procedures for complying with regulatory requirements.
We communicated identified laws and regulations throughout our
team and remained alert to any indications of non-compliance
throughout the audit.
The potential effect of these laws and regulations on the syndicate
underwriting year accounts for the 2021 open year of account varies
considerably.
Firstly, the syndicate is subject to laws and regulations that directly
affect the syndicate underwriting year accounts for the 2021 open
year of account, including financial reporting legislation (including
related Lloyd’s legislation), and we assessed the extent of compliance
with these laws and regulations as part of our procedures on the
related syndicate underwriting year accounts for the 2021 open year
of account items.
Secondly, the syndicate is subject to many other laws and regulations
where the consequences of non-compliance could have a material
effect on amounts or disclosures in the syndicate underwriting year
accounts for the 2021 open year of account, for instance through the
imposition of fines or litigation or the loss of the syndicate’s capacity
to operate. We identified the following areas as those most likely to
have such an effect: corruption and bribery, compliance with
regulations relating to sanctions due to the nature of the business
written by the syndicate, financial products and services regulation
and the Solvency II regime including capital requirements,
recognising the financial and regulated nature of the syndicate’s
activities. Auditing standards limit the required audit procedures to
identify non-compliance with these laws and regulations to enquiry
of the directors and other management and inspection of regulatory
and legal correspondence, if any. Therefore, if a breach of operational
regulations is not disclosed to us or evident from relevant
correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or
breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable
risk that we may not have detected some material misstatements in
the syndicate underwriting year accounts for the 2021 open year of
account, even though we have properly planned and performed our
audit in accordance with auditing standards. For example, the further
removed non- compliance with laws and regulations is from the
events and transactions reflected in the syndicate underwriting year
accounts for the 2021 open year of account, the less likely the
inherently limited procedures required by auditing standards would
identify it.
In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal
controls. Our audit procedures are designed to detect material
misstatement. We are not responsible for preventing non-
compliance or fraud and cannot be expected to detect non-
compliance with all laws and regulations.
OTHER INFORMATION
The directors of the Managing Agent are responsible for the other
information, which comprises the information included in the
Underwriting Year Accounts, other than the syndicate underwriting
year accounts for the 2021 open year of account and our auditor’s
report thereon. Our opinion on the syndicate underwriting year
accounts for the 2021 open year of account does not cover the other
information and we do not express an audit opinion or, except as
explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our syndicate underwriting year
accounts for the 2021 open year of account audit work, the
information therein is materially misstated or inconsistent with the
syndicate underwriting year accounts for the 2021 open year of
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
SYNDICATE 609 2021 YEAR OF ACCOUNT CONTINUED
51
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
account or our audit knowledge. Based solely on that work we have
not identified material misstatements in the other information.
MATTERS ON WHICH WE ARE REQUIRED TO
REPORT BY EXCEPTION
Under the Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008 and the Lloyd’s Syndicate
Accounting Byelaw (no. 8 of 2005), we are required to report to you if,
in our opinion:
• adequate accounting records have not been kept on behalf of
the syndicate; or
• the syndicate underwriting year accounts for the 2021 open year
of account are not in agreement with the accounting records; or
• we have not received all the information and explanations we
require for our audit.
We have nothing to report in these respects.
RESPONSIBILITIES OF THE DIRECTORS OF THE
MANAGING AGENT
As explained more fully in their statement set out on page 48, the
directors of the Managing Agent are responsible for: the preparation
of the syndicate underwriting year accounts for the 2021 open year
of account and for being satisfied that they give a true and fair view;
such internal control as they determine is necessary to enable the
preparation of syndicate underwriting year accounts for the 2021
open year of account that are free from material misstatement,
whether due to fraud or error; assessing the syndicate’s ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern; and using the going concern basis of
accounting unless they either intend to cease operations, or have no
realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES
Our objectives are to obtain reasonable assurance about whether the
syndicate underwriting year accounts for the 2021 open year of
account as a whole are free from material misstatement, whether
due to fraud or error, and to issue our opinion in an auditor’s report.
Reasonable assurance is a high level of assurance, but does not
guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of the
syndicate underwriting year accounts for the 2021 open year of
account.
A fuller description of our responsibilities is provided on the FRC’s
website at www.frc.org.uk/auditorsresponsibilities.
THE PURPOSE OF OUR AUDIT WORK AND TO
WHOM WE OWE OUR RESPONSIBILITIES
This report is made solely to the members of the 2021 open year of
account of the syndicate (“the syndicate’s 2021 YOA Members”), as a
body, in accordance with the Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 and Lloyd’s
Syndicate Accounting Byelaw. Our audit work has been undertaken
so that we might state to the syndicate’s 2021 YOA Members those
matters we are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the syndicate
and the syndicate’s 2021 YOA Members, as a body, for our audit work,
for this report, or for the opinions we have formed.
Elizabeth Cox (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London E14 5GL
4 March 2025
52
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
SYNDICATE 609 2022 YEAR OF ACCOUNT
OPINION
We have audited the syndicate underwriting year accounts for the
2022 closed year of account of syndicate 609 for the three year
period ended 31 December 2024 which comprise the Statement of
Comprehensive Income: Technical Account – General Business for
the 2022 Year of Account; Statement of Comprehensive Income:
Non-Technical Account for the 2022 Year of Account; Balance Sheet
for the 2022 Year of Account; Statement of Cash Flows for the 2022
Year of Account and related notes which relate to the 2022 closed
year of account, including the accounting policies in Note 3.
In our opinion the syndicate underwriting year accounts for the 2022
closed year of account:
• give a true and fair view of the syndicate’s profit for the 2022
closed year;
• have been properly prepared in accordance with UK accounting
standards, including FRS 102 The Financial Reporting Standard
applicable in the UK and Republic of Ireland; and
• have been properly prepared in accordance with the
requirements of the Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 and in
accordance with the requirements of the Lloyd’s Syndicate
Accounting Byelaw (No. 8 of 2005).
BASIS FOR OPINION
We conducted our audit in accordance with International Standards
on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
are described below. We have fulfilled our ethical responsibilities
under, and are independent of the syndicate in accordance with, UK
ethical requirements including the Financial Reporting Council
(“FRC”) Ethical Standard as applied to other entities of public interest.
We believe that the audit evidence we have obtained is a sufficient
and appropriate basis for our opinion.
EMPHASIS OF MATTER – NON-GOING CONCERN
BASIS OF PREPARATION
We draw attention to the disclosure made in Note 1 to the syndicate
underwriting year accounts for the 2022 closed year of account
which explains that the syndicate underwriting year accounts for the
2022 closed year of account is now not prepared on the going
concern basis for the reasons set out in that note. Our opinion is not
modified in respect of this matter.
FRAUD AND BREACHES OF LAWS AND
REGULATIONS – ABILITY TO DETECT
Identifying and responding to risks of material
misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”)
we assessed events or conditions that could indicate an incentive or
pressure to commit fraud or provide an opportunity to commit fraud.
Our risk assessment procedures included:
• Enquiring of directors, the audit committee, internal audit and
inspection of policy documentation as to the syndicate and
Managing Agent’s high-level policies and procedures to prevent
and detect fraud, including the internal audit function, and the
syndicate and Managing Agent’s channel for “whistleblowing”, as
well as whether they have knowledge of any actual, suspected or
alleged fraud.
• Reading Board and audit committee minutes.
• Considering remuneration incentive schemes and performance
targets for management and directors.
• Using analytical procedures to identify any unusual or
unexpected relationships.
We communicated identified fraud risks throughout the audit team
and remained alert to any indications of fraud throughout the audit.
As required by auditing standards, and taking into account possible
pressures to meet profit targets and our overall knowledge of the
control environment, we perform procedures to address the risk of
management override of controls, in particular the risk that
management may be in a position to make inappropriate accounting
entries and the risk of bias in accounting estimates and judgements
related to the valuation of claims reserves.
Valuation of these liabilities, especially in respect of the incurred but
not reported (‘IBNR’) component, is highly judgmental as it requires a
number of assumptions to be made such as initial expected loss
ratios and claim development patterns all of which carry high
estimation uncertainty and are difficult to corroborate creating
opportunity for management to commit fraud.
On this audit we do not believe there is a fraud risk related to revenue
recognition because of the limited estimation involved in accruing
premium income. We did not identify any additional fraud risks.
In determining the audit procedures, we took into account the
results of our evaluation and testing of the operating effectiveness of
some of the fraud risk management controls.
53
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
We performed procedures including:
• Identifying potential journal entries to test based on risk criteria
and comparing these entries to supporting documentation.
These included entries consisting of unusual double entries to
cash accounts or journals posted by individuals who typically do
not make journal entries.
• We assessed the appropriateness and consistency of the
methods and assumptions used for reserving. For a selection of
classes of business we considered to be higher risk, we
performed alternative projections to the actuarial best estimate
using our own gross loss ratios and compared these to the
syndicate’s results, assessing the results for evidence of bias.
Identifying and responding to risks of material
misstatement related to compliance with laws and
regulations
We identified areas of laws and regulations that could reasonably be
expected to have a material effect on the syndicate underwriting
year accounts for the 2022 closed year of account from our general
commercial and sector experience, through discussion with the
directors and other management (as required by auditing standards),
from inspection of the Managing Agent’s regulatory and legal
correspondence and discussed with the directors and other
management the policies and procedures regarding compliance
with laws and regulations.
As the syndicate is regulated, our assessment of risks involved
gaining an understanding of the control environment including the
entity’s procedures for complying with regulatory requirements.
We communicated identified laws and regulations throughout our
team and remained alert to any indications of non-compliance
throughout the audit.
The potential effect of these laws and regulations on the syndicate
underwriting year accounts for the 2022 closed year of account
varies considerably.
Firstly, the syndicate is subject to laws and regulations that directly
affect the syndicate underwriting year accounts for the 2022 closed
year of account including financial reporting legislation (including
related Lloyd’s legislation), and we assessed the extent of compliance
with these laws and regulations as part of our procedures on the
related syndicate underwriting year accounts for the 2022 closed
year of account items.
Secondly, the syndicate is subject to many other laws and regulations
where the consequences of non-compliance could have a material
effect on amounts or disclosures in the syndicate underwriting year
accounts for the 2022 closed year of account, for instance through
the imposition of fines or litigation or the loss of the syndicate’s
capacity to operate. We identified the following areas as those most
likely to have such an effect: corruption and bribery, compliance with
regulations relating to sanctions due to the nature of the business
written by the syndicate, financial products and services regulation
and the Solvency II regime including capital requirements,
recognising the financial and regulated nature of the syndicate’s
activities.
Auditing standards limit the required audit procedures to identify
non-compliance with these laws and regulations to enquiry of the
directors and other management and inspection of regulatory and
legal correspondence, if any. Therefore, if a breach of operational
regulations is not disclosed to us or evident from relevant
correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or
breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable
risk that we may not have detected some material misstatements in
the syndicate underwriting year accounts for the 2022 closed year of
account, even though we have properly planned and performed our
audit in accordance with auditing standards. For example, the further
removed non-compliance with laws and regulations is from the
events and transactions reflected in the syndicate underwriting year
accounts for the 2022 closed year of account, the less likely the
inherently limited procedures required by auditing standards would
identify it.
In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal
controls. Our audit procedures are designed to detect material
misstatement. We are not responsible for preventing non-
compliance or fraud and cannot be expected to detect non-
compliance with all laws and regulations.
OTHER INFORMATION
The directors of the Managing Agent are responsible for the other
information, which comprises the information included in the
Underwriting Year Accounts, other than the syndicate underwriting
year accounts for the 2022 closed year of account and our auditor’s
report thereon. Our opinion on the syndicate underwriting year
accounts for the 2022 closed year of account does not cover the
other information and we do not express an audit opinion or, except
as explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our syndicate underwriting year
accounts for the 2022 closed year of account audit work, the
information therein is materially misstated or inconsistent with the
syndicate underwriting year accounts for the 2022 closed year of
account or our audit knowledge. Based solely on that work we have
not identified material misstatements in the other information.
54
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
MATTERS ON WHICH WE ARE REQUIRED TO
REPORT BY EXCEPTION
Under the Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008 and the Lloyd’s Syndicate
Accounting Byelaw (no. 8 of 2005), we are required to report to you if,
in our opinion:
• adequate accounting records have not been kept on behalf of
the syndicate; or
• the syndicate underwriting year accounts for the 2022 closed
year of account are not in agreement with the accounting
records; or
• we have not received all the information and explanations we
require for our audit.
We have nothing to report in these respects.
RESPONSIBILITIES OF THE DIRECTORS OF THE
MANAGING AGENT
As explained more fully in their statement set out on page 48, the
directors of the Managing Agent are responsible for: the preparation
of the syndicate underwriting year accounts for the 2022 closed year
of account and for being satisfied that they give a true and fair view;
such internal control as they determine is necessary to enable the
preparation of syndicate underwriting year accounts for the 2022
closed year of account that are free from material misstatement,
whether due to fraud or error; assessing the syndicate’s ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern; and using the going concern basis of
accounting unless they either intend to cease operations, or have no
realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES
Our objectives are to obtain reasonable assurance about whether the
syndicate underwriting year accounts for the 2022 closed year of
account as a whole are free from material misstatement, whether
due to fraud or error, and to issue our opinion in an auditor’s report.
Reasonable assurance is a high level of assurance, but does not
guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of the
syndicate underwriting year accounts for the 2022 closed year of
account.
A fuller description of our responsibilities is provided on the FRC’s
website at www.frc.org.uk/auditorsresponsibilities.
THE PURPOSE OF OUR AUDIT WORK AND TO
WHOM WE OWE OUR RESPONSIBILITIES
This report is made solely to the members of the 2022 closed year of
account of the syndicate (“the syndicate’s 2022 YOA Members”), as a
body, in accordance with the Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 and Lloyd’s
Syndicate Accounting Byelaw. Our audit work has been undertaken
so that we might state to the syndicate’s 2022 YOA Members those
matters we are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the syndicate
and the syndicate’s 2022 YOA Members, as a body, for our audit work,
for this report, or for the opinions we have formed.
Elizabeth Cox (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London E14 5GL
4 March 2025
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
SYNDICATE 609 2022 YEAR OF ACCOUNT CONTINUED
55
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
With this year being at the top of the market cycle and with rates
hitting their peak in most areas, you would expect this report to be
full of positivity and optimism. It is, BUT…. having to write an
Underwriter’s Report which shares further news of significant
deteriorations from the same two major loss events detailed in both
of my last two reports is very frustrating.
Outside of the 2021 and prior year challenges, the year itself had
plenty of loss activity to contend with, including natural catastrophes
arising all around the globe, one of the most significant shipping
disasters in modern history and the impact of ongoing political
friction arising around the world. All that said, the team continue to
navigate through these, and I am pleased to share that the
performance of the more recent years is looking very good.
On 13 January 2025, we put in place a Loss Portfolio Transfer covering
three discontinued lines of business (Contractors US General Liability
and both the Property and Marine Treaty accounts). This reinsurance
arrangement transfers the cost of and responsibility for all future
claims for the 2023 and prior years of account to Enstar’s Lloyd’s
Syndicate 2008. This arrangement has allowed us to ring-fence any
on these classes, to loss limits of $304.2m, and enables us to focus on
what lies ahead without having to utilise a disproportionate amount
of our time managing these underperforming elements of past years
underwriting.
2021 YEAR OF ACCOUNT
Last year we made the decision to leave the 2021 year of account
open, given the level of uncertainty and the volatility that is present
with regards to the western-leased aircraft which have not been
returned from Russia. Whilst there has been development with
regards to the lessor claims over the last year and whilst litigation
continues, we have managed to make compromised settlements
with some insureds where it made economic sense to do so. Given
the complexity involved with these claims and the fact that, at the
time of writing this report, we are still in litigation with many, there is
still much uncertainty as to how this will conclude. As a result of the
settlements made and the uncertainty of outcomes, we have
increased our loss reserves by a further £128.9m gross and £29.3m
net of reinsurance recoveries. The reserves for all claims related to the
western-leased aircraft in Russia now stand at £393.4m gross and
£113.8m net of reinsurance recoveries.
For the last two years I have reported how the issues relating to the
Florida based contractors was impacting the US General Liability
book. As a consequence of the continued deterioration of this legacy
issue, we engaged a third party claims adjuster to review the
adequacy of the net reserves taking the ultimate reserved position
from £79.4m as at the end of 2023, to a revised gross number of
£132.0m as at the end of 2024, £131.3m net of reinsurance.
The natural catastrophe losses which affected the year being Storm
Uri, Hurricane Ida and the various tornadoes are very similar to last
year at £42.0m gross and £36.0m net of reinsurance recoveries.
The investment market remained healthy and has provided a
much-needed positive impact on the 2021 year of account forecast.
As the 2021 year of account remained open, the income for the year
is still developing and is now at £546.6m as at 48 months. This
equates to 87.5% of stamp capacity. The outcome of the most recent
modelling, as described earlier in this report, has been factored in to
the latest forecast range for the 2021 year of account which is a result
of between 0.0% and +10.0% of capacity upon closure.
2022 YEAR OF ACCOUNT
I am extremely pleased to report the 2022 year of account has closed
with a profit of £121.4m after all personal expenses but before
members agents’ fees. This equates to 18.7% of stamp capacity. This is
a very healthy return given that there was no contribution from prior
year reserve releases and the 2022 year has not benefited from the
investment income gains of the 2021 and earlier years. The income
finalised at £690.4m which is 106.0% of stamp capacity.
The 2022 year was the year with the most material improvement in
rates. We took advantage of the good market conditions and
increased the income for the syndicate by around 25% over and
above the 2021 year.
The growth in income wasn’t uniform across all classes but focused
on those classes with the greatest improvement in rates and
conditions, with our core specialty classes seeing the best
opportunity for growth. The property classes also grew steadily
during the period, whilst the casualty classes were much more staid
in their income management, as the long tail market was less
buoyant despite the prior years’ development impacting a lot of the
casualty insurance and reinsurance reserves.
As I reported last year, whilst we sustained the normal run of
catastrophes and large losses, the only major loss of note during the
2022 year was Hurricane Ian, which as a market loss now exceeds
£39.9bn. I am pleased to see our loss reserve for this loss has reduced
slightly over the year and now stands at £24.2m gross and £24.1m
net of reinsurance recoveries.
2023 YEAR OF ACCOUNT
It was pleasing to see the market continue to harden further in 2023
although the rate rises were at a slower trajectory as market
confidence and fresh capacity started to arrive.
2023 was a year of frequency for catastrophe and large losses with
Cyclone Gabrielle and the flooding in New Zealand followed by a
major earthquake in Turkey/Syria, Hurricane Otis hitting Mexico,
UNDERWRITER’S REPORT
SYNDICATE 609
56
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
wildfires severely impacting the people of Hawaii and multiple severe
convective storms impacting the USA. However, it was a year that
avoided any major severity, and the market was grateful for a benign
North American hurricane season.
Whilst we managed to achieve further growth, it became increasingly
difficult to increase our share of existing good business and ‘good’
new business was becoming progressively harder to find. Whilst we
did see good growth during the year, we are forecasting that income
will be 2.0% short of our planned income in what was a market of
more aggressive capacity, especially from the new entrants.
The forecast income is £747.4m, which equates to an 85.9%
utilisation against our stamp capacity, and I’m pleased to report the
current forecast result stands at a range of +7.5% to +17.5% after all
personal expenses but before members agents’ fees.
2024 YEAR OF ACCOUNT
We went into the 2024 year in the knowledge that we were in a great
period within the market cycle and we looked to capitalise on the
growth we had achieved already. We increased stamp capacity to
£925.0m as we continued to grow where we could whilst the rating
environment allows.
Our various classes within the property, casualty and specialty
business groups saw the peak of their market arrive at different
points during the year, but there is no doubt that the turn in the
market has commenced. It is important for both underwriters and
capital providers to keep in mind that the market is still at the peak of
the cycle and we are still experiencing excellent trading conditions.
The 2024 year finished in a position of overall positive rate
improvement and we managed to achieve much of the growth we
planned for. Whilst there is still further development in the 2024
income, we expect to achieve a degree of growth over 2023,
achieving a full year final income of close to £750.9m.
The specialty classes were impacted by a negative rating
environment in most classes with Aviation Hull & Liability seeing rate
reductions which made some business impossible to continue with.
This, coupled with the end of the hardening market on Aviation War,
meant the specialty income was below plan. We did anticipate this
reduction but, given the good margins within the specialty business
in recent years, it was still a little disappointing.
The casualty classes were expecting a small amount of growth in
income but ended up flat against the prior year as we looked to
rebalance some areas of the book such as the US General Liability
and the International Professional Liability accounts.
The real areas of growth in 2024 were in the property classes. All the
property classes saw further growth, primarily due to rate increases
as opposed to exposure growth. We made the difficult decision to
cease underwriting Property Treaty Reinsurance, choosing instead to
support two external parties via quota-share arrangements. These
new partnerships enabled us to support two markets with a much
more significant presence and considerably greater resources
enabling us to benefit from their expertise and infrastructure. This
meant we grew the property reinsurance income considerably
during the year when the market rates were at their peak.
The year was an active one for severity losses with the 2024 year
seeing what is predicted to be the largest ever shipping event in
economic loss terms. In March 2024, container ship Dali struck the
Francis Scott Key Bridge in the Port of Baltimore, causing it to
collapse. Whilst this loss will take years to conclude, our reserve
position for this event is £64.1m gross and £7.3m net of reinsurance
recoveries.
The year also saw a series of other catastrophes including a
Taiwanese earthquake, flooding in Europe and Dubai, and an active
hurricane season in North America.
Hurricane Milton was a particularly devastating storm which made
landfall on the west coast of Florida. Our current loss reserve for this
event is £30.2m gross and net of reinsurance. An earlier storm also
impacted Florida, Hurricane Helene, has been reserved to the
syndicate at a cost of £10.0m both gross and net of reinsurance.
A significant loss impacting the 2024 year of account is expected to
be the California wildfires in Los Angeles. At the time of writing the
overall loss quantum to the syndicate is still to be determined
however industry loss estimates are currently in the range of
between $30bn to $50bn.
These major catastrophe losses will obviously have an impact on the
2024 year result, however given the great market conditions, we are
confident we should still be able to produce a profitable result for
the year.
2025 AND BEYOND
Whilst 2025 will be a year where rate reductions become the norm,
the overall rating levels are similar to that of 2023, so there are good
margins to be made in many areas of what we do. The 609
Underwriting Team are definitely up for the challenge and we are
looking to extract further growth whilst conditions allow and where
opportunities exist.
In the next few years it will be tougher to grow the book, but we
continue to work hard to make sure we achieve profitable growth
whilst the conditions warrant the extra effort. The downcycle of the
insurance market is long and slow to recover, so we need to make
sure we enter the softening market in the best position we can.
Having watched the team enjoy the excellent market conditions,
working long hours to ensure we make the most of them, it has
UNDERWRITER’S REPORT
SYNDICATE 609 CONTINUED
57
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
demonstrated what a passionate and hard-working team we have
here at Atrium, on both the underwriting and agency functions. I
would like to express my heartfelt thanks to them for their
contribution over the year. It makes me immensely proud to see the
team thriving in the current market conditions and I enjoy seeing the
enthusiasm of new talent arriving as we grow.
Finally, we feel excited about the year ahead and although a slight
downwards shift in the market makes for additional challenge, with
the quality team we have, I am confident that 2025 should be
another profitable year.
Peter Laidlaw
Active Underwriter, Syndicate 609
4 March 2025
58
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
Calendar
Year Cumulative
Notes £’000 £’000
Syndicate allocated capacity 624,854
Earned premiums, net of reinsurance
Gross premiums written 4 4,493 750,088
Outward reinsurance premiums (1,809) (91,305)
Earned premiums, net of reinsurance 2,684 658,783
Reinsurance to close premium received, net of reinsurance
At transaction rates of exchange – 481,333
Revaluation to closing rates of exchange 1,530 (18,099)
Reinsurance to close premium received, net of reinsurance at closing rates of exchange 5 1,530 463,234
4,214 1,122,017
Allocated investment return transferred from the non-technical account 32,468 69,134
Claims incurred, net of reinsurance
Claims paid
Gross amount (172,771) (502,458)
Reinsurers’ share 37,511 77,261
(135,260) (425,197)
Amount retained to meet all known and unknown outstanding liabilities, net of reinsurance 6 50,699 (558,591)
(84,561) (983,788)
Net operating expenses 8 (11,307) (250,164)
Balance on the technical account for general business 12 (36,572) (42,801)
NON-TECHNICAL ACCOUNT – GENERAL BUSINESS
FOR THE 2021 YEAR OF ACCOUNT FOR THE FOUR YEARS ENDED 31 DECEMBER 2024
Calendar
Year Cumulative
Notes £’000 £’000
Balance on the technical account for general business (36,572) (42,801)
Investment income 11 19,171 45,136
Net realised gains on investments 11 8,905 6,824
Net unrealised gains on investments 11 4,822 18,215
Investment expenses and charges 11 (430) (1,041)
Allocated investment return transferred to general business technical account (32,468) (69,134)
Foreign exchange losses (5,818) (2,003)
Loss for the 2021 year of account at 48 months (42,390) (44,804)
Other comprehensive (expense)/income (5,071) 22,474
Total comprehensive expense for the 2021 year of account at 48 months 15 (47,461) (22,330)
STATEMENT OF COMPREHENSIVE INCOME
TECHNICAL ACCOUNT – GENERAL BUSINESS
FOR THE 2021 YEAR OF ACCOUNT FOR THE FOUR YEARS ENDED 31 DECEMBER 2024
59
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
BALANCE SHEET
FOR THE 2021 YEAR OF ACCOUNT AT 31 DECEMBER 2024
Notes £’000
Assets
Investments 13 669,206
Deposits with ceding undertakings 2,795
Debtors 14 63,350
Reinsurance recoveries anticipated on gross amount retained to meet all known and unknown
outstanding liabilities 6 290,493
Other assets
Cash at bank and in hand 8,546
Prepayments and accrued income 170
Total assets 1,034,560
Liabilities
Amounts due from members 15 (24,905)
Amount retained to meet all known and unknown outstanding liabilities – gross amount 6 849,084
Creditors 16 209,818
Accruals and deferred income 563
Total liabilities 1,034,560
The 2021 year underwriting accounts were approved at a meeting of the Board of Directors of Atrium Underwriters Limited, and by the Active
Underwriter, on 4 March 2025 and were signed on its behalf by:
John Fowle Peter Laidlaw
Chief Executive Officer Active Underwriter
4 March 2025 4 March 2025
60
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
£’000
Cash flows from operating activities
Loss for the year of account (22,330)
Non-cash consideration for net RITC receivable (456,568)
Net amount retained to meet all known and unknown outstanding liabilities 558,591
Increase in debtors (34,399)
Decrease in creditors (53,199)
Investment return (69,134)
Net cash flows from operating activities (77,039)
Cash flows from investing activities
Purchase of debt securities and other fixed income securities (303,808)
Sale of debt securities and other fixed income securities 321,270
Investment income received 50,919
Foreign exchange 19,779
Net cash flows from investing activities 88,160
Cash flows from financing activities
Members’ agents’ fees paid on behalf of members (2,687)
Transfer to members in respect of underwriting participations 112
Net cash flows from financing activities (2,575)
Net increase in cash and cash equivalents 8,546
Cash and cash equivalents at 1 January 2021 –
Effect of foreign exchange rate changes –
Cash and cash equivalents at end of financial year 8,546
STATEMENT OF
CASH FLOWS
FOR THE 2021 YEAR OF ACCOUNT FOR THE FOUR YEARS ENDED 31 DECEMBER 2024
61
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
NON-TECHNICAL ACCOUNT – GENERAL BUSINESS
FOR THE 2022 YEAR OF ACCOUNT FOR THE THREE YEARS ENDED 31 DECEMBER 2024
Notes £’000
Balance on the technical account for general business 135,245
Investment income 11 15,388
Net realised gains on investments 11 2,828
Net unrealised gains on investments 11 9,643
Investment expenses and charges 11 (303)
Allocated investment return transferred to general business technical account (27,556)
Foreign exchange losses (1,428)
Profit for the 2022 closed year of account at 36 months 133,817
Other comprehensive expense (12,399)
Total comprehensive income for the 2022 closed year of account 15 121,418
STATEMENT OF COMPREHENSIVE INCOME
TECHNICAL ACCOUNT – GENERAL BUSINESS
FOR THE 2022 YEAR OF ACCOUNT FOR THE THREE YEARS ENDED 31 DECEMBER 2024
Notes £’000
Syndicate allocated capacity 650,861
Earned premiums, net of reinsurance
Gross premiums written 4 932,984
Outward reinsurance premiums (120,131)
Earned premiums, net of reinsurance 812,853
Allocated investment return transferred from the non-technical account 27,556
Claims incurred, net of reinsurance
Claims paid
Gross amount (218,752)
Reinsurers’ share 20,443
(198,309)
Reinsurance to close payable, net of reinsurance 7 (181,299)
(379,608)
Net operating expenses 8 (325,556)
Balance on the technical account for general business 12 135,245
62
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
BALANCE SHEET
FOR THE 2022 YEAR OF ACCOUNT AT 31 DECEMBER 2024
Notes £’000
Assets
Investments 13 335,061
Debtors 14 12,774
Reinsurance recoveries anticipated on gross reinsurance to close premium payable to close the account 7 25,768
Other assets
Cash at bank and in hand 8,994
Prepayments and accrued income 108
Total assets 382,705
Liabilities
Amounts due to members 15 118,692
Reinsurance to close premium payable to close the account – gross amount 7 207,067
Other creditors 16 56,535
Accruals and deferred income 411
Total liabilities 382,705
The 2022 year underwriting accounts were approved at a meeting of the Board of Directors of Atrium Underwriters Limited, and by the Active
Underwriter, on 4 March 2025 and were signed on its behalf by:
John Fowle Peter Laidlaw
Chief Executive Officer Active Underwriter
4 March 2025 4 March 2025
63
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
£’000
Cash flows from operating activities
Profit for the year of account 121,418
Non-cash consideration for net RITC receivable –
Net reinsurance to close premium payable 181,299
Increase in debtors (12,882)
Increase in creditors 56,946
Investment return (27,556)
Net cash flows from operating activities 319,225
Cash flows from investing activities
Purchase of debt securities and other fixed income securities (563,107)
Sale of debt securities and other fixed income securities 240,855
Investment income received 17,913
Foreign exchange (3,166)
Net cash flows from investing activities (307,505)
Cash flows from financing activities
Members’ agents’ fees paid on behalf of members (2,767)
Transfer to members in respect of underwriting participations 41
Net cash flows from financing activities (2,726)
Net increase in cash and cash equivalents 8,994
Cash and cash equivalents at 1 January 2022 –
Effect of foreign exchange rate changes –
Cash and cash equivalents at end of financial year 8,994
STATEMENT OF
CASH FLOWS
FOR THE 2022 YEAR OF ACCOUNT FOR THE THREE YEARS ENDED 31 DECEMBER 2024
64
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
1. BASIS OF PREPARATION
The syndicate is managed by Atrium Underwriters Limited which is incorporated in the United Kingdom. The address of its registered office is
Level 20, 8 Bishopsgate, London, EC2N 4BQ and the company registration number of the managing agent is 1958863.
The syndicate’s principal activity during the year continued to be the transaction of general insurance and reinsurance business at Lloyd’s.
These financial statements have been prepared in accordance with the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate
Accounts) Regulations 2008, the Lloyd’s Syndicate Accounting Byelaw (No. 8 of 2006), and applicable Accounting Standards in the United
Kingdom and the Republic of Ireland, including Financial Reporting Standard 102 (FRS 102). FRS 102 requires the application of Financial
Reporting Standard 103 (FRS 103) in relation to insurance contracts.
The syndicate underwriting year accounts have been prepared on a basis other than going concern.
These accounts cover two separate years of account on the basis that the 2021 year of account has been kept open due to the levels of
uncertainty that the managing agent considers remain in the reserves held in respect of the exposure to leased aircraft in Russia. The 2022 year
of account has been reinsured to close, in line with more standard practice, into the 2023 year of account of the syndicate. While the primary
statements have been presented separately (on pages 58 to 60 for the 2021 open year and pages 61 to 63 for the 2022 closing year), the notes
to the accounts that follow have been presented in a two column format. These do not represent comparative balances, rather the relevant
supplementary information for the 2021 year as at, and for the four years ended 31 December 2024 and the 2022 year as at, and for the three
years ended 31 December 2024.
Going Concern
The syndicate underwriting year accounts for the 2021 year of account have been prepared on a basis other than going concern.
Whilst the Directors of the managing agent have a reasonable expectation that the syndicate has adequate resources to continue in
operational existence for the foreseeable future, these financial statements represent the participation of members in the 2021 and 2022 years
of account, cumulative to 31 December 2024.
The 2021 year of account remains open due to the fact that the potential for variation to the booked reserves is considerably greater than the
normal level of reserve sensitivity to downside risk and the actual outcome of the loss in respect of the Russia aviation claims could be in a
particularly wide range with greater than usual variability. As a result, the 2021 year of account will continue to remain open until the level of
reserve sensitivity to downside risk normalises.
The 2022 year of account closed on 31 December 2024. The accumulated profits of the 2022 year of account will be distributed following
publication of these accounts, and the cash in respect of members’ profits will be collected by Lloyd’s Central Accounting on 10 April 2025 in
line with Lloyd’s distribution timetable. Therefore the 2022 year of account is not continuing to trade and, accordingly Directors have not
adopted the going concern basis in the preparation of these accounts. This has no effect on the amounts reported in the accounts as the 2022
year of account will be closed by payment of a reinsurance to close premium, as outlined in note 7 below, which is consistent with the normal
course of business for a Lloyd’s syndicate and with the approach we have applied to earlier underwriting years.
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE 2021 YEAR OF ACCOUNT FOR THE FOUR YEARS ENDED 31 DECEMBER 2024 AND
THE 2022 CLOSED YEAR OF ACCOUNT FOR THE THREE YEARS ENDED 31 DECEMBER 2024
65
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
2. USE OF JUDGMENTS AND ESTIMATES
In preparing these financial statements, the Directors 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. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.
The measurement of the provision for claims outstanding involves judgments and assumptions about the future that have the most
significant effect on the amounts recognised in the financial statements.
The provision for claims outstanding comprises the estimated cost of settling all claims incurred but unpaid at the balance sheet date,
whether reported or not. This is a judgemental and complex area due to the subjectivity inherent in estimating the impact of claims events
that have occurred but for which the eventual outcome remains uncertain. In particular, judgment is applied when estimating the value of
amounts that should be provided for claims that have been incurred at the reporting date but have not yet been reported to the syndicate.
The amount included in respect of IBNR is based on statistical techniques of estimation applied by the in-house actuaries and reviewed by
external consulting actuaries. These techniques generally involve projecting from past experience the development of claims over time in
view of the likely ultimate claims to be experienced and for more recent underwriting, having regard to 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.
For the most recent years, where a high degree of volatility arises from projections, estimates may be based in part on output from rating and
other models of business accepted and assessments of underwriting conditions.
In arriving at the level of claims provisions a margin is applied over and above the actuarial best estimate.
3. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of the syndicate financial statements are set out below.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements are disclosed in note 2.
The underwriting accounts for each year of account are normally kept open for three years before the result on that year is determined. At the
end of the three year period, outstanding liabilities can normally be determined with sufficient certainty to permit the year of account to be
closed by payment of a reinsurance to close premium to the successor year of account.
With respect to the 2021 year of account, the Directors do not consider there to be sufficient certainty over the valuation of the outstanding
liabilities at 48 months due to the syndicate’s exposure to the Russian invasion of Ukraine, as such the 2021 year of account will remain open.
Further detail is provided in note 6.
Insurance classification
The syndicate’s contracts are classified at inception, for accounting purposes, as insurance contracts. A contract that is classified as an
insurance contract remains an insurance contract until all rights and obligations are extinguished or expire. Insurance contracts are those
contracts that transfer significant insurance risk, if and only if, an insured event could cause an insurer to pay significant additional benefits
above premiums received and interest earned thereon, excluding scenarios that lack commercial substance. Such contracts may also transfer
financial risk.
Gross Premiums Written
Gross premiums are allocated to years of account on the basis of the inception date of the policy. Gross premiums in respect of insurance
contracts underwritten under a binding authority, line slip or consortium arrangement are allocated to the year of account corresponding to
the calendar year of inception of the arrangement. Gross premiums are shown gross of brokerage payable and exclude taxes and duties levied
on them. Gross premiums written are treated as fully earned.
Reinsurance Premium Ceded
Initial reinsurance premiums paid to purchase policies which give excess of loss protection are charged to the year of account in which the
protection commences. Premiums for other reinsurances are charged to the same year of account as the risks being protected.
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SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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.
Amounts retained to meet all known and unknown outstanding liabilities
Where substantial uncertainties affect the assessment of outstanding liabilities a year of account might not be closed, as has been the case for
the 2021 year of account presented in these financial statements. In such cases an amount to meet all known and unknown liabilities is
retained at each year end until the year of account is finally closed.
The net amount to meet all known and unknown liabilities is determined on the basis of estimated outstanding liabilities and related claims
settlement costs (including claims incurred but not reported), net of estimated collectible reinsurance recoveries, relating to the run-off year of
account and previous years of account reinsured therein. The provision for claims outstanding is assessed on an individual case basis and is
based on the estimated ultimate cost of all claims notified but not settled by the balance sheet date, together with the provision for related
claims handling costs. The provision also includes the estimated cost of IBNR at the balance sheet date based on statistical methods.
These methods generally involve projecting from past experience of the development of claims over time to form a view of the likely ultimate
claims to be experienced for more recent underwriting, having regard to variations in the business accepted and the underlying terms and
conditions. For the most recent years, where a high degree of volatility arises from projections, estimates may be based in part on output from
rating and other models of the business accepted and assessments of underwriting conditions. The amount of salvage and subrogation
recoveries is separately identified and, where material, reported as an asset.
The reinsurers’ share is based on the amounts of outstanding claims and projections for IBNR, net of estimated irrecoverable amounts, having
regard to the reinsurance programme in place for the class of business, the claims experience for the year and the current security rating of the
reinsurance companies involved. A number of statistical methods are used to assist in making these estimates.
The two most critical assumptions as regards claims provisions are that the past is a reasonable predictor of the likely level of claims
development and that the rating and other models used for current business are fair reflections of the likely level of ultimate claims to be
incurred.
The Directors consider that the provisions for gross claims and related reinsurance recoveries are fairly stated on the basis of the information
currently available to them. However, the ultimate liability will vary as a result of subsequent information and events and this may result in
significant adjustments to the amounts provided. Adjustments to the amounts of claims provisions established in prior years are reflected in
the financial statements for the period in which the adjustments are made. The methods used, and the estimates made, are reviewed regularly.
Reinsurance to Close Premium Payable
The net reinsurance to close premium is determined on the basis of estimated outstanding liabilities and related claims settlement costs
(including claims IBNR), net of estimated collectible reinsurance recoveries, relating to the closed year of account. The estimate of claims
outstanding is assessed on an individual case basis and is based on the estimated ultimate cost of all claims notified but not settled by the
balance sheet date. It also includes the estimated cost of claims IBNR at the balance sheet date based on statistical methods.
These methods generally involve projecting from past experience of the development of claims over time to form a view of the likely ultimate
claims to be experienced for more recent underwriting, having regard to variations in the business accepted and the underlying terms and
conditions. For the most recent years, where a high degree of volatility arises from projections, estimates may be based in part on output from
rating and other models of the business accepted and assessments of underwriting conditions. The amount of salvage and subrogation
recoveries is separately identified.
The reinsurers’ share is based on the amounts of outstanding claims and projections for IBNR, net of estimated irrecoverable amounts, having
regard to the reinsurance programme in place for the class of business, the claims experience for the year and the current security rating of the
reinsurance companies involved. A number of statistical methods are used to assist in making these estimates.
The two most critical assumptions as regards claims estimates are that the past is a reasonable predictor of the likely level of claims development
and that the rating and other models used for current business are fair reflections of the likely level of ultimate claims to be incurred.
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FOR THE 2021 YEAR OF ACCOUNT FOR THE FOUR YEARS ENDED 31 DECEMBER 2024 AND
THE 2022 CLOSED YEAR OF ACCOUNT FOR THE THREE YEARS ENDED 31 DECEMBER 2024
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SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED
The Directors consider that the estimates of gross claims and related reinsurance recoveries are fairly stated on the basis of the information
currently available to them. However, it is implicit in the estimation procedure that the ultimate liabilities will be at variance from the
reinsurance to close premium so determined.
Foreign Currencies
The syndicate’s functional currency is US Dollars (USD), being the primary economic environment in which it operates. The syndicate’s
presentational currency is Sterling (GBP).
Transactions, other than reinsurance to close, in USD, Canadian Dollars and Euros are translated at the average rates of exchange for the period.
Amounts retained to meet all known and unknown outstanding liabilities, and underwriting transactions denominated in other foreign
currencies, are included at the rate of exchange ruling at the transaction date. Assets and liabilities denominated in foreign currencies are
translated at the rate of exchange at the balance sheet date. Exchange differences are included in the non-technical account.
In translating its results and financial position into the presentational currency, the syndicate translates all assets and liabilities at the closing
rates of exchange and translates all income and expense items at average rates, with all resulting exchange gains and losses recognised in
other comprehensive income.
Investment Return
Investment return comprises all investment income, realised investment gains and losses and movements in unrealised gains and losses, net
of investment expenses, charges and interest. The returns on the Joint Asset Trust Funds and Illinois Deposit are allocated to the year of
account as notified by Lloyd’s. The returns on other assets arising in a calendar year are apportioned to years of account open during the
calendar year in proportion to the average funds available for investment on each year of account.
Realised gains and losses on investments carried at market value are calculated as the difference between sale proceeds and purchase price.
Unrealised gains and losses on investments represent the difference between the valuation at the balance sheet date and their valuation at
the previous balance sheet date, or purchase price, if acquired during the year, together with the reversal of unrealised gains and losses
recognised in earlier accounting periods in respect of investment disposals in the current period.
Investment return is initially recorded in the non-technical account. A transfer is made from the non-technical account to the general business
technical account. Investment return has been wholly allocated to the technical account as all investments support the underwriting business.
Operating Expenses
Where expenses are incurred by or on behalf of the managing agent on the administration of the managed syndicate, these expenses are
apportioned using varying methods depending on the type of expense. Expenses which are incurred jointly for the agency company and
managed syndicate are apportioned between the agency company and the syndicate on bases depending on the amount of work
performed, resources used and the volume of business transacted. Syndicate operating expenses are allocated to the year of account for
which they are incurred.
Financial Instruments
The syndicate has chosen to adopt the Sections 11 and 12 of FRS 102 in respect of financial instruments.
Basic financial assets, including deposits with credit institutions, debtors arising out of direct insurance and reinsurance operations, cash and
cash equivalents and other debtors, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction,
where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Such assets are
subsequently carried at fair value.
Investments are stated at current value at the balance sheet date. For this purpose, listed investments are stated at fair value and deposits with
credit institutions are stated at cost. Unlisted investments for which a market exists are stated at the average price at which they are traded on
the balance sheet date or the last trading day before that date. Any surplus or deficit on any revaluation is recognised in the non-technical
account.
Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all
the risks and rewards of the ownership of the asset are transferred to another party or (c) control of the asset has been transferred to another
party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.
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SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Basic financial liabilities, including creditors arising from insurance operations that are classified as debt, are initially recognised at transaction
price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future
receipts discounted at a market rate of interest.
Financial liabilities are derecognised when the liability is extinguished, that is, when the contractual obligation is discharged, cancelled or
expires.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to
set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability, simultaneously.
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 syndicate estimates the fair value by using a valuation technique.
At each reporting date the syndicate assesses whether there is objective evidence that financial assets not at fair value through profit or loss,
are impaired. Financial assets are impaired when objective evidence demonstrates that a loss event has occurred after the initial recognition of
an asset, and that the loss event has an impact on the future cash flows on the asset that can be estimated reliably.
An impairment loss recognised reduces directly the carrying amount of the impaired asset. All impairment losses are recognised in profit or
loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised.
Deposits with Ceding Undertakings
Deposits with ceding undertakings relate to the payment of advance funds by the syndicate under the reinsurance agreement into
segregated Part VII settlement bank accounts managed by the managing agent on behalf of LIC to settle Part VII claims. Amounts are
denominated in multiple currencies, primarily GBP, USD and Euros. Deposits with ceding undertakings are measured at cost less allowance for
impairment.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily
convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Taxation
Under Schedule 19 of the Finance Act 1993 managing agents are not required to deduct basic rate income tax from trading income. In
addition, all UK basic rate income tax deducted from syndicate investment income is recoverable by managing agents and consequently the
distribution made to members or their members’ agents is gross of tax. Capital appreciation falls within trading income and is also distributed
gross of tax.
No provision has been made for any United States Federal Income Tax payable on underwriting results or investment earnings. Any payments
on account made by the syndicate during the year are included in the balance sheet under the heading ‘other debtors’.
No provision has been made for any overseas tax payable by members on underwriting results.
Pension Costs
The Atrium Group operates a defined contribution scheme. Pension contributions relating to syndicate staff are charged to the syndicate and
included within net operating expenses.
Profit Commission
Profit commission is charged by the managing agent at a rate of 20% of profit subject to the operation of a deficit clause. Where profit
commission is charged, it is included within members’ standard personal expenses within administrative expenses.
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FOR THE 2021 YEAR OF ACCOUNT FOR THE FOUR YEARS ENDED 31 DECEMBER 2024 AND
THE 2022 CLOSED YEAR OF ACCOUNT FOR THE THREE YEARS ENDED 31 DECEMBER 2024
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SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
4. ANALYSIS OF UNDERWRITING RESULT
An analysis of the underwriting result before investment return is set out below:
Gross
premiums Gross claims Gross Reinsurance
written incurred operating balance
(note 1) (note 2) expenses (note 3) Total
2021 year of account £’000 £’000 £’000 £’000 £’000
Direct insurance:
Accident and Health 35,116 16,138 16,833 (268) 1,877
Motor (Third Party Liability) 3,567 1,630 1,335 (294) 308
Motor (Other Classes) 14,524 8,041 8,491 351 (1,657)
Marine Aviation and Transport 138,764 378,673 50,007 216,456 (73,460)
Fire and other damage to property 300,305 125,310 102,115 (16,199) 56,681
Third Party Liability 200,307 199,459 72,352 (5,703) (77,207)
Credit and Suretyship 7,360 (5,808) 3,063 4,441 14,546
Legal Expenses 2,286 601 3,132 (44) (1,491)
702,229 724,044 257,328 198,740 (80,403)
Reinsurance 47,859 68,138 4,527 6,686 (18,120)
750,088 792,182 261,855 205,426 (98,523)
RITC received 463,234 559,360 – 82,714 (13,412)
Total 1,213,322 1,351,542 261,855 288,140 (111,935)
Gross
premiums Gross claims Gross Reinsurance
written incurred operating balance
(note 1) (note 2) expenses (note 3) Total
2022 year of account £’000 £’000 £’000 £’000 £’000
Direct insurance:
Accident and Health 35,600 10,913 17,889 (2,389) 4,409
Motor (Third Party Liability) 4,195 1,134 1,499 7 1,569
Motor (Other Classes) 16,786 9,056 6,677 27 1,080
Marine Aviation and Transport 224,695 78,815 88,611 (18,162) 39,107
Fire and other damage to property 370,050 176,225 127,796 (23,279) 42,750
Third Party Liability 213,987 96,704 84,693 (13,182) 19,408
Credit and Suretyship 10,509 2,750 4,460 (525) 2,774
Legal Expenses 6,098 3,005 2,389 10 714
881,920 378,602 334,014 (57,493) 111,811
Reinsurance 51,064 47,215 11,177 3,206 (4,122)
932,984 425,817 345,191 (54,287) 107,689
RITC received – – – – –
Total 932,984 425,817 345,191 (54,287) 107,689
1 Gross premiums written are treated as fully earned.
2 Gross claims incurred comprises gross claims paid and gross amount retained to meet all known and unknown outstanding liabilities.
3 The reinsurance balance comprises reinsurance premiums ceded less reinsurance recoveries on claims paid and reinsurance recoveries
retained to meet all known and unknown outstanding liabilities.
4 All premiums are concluded in the UK.
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SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
5. REINSURANCE TO CLOSE PREMIUM RECEIVABLE
2021
year of
account
£’000
Gross notified outstanding claims 256,413
Reinsurance recoveries anticipated (33,561)
Net notified outstanding claims 222,852
Provision for gross claims incurred but not reported 306,614
Reinsurance recoveries anticipated (48,133)
Provision for net claims incurred but not reported 258,481
Reinsurance to close premium receivable, net of reinsurance at transaction rates of exchange
481,333
Revaluation to closing rates of exchange (18,099)
Reinsurance to close premium receivable, net of reinsurance at closing rates of exchange 463,234
The note above is solely in respect of the 2021 year of account. Due to the fact that the 2021 year of account has remained open, the 2022
year of account has not received a reinsurance to close premium.
6. AMOUNT RETAINED TO MEET ALL KNOWN AND UNKNOWN OUTSTANDING LIABILITIES
2021
year of
account
£’000
Gross notified outstanding claims 208,930
Reinsurance recoveries anticipated (28,618)
Net notified outstanding claims 180,312
Provision for gross claims incurred but not reported 640,154
Reinsurance recoveries anticipated (261,875)
Provision for net claims incurred but not reported 378,279
Amount retained to meet all known and unknown outstanding liabilities, net of reinsurance 558,591
The largest loss event to which the 2021 year of account is exposed relates to the Russian invasion of Ukraine in February 2022, with a
significant loss relating to the fate of the western leased aircraft in Russia.
The syndicate has exposure to the fate of the western leased aircraft in Russia. The situation remains complex and continues to develop with
multiple ongoing litigation in a number of different jurisdictions. Key factors including underlying peril, date of loss, and whether any form of
negotiated settlement is feasible, all result in considerably different ultimate outcomes to the syndicate.
In arriving at the reserving position for this loss, the financial implications of various scenarios have been modelled, taking account of the
uncertainties listed above. In arriving at our reserving position, the likelihood of the scenarios occurring was established using expert
judgement. A similar probabilistic approach was employed at 31 December 2023. However, for this update we have reduced and re-focused
the number of scenarios under consideration, in line with our evolving knowledge and expectations of the situation.
The updates have resulted in ultimate gross reserves of £393.4m, £113.8m net of reinsurance (31 December 2023 – £264.5m gross, £84.5m net of
reinsurance) included in the financial results as at 31 December 2024. The classes impacted are Aviation Reinsurance, Aviation War and Marine XL.
The loss reserves for the 2021 and prior years of account are £360.9m gross and £103.1m net of reinsurance (31 December 2023 – £252.5m gross
and £76.5m net of reinsurance).
The Directors, in conjunction with the relevant subject matter experts, continue to monitor the situation closely, taking legal advice and
meeting with market participants on a regular basis to ensure that the most up to date information is reflected within the syndicate reserves.
Due to the nature of the circumstances mentioned above, the potential for variation to the booked reserves is considerably greater than the
normal level of reserve sensitivity to downside risk and the actual outcome of the loss could be in a particularly wide range with greater than
usual variability. As a result, the 2021 year of account will continue to remain open until the level of reserve sensitivity to downside risk
normalises.
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FOR THE 2021 YEAR OF ACCOUNT FOR THE FOUR YEARS ENDED 31 DECEMBER 2024 AND
THE 2022 CLOSED YEAR OF ACCOUNT FOR THE THREE YEARS ENDED 31 DECEMBER 2024
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SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
7. REINSURANCE TO CLOSE PREMIUM PAYABLE
2022
year of
account
£’000
Gross notified outstanding claims 72,108
Reinsurance recoveries anticipated (1,938)
Net notified outstanding claims 70,170
Provision for gross claims incurred but not reported 134,959
Reinsurance recoveries anticipated (23,830)
Provision for net claims incurred but not reported 111,129
Reinsurance to close premium payable, net of reinsurance 181,299
The reinsurance to close is effected to the 2023 year of account of Syndicate 609 and is not applicable to the 2021 year of account.
8. NET OPERATING EXPENSES
2021 2022
year of year of
account account
£’000 £’000
Acquisition costs:
Brokerage & Commission 203,496 242,581
Other acquisition costs 23,825 21,119
227,321 263,700
Administrative expenses 34,534 81,491
261,855 345,191
Reinsurance commissions receivable (11,691) (19,635)
250,164 325,556
Administrative expenses include:
2021 2022
year of year of
account account
£’000 £’000
Auditor’s remuneration
Audit services 542 298
Other services 76 114
Managing agent’s profit commission – 24,984
Members’ standard personal expenses (Lloyd’s Subscriptions, Central Fund Contributions, Managing Agent’s Fees and Profit Contributions) are
included within administrative expenses and amount to £10,294,000 for the 2021 year of account and £35,070,000 for the 2022 year of
account.
The cumulative loss reported on the 2021 year of account as at 31 December 2024 has resulted in the profit commission deficit clause
operating in line with the stated accounting policy. This has resulted in the profit commission charge to the 2022 year of account names being
reduced by £5.0m.
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SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
9. STAFF NUMBERS AND COSTS
All staff are employed by Atrium Group Services Limited (AGSL). The following amounts were recharged to the syndicate in respect of staff
costs:
2021 2022
year of year of
account account
£’000 £’000
Wages and salaries 21,450 19,283
Social security costs 2,753 2,573
Other pension costs 3,092 2,761
27,295 24,617
The average number of employees employed by AGSL, but working for the syndicate during the four years for 2021 year of account and the
three years for the 2022 year of account, was as follows:
2021 2022
year of year of
account account
Number Number
Management 5 4
Underwriting 82 86
Claims 12 13
Administration 87 88
186 191
10. REMUNERATION OF THE DIRECTORS OF ATRIUM UNDERWRITERS LIMITED
The ten Directors of Atrium Underwriters Limited, who served during the four years ending 31 December 2024 for the 2021 year of account
and the three years ending 31 December 2024 for the 2022 year of account, received the following aggregate remuneration charged to the
syndicate and included within net operating expenses:
2021 2022
year of year of
account account
£’000 £’000
Remuneration 1,330 1,192
No other compensation was payable to key management personnel and charged to the syndicate.
The Active Underwriter received the following remuneration charged as a syndicate expense and included within net operating expenses:
2021 2022
year of year of
account account
£’000 £’000
Remuneration 293 268
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FOR THE 2021 YEAR OF ACCOUNT FOR THE FOUR YEARS ENDED 31 DECEMBER 2024 AND
THE 2022 CLOSED YEAR OF ACCOUNT FOR THE THREE YEARS ENDED 31 DECEMBER 2024
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SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
11. INVESTMENT RETURN
2021 2022
year of year of
account account
£’000 £’000
Investment income:
Income from investments 45,136 15,388
Net realised gains on investments:
Gains on the realisation of investments 10,719 4,130
Losses on the realisation of investments (3,895) (1,302)
6,824 2,828
Net unrealised gains on investments:
Unrealised gains on investments 40,364 14,440
Unrealised losses on investments (22,149) (4,797)
18,215 9,643
Investment expenses and charges:
Investment managers expenses, including interest (1,041) (303)
Allocated investment return transferred to the technical account 69,134 27,556
12. BALANCE ON TECHNICAL ACCOUNT
2021
year of
account
£’000
Balance excluding investment return and operating expenses
Profit attributable to business allocated to the 2021 pure year of account 166,643
Loss attributable to business reinsured into the 2021 year of account (28,414)
138,229
Allocated investment return transferred from the non-technical account 69,134
Net operating expenses (250,164)
(42,801)
2022
year of
account
£’000
Balance excluding investment return and operating expenses
Profit attributable to business allocated to the 2022 pure year of account 433,245
Allocated investment return transferred from the non-technical account 27,556
Net operating expenses (325,556)
135,245
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SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
13. INVESTMENTS
2021 year of account 2022 year of account
Fair value Cost Fair value Cost
£’000 £’000 £’000 £’000
Shares and other variable yield securities and units in unit trusts 80,844 80,844 21,456 21,456
Debt securities and other fixed income securities 588,353 548,637 313,602 299,836
Deposits with credit institutions 9 9 3 3
669,206 629,490 335,061 321,295
Shares and other variable yield securities and units in unit trusts represents the syndicate’s holdings in collective investment schemes.
Included within debt securities and other fixed income securities are Lloyd’s overseas deposits which were reclassified to be consistent with
the new filing requirements under Lloyd’s guidelines.
Using Standard & Poor’s and Moody’s as rating sources, the credit ratings of the debt and other fixed income securities are set out below:
2021 year of account 2022 year of account
Fair value Fair value
£’000 % £’000 %
Government/Government Agency 216,694 36.8 115,501 36.8
AAA/Aaa 90,237 15.3 48,098 15.3
AA/Aa 69,478 11.8 37,033 11.8
A 145,358 24.7 77,478 24.7
BBB 61,869 10.5 32,977 10.5
<BBB 4,717 0.8 2,514 0.8
588,353 100.0 313,601 100.0
14. DEBTORS
2021 2022
year of year of
account account
£’000 £’000
Arising out of direct insurance operations:
Due from intermediaries 50,211 5,974
Arising out of reinsurance operations: 12,814 6,675
Other 325 125
63,350 12,774
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FOR THE 2021 YEAR OF ACCOUNT FOR THE FOUR YEARS ENDED 31 DECEMBER 2024 AND
THE 2022 CLOSED YEAR OF ACCOUNT FOR THE THREE YEARS ENDED 31 DECEMBER 2024
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SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
15. AMOUNTS DUE TO/(FROM) MEMBERS
2021
year of
account
£’000
Loss for the 2021 year of account (22,330)
Members’ agents’ fee advances (2,687)
Distributions to members to date 112
Amounts due from members at 31 December 2024 (24,905)
2022
year of
account
£’000
Profit for the 2022 closed year of account 121,418
Members’ agents’ fee advances (2,767)
Distributions to members to date 41
Amounts due to members at 31 December 2024
118,692
16. CREDITORS
2021 2022
year of year of
account account
£’000 £’000
Arising out of direct insurance operations:
Due to intermediaries 2,224 13,751
Arising out of reinsurance operations 16,906 2,165
Managing agent’s profit commission – 24,772
Other 190,688 15,847
209,818 56,535
Other creditors include inter year loans of £192,171,000 and £12,821,000 for the 2021 and 2022 years of account respectively.
76
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
17. DISCLOSURES OF INTEREST
Atrium Underwriting Group Limited (AUGL) is a wholly owned subsidiary of Alopuc Limited (a UK holding company) and Alopuc Limited is in
turn a wholly owned subsidiary of Northshore Holdings Limited (Northshore), a Bermudan company. The ultimate beneficial owners of
Northshore are affiliates of Stone Point Capital LLC (Stone Point) who hold approximately 88% economic interest. The balance of the
shareholding in Northshore are held by Atrium management and staff (9.9%), Dowling Capital Partners (1.8%) and Capital City Partners LLC
(0.3%).
AUGL is the holding company of the following wholly owned subsidiaries; AUL, Atrium Insurance Agency Limited (AIAL), AGSL, Atrium Risk
Management Services (Washington) Ltd (ARMS), Atrium Corporate Capital Limited (ACCL) and Atrium 5 Limited. AGSL is the holding company
of Atrium Nominees Limited. AUL is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and
the Prudential Regulation Authority and is the managing agent of the syndicate.
The Atrium corporate underwriting capacity is provided by ACCL, with its capacity noted in the table below:
2021 2022 2023 2024 2025
Capacity Capacity Capacity Capacity Capacity
£m £m £m £m £m
Syndicate 609 158.7 165.0 221.6 234.9 250.1
ACCL’s participations on the managed syndicate as % of syndicate capacity:
Year of account
2021 2022 2023 2024 2025
% % % % %
Syndicate 609 25.4 25.4 25.4 25.4 25.4
AIAL is a registered Lloyd’s UK coverholder and is authorised and regulated by the Financial Conduct Authority. The syndicate leads a binding
authority granted to AIAL to underwrite Space business. Under the terms of the binding authority, fees and profit commission are payable by
the syndicate to AIAL. Fee income of US$302,000 and US$519,000 was paid by the syndicate to AIAL in relation to premium earned on the
2021 and 2022 years of account respectively. No profit commission is due in relation to the 2021 and 2022 years of account.
AGSL is a group service company. All UK employee contracts and, where possible, all material service provider contracts are held by AGSL.
A service agreement is in place whereby AGSL provides management services to all Atrium Group companies. Under the service agreement
AGSL will charge the costs to each Atrium group company, including AUL, for the respective services provided.
ARMS was incorporated in Washington State, United States, and was established to support the syndicate strategy to maintain and grow its
North American direct portfolio and distribution network. ARMS charges fees to the syndicate equal to its operating costs plus a small margin
for transfer pricing reasons. Fees of US$2,258,000 and US$2,427,000 were paid by the syndicate to ARMS in respect of the 2021 and 2022 years
of account respectively.
With effect from January 2025 ARMS fee charging structure will transition to a new model whereby fees for claims handling services and digital
management services will be charged on a similar basis as a third party provider of similar services. This change will have no detrimental
impact on the financial results of the syndicate in 2025.
The Directors’ participations on the syndicate via Nomina No. 207 LLP (the staff LLP) are as follows (this includes any director of AUL that served
during 2024 and was a partner in the staff LLP):
Year of account
2021 2022 2023 2024 2025
£ £ £ £ £
James Cox 313,317 472,886 473,168 580,834 508,412
John Fowle – – – 207,246 181,285
Peter Laidlaw 232,067 429,178 432,146 424,653 372,298
James Lee 194,879 259,220 258,156 257,682 –
Samit Shah 432,970 680,306 688,180 842,376 736,932
Kirsty Steward 77,680 105,362 103,262 127,973 112,250
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FOR THE 2021 YEAR OF ACCOUNT FOR THE FOUR YEARS ENDED 31 DECEMBER 2024 AND
THE 2022 CLOSED YEAR OF ACCOUNT FOR THE THREE YEARS ENDED 31 DECEMBER 2024
77
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
17. DISCLOSURES OF INTEREST CONTINUED
AUL has made no loans to directors of the company during 2024 (2023 - nil). There were no loans outstanding at the balance sheet date.
Managing agency fees of £4,338,000 and £4,507,000 were paid by the syndicate to AUL in relation to the 2021 and 2022 years of account
respectively. No profit commission is payable by the syndicate to AUL in relation to the 2021 year of account result and £24,772,000 is payable
by the syndicate to AUL in relation to the 2022 year of account result. The managing agents agreement was amended in 2007 to enable
managing agents to make payments on account of profit commission, prior to the closure of a year of account. Payments on account can be
made when the syndicate transfers open year surpluses from the syndicate level premium trust funds to the members’ personal reserve fund.
No such payment was made in 2024. Included within creditors is £24,772,000 in respect of profit commission payable to AUL in relation to the
2022 year of account.
The Stone Point managed Trident V Funds, acting in concert, became majority owners of Northshore from 1 January 2021. Stone Point has
investments in a wide range of companies and sectors, including the global insurance industry and as such as part of ordinary business and
operations AUL and the syndicate might enter into transactions with other Stone Point affiliates from time to time. This could include
transactions relating to inwards and outwards reinsurance, insurance intermediation, provision of insurance services, or other non-insurance
related services. Any such related party transactions are entered into by the syndicate on a commercial basis and managed in accordance with
the protocols set out in Atrium’s Conflicts of Interest Policy.
Currently no Stone Point representatives sit on the AUL Board.
As part of Lloyd’s Brexit arrangements, AUL has entered into an outsourcing agreement and a secondment agreement with LIC and
reinsurance contracts between the syndicate and LIC. This structure covers business underwritten by AUL on behalf of LIC since 1 January
2019 as well as legacy EEA business transferred to LIC under the Lloyd’s Part VII Transfer, which had a Scheme Effective Date of 30 December
2020. The outsourcing agreement covers the activities performed by AUL on behalf of LIC in writing and servicing the relevant business. The
secondment agreement (effective 1 January 2022) covers provision of seconded AUL underwriters to LIC under the Lloyd’s European
Operating Model. The reinsurance contracts cede 100% of the business written by, or transferred to, LIC back to the syndicate.
18. POST BALANCE SHEET EVENTS
On 13 January 2025, the syndicate entered into a Loss Portfolio Transfer “LPT” agreement with syndicate 2008, managed by Enstar Managing
Agency Ltd, the reinsurer.
The transaction covers the discontinued portfolios in Marine Treaty Reinsurance, Property Treaty Reinsurance and US Contractors General
Liability. The cover relates to business underwritten in year of account 2023 and earlier (the majority relates to the 2021 year of account and
earlier). The LPT is a reinsurance contract by nature. The syndicate ceded net loss reserves of $196.1m with a loss limit of $304.2m. All claims
handling responsibilities relating to the ceded policies have been transferred to the reinsurer.
The premium payable associated with the transfer was $188.9m. There were further acquisition costs and interest charges associated with the
transaction. After allowing for these costs the net impact to the statement of comprehensive income was a profit of $2.3m. This will be
recorded in the 2025 results of the syndicate and has no impact on the results as recorded for 31 December 2024.
78
SYNDICATE 609 UNDERWRITING YEAR ACCOUNTS
SEVEN YEAR SUMMARY OF RESULTS
SYNDICATE 609 AT 31 DECEMBER 2024
Year of Account
2022 2021 2020 2019 2018 2017 2016
Notes £m £m £m £m £m £m £m
Syndicate allocated capacity 651 625 524 450 449 419 419
Aggregate net premiums 813 659 591 533 460 442 401
Number of underwriting members 2,734 2,768 2,819 2,882 2,970 3,040 3,056
Results for an illustrative
share of £10,000 £ £ £ £ £ £ £
Gross premiums 14,335 12,004 12,707 13,188 11,408 11,868 10,713
Gross premiums % 1 143.4% 120.0% 127.1% 131.9% 114.1% 118.7% 107.1%
Net premiums 12,489 10,543 11,277 11,844 10,246 10,544 9,568
Net premiums % 2 124.9% 105.4% 112.8% 118.4% 102.5% 105.4% 95.7%
Premium for the reinsurance to
close an earlier year of account 3 – 7,413 8,301 7,714 7,109 7,506 7,452
Net Claims 4 3,047 6,805 4,493 4,959 5,084 5,929 3,784
Premium for the reinsurance to
close the year of account 2,786 – 9,189 8,837 7,687 7,757 7,779
Amounts retained to meet all known
and unknown liabilities – 8,940 – – – – –
Underwriting Profit 6,656 2,211 5,896 5,762 4,584 4,364 5,457
Syndicate operating expenses 4,463 3,839 4,252 4,621 4,114 4,134 3,945
Balance on technical account 2,193 (1,628) 1,644 1,141 470 230 1,512
Balance on technical account % 5 15.3% (13.6%) 14.3% 9.8% 5.9% 2.6% 17.0%
Investment return 423 1,106 (508) 97 492 450 152
Foreign exchange (losses)/gains 5 (212) 330 (4) (307) 162 (140) 77
Profit/(loss) for closed year of account 2,404 (192) 1,132 931 1,124 540 1,741
Illustrative managing agent’s profit
commission 384 – 179 155 204 80 309
Illustrative personal expenses 6 155 164 153 161 154 154 156
Profit after illustrative profit commission
and illustrative personal expenses 6 1,865 (356) 800 615 766 306 1,276
Notes
1. Gross premiums as a percentage of illustrative share.
2. Net premiums as a percentage of illustrative share.
3. The reinsurance to close premium that has been received by the 2021 year of account has been retranslated to the rates of exchange that
were applicable as at 31 December 2024. Reinsurance to close premiums receivable in respect of the 2020 and prior years of account have
not been restated.
4. Net claims include internal claims settlement expenses.
5. Balance on technical account as a percentage of gross premiums.
6. Illustrative personal expenses, including illustrative profit commission, are based on a calculation of amounts incurred by a member
writing an illustrative share. For this purpose minimum fee charges are ignored.
7. 2021 year of account remains open at 31 December 2024.
Year of Account
2022 2021 2020 2019 2018 2017 2016
Results for an illustrative share of £10,000 Notes £m £m £m £m £m £m £m
Aggregation of annual fee, profit
commission and syndicate expenses 6 1,164 457 873 832 826 600 908
ATRIUM UNDERWRITERS LIMITED
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