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Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
3
Contents
Syndicate 2019 annual accounts for the year ended 31 December 2024
Directors and Administration – Syndicate 2019 4
Report of the Directors of the Managing Agent 6
Statement of Managing Agent’s Responsibilities 12
Independent Auditor’s Report to the Members of Syndicate 2019 13
Statement of profit or loss and other comprehensive income 17
Balance sheet – Assets 19
Balance sheet – Liabilities 20
Statement of changes in members’ balances 21
Statement of cash flows 22
Notes to the financial statements 23
Syndicate 2019 underwriting year accounts for the 2022 year of account
Underwriting Year – Report of the directors of the Managing Agent 55
Underwriting Year – Statement of Managing Agent’s responsibilities 57
Independent auditors’ report to the members of Syndicate 2019 – 2022 closed year of account 58
Profit and loss account: technical account – general business 62
Profit and loss account: non-technical account 63
Balance Sheet 64
Notes to the underwriting year accounts 65
Two-year summary of closed year results (unaudited) 70
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
4
Directors and Administration – Syndicate 2019
Managing Agent
Managing Agent’s registered number
58 Fenchurch Street
London
EC3M 4AB
2202362
Directors
CJR Rash
JG Ross
RE Bean
RD Cowling
ME Hind
DJ Batchelor
KA Coates
JL Hancock
Chief Executive
Chief Risk Officer
Chief Underwriting Officer
Chief Financial Officer
Independent Non-executive
Independent Non-executive
Independent Non-executive
Non-executive
Company secretary
Active underwriter
JP Middleton
AR Fox
Bankers
Investment managers
Citibank NA
Barclays plc
BlackRock Investment Management (UK) Limited
12 Throgmorton Avenue
London
EC2N 2DL
Lloyd’s Treasury Services
One Lime Street
London
EC3M 7HA
Independent auditors
PricewaterhouseCoopers LLP
7 More London
Riverside
London
SE1 2RT
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
6
Report of the Directors of the Managing Agent
The Directors of the Managing Agent, Talbot Underwriting Ltd (TUL), present the annual report and
audited accounts of Syndicate 2019 (the Syndicate) for the year ended 31 December 2024 . The annual
report is prepared using the annual basis of accounting as required by Regulation 5 of the Insurance
Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008.
The comments below refer to both information prepared on an annual accounting basis and information
derived from a Lloyd’s underwriting year of account basis. The latter is included where it is used to
manage the business.
Principal activities
The principal activity of the Syndicate is the underwriting of proportional quota share reinsurance
covering High Net Worth (HNW) personal lines insurance business in the US, underwritten by American
International Group, Inc (AIG). The quota share reinsurance provides coverage for AIG HNW policies,
incepting from 1 January each year.
In December 2024, AIG non-renewed the PCS Whole Account Quota Share for the 2025 underwriting
year of account. For the 2025 underwriting year of account, the Syndicate has underwritten a quota
share for the PCS Collections portfolio on a standalone basis with a 30% participation. The remainder
being reinsured by other Lloyd’s Syndicates.
The Collections quota share for PCS incepts 1 January 2025 and is ceded on a gross basis. Any
outwards reinsurance cover will be purchased directly by the Syndicate. This contrasts to the 2024 and
prior years of account, where the whole account quota share agreements were ceded net of the deemed
inuring reinsurance cover purchased by AIG. The deemed inuring reinsurance purchased by AIG in
2025 will continue to apply to the run off of the 2024 and prior underwriting years.
As a result of these changes the Syndicate capacity for the 2025 underwriting year of account has
decreased to £21.0m (2024: £498.2m; 2023: £498.2m). PCG 2019 Corporate Member will continue to
be the Corporate Member for Syndicate 2019.
Results for the financial year
The result for the year was a profit of $131.8m (2023: profit of $59.3m). The Syndicate’s key financial
performance indicators during the year were as follows:
2024
$m
2023
$m
2022
$m
2021
$m
2020
$m
Gross premiums written
572.9
748.5
602.4
773.4
724.7
Net premiums written
572.9
748.5
602.4
773.4
724.7
Net earned premiums
643.3
719.0
677.1
728.0
370.1
Underwriting result
99.5
24.8
(50.2)
(99.1)
(67.3)
Investment return
32.4
34.2
(13.8)
(2.0)
0.6
Profit/(loss) for the financial year
131.8
59.3
(64.0)
(101.3)
(66.7)
Net claims ratio (%)
1
54.6
65.3
73.7
77.7
81.8
Net expense ratio (%)
2
29.9
31.3
33.7
35.9
36.4
Combined ratio (%)
3
84.5
96.6
107.4
113.6
118.2
1
The ratio of net claims incurred to net earned premiums.
2
The ratio of net operating expenses (both net acquisition costs and administrative expenses) to net earned premiums.
3
The total of net claims incurred and net operating expenses as a percentage of net earned premiums.
Report of the Directors of the Managing Agent (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
7
Review of the business
Underwriting
The Syndicate underwrote a 50.0% quota share of AIG’s HNW portfolio for the 2024 underwriting year
of account (2023 underwriting year of account: 70.0%). The portfolio is protected by a reinsurance
programme purchased by AIG, comprising excess of loss, quota share and facultative covers, which is
applied before premium is ceded to the Syndicate. The Syndicate did not purchase any reinsurance in
2024 (2023: nil).
In 2024, the Syndicate delivered a combined ratio of 84.5% (2023: 96.6%). The 2024 result has
benefited from favourable current year attritional claims experience and prior year claims development.
Gross Premiums Written
Gross premiums written by class of business for the calendar year were as follows:
2024
$m
2023
$m
Homeowners
372.8
487.0
Auto
103.0
137.0
Collections Fine Art
8.8
12.8
Collection General Specie
36.9
35.5
Yacht
4.7
14.2
Excess Liability
45.2
59.3
Workers Comp
1.5
2.7
Total Gross premiums written
572.9
748.5
Gross premiums written decreased by $175.6m in 2024 to $572.9m (2023: $748.5m) due to the
decrease in cession of the AIG HNW Quota Share from 70.0% to 50.0%.
Net claims
The net claims ratio for the year was 54.6% (2023: 65.3%). Net claims incurred as a percentage of net
earned premiums were as follows:
2024
2023
Current year claims – attritional (%)
52.1
56.7
Current year claims – catastrophe (%)
10.2
9.4
Change in prior years’ net claims (%)
(7.7)
(0.8)
Net claims ratio (%)
54.6
65.3
Report of the Directors of the Managing Agent (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
8
The current year attritional loss ratio of 52.1% (2023: 56.7%) reflects favourable experience on the 2023
and 2024 underwriting years of account.
Catastrophe losses in the year contributed 10.2% to the net claims ratio (2023: 9.4%). Whilst there have
been notable losses, including Hurricane Helene, Hurricane Milton and the Oklahoma Tornadoes,
overall catastrophe losses have been within the range of expectation.
The net claims ratio benefited from prior year development of $49.3m, or 7.7% of net earned premium
(2023: $5.8m, or 0.8% of net earned premium). This is a combination of favourable attritional experience
and improvements on catastrophe claims across all prior years. Refer to note 6 for further details.
Net operating expenses
Net operating expenses for the year are set out below:
2024
$m
2023
$m
Movement
$m
Net acquisition costs
180.1
202.0
(21.9)
Administrative expenses
12.3
22.4
(10.1)
Net operating expenses
192.4
224.4
(32.0)
As % of net earned premiums
%
%
%
Net acquisition expense ratio (%)
28.0
28.1
(0.1)
Administrative expense ratio (%)
1.9
3.2
(1.3)
Net expense ratio (%)
29.9
31.3
(1.4)
Net acquisition costs comprise the ceding commission as specified in the respective underwriting year
of account quota share contracts. The net acquisition ratio of 28.0% (2023: 28.1%) is a blend of costs
associated with premium earned across each underwriting year of account in the period. The quota
share acquisition ratio for the 2024 underwriting year of account is unchanged from the 2023
underwriting year of account (28.0%). Administrative expenses comprise mainly of Lloyd’s costs and
managing agency fees.
Review of the business (continued) | Net claims (continued)
Report of the Directors of the Managing Agent (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
9
Investment return
The return on Syndicate funds is shown below:
2024
$m
2023
$m
2024
Average Syndicate funds available for investment
778.3
763.3
Investment return for the year
32.4
34.2
Calendar year investment return (%)
4.2%
4.5%
Net investment return for 2024 was a profit of $32.4m (2023: profit of $34.2m) equating to a return of
4.2% (2023: return of 4.5%). Investment return includes net realised and unrealised gains of $1.7m
(2023: $16.1m) and income from investments net of expenses of $30.6m (2023: $18.1m). The
investment portfolio largely comprises investment grade fixed income securities with an average rating
of AA-. The Syndicate has increased its asset duration, resulting in an increase in the reinvestment yield.
Refer to note 9 for further details of investment income, expenses and charges.
Financial position
The Syndicate’s members’ balance was $61.2m at 31 December 2024 (2023: deficit of $46.8m). The
main components of the balance sheet are financial investments and technical provisions.
Financial investments consist primarily of debt securities, issued by governments, government
agencies, or high-grade corporate entities and comprise 94.1% of the investment portfolio (2023:
80.6%). All investments are traded within liquid markets. The fair value of investments is determined
predominantly by TUL’s investment managers, using data from a number of sources including index
providers, commercial valuation providers and broker-dealers. At 31 December 2024, the fair value of
investments was $762.3m (2023: $732.3m) and the portfolio composition, as well as further details on
valuation methodology, is shown in note 11
Technical provisions include a provision for claims outstanding of $608.9m (2023: $608.0m) and a
provision for unearned premiums of $284.5m (2023: $354.9m). Refer to note 2 for further details on the
reserving methodologies used for claims provisions and the judgements and uncertainties involved.
Capital
An internal capital model is used to set the Syndicate’s capital. The Syndicates managed by TUL comply
with Lloyd’s capital setting processes, which are described in more detail in note 4H.
Lloyd’s unique capital structure is designed to provide financial security to policyholders and capital
efficiency for members. Lloyd’s is A+ rated by A.M. Best, AA- by Fitch Ratings, AA- by Kroll Bond Rating
Agency and AA- by Standard & Poor’s. This chain of security provides the financial strength that
ultimately backs the insurance written through Lloyd’s.
Review of the business (continued)
Report of the Directors of the Managing Agent (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
10
Key components of the Lloyd’s capital structure are as follows:
All premiums received by Syndicates are held in trust
Every member is required to hold capital at Lloyd’s known as Funds at Lloyd’s (FAL); and
Central assets are available at the discretion of the Council of Lloyd’s to meet any valid claim
that cannot be met from the resources of any member.
The Syndicate, for the 2022 and prior years of account, has a number of corporate members, including
the majority participant PCG 2019 Corporate Member Limited, which is part of the AIG Group. For the
2023, 2024 and 2025 underwriting years of account, the Syndicate is wholly aligned to one member,
PCG 2019 Corporate Member Limited. The capital and solvency position of the Syndicate remains
robust with continued support from AIG, as evidenced by its commitment of capital support for the 2025
Syndicate Business Plan. The Syndicate’s 2025 underwriting plan is fully capitalised with FAL that is
entirely provided by AIG, which is A rated by A.M. Best and A+ by Fitch Ratings and Standard & Poor’s.
The Syndicate has available resources to mitigate all modelled stress scenarios.
Future developments and outlook
The Syndicate capacity for the 2025 underwriting year of account has decreased to £21.0m (2024
underwriting year of account: £498.2m). The reduction reflects the non-renewal of the PCS whole
account quota share and that, for the 2025 underwriting year of account, the Syndicate has underwritten
a quota share for the PCS Collections portfolio.
For the 2024 and prior underwriting years of account TUL will manage the orderly run-off of the liabilities
for these years. In parallel, TUL will continue to work with AIG to explore options, which may facilitate
the release of capital and reduction in costs.
For the 2025 year of account, the Syndicate will reinsure AIG’s PCS Collections portfolio on a standalone
basis with 30% participation. The Syndicate has purchased direct outwards reinsurance protection for
this business. This book will complement the Fine Art and Specie book that TUL underwrites through
Syndicate 1183, and TUL will work with AIG on additional opportunities, which would be accretive.
Principal risks and uncertainties
The principal risks and uncertainties to the Syndicate are insurance, financial, operational and climate
risks. A description of these principal risks and uncertainties, as well as details around TUL’s wider risk
management framework is set out in note 4 to the financial statements (risk management).
Review of the business (continued) | Capital (continued)
Report of the Directors of the Managing Agent (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
11
Directors
The Directors of the Managing Agent during the period from 1 January 2024 to the date of this report
were as follows:
CJR Rash
(Chief Executive)
JG Ross
(Chief Risk Officer)
RE Bean
(Chief Underwriting Officer)
RD Cowling
(Chief Financial Officer)
ME Hind
(Independent Non-executive)
DJ Batchelor
(Independent Non-executive)
KA Coates
(Independent Non-executive)
JL Hancock
(Non-executive, shareholder representative)
Former Directors who served during the period from 1 January 2024 to the date of this report were as
follows:
MEA Carpenter
(Non-executive, resigned 31 March 2024)
TA Bolt
(Non-executive, shareholder representative, resigned 31 December 2024)
Active Underwriter
AR Fox (Appointed 24 March 2024)
A Howse (Resigned 24 March 2024)
Company Secretary
JP Middleton (Appointed 5 June 2024)
M-C Gallagher (Resigned 5 June 2024)
Statutory Information
Disclosure of information to auditors
The Directors of the Managing Agent who held office at the date of approval of this report confirm that,
so far as they are each aware, there is no relevant audit information of which the Syndicate’s auditors
are unaware; and each Director has taken all the steps that they ought to have taken as a Director to
make themselves aware of any relevant audit information and to establish that the Syndicate’s auditors
are aware of that information.
Independent auditors
The Syndicate auditors, PricewaterhouseCoopers LLP, have indicated their willingness to continue in
office and will be reappointed.
Annual General Meeting
Subject to the consent of the Council of Lloyd’s, it is not intended to hold a Syndicate Annual General
Meeting in 2025.
Review of the business (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
12
Statement of Managing Agent’s Responsibilities
The Directors of the Managing Agent are required by the Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 to prepare Syndicate annual accounts at 31
December each year, which 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 year. The Directors have elected to prepare the Syndicate annual
accounts in accordance with applicable law and United Kingdom Accounting Standards (United
Kingdom Generally Accepted Account Practice), including Financial Reporting Standard 102 “The
Financial Reporting Standard Applicable in the UK and Republic of Ireland” (FRS 102).
The Directors must not approve the 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 accounts, the Directors 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, including FRS 102, have been followed,
subject to any material departures disclosed and explained in the Syndicate annual accounts; and
prepare the Syndicate annual accounts on the basis that the Syndicate will continue to write
business unless it is inappropriate to presume that the Syndicate will do so.
The Directors of the Managing Agent confirm that they have complied with the above requirements in
preparing the Syndicate annual accounts.
The Directors of the Managing Agent are responsible for;
keeping proper accounting records that disclose with reasonable accuracy at any time the financial
position of the Syndicate and enable them to ensure that its accounts comply with the Insurance
Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008;
safeguarding the assets of the Syndicate and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities; and
the preparation and review of the iXBRL tagging that has been applied to the Syndicate annual
accounts in accordance with the instructions issued by Lloyd’s, including designing, implementing
and maintaining systems, processes and internal controls to result in tagging that is free from
material non-compliance with the instructions issued by Lloyd’s, whether due to fraud or error.
Approved by the Board of Directors and signed on behalf of the Board.
RD Cowling, Chief Financial Officer
04 March 2025
13
Independent auditors’ report to the members of
Syndicate 2019
Report on the audit of the syndicate annual accounts
Opinion
In our opinion, Syndicate 2019’s 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 and cash flows for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards, including FRS 102 “The Financial
Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law); and
have been prepared in accordance with the requirements of The Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the requirements within the
Lloyd’s Syndicate Accounts Instructions version 2.0 as modified by the Frequently Asked
Questions issued by Lloyd’s version 1.1 (“the Lloyd’s Syndicate Instructions”).
We have audited the syndicate annual accounts included within the Annual Report and Accounts (the
“Annual Report”), which comprise: the balance sheet as at 31 December 2024; the statement of
profit or loss and other comprehensive income, the statement of cash flows, and the statement of
changes in members’ balances for the year then ended; and the notes to the syndicate annual
accounts, which include a description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”),
The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008,
the Lloyd’s Syndicate Instructions and other applicable law. Our responsibilities under ISAs (UK) are
further described in the Auditors’ responsibilities for the audit of the syndicate annual accounts section
of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We remained independent of the syndicate in accordance with the ethical requirements that are
relevant to our audit of the syndicate annual accounts in the UK, which includes the FRC’s Ethical
Standard, as applicable to other entities of public interest, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s
Ethical Standard were not provided.
Other than those disclosed in note 7, we have provided no non-audit services to the syndicate in the
period under audit.
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
14
Independent auditor’s report to the member of Syndicate 2019 (continued)
Conclusions relating to going concern
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the syndicate’s ability
to continue as a going concern for a period of at least twelve months from when the syndicate annual
accounts are authorised for issue.
In auditing the syndicate annual accounts, we have concluded that the Managing Agent’s use of the
going concern basis of accounting in the preparation of the syndicate annual accounts is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee
as to the syndicate's ability to continue as a going concern.
Our responsibilities and the responsibilities of the Managing Agent with respect to going concern are
described in the relevant sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the syndicate
annual accounts and our auditors’ report thereon. The Managing Agent is responsible for the other
information. Our opinion on the syndicate annual accounts does not cover the other information and,
accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in
this report, any form of assurance thereon.
In connection with our audit of the syndicate annual accounts, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
syndicate annual accounts or our knowledge obtained in the audit, or otherwise appears to be materially
misstated. If we identify an apparent material inconsistency or material misstatement, we are required
to perform procedures to conclude whether there is a material misstatement of the syndicate annual
accounts or a material misstatement of the other information. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report
that fact. We have nothing to report based on these responsibilities.
With respect to the Report of the Directors of the Managing Agent (the “Managing Agent’s Report”), we
also considered whether the disclosures required by The Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 have been included.
Based on our work undertaken in the course of the audit, The Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 requires us also to report certain opinions and
matters as described below.
Managing Agent’s Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the
Managing Agent’s Report for the year ended 31 December 2024 is consistent with the syndicate annual
accounts and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the syndicate and its environment obtained in the course
of the audit, we did not identify any material misstatements in the Managing Agent’s Report.
Responsibilities for the syndicate annual accounts and the audit
Responsibilities of the Managing Agent for the syndicate annual accounts
As explained more fully in the Statement of Managing Agent’s Responsibilities, the Managing Agent is
responsible for the preparation of the syndicate annual accounts in accordance with the applicable
framework and for being satisfied that they give a true and fair view. The Managing Agent is also
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
15
Independent auditor’s report to the member of Syndicate 2019 (continued)
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.
In preparing the syndicate annual accounts, the Managing Agent is responsible for 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 it is intended for the syndicate to cease
operations, or it has no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the syndicate annual accounts
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 an auditors’ report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these syndicate annual accounts.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect
of irregularities, including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud, is detailed below.
Based on our understanding of the syndicate and industry, we identified that the principal risks of non-
compliance with laws and regulations related to breaches of regulatory principles, such as those
governed by the Prudential Regulation Authority and the Financial Conduct Authority, and those
regulations set by the Council of Lloyd’s, and we considered the extent to which non-compliance might
have a material effect on the syndicate annual accounts. We also considered those laws and regulations
that have a direct impact on the syndicate annual accounts such as The Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the Lloyd’s Syndicate Instructions.
We evaluated management’s incentives and opportunities for fraudulent manipulation of the syndicate
annual accounts (including the risk of override of controls), and determined that the principal risks were
related to fraud in revenue recognition and management override of controls.
Audit procedures performed by the engagement team included:
● Discussions with management, the Board, the compliance function and the Internal Audit Group
of the Managing Agent, including consideration of known or suspected instances of non-
compliance with laws and regulations, and fraud;
● Assessment of matters reported on the Managing Agent’s whistleblowing helpline relevant to
the syndicate and the results of investigations of such matters;
● Reviewing relevant meeting minutes and correspondence with regulatory authorities;
● Testing and challenging where appropriate the assumptions and judgements made in
establishing significant accounting estimates;
● Identifying and testing journal entries based on risk criteria; and
● Designing audit procedures to incorporate unpredictability around the nature, timing and extent
of testing.
There are inherent limitations in the audit procedures described above. We are less likely to become
aware of instances of non-compliance with laws and regulations that are not closely related to events
and transactions reflected in the syndicate annual accounts. Also, the risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through
collusion.
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
16
Independent auditor’s report to the member of Syndicate 2019 (continued)
A further description of our responsibilities for the audit of the syndicate annual accounts is located on
the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’
report.
Use of this report
This report, including the opinions, has been prepared for and only for the syndicate’s members in
accordance with part 2 of The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate
Accounts) Regulations 2008 and for no other purpose. We do not, in giving these opinions, accept or
assume responsibility for any other purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior consent in writing.
Other required reporting
Under The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008
we are required to report to you if, in our opinion:
● we have not obtained all the information and explanations we require for our audit; or
● adequate accounting records have not been kept by the Managing Agent in respect of the
syndicate; or
● certain disclosures of Managing Agent remuneration specified by law are not made; or
● the syndicate annual accounts are not in agreement with the accounting records.
We have no exceptions to report arising from this responsibility.
Other matter
We draw attention to the fact that this report may be included within a document to which iXBRL tagging
has been applied. This auditors’ report provides no assurance over whether the iXBRL tagging has been
applied in accordance with section 2 of the Lloyd’s Syndicate Instructions version 2.0.
Paul Pannell (Senior statutory auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
4 March 2025
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
17
Statement of profit or loss and other
comprehensive income:
Technical account – General business
For the year ended 31 December 2024
Note | 2024 $000 | 2023 $000 | |
Gross premiums written | 5 | ||
Outwards reinsurance premiums | |||
Premiums written, net of reinsurance | |||
Changes in unearned premium | 16 | ||
Change in the gross provision for unearned premiums | ( | ||
| Change in the provision for unearned premiums reinsurers’ share | |||
Net change in provisions for unearned premiums | ( | ||
| Earned premiums, net of reinsurance | |||
Allocated investment return transferred from the non-technical account | 9 | ||
Claims paid | |||
Gross amount | ( | ( | |
| Reinsurers’ share | |||
Net claims paid | ( | ( | |
Change in the provision for claims | 16 | ||
Gross amount | ( | ( | |
| Reinsurers’ share | |||
Net change in provisions for claims | ( | ( | |
Claims incurred, net of reinsurance | ( | ( | |
Net operating expenses | 7 | ( | ( |
| Balance on the technical account – general business |
Statement of profit or loss and other comprehensive income: (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
18
Non-technical account – General business
For the year ended 31 December 2024
*Comparative balances for the year ended 31 December 2023 have been represented – refer to note
23 to the financial statements for further details.
There was no other comprehensive income or expense in the current or prior year.
The accompanying notes from page 23 to 53 form an integral part of these financial statements.
Note | 2024 $000 | *2023$000 | |
| Balance on the technical account – general business | |||
Investment income | 9 | ||
Realised gains/(losses) on investments | 9 | ( | ( |
Unrealised gains/(losses) on investments | 9 | ||
Investment expenses and charges | 9 | ( | ( |
Total investment return | |||
Allocated investment return transferred to the general business technical account | ( | ( | |
Gain/(loss) on foreign exchange | ( | ||
Profit/(loss) for the financial year |
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
19
Balance sheet – Assets
As at 31 December 2024
Note | 2024 $000 | *2023 $000 | |
Investments | |||
Financial investments | 11 | ||
Deposits with ceding undertakings | |||
Total investments | |||
| Reinsurers’ share of technical provisions | 16 | ||
Provision for unearned premiums | |||
Claims outstanding | |||
| Total reinsurers’ share of technical provisions | |||
Debtors | |||
Debtors arising out of reinsurance operations | 12 | ||
Other debtors | 13 | ||
Total debtors | |||
Other assets | |||
Cash at bank and in hand | 19 | ||
Total other assets | |||
Prepayments and accrued income | |||
Accrued interest | |||
Deferred acquisition costs | 14 | ||
Total prepayments and accrued income | |||
Total assets |
*Comparative balances for the year ended 31 December 2023 have been represented – refer to note
23 to the financial statements for further details.
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
20
Balance sheet – Liabilities
As at 31 December 2024
Note | 2024 $000 | 2023 $000 | |
Capital and reserves | |||
| Members’ balances | ( | ||
Total capital and reserves | ( | ||
Technical provisions | 16 | ||
Provision for unearned premiums | |||
Claims outstanding | |||
Total technical provisions | |||
Creditors | |||
Creditors arising out of reinsurance operations | 17 | ||
| Reinsurers’ share of deferred acquisition costs | 14 | ||
Other creditors | 18 | ||
Total creditors | |||
Accruals and deferred income | |||
Accruals | |||
Total liabilities | |||
Total liabilities, capital and reserves |
The accompanying notes from page 23 to 53 form an integral part of these financial statements.
The financial statements on pages 17 to 53 were approved by the Board of Directors on 18 February
2025 and were signed on its behalf by;
RD Cowling, Chief Financial Officer
04 March 2025
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
21
Statement of changes in members’ balances
For the year ended 31 December 2024
| 2024 $000 | 2023 $000 | |
| Members’ balances brought forward at 1 January | ( | ( |
Total profit/(loss) for the year | ||
| Payments of profit to members’ reserve funds | ( | |
Losses collected in relation to distribution on closure of underwriting year | ||
| Members’ balances carried forward at 31 December | ( |
The members participate on the Syndicate by reference to underwriting year of account.
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
22
Statement of cash flows
For the year ended 31 December 2024
Note | 2024 $000 | 2023 $000 | |
Cash flows from operating activities | |||
Profit/(loss) for the financial year | |||
Adjustments: | |||
Increase/(decrease) in gross technical provisions | ( | ||
| Increase/(decrease) in reinsurers’ share of gross technical provisions | |||
Increase/(decrease) in debtors | ( | ||
Increase/(decrease) in creditors | ( | ||
Movement in other assets/liabilities | ( | ||
Investment return | ( | ( | |
Foreign exchange | ( | ||
Other | |||
Net cash flows from operating activities | |||
Cash flows from investing activities | |||
Purchase of equity and debt instruments | ( | ( | |
Sale of equity and debt instruments | |||
Investment income received | |||
Other | ( | ||
Net cash flows from investing activities | ( | ||
Cash flows from financing activities | |||
Cash calls from member | |||
Distribution of profit | ( | ||
Other | ( | ||
Net cash flows from financing activities | ( | ( | |
Net increase/(decrease) in cash and cash equivalents | ( | ||
Cash and cash equivalents at the beginning of the year | |||
Foreign exchange on cash and cash equivalents | |||
Cash and cash equivalents at end of year | 19 |
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
23
Notes to the financial statements
1. Basis of preparation
The financial statements of Syndicate 2019 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 and the Lloyd’s Syndicate Accounts Instructions Version 2.0 as
modified by the Frequently Asked Questions Version 1.1 issued by Lloyd’s.
The financial statements have been prepared on the historical cost basis, except for financial assets at
fair value through profit or loss and available for sale that are measured at fair value.
The financial statements are presented in US dollars, which is also the Syndicate’s functional currency.
All amounts have been rounded to the nearest thousand, unless otherwise indicated.
Going concern
The Syndicate has financial resources to meet its financial needs and manage its portfolio of insurance
risk. The directors have continued to review the business plans, liquidity and operational resilience of
the Syndicate and are satisfied that the Syndicate is well positioned to manage its business risks in the
current economic environment. The Syndicate 2025 year of account opened and the directors have
concluded that the Syndicate has sufficient resources to, and a reasonable expectation that it will, open
a 2026 year of account. The Syndicate has sufficient capital for each year of account in its Funds at
Lloyd’s (FAL). There is no intention to cease underwriting or cease the operations of the Syndicate.
Accordingly, the directors of the Managing Agent 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.
The Syndicate makes critical judgements, estimates and assumptions concerning the future. The
resulting accounting estimates will, by definition, seldom equal the related actual results. The
judgements, estimates and assumptions that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year are addressed below.
Premium estimates
Significant estimates include premium written and the earning pattern of recognising premium over the
life of the policy.
Syndicate 2019 writes a single annual quota share reinsurance contract. Premium written is initially
based on estimated premium income (EPI) recognised in full at inception based on what will be
ultimately written under the contract.
The premium ceded to, and recognised by, the Syndicate under the quota share contract is net of
deemed reinsurance outlined within the quota share reinsurance contract and applied by the cedent
prior to cession to the Syndicate. The cedent’s reinsurance programme is not exclusive to the portfolio
of business ceded under the quota share contract and thus the reinsurance applied prior to cession to
the Syndicate represents an allocation of the total deemed reinsurance coverage the cedent has
purchased.
Notes to the financial statements (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
24
Premium written is provided quarterly by AIG, which will include actuals and estimates for future months
of the underwriting year, and is adjusted to actual as the underwriting year develops. Premium estimates
will also include estimates for the reinsurance applied before the cession of premium. These reinsurance
cost estimates will include allocation to the business ceded under the quota share as well as allocation
to underwriting year.
Premium estimates are reviewed at least quarterly. Quarterly EPI reflects actual underlying written
premium and forecast for future months, which are compared to plan and previous quarters’ actuals for
reasonableness. The allocation of reinsurance applied by AIG prior to cession is validated against
modelling outputs as well as placing broker analysis. Premium estimates are subject to review and
approval by the Active Underwriter and Reserve Committee. A source of uncertainty arises from the fact
that, at any given point in time, the EPI could be different to final signed premium thereby leading to an
adjustment that could be material.
Premium is earned on a straight-line basis for underlying AIG policies, which have been ceded under
the quota share contract.
Claims provisions
Significant estimates include the estimate for insurance losses incurred but not reported (IBNR), which
is included in claims outstanding in the balance sheet. If this estimation were to prove inadequate then
a loss would arise in future years. The total gross IBNR at 31 December 2024 is $386.9m (2023:
$384.3m).
The process for estimating claims provisions considers key sources of uncertainty around the following:
The allocation of claims liabilities by underwriting year prior to cession to the Syndicate;
Future development of inward claims, both reported but unsettled, and ultimate IBNR;
Estimates of claims liabilities for catastrophe events;
The splits of future claim liabilities between earned and unearned exposures.
These significant estimates are made using data, assumptions, models and expert judgement by in-
house actuarial, claims and underwriting personnel and adopted only after suitable discussion and
challenge from management, through the Reserve Committee, and the Audit Committee. The data and
analysis used includes:
Quarterly cedent updates on expected premium volumes and rating levels in light of business
written and prevalent market conditions;
Quarterly claims and premium data, both gross and net of reinsurance, with the claims data being
both paid and reported and being segmented by the Syndicate’s classes of business and between
attritional and catastrophe losses;
Ongoing monitoring of actual emerging claims experience relative to that expected from the
reserving model, with quarterly monitoring of the ongoing suitability of the actuarial reserving
assumptions in light of the emerging experience; and
Annual detailed reviews of actuarial assumptions used in the reserving model, including discussion
of the impact of any material changes in the business mix, rate movements, underwriting strategies,
reinsurance protection, etc., on these assumptions.
The Syndicate incurred to ultimate development of catastrophe claims can take longer to develop
due to the nature of the portfolio and coverage being provided for AIG HNW clients. The estimates
of claims provisions allow for alternative living costs and building code changes.
Deemed inuring reinsurance protection on the AIG HNW portfolio applies before cession to the
Syndicate. Catastrophe and other claims may therefore develop up to a specific retention. The
2. Use of judgements and estimates | Claims provisions (continued) 2. Use of judgements and estimates | Claims provisions (continued)
Notes to the financial statements (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
25
retention and limit of the deemed inuring reinsurance coverage varies depending on the type of
coverage and US state.
TUL receives the reserve data from the cedent and reviews these assumptions and judgements. TUL’s
Reserve Committee sets the claims liability provisions on a best estimate, undiscounted basis.
3. Significant accounting policies
The following significant accounting policies have been applied consistently in dealing with items which
are considered material in relation to the Syndicate’s financial statements.
A. Gross premiums written
Gross premiums written comprise premiums on contracts incepted during the financial year as well as
adjustments made in the year to premiums written in prior accounting periods. 2020, 2021, 2022, 2023
and 2024 each comprise a single quota share contract incepting on 1 January, which renews annually.
Premiums are shown gross of acquisition costs. Premiums include estimated amounts of premium due
but not yet received or notified.
B. Unearned premiums
Written premiums are recognised as earned according to the risk profile of the policy. Unearned
premiums represent the proportion of premiums written that relate to unexpired terms of policies in force
at the balance sheet date. The provision for unearned premiums is calculated on a pro rata basis. The
Syndicate underwrites risks attaching during (RAD) contracts for which premiums are earned in line with
the gross premiums to which the risk attaching contract relates.
C. Acquisition costs
Acquisition costs comprise the ceding commission as specified in the respective underwriting year of
account quota share contracts. The acquisition ratio is a blend of costs associated with premium earned
across each year of account in the period. The quota share acquisition ratio of 28.0% for the 2024
underwriting year of account is unchanged from the 2023 underwriting year of account. The deferred
acquisition cost asset represents the proportion of acquisition costs, which corresponds to the proportion
of gross premiums written that is unearned at the balance sheet date.
D. Reinsurance
Outwards reinsurance premiums written comprise premiums for contracts incepted during the financial
year as well as adjustments made in the year to outwards reinsurance premiums written in prior
accounting periods. There has been no outwards reinsurance since the inception of the Syndicate.
Notes to the financial statements (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
26
E. Claims provisions and related reinsurance recoveries
Provision is made at the year-end for the estimated cost of unpaid claims incurred.
In calculating the claims provisions, the Syndicate uses generally accepted estimation techniques
applied to underwriting year of account data, usually based upon analyses of historical experience,
which assume that the development pattern of future claims will be consistent with past experience.
Allowance is made, however, for changes or uncertainties which may create distortions in the underlying
statistics or which might cause the cost of unsettled claims to alter when compared with the cost of those
previously settled. Catastrophe and Large claims that impact specific classes of business are assessed
and measured on a case by case basis or projected separately.
The Syndicate writes a mix of predominantly short tail business, wherein most of the claims are settled
within relatively few years following the writing of the policy. A proportion of the Syndicate’s short tail
business is, however, low frequency and high severity in nature, which increases the volatility of the
data.
For longer tail business, where there are liability exposures, the time from the occurrence of a claim to
it being reported and the subsequent time before settlement of the claim can be many years. In this
time, additional facts regarding individual claims and trends often will become known and legislation and
case law may change, affecting the ultimate value of the claim.
Provisions are calculated net of any reinsurance recoveries. There has been no outwards reinsurance
since inception of the Syndicate.
Net ultimate claims provision are split between earned and unearned components, based upon earned
exposure at the balance sheet date.
The factors above bring considerable uncertainty to the process of estimating earned ultimate losses
and earned claims provisions.
The Directors consider that the claims provisions are fairly stated on the basis of the information
currently available to them. However, the ultimate liability may vary as a result of subsequent information
and this may result in significant adjustments in future years to the amounts provided.
F. Unexpired risks provision
Provision is made for unexpired risks arising from general insurance contracts where the expected value
of claims and expenses attributable to the unexpired periods of policies in force at the balance sheet
date exceeds the unearned premiums provision in relation to such policies (after the deduction of any
deferred acquisition costs). The provision for unexpired risks is calculated at the whole account level
and by underwriting year of account, after taking into account relevant investment return. The Syndicate
reinsures a single annual reinsurance contract and all business is reinsured together under one contract.
There are no unexpired risk provisions to be reported in the current or prior year.
G. Foreign currencies
Transactions in foreign currencies are translated to the functional currency using the exchange rates at
the date of the transactions. The Syndicate’s monetary assets and liabilities denominated in foreign
currencies are translated into the functional currency at the rates of exchange at the balance sheet date.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value
are retranslated to the functional currency at the exchange rate at the date that the fair value was
determined. Non-monetary items denominated in foreign currencies that are measured at historical cost
are translated to the functional currency using the exchange rate at the date of the transaction. For the
purposes of foreign currency translation, unearned premiums and deferred acquisition costs are treated
as if they are monetary items.
Differences arising on translation of foreign currency amounts relating to the insurance operations of the
Syndicate are included in the non-technical account. Differences arising on translation from the
functional currency to the presentational currency are recognised in other comprehensive income.
3. Significant accounting policies (continued)
Notes to the financial statements (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
27
H. Financial assets and liabilities
In applying FRS 102, the Syndicate has chosen to apply the recognition and measurement provisions
of Chapters 11 and 12 of FRS 102.
i. Classification
The accounting classification of financial assets and liabilities determines the way in which they are
measured and changes in those values are presented in the statement of profit or loss and other
comprehensive income. Financial assets and liabilities are classified on their initial recognition.
The initial classification of a financial instrument shall take into account contractual terms including those
relating to future variations. Once the classification of a financial instrument is determined at initial
recognition, re-assessment is only required subsequently when there has been a modification of
contractual terms that is relevant to an assessment of the classification.
Financial assets and financial liabilities at fair value through profit and loss comprise financial assets
and financial liabilities held for trading and those designated as such on initial recognition. Investments
in shares and other variable yield securities and debt and other fixed income securities are designated
as at fair value through profit or loss on initial recognition, as they are managed on a fair value basis in
accordance with the Syndicate’s investment strategy.
Deposits with credit institutions, debtors, and accrued interest are classified as loans and receivables.
ii. Recognition
Financial instruments are recognised when the Syndicate becomes a party to the contractual provisions
of the instrument. Financial assets are derecognised if the Syndicate’s contractual rights to the cash
flows from the financial assets expire or if the Syndicate transfers the financial asset to another party
without retaining control of substantially all risks and rewards of the asset. A financial liability is
derecognised when its contractual obligations are discharged, cancelled or expired.
Purchases and sales of financial assets are recognised and derecognised, as applicable, on the trade
date, i.e., the date that the Syndicate commits itself to purchase or sell the asset.
iii. Measurement
A financial asset or financial liability is measured initially at fair value plus, for a financial asset or financial
liability not at fair value through profit or loss, transaction costs that are directly attributable to its
acquisition or issue.
Financial assets at fair value through profit or loss are measured at fair value with fair value changes
recognised immediately in profit or loss. Net gains or net losses on financial assets measured at fair
value through profit or loss includes foreign exchange gains/losses arising on their translation to the
functional currency but excludes interest and dividend income.
Loans and receivables and financial liabilities are measured at amortised cost, except Syndicate Loans
to the Central Fund which are measured at fair value through profit or loss.
iv. Identification and measurement of impairment
At each reporting date the Syndicate assesses whether there is objective evidence that financial assets
not at fair value through profit or loss are impaired. Financial assets are impaired when objective
evidence demonstrates that a loss event has occurred after the initial recognition of an asset, and that
the loss event has an impact on the future cash flows of the asset that can be estimated reliably.
Objective evidence that financial assets are impaired includes observable data that comes to the
attention of the Syndicate about any significant financial difficulty of the issuer, or significant changes in
the technological, market, economic or legal environment in which the issuer operates.
3. Significant accounting policies (continued)
Notes to the financial statements (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
28
Impairment losses on available for sale financial assets are recognised by reclassifying the losses
accumulated in other comprehensive income to profit or loss. The net cumulative loss that is reclassified
from other comprehensive income to profit or loss is the difference between the acquisition cost, net of
any principal repayment, and the current fair value, less any impairment loss recognised previously in
profit or loss. If, in a subsequent period, the fair value of an impaired available for sale debt security
increases and the increase can be related objectively to an event occurring after the impairment loss
was recognised, the impairment loss is reversed through profit or loss. Otherwise it is reversed through
the statement of comprehensive income.
v. Off-setting
Financial assets and financial liabilities are offset, and the net amount presented in the balance sheet
when, and only when, the Syndicate has a legal right to set off the amounts and intends either to settle
on a net basis or to realise the asset and settle the liability simultaneously.
I. Investment return
Investment return comprises investment income and movements in unrealised gains and losses on
financial instruments at fair value through profit or loss, less investment management expenses, interest
expense, realised losses and impairment losses. Investment income comprises interest income,
dividends receivable and realised investment gains.
For the purpose of separately presenting investment income and unrealised gains and losses for
financial assets at fair value through profit or loss, interest income is calculated using the effective
interest method excluding transaction costs that are expensed when incurred. For investments at fair
value through profit or loss, realised gains and losses represent the difference between the net proceeds
on disposal and the purchase price.
Unrealised investment gains and losses represent the difference between the fair value at the balance
sheet date and the fair value at the previous balance sheet date, or purchase price if acquired during
the year. Movements in unrealised investment gains and losses comprise the increase/decrease in the
reporting period in the value of the investments held at the reporting date and the reversal of unrealised
investment gains and losses recognised in earlier reporting periods in respect of investment disposals
of the current period.
Investment return is initially recorded in the non-technical account. The return is typically transferred in
full to the general business technical account to reflect the investment return on funds supporting
underwriting business.
J. Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with maturities of three months
or less from the acquisition date that are subject to an insignificant risk of changes in fair value and are
used by the Syndicate in the management of its short-term commitments.
Cash and cash equivalents are carried at amortised cost in the balance sheet.
Bank overdrafts that are repayable on demand and form an integral part of the Syndicate’s cash
management are included as a component of cash and cash equivalents for the purpose of the
statement of cash flows.
K. 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.
3. Significant accounting policies | H. Financial assets and liabilities, iv. Identification & measurement (continued)
Notes to the financial statements (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
29
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 have been
included in the balance sheet under the heading ‘other debtors’.
No provision has been made for any other overseas tax payable by members on underwriting results.
L. Profit commission
Profit commissions payable to the managing agent, which are expected to arise on closure of a Lloyd’s
year of account, are recognised on an accruals basis, taking into consideration any deficit clauses. The
managing agent’s charges for the 2024, 2023, 2022 and 2021 years of account do not include profit
commission.
M. Operating expenses
Syndicate operating expenses are allocated to the year of account for which they are incurred. Where
expenses incurred in a financial year do not relate to any specific year of account they are apportioned
between years of account based the volume of business transacted.
N. Debtors and creditors
Insurance debtors and creditors include amounts due to and from brokers and contract holders. These
are classified as insurance debtors and creditors as they are non-derivative financial assets with fixed
or determinable payments that are not quoted on an active market.
Other debtors principally consist of sundry debtors and are carried at amortised cost.
Other creditors principally consist of amounts due to related entities and other sundry payables. These
are stated at amortised cost.
O. Classification of insurance and reinsurance contracts
Insurance and reinsurance contracts are classified as insurance contracts where they transfer significant
insurance risk. If a contract does not transfer significant insurance risk it is classified as a financial
instrument. All of the Syndicates written contracts and purchased reinsurance contracts transfer
significant insurance risk and therefore are recognised as insurance contracts.
P. Comparative disclosure
Certain comparative balances for the year ended 31 December 2023 have been represented following
changes to the presentation of the financial statements as required by the Society of Lloyd’s reporting
requirements. The changes are detailed in note 23.
3. Significant accounting policies | K. Taxation (continued)
Notes to the financial statements (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
30
4. Risk and capital management
A. Introduction and overview
This note presents information about the nature and extent of insurance, financial, operational and
climate change risks to which the Syndicate is exposed, the Managing Agent’s objectives, policies and
processes for measuring and managing insurance and financial risks, and for managing the Syndicate’s
capital.
B. Risk governance
The Managing Agent for the Syndicate, TUL, is responsible for the management of risk at the Syndicate
level. The Board has overall responsibility for the establishment and oversight of the Syndicate’s risk
management framework. Risk management policies and procedures are established to identify and
analyse the risks faced by the Syndicate, to set appropriate risk appetite, limits and controls, and to
monitor risks and adherence to limits. The Board has established a Risk and Compliance Committee to
oversee the operation of the Syndicate’s risk management framework and to review and monitor the
management of the risks to which the Syndicate is exposed.
Risk oversight by the Board Risk and Compliance Committee is supplemented by specific risk oversight
from three other Board sub-committees: the Audit Committee for reserving, financial reporting, market,
credit and liquidity risks; the Underwriting Committee for underwriting, reinsurance and systemic risks;
and the People and Remuneration Committee for people risks.
All material risks are recorded on a comprehensive risk register for the Syndicate and TUL and are
managed by the business in line with the established set of risk appetite limits, risk policies and
procedures, monitoring and mitigations, enabling new risks to be identified and new controls to be put
in place as necessary either to reduce the likelihood of a risk event or to mitigate its impact once it has
happened.
Executive oversight of the risk management framework is delegated to the Chief Executive Officer, who
is responsible for ensuring that risk management is embedded as part of TUL’s culture and that risks
are properly managed and mitigated through appropriate controls, operating effectively.
The Chief Executive Officer has formed an Executive Committee to support the discharge of the duties
delegated from the Board. The Executive Committee oversees the management of the key risks with
regard to strategy and relationships with key stakeholders and has established a number of
management committees that support oversight of how risk is managed by the business including the
following:
Syndicate 2019 Steering Committee (responsible for general oversight of the Syndicate)
Reserve Committee (responsible for overseeing reserve risk);
Aggregation Risk Committee (responsible for overseeing systemic risk);
Finance Committee (responsible for overseeing credit risk (excluding investments), liquidity risk,
currency matching risk and financial reporting and process risk);
Sustainability Committee (responsible for developing and embedding the framework for overseeing
climate change risk);
Investment Committee (responsible for overseeing market risk and credit risk with regard to
investments);
Operational Risk Committee (responsible for overseeing operational risks); and
Internal Model Governance Committee (responsible for overseeing the Internal Model).
4. Risk and capital management (continued)
Notes to the financial statements (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
31
C. Insurance risk
Insurance risk is defined as the risk of actual claims experience and/or policyholder behaviour being
materially different than initially expected at the inception of an insurance contract or at the latest
valuation. Uncertainties related to insurance risk can lead to deviations in magnitude and/or time of
prospective cash flows associated with the Syndicate’s liabilities compared to what is expected.
Insurance risk can be categorised into underwriting risk and reserve risk.
a. Underwriting risk
Underwriting risk is the risk that in aggregate insurance premiums will not be sufficient to cover future
insurance claims and associated expenses. This might arise because premiums are set too low for the
cover provided, or because the actual timing, frequency, severity or aggregation of claims events is
higher than was expected during the underwriting process.
i. Management of underwriting risk
Underwriting risk arises from differences in timing, frequency and severity of insured events, relative to
expectations at the time of underwriting, as well as inappropriate pricing, selection and approval of
insurance risks. The AIG business plan, including the deemed reinsurance, for the prospective year of
account is reviewed in depth prior to underwriting the quota share contract. The business ceded to the
Syndicate is after the application of the deemed reinsurance to arrive at an acceptable level of risk. The
Board reviews the deemed reinsurance structure at least annually to determine whether any additional
reinsurance is required at a Syndicate level. Underwriting strategy is agreed by the Board and is set out
in the Syndicate business plan that is submitted to the Society of Lloyd’s for approval each year.
Underwriting is aligned with the Syndicate’s strategy, agreed business plan and underwriting policy.
The nature of the business exposes the Syndicate to various kinds of natural disaster, such as
hurricanes, windstorms, hailstorms, flooding, earthquakes, wildfires, and other catastrophes, in which
multiple losses can occur and affect multiple lines of business in any given year. TUL’s Risk Appetite
Framework establishes and maintains appropriate limits on the material risks identified. A significant
proportion of the natural catastrophe-related risks that are underwritten by AIG are renewed on an
annual basis. This provides the opportunity to regularly re-underwrite and re-price the risk. TUL, in
combination with AIG, uses a blend of proprietary and third-party risk models to help better understand
the frequency and severity of natural catastrophe risk. TUL and AIG have assembled a collection of
hazard and engineering data, client and industry exposure, and loss information all of which have been
used to analyse the external catastrophe models, inform catastrophe model selections, and support
catastrophe model calibrations which form the in-house view of catastrophe risk. For weather perils TUL
models the following: 1) hurricanes including storm surge, 2) floods, 3) wildfires, 4) severe convective
storms, and 5) winter storms. TUL has a clear approach for how catastrophe risk is represented in the
Internal Model and this includes validation and governance around model selection, model peril
evaluation, model use, and model change. Wider climate risk impacts to the Syndicate and their
mitigation are detailed in note 4(f) below.
b. Reserve risk
Reserve risk is the risk that the reserves established in respect of insurance claims and claim expenses
incurred at the balance sheet date, whether reported or incurred but not reported (IBNR), are insufficient
to settle those claims and associated expenses in full. The level of uncertainty in the reserves set can
vary significantly across lines of business. It can arise from inadequate reserving data and processes
or from the naturally uncertain progress of insurance events.
i. Management of reserve risk
The Syndicate has exposure to volatile lines of business that carry inherent risk that the ultimate claims
settlement will vary from previous assessments of reserves. The Syndicate reserves are annually
subject to a formal independent actuarial opinion. The actuarial opinions are covered by a combination
of formal Actuarial Professional Standards and specific Lloyd’s guidance and rules.
Notes to the financial statements (continued)
Talbot Underwriting Ltd | Lloyd’s Syndicate 2019
Annual Report and Accounts for the year ended 31 December 2024
32
Note 2 contains additional details around the key judgements and uncertainties involved in the estimate
for claims provisions as well as how these are managed and overseen. The Syndicate also has in place
detailed procedures and controls to manage and monitor the handling and assessment of claims and
the setting of appropriate reserves. Note 15 includes further detail on claims provisions and claims
development triangles.
The Syndicate’s quarterly reserves are reviewed and approved by the Reserve Committee, reporting to
the Executive Committee, and overseen by the Audit Committee. The Syndicate reserves are also
subject to an annual, independent statement of actuarial opinion (SAO). The work of the in-house
actuarial team and of the third-party actuaries providing the SAO is carried out in compliance with th