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Beazley Furlonge Limited | Syndicate 623 at Lloyd’s
Annual report and accounts 2024
Welcome to our Annual report 2024
As a leading global
specialist insurer, we are
passionate about bringing
an innovative and
progressive approach to
helping our clients
mitigate the risks of the
world. 2024 saw this
syndicate achieve its
highest written premium
ever.
Contents
1
Highlights
2
Strategic report of the managing
agent
6
Divisional performance commentary
11
Managing agent’s report
17
Statement of managing agent’s
responsibilities
18
Independent auditor’s report to the
members of Syndicate 623
21
Statement of comprehensive income
22
Balance sheet
23
Statement of changes in members’
balances
24
Cash flow statement
25
Notes to the syndicate annual
accounts
53
2022 underwriting year of account for
Syndicate 623
54
Managing agent’s report
55
Statement of managing agent’s
responsibilities
56
Independent auditor’s report to the
members of Syndicate 623 – 2022
closed year of account
59
Profit or loss account
60
Statement of changes in members'
balances
61
Balance sheet
62
Cash flow statement
63
Notes to the syndicate 2022
underwriting year of account
69
Seven-year summary of closed year
results at 31 December 2024
70
Managing agent's corporate
information
Highlights
Syndicate capacity Profit for the financial year Combined ratio
£887.2m $122.4m 94%
(2023: £818.6m) (2023: $180.8m) (2023: 84%)
Gross premiums written Rate increase on renewals Cash and investments
$1,048.7m 0.2% $1,405.8m
(2023: $974.7m) (2023: 5%) (2023: $1,279.2m)
Net premiums written Claims ratio Investment return
$873.6m 49% 5.3%
(2023: $816.7m) (2023: 43%) (2023: 5.3%)
Earned premiums, net of reinsurance Expense ratio
$844.9m 45%
(2023: $736.1m) (2023: 41%)
www.beazley.com Beazley | Syndicate 623 Annual report 2024
01
Strategic report of the managing agent
Overview
The balanced portfolio of Syndicate 623 (the ‘syndicate’) continues to underpin its underwriting performance in recent years.
This syndicate writes business in parallel with Syndicate 2623. The syndicate made a profit of $122.4m (2023: $180.8m) for
the year ended 31 December 2024 . Gross premiums written increased to $1,048.7m (2023: $974.7m). For the 2024
underwriting year and beyond, business written domestically by Beazley’s US-based underwriters in prior years is no longer
written through Syndicate 623. Additionally, the syndicate's portfolio was rebalanced to cover a larger share of Beazley's
existing wholesale business written in London and Singapore, with Syndicate 623 taking a larger share of risks that are written
in parallel with Syndicate 2623.
The capacities of the syndicates managed by Beazley Furlonge Limited ('BFL') are as follows:
2024 £m 2023 £m
623 887.2 818.6
2623 2,299.6 3,794.5
3622 37.0 33.8
3623 1,325.6 —
4321 — 33.1
5623 396.6 339.8
6107 57.8 43.3
Total 5,003.8 5,063.1
Year of account results
The 2022 year of account ('YOA') has closed with a return on capacity of 14.2% despite being adversely impacted by a number
of catastrophe events including Hurricane Ian and Storm Elliott. The managing agent has maintained an active approach to
portfolio diversification and this coupled with careful risk selection has minimised the impact of these events and enabled the
achieved return on capacity. The 2023 YOA is currently forecasting a positive 10% return on capacity. Although there were
numerous adverse weather events that impacted the syndicate, the positive return on capacity demonstrates that such events
are within the expected range for the syndicate. The 2024 YOA is currently projected to close with a positive return on capacity.
This YOA is still developing. Catastrophe events throughout 2025 and the development of 2024 calendar year losses may still
impact the 2024 YOA.
Rating environment
Rate increases for the syndicate softened to 0.2% in 2024 across the portfolio (2023: 4.6%). Property Risks experienced
modest rate increases at 1.8% (2023: 22.1%) while MAP Risks rate increases were 1.1% (2023: 5.8%). After a prolonged
period of high rate increases until year end 2022, Cyber Risks experienced rate decreases in 2023 and 2024 (6.4% and 4.4%
respectively). Specialty Risks remained relatively flat year on year, with small rate increases of 0.3% (2023: 0.1%).
An overview of the syndicate’s performance by division is presented between pages 6 and 10. Below is a cumulative rate
change graph since 2019, by division.
02
Beazley | Syndicate 623 Annual report 2024 www.beazley.com
Combined ratio
The combined ratio ('COR') is a measure of operating performance and represents the ratio of the syndicate's total costs
(excluding foreign exchange movements) to total net earned premium. The syndicate’s combined ratio has increased in 2024 to
94% (2023: 84%) driven by deteriorations in both the claims and expense ratio.
Claims
The claims ratio is a measure of the syndicate's claims experience and represents the ratio of net insurance claims to net
earned premium. The claims ratio increased to 49% in 2024 (2023: 43%). There were more catastrophe losses in 2024 relative
to 2023, such as Hurricanes Milton and Helene which have worsened the claims ratio. The prior year claims ratio included a
positive impact from margin releases on some classes due to a revision in the actuarial methodology in determining risk margin
that is held. The current year claims ratio remains substantially lower than in years prior to 2023. The managing agent
continues to be of the view that the reserves held are appropriate.
Prior year reserve releases
During 2024 the syndicate released prior year reserves of $26.4m (2023: $58.7m). The syndicate experienced a net release
on most divisions, offset by a strengthening on the MAP and Specialty Risk divisions on older years of account. Net (releases)/
strengthening are shown by division in the table below:
2024 2023
$m $m
Cyber Risks (8.8) 5.7
Digital (5.7) (8.0)
MAP Risks 13.6 (22.6)
Property Risks (26.8) (8.1)
Specialty Risks 1.3 (25.7)
Total
(26.4) (58.7)
www.beazley.com Beazley | Syndicate 623 Annual report 2024
03
Strategic report of the managing agent continued
Net operating expenses
Net operating expenses, including business acquisition costs and administrative expenses, increased from $296.8m to
$380.9m in 2024. The breakdown of these costs is shown below:
2024 2023
$m $m
Brokerage costs 223.7 198.5
Other acquisition costs 27.1 19.0
Total acquisition costs
250.8
217.5
Administrative and other expenses 102.4 49.9
Profit commissions payable to managing agent 27.7
29.4
Net operating expenses
1
380.9 296.8
1 A further breakdown of net operating expenses can be seen in note 4.
Brokerage costs as a percentage of net earned premium are approximately 26% (2023: 27%). Brokerage costs are deferred and
expensed over the life of the associated premiums in accordance with accounting guidelines. Other acquisition costs comprise
costs that have been identified as being directly related to underwriting activity (e.g. underwriters’ salaries and Lloyd’s box
rental). These costs are also deferred in line with premium earning patterns. Administrative expenses comprise primarily IT
costs, staff costs, facilities costs, Lloyd’s central costs and other support costs.
The expense ratio is a measure of net operating expenses to net earned premium. The expense ratio for 2024 is 45% (2023:
41%). The managing agent continues to focus on total expense base, allowing for additional expenses where aligned to
underlying business growth or to enhance the syndicate's business model. The syndicate has grown its gross premiums
considerably year on year and it is receiving a higher proportion of expenses, primarily driven by an increase in personnel costs
including incentive payments that are linked to the syndicate's performance as referenced in the "year of account results"
above. In prior year, the syndicate was not charged managing agent fees as part of the portfolio rebalancing referred to in the
overview section above. Resumption of these fees this year has impacted the expense ratio relative to prior year. Finally, the
syndicate has changed the mix of its reinsurance cover between 2023 and 2024. It is receiving less overriding commissions
(which are offset against expenses) from proportional reinsurance arrangements as it pivots to more non-proportional
reinsurance cover.
Investment performance
The syndicate’s investments generated a return of $71.5m, or 5.3% in 2024 (2023: a return of $59.9m, or 5.3%). Financial
assets grew to $1,405.8m as at 31 December 2024 (2023: $1,279.2m). Returns were again driven by strong performance
from equity, credit and hedge fund exposures; and by the level of risk-free yield available in the market, where the interest rate
risk on our assets closely matches our liabilities.
US GDP growth was surprisingly strong, shaking off high short-term interest rates to register approximately 3% for 2024, led by
services and consumption. US government bond yields were volatile, rising early in the year before falling through Q3, and rising
again in Q4 as financial market participants began to digest a possible Republican presidential victory and the Federal Reserve
indicating a slower than expected pace of future cuts. The shape of the yield curve changed, pivoting around the 2yr where
yields were little changed; yield on shorter maturities fell, whilst longer maturities rose. Despite this volatility, and with most
exposures at the short end, the portfolio performed well.
Equity markets again delivered a strong return. The equity portfolio (within shares and other variable yield and units in unit
trusts line in the below table), which continues to be focused on US markets, and selected to align with the responsible
investment commitments, returned in excess of 24%. Performance was strong throughout the year. Corporate credit exposures
performed strongly as well, with both high yield and investment grade spreads tightening. High yield spreads came close to the
historic low of 240bps, before finishing the year just below 300bps. The hedge fund portfolio also delivered a solid return with
low volatility and correlation to other asset classes.
The yield of the fixed income portfolio (within debt securities and other fixed income securities line in the below table) at 31
December 2024 was 4.6%, with a duration of 1.6yrs. This level of yield is a positive starting point for investment returns in
2025. However, there are plenty of risks: economic growth is diverging; remaining solid in the US, but slowing elsewhere.
Geopolitical risks are elevated, and markets will likely have to weather a shift in US foreign and domestic policy under the new
administration. The investment portfolio remains diversified and well positioned for a range of market outcomes.
04
Beazley | Syndicate 623 Annual report 2024 www.beazley.com
The table below details the breakdown of our portfolio by asset class:
31 Dec 2024 31 Dec 2023
$'000 % $'000 %
Shares and other variable yield securities and units in unit trusts 242,717 17.3 % 185,245 14.5
Debt securities and other fixed income securities
1,033,543 73.5 % 1,000,007 78.2
Participation in investment pools 13,349 0.9 % 8,295 0.6
Loans and deposits with credit institutions
— — % — —
Derivative assets 1,955 0.1 % 1,008 0.1
Syndicate loans to central fund 5,864 0.4 % 6,800 0.5
Other investments 67,440 4.8 % 71,288 5.6
Financial assets at fair value 1,364,868 97.0 1,272,643 99.5
Cash at bank and in hand 40,887 3.0 6,604 0.5
Total 1,405,755 100
1,279,247 100
Reinsurance
In 2024, the amount spent on outward reinsurance was $175.2m (2023: $158.0m). As a percentage of gross premiums
written, it increased in 2024 to 17% from 16% in 2023. This modest change is mostly arising out of changes to the business
mix of the syndicate. Of note, the syndicate is now benefiting from new cyber reinsurance catastrophe bonds and a cyber
industry loss warranty that Beazley Group issued during the year.
Outlook
The 2023 underwriting year was relatively quiet from a natural catastrophes point of view. It suffered losses due to the
Hawaiian Wildfires, multiple small storms and hurricanes, however these had a relatively small financial impact on the
syndicate. This YOA achieved a mix of rate changes across its business mix. MAP Risks and Property Risks demonstrated
double digit rate increases. These were offset by a softening of the rates on the Cyber Risks book in 2023. The syndicate is
expected to produce a positive 10% return on capacity for 2023 underwriting year.
In 2024, the syndicate changed its business mix - reducing its exposure to Cyber Risks and increasing its exposure to MAP
Risks. Most divisions continue to demonstrate rate increases despite difficult market conditions. The 2024 YOA has
experienced some claims events - most notably Hurricanes Milton, Beryl and Helene. Despite this, and even though it is in the
early stages of development, this YOA is expected to generate a positive return on capacity.
Looking ahead to 2025, the managing agent will continue to explore opportunities for the syndicate. In an era of accelerating
risk, clients need expertise and strong underwriting capabilities to shoulder the burden of managing risk. Syndicate 623 is at
the forefront of serving this need. The managing agent continues to search for growth opportunities while taking heed of the
increasingly complex risk environment driven by climate change, political and macro-economic factors.
C C J Wong
Chief Financial Officer
5 March 2025
www.beazley.com Beazley | Syndicate 623 Annual report 2024
05
Divisional performance commentary
Cyber Risks
2024 2023
$m $m
Gross premiums written 141.5 194.9
Net premiums written 89.1 146.5
Earned premiums, net of reinsurance 123.2 140.7
Claims incurred, net of reinsurance (61.7) (78.6)
Net operating expenses (50.3) (47.4)
Technical result 11.2 14.7
Claims ratio 50 % 56 %
Expense ratio 41 % 34 %
Combined ratio 91 % 90 %
Renewal rate change (4) % (6) %
Cyber Risks gross premium decreased in 2024 to $141.5m (2023: $194.9m). This was largely due to a change in business
mix as the syndicate moved towards a higher concentration on MAP Risks.
Cyber Risks combined ratio of 91% demonstrates the effective rate stability that the managing agent has retained in the market
since 2020, reflecting the reality of the cyber threat that businesses everywhere face. The managing agent experienced
competition in the international markets during the year as they entered the next phase of maturity. However, July’s global IT
outage provided a reminder of the scale of risk that cyber threats from malign or non-malicious sources pose to businesses.
Cyber Risks (through the managing agent) retained its leadership role in the international cyber insurance market in 2024, with
the creation of new cyber reinsurance capacity, in the form of additional catastrophe bonds and the launch of the market’s
largest cyber industry loss warranty. These innovations together with the managing agent's move to a probabilistic modelling
approach for cyber ensures that the syndicate has strong protection right across its cyber business.
The managing agent also played its part in building a robust modelling framework for cyber catastrophes during 2024, following
a year-long collaboration with Munich Re and Gallagher Re on the modelling of cyber accumulation risk from significant malware
events.
Looking ahead, the managing agent anticipates continuing demand-led growth in its international segment.
06
Beazley | Syndicate 623 Annual report 2024 www.beazley.com
Digital
2024 2023
$m $m
Gross premiums written 6.1 33.6
Net premiums written 4.8 29.6
Earned premiums, net of reinsurance 15.8 31.1
Claims incurred, net of reinsurance (2.2) (7.1)
Net operating expenses (11.1) (17.4)
Technical result 2.5 6.6
Claims ratio 14 % 23 %
Expense ratio 70 % 56 %
Combined ratio 84 % 79 %
Renewal rate change 2 % (2) %
The Digital division achieved gross premiums written of $6.1m (2023: $33.6m) with a technical result of $2.5m (2023: $6.6m)
and a combined ratio of 84% (2023: 79%). The decrease in the size of this book mostly relates to the changing business mix of
the syndicate during 2024. The managing agent expects this division to continue to decrease in size as the business mix for
this syndicate continues to change.
www.beazley.com Beazley | Syndicate 623 Annual report 2024
07
Divisional performance commentary continued
MAP Risks
2024 2023
$m $m
Gross premiums written 240.0 155.0
Net premiums written 219.9 143.6
Earned premiums, net of reinsurance 182.2 129.8
Claims incurred, net of reinsurance (95.5) (30.0)
Net operating expenses (85.9) (59.8)
Technical result 0.8 40.0
Claims ratio 52% 23%
Expense ratio 47% 46%
Combined ratio 99% 69%
Renewal rate change 1% 6%
2024 saw growth by MAP Risks with gross premiums written of $240.0m (2023: $155.0m). MAP Risks had a positive growth
year, based on a continued positive rating environment, of which ongoing geopolitical uncertainty is a key driver. This has been
particularly true of the political risk and political violence segment where demand remains consistently strong and where the
managing agent remains steadfast in its support of its clients, but always exercises caution given the level of unpredictability.
The combined ratio increased sharply to 99% (2023: 69%), primarily driven by prior year reserve strengthening. The managing
agent will continue to monitor the claims ratio, but overall we are satisfied with the reserving on this division.
Ongoing volatility is resulting in businesses identifying gaps in cover and seeking comprehensive solutions. In particular, the
managing agent is experiencing growing demand for its Deadly Weapons Protection product which offers risk management and
prevention expertise, alongside indemnity and recovery advice, to protect clients from the worst impacts of attacks involving
deadly weapons.
During the year, the marine market successfully navigated the dual challenges of the Baltimore bridge disaster and ongoing
war in the Middle East. The market’s success, despite these external events, has encouraged competition to enter, particularly
in Hull and Cargo, where rates are flattening, while the experience of the bridge collapse is generating a more stable rating
environment for marine liability.
The syndicate's renewables business took off in 2024, growing its relevance and presence with brokers as part of a long-term
investment we are making into this growth energy business as part of the managing agents commitment to supporting clients in
the transition, which includes investigating insurance solutions to the development of nuclear fusion energy.
Looking ahead, there is no evidence that geopolitical uncertainty is receding and the managing agent believes we will see
ongoing demand-led growth for its products and services.
08
Beazley | Syndicate 623 Annual report 2024 www.beazley.com
Property Risks
2024 2023
$m $m
Gross premiums written 336.8 285.9
Net premiums written 265.5 236.2
Earned premiums, net of reinsurance 254.5 198.6
Claims incurred, net of reinsurance (97.0) (81.8)
Net operating expenses (103.1) (71.4)
Technical result 54.4 45.4
Claims ratio 38 % 41 %
Expense ratio 41 % 36 %
Combined ratio 79 % 77 %
Renewal rate change 2 % 22 %
Property Risks had a successful year achieving gross premium written of $336.8m from $285.9m the previous year, or 18%
growth. Rates began to flatten in 2024 as the market stabilised after a volatile 2023 financial year. The rebalancing of the
syndicates business mix in 2024 was offset by premium increases across its continuing property book. The COR has
deteriorated slightly year on year, mostly driven by a higher expense ratio.
The retained Property Risks business saw strong momentum during the year, as rate increases persisted albeit in the single
digits (2%). Demand for the managing agents expertise continued due to its work over recent years to better understand the
impact of the changing climate on Property Risks.
2024 brought yet more experience of extreme weather, notably an active Atlantic hurricane season, reminding the market of the
importance of a sustainable approach to underwriting focused on maintaining rate adequacy. Underwriting fundamentals and
careful selection of risks ensured our portfolio outperformed during the hurricane season.
Individual regional markets that saw significant impacts from natural catastrophe activity (such as the Southeastern US due to
hurricanes and Canada following wildfires) are all now experiencing stronger rating increases.
As we move to 2025, the managing agent sees opportunity for organic growth, given the track record it has created over the
last two years, it expects to continue our long-term investment into property underwriting.
www.beazley.com Beazley | Syndicate 623 Annual report 2024
09
Divisional performance commentary continued
Specialty Risks
2024 2023
$m $m
Gross premiums written 324.3 305.3
Net premiums written 294.3 260.8
Earned premiums, net of reinsurance 269.2 235.9
Claims incurred, net of reinsurance (156.2) (120.7)
Net operating expenses (130.5) (100.8)
Technical result (17.5) 14.4
Claims ratio 58 % 51 %
Expense ratio 48 % 43 %
Combined ratio 106 % 94 %
Renewal rate change 0.3 % 0.1 %
Overall the division experienced an increase of gross premiums written to $324.3m (2023 $305.3m). The decreased exposure
to US written business was offset by the syndicates increased exposure to pre-existing London based Specialty Risks book.
Specialty Risks COR of 106% reflects a mixed underwriting year. While the managing agent believes that it has demonstrated
mature underwriting skill and it has diversified the syndicate's Specialty Risks book, it has suffered two specific adverse
developments throughout 2024. The claims ratio should moderate over the coming year as the managing agent does not expect
these developments to recur in 2025.
Specialty lines of insurance, such as Environmental Liability, Programmes and Safeguard, contributed positively to the divisions
result. In Directors & Officers (D&O) the managing agent is now seeing signs that rates are stabilising and are narrowing to flat,
although it maintains a laser like focus on rate adequacy.
Effectively managing the cycle also means constantly assessing where social inflation is undermining the long-term
viability of insurance and where needed the managing agent will take the difficult decision to reduce or pull back altogether to
protect the syndicate's business from excessive court awards.
The managing agent is actively watching capital markets activity and in the US particularly it has hopes of a pickup in activity in
2025. More capital markets and M&A activity creates demand for insurance products such as D&O and environmental liability
during the course of transactions and we stand ready to support the market.
The managing agent's clients face complex problems that often involve litigation and the managing agent's focus is on
providing them with speciality products, risk management advice and sufficient capacity so that they can get on with the task of
running a successful business, without worrying about risk. The managing agent is optimistic of the opportunities to deliver that
in 2025.
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Beazley | Syndicate 623 Annual report 2024 www.beazley.com
Managing agent’s report
The managing agent presents its 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 and applicable United Kingdom
Accounting Standards, including Financial Reporting Standard 102: The Financial Reporting Standard applicable in the United
Kingdom and Republic of Ireland and Financial Reporting Standard 103: Insurance Contracts.
Principal activity
The principal activity of the syndicate is the transaction of a range of specialised insurance business at Lloyd’s, including the
underwriting of professional indemnity, cyber liability, property, marine, reinsurance, accident and life, political risks and
contingency business.
Business review
A review of the syndicate’s activities and future outlook is included in the strategic report.
Risk governance and reporting
BFL's Board of Directors (the 'Board') has the responsibility for defining and monitoring the risk appetite within which BFL and
the syndicates operate (collectively, ‘Beazley’), with key individuals and committees accountable for day-to-day management of
risks and controls. Regular reporting by the risk management team in Board meetings and senior management committees
ensures that risks are monitored and managed as they arise. Beazley is actively "future proofing" its structure across its three
platforms. One of these platforms is its London Wholesale platform which the managing agent governs. This platform focus will
allow strengthening of the managing agent’s leadership and further enhance platform-specific and entity governance, while
continuing to bolster its risk management structure. The managing agent continues to evolve its structure to deliver on this
governance framework.
Climate change/Responsible business
Led by Beazley plc’s Board and supported by the Boards of BFL, Beazley Insurance dac, and Beazley Insurance Company Inc,
Environmental, Social and Governance issues and climate related risks have become regular agenda items throughout 2024. In
March 2021 we launched our first Responsible Business Strategy. This document, and the subsequent update which is
published alongside the Beazley plc annual report and accounts ('ARA'), sets out the goals and targets across a wider range of
sustainability issues, including climate change.
In addition to the summary Responsible Business report, Beazley plc discloses its compliance with the Task Force on Climate-
Related Financial Disclosures' ('TCFD') Recommendations and Recommended Disclosures at the consolidated group level in the
Beazley plc annual report and accounts produced annually. The 2024 Beazley plc ARA was published on the Group's website in
March 2025.
Although not specifically listed in the risk categories detailed further in this report, the Board of BFL deems climate risk to be
inherently embedded within all risks managed across the syndicate.
Risk management
Beazley prides itself on understanding the drivers of risk across the syndicate. The risk management function supports and
challenges management in effectively managing those risks. During the year, Beazley continued to enhance, roll out and embed
elements of the risk management framework. Beazley has continued working with our colleagues across the first and second
lines of defence to support the syndicate strategy, including challenging the oversight of climate-related risks (covering physical,
transition and litigation) and journey in digitisation. The details of the performance of the risk management framework are
considered further in this report.
www.beazley.com Beazley | Syndicate 623 Annual report 2024
11
Managing agent’s report continued
Risk management oversight and framework
The Board delegates direct oversight of the risk management function and framework to its Risk Committee. The Board
delegates executive oversight of the risk management function and framework to the Executive Committee, which fulfils this
responsibility primarily through its Risk and Regulatory Committee.
The risk management framework establishes the approach to identifying, measuring, mitigating, monitoring, and reporting on
principal risks. The risk management framework supports Beazley's strategy and objectives.
Beazley has adopted a ‘three lines of defence’ model, in which the risk management function is part of the second line of
defence. Ongoing communication and collaboration across the three lines of defence ensures that Beazley identifies and
manages risks effectively.
The Board approves the company’s risk appetite statements at least annually and receives updates on monitoring against risk
appetites throughout the year. This includes an assessment of principal risks.
A suite of reports from the risk management function support senior management and the Board in discharging their oversight
and decision-making responsibilities throughout the year. The risk management function's reports include updates on risk
appetite, risk profiles, stress and scenario testing (including reverse stress testing) and analysis, emerging and heightened
risks, and the Own Risk and Solvency Assessment (ORSA) report for BFL.
The business operates a control environment which supports mitigating risks to stay within risk appetite. The risk management
function reviews and challenges the control environment through various risk management activities (e.g. risk opinions, risk
reviews etc). In addition, the risk management function works with the capital modelling and exposure management teams,
particularly in relation to validation of the internal model, preparing parts of the ORSA, monitoring risk appetite and the business
planning process.
The risk management plan considers, among other inputs, the inherent and residual risk scores for the risks in the risk
registers. The risk management function also incorporates results from internal audits and other assurance activities into its
risk assessment process. The internal audit function considers the risk management framework in its audit universe to derive a
risk-based audit plan.
The approach to identifying, managing and mitigating emerging risks includes inputs from across the business, analysis of
lessons learned following incidents and industry thought leadership. The approach considers the potential materiality and
likelihood of impacts, which helps prioritise emerging risks which the company monitors or undertakes focused work on. Key
emerging risks in 2024 included geopolitical and conflict escalation, artificial intelligence, systemic cyber attack, political and
social unrest, supply chain risk and climate change. The Board carries out a robust assessment of the emerging risks at least
annually.
Principal risks
Principal risks are under continuous review with ongoing risk assessments. Whilst the risk profile has remained broadly stable
in 2024, Beazley continues to focus on operational and regulatory risks, to ensure that the control environment keeps pace with
business change and growth initiatives. The table below summarises the principal risks the company faces, and the control
environment, governance and oversight that mitigate these risks. The approach to managing the risks arising from climate
change are set out within the TCFD section of Beazley plc’s annual Report.
Legend for principal risks table below
Risk outlook
Increasing Stable Decreasing
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Beazley | Syndicate 623 Annual report 2024 www.beazley.com
Insurance
Risk of loss arising from uncertainties and deviations of the
occurrence, frequency, amount and timing of insurance
premium and claim liabilities relative to the assumptions at
the time of underwriting. This includes risk from
underwriting such as market cycle, catastrophe,
reinsurance and reserves.
• Market cycle: potential systematic mispricing of medium-
or long-tailed business that does not support revenue to
invest and cover future claims;
• Catastrophe: one or more large events caused by nature
(e.g. hurricane, windstorm, earthquake and/or wildfire) or
mankind (e.g. coordinated cyber-attack, global pandemic,
losses linked to an economic crisis, an act of terrorism
or an act of war and/or a political event) impacting a
number of policies, and therefore giving rise to multiple
losses;
• Reinsurance arrangements: reinsurance may not be
available or purchases do not support the business
underwritten (e.g. mismatch); and
• Reserving: reserves may not be sufficiently established
to reflect the ultimate paid losses.
Insurance risk is principally managed through pricing tools, analysis of
macro trends and claim frequency/severity and ensures exposure is well
diversified and not overly concentrated in any one area, or line of
business.
Our strategic approach to exposure management and a comprehensive
internal and external reinsurance programme helps to reduce volatility of
profits in addition to managing net exposure through the transfer of risk.
Our prudent and comprehensive approach to reserving ensures adequate
provisions are made for the payment of all valid claims. High calibre
claims and underwriting professionals deliver expert service and claims
handling to insureds, ensuring good customer outcomes.
Beazley carries out periodic analysis to identify significant areas of
concentration risk across its business.
Beazley makes extensive use of modelling, including catastrophe
modelling, the use of our Solvency II model and stress and scenario
testing to ensure insurance risk is within our risk appetite.
Insurance risk outlook continues to be stable as the managing agent
manages the market cycle across all the lines of business.
Credit
The risk of loss resulting from default in obligations due or
changes in the credit standing of either issuers of
securities, counterparties or any debtors which the
company is exposed to. Exposure to credit risk largely
emanates from the use of reinsurers, brokers, and
coverholders and our investments, of which reinsurance
asset is the largest exposure for the syndicate.
Beazley maintains long-term partnerships with strategic reinsurance
partners to support it throughout the insurance cycle and during potential
catastrophic claim events. Beazley uses a range of traditional and
alternative reinsurance mechanisms to diversify reinsurance credit risk.
All reinsurers must meet stringent internal approval criteria, overseen by
the Reinsurance Security Committee. Credit risk from brokers and
coverholders remains low.
The credit risk outlook therefore remains stable, as Beazley manages
reinsurance, broker, coverholder and investment credit risks, maintaining
low levels of aged and/or bad debt.
Market
The risk of loss resulting from fluctuations in the level and
in the volatility of market prices of assets, liabilities and
financial instruments. Investment assets may be impacted
by adverse movements in financial markets, interest rates,
exchange rates, or external market forces.
Beazley operates a conservative investment strategy with a view to
limiting investment losses that would impact the syndicate’s financial
results. We employ robust policies and tools to manage market risk,
ensuring alignment with regulatory requirements and industry best
practices. Interest rate and foreign exchange risks are managed using
natural hedges and financial instruments, minimizing potential volatility.
The Investment Committee regularly reviews market risk exposures to
ensure that our risk management capabilities remain agile and effective
in responding to evolving market dynamics.
Despite the global and political economic uncertainties, we maintain a
stable market risk outlook, driven by clear political outcomes and steady
growth in the United States, where most of our asset exposures are
concentrated.
Group
The contagion risk that an action or inaction of one part of
the Beazley Group adversely affect an area of the
Syndicate. This also includes a deterioration in culture
which leads to inappropriate behaviour, actions and/or
decisions including dilution of culture or negative impact on
the brand.
Risk culture is grounded in principles of transparency, accountability, and
awareness. An effective risk culture reflects a mature risk management
function, encourages prudent risk-taking, and fosters awareness of
existing and emerging risks. The Executive Committee and the Board
oversee Group risk, with regular monitoring conducted by the Risk
Management function and overseen by the Risk Committee.
Our Group risk outlook remains stable, with the Executive Committee
continuously managing and improving our risk culture through ongoing
monitoring and enhancements.
Principal risks and summary descriptions Mitigation and monitoring
www.beazley.com Beazley | Syndicate 623 Annual report 2024
13
Managing agent’s report continued
Liquidity
Investments and/or other assets are not available or
adequate in order to settle financial obligations when they
fall due.
By actively managing its liquidity needs, Beazley maximizes flexibility in
handling its financial assets and investment strategy. This proactive
approach ensures that clients and creditors are financially protected.
Beazley regularly evaluates the liquidity position of the syndicate, under
the oversight of the Risk Committee.
Our liquidity risk outlook remains stable as we consistently maintain
more than adequate levels of liquidity.
Regulatory and legal
Non-compliance with regulatory and legal requirements,
failing to operate in line with the relevant regulatory
framework in the territories where the Syndicate operates.
This may lead to financial loss (fines, penalties), sanctions,
reputational damage, loss of confidence from regulators,
regulatory intervention, inability to underwrite or pay claims.
Beazley maintains active ongoing dialogue with its principal regulators. A
suite of compliance controls are in place to support the nature, scale
and complexity of the business which are overseen by the Risk and
Regulatory Committee. Beazley wants to have a trusting and transparent
relationship with regulators, ensuring coordinated communication and
the following of robust processes, policies and procedures in the
business. In addition, key staff, particularly those who hold defined roles
with regulatory requirements, are experienced and maintain regular
dialogue with regulators.
Beazley is implementing a horizon scanning service to support in-house
activity to identify relevant regulatory and legal matters and emerging
policy so the business can consider their potential impacts on the
business.
Considering the needs of our clients in everything our business does is
of utmost importance to Beazley. We deliver good customer outcomes to
our clients throughout the product lifecycle. The Conduct Review Group
oversees this risk.
Beazley has a very low appetite for regulatory and legal risk, therefore
maintaining strong and open relationships with our regulators is of
paramount importance. The outlook for this is increasing as throughout
2024 and into 2025, we have seen increased engagement with our
regulators as the regulatory environment becomes more complex and
Beazley grows.
Principal risks and summary descriptions Mitigation and monitoring
14
Beazley | Syndicate 623 Annual report 2024 www.beazley.com
Operational
Failures of people, processes and systems or the impact of
an external event on operations (e.g., a cyber-attack having
a detrimental impact on operations) including
transformation and change related risks.
Beazley attracts and nurtures talented colleagues who champion diversity
of thought, fostering a culture of empowerment, collaboration, and
innovation. This commitment creates an environment of employee
wellbeing, where high-calibre, motivated, loyal, and productive individuals
are empowered to perform their duties competently.
Beazley continues investing in technology and re-engineering processes
to support our operations, overseen by the Operations Committee. Our
business continuity, disaster recovery, and incident response plans
ensure the stability of our processes and systems, enabling our team to
consistently deliver optimal outcomes for our clients.
We expect technology and cyber resilience to continue being key focus
areas. We are dedicated to collaborating with external agencies, and
maintaining robust controls over information security, data, and
operational resilience. We regularly review incident response plans and
continue to invest in cybersecurity training for our employees.
While maintaining a low appetite for operational risk, we observed an
increased frequency of reported risk incidents during 2024, coinciding
with an increasingly complex operating environment.
During 2024, there was one incident in relation to activities of an
individual underwriter which received additional Board and management
scrutiny during the year. The managing agent oversaw a root cause
analysis from the incident and has identified areas to further enhance
processes and controls. Beazley Group will continue to carry out its
medium-term plans to de-risk and simplify the business; including
evolving current infrastructure and automating processes to support a
more robust internal control framework. The managing agent reviewed
legacy areas of concern to ensure that there is adequate management
attention and oversight in place while more permanent solutions from
strategic projects are delivered.
The risk management function continues to work with first line teams to
ensure that controls and processes in place remain appropriate as the
operating landscape evolves.
Our risks and controls are formally monitored and reported through a risk
and control self-assessment process and the use of quantifiable Key
Risk Indicators.
The outlook for this risk is increased as we continue to strengthen
operationally and realise the benefits of ongoing initiatives to modernise
our systems and processes.
Strategic
The risk of loss resulting from ineffective strategic direction
and implementation that leads to inadequate profitability,
insufficient capital, financial loss and/or reputational
damage for BFL.
Pervasive risks impacting multiple areas of Beazley (e.g.,
reputation, and sustainability) occurring through real or
perceived action, or inaction, by a regulatory body, market
and/or third-party provider.
A negative change to Beazley’s reputation would have a
detrimental impact to the syndicates performance and
public perception.
Beazley consistently addresses key strategic opportunities and
challenges, striving to be the highest performing and most sustainable
specialist insurer. We ensure that we recognize, understand, discuss,
and develop action plans for significant strategic priorities in a timely
manner, while maintaining operational effectiveness and brand
reputation.
Beazley creates an environment that attracts, retains and develops high
performing talent with diverse perspectives, encouraging exploration,
creation, and innovation. By investing in understanding the complexities
of the risks our clients face and deploying our expertise where it adds
value, we thrive. The Executive Committee and the Board oversee these
risks.
Our commitment is to create a sustainable business for our people,
partners, and planet through responsible business goals. We embed
sustainability principles and ambitions, focusing on reducing our carbon
footprint (refer to the Group's TCFD report for more details on climate-
related risks and mitigations), contributing to our social environment, and
practicing good governance. While we consider market developments, we
evaluate each on its individual merits, weighing both potential
opportunities and risks.
As we consolidate and embed our achievements from 2024, our
strategic risk outlook remains stable.
Principal risks and summary descriptions Mitigation and monitoring
www.beazley.com Beazley | Syndicate 623 Annual report 2024
15
Managing agent’s report continued
Directors
The Directors of BFL during the period covered by this annual report who participated in Syndicate 623 indirectly through Beazley
Staff Underwriting Limited are as follows:
2023 year of account
underwriting capacity
2024 year of account
underwriting capacity
2025 year of account
underwriting capacity
£ £ £
A P Cox 400,000 400,000 500,000
S M Lake 250,000 — —
I Fantozzi 400,000 400,000 —
R Anarfi 112,143 175,000 275,000
P Bantick 350,000 350,000 500,000
R Quane 100,000 150,000 —
A full list of the Directors of the managing agent who held office during the year can be found on page 70 of these syndicate
annual accounts.
Syndicate annual general meeting
In accordance with the Syndicate Meetings (Amendment No. 1) Byelaw (No. 18 of 2000) the managing agent does not propose
to hold a syndicate annual meeting this year. Members may object to this proposal within 21 days of this notice. Any objections
must be made in writing to the managing agent.
Disclosure of information to the auditor
The Directors of the managing agent who held office at the date of approval of this managing agent’s report confirm that, so far
as they are each aware, there is no relevant audit information of which the syndicate’s auditor is unaware; and each Director
has taken all the steps that they ought to have taken as a director to make themselves aware of any relevant audit information
and to establish that the syndicate’s auditor is aware of that information.
Auditor
Pursuant to Section 14(2) of Schedule 1 of the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008, the auditor will be deemed to be reappointed and Ernst & Young LLP will therefore continue in office.
On behalf of the Board
C C J Wong
Chief Financial Officer
5 March 2025
16
Beazley | Syndicate 623 Annual report 2024 www.beazley.com
Statement of managing agent’s responsibilities
The Directors of the managing agent are responsible for preparing the syndicate financial statements in accordance with
applicable law and regulations.
The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 requires the Directors of the
managing agent to prepare their syndicate 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.
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 financial statements, 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 financial statements 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 financial statements 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 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 financial
statements may differ from legislation in other jurisdictions.
The Directors of the managing agent are required to comply with the requirements of Section 1 of the Lloyd’s Syndicate
Accounts Instructions version 2.1 as modified by the Frequently Asked Questions version 1.1 issued by Lloyd’s (the Syndicate
Accounts Instructions).
The Directors of the managing agent are responsible for the preparation and review of the iXBRL tagging that has been applied
to the syndicate accounts in accordance with the instructions issued by Lloyd's, including designing, implementing and
maintaining systems, processes and internal controls to result in tagging that is free from material non-compliance with the
instructions issued by Lloyd's, whether due to fraud or error.
On behalf of the Board
C C J Wong
Chief Financial Officer
5 March 2025
www.beazley.com Beazley | Syndicate 623 Annual report 2024
17
Independent auditor’s report to the
members of Syndicate 623
Opinion
We have audited the syndicate annual accounts of syndicate 623 (‘the syndicate’) for the year ended 31 December 2024 which
comprise the Statement of Comprehensive Income, the Statement of changes in Members’ Balances, the Balance Sheet, the
Cash Flow statement and the related notes 1 to 25, including a summary of significant accounting policies. The financial
reporting framework that has been applied in their preparation is applicable law including The Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, United Kingdom Accounting Standards including FRS 102 “The
Financial Reporting Standard applicable in the UK and Republic of Ireland” and FRS 103 “Insurance Contracts” (United Kingdom
Generally Accepted Accounting Practice), and Section 1 of the Lloyd’s Syndicate Accounts Instructions V2.1 as modified by the
Frequently Asked Questions Version v1.1 issued by Lloyd’s (the Syndicate Accounts Instructions).
In our opinion, the syndicate annual accounts:
• give a true and fair view of the syndicate’s affairs as at 31 December 2024 and of its profit for the year then ended;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of The Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008 and the Syndicate Accounts Instructions.
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 Syndicate Accounts Instructions, and other
applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the syndicate annual accounts section of our report. We are independent of the syndicate in accordance with the ethical
requirements that are relevant to our audit of the syndicate annual accounts in the UK, including the FRC’s Ethical Standard as
applied to other entities of public interest, and we have fulfilled our other ethical responsibilities in accordance with these
requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the 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.
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 12
months from when the syndicate annual accounts are authorised for issue.
Our responsibilities and the responsibilities of the managing agent with respect to going concern are described in the relevant
sections of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee
as to the syndicate’s ability to continue as a going concern.
Other information
The other information comprises the information included in the annual report and accounts other than the syndicate annual
accounts and our auditor’s report thereon. The Directors of the managing agent are responsible for the other information
contained within the annual report and accounts.
Our opinion on the syndicate annual accounts does not cover the other information and, except to the extent otherwise explicitly
stated in this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the syndicate annual accounts or our knowledge obtained in the course of the audit or otherwise appears to
be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the syndicate annual accounts themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of the other information, we are required to report
that fact.
We have nothing to report in this regard.
18
Beazley | Syndicate 623 Annual report 2024 www.beazley.com
Opinions on other matters prescribed by The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate
Accounts) Regulations 2008
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the managing agent’s report for the financial year in which the syndicate annual accounts are
prepared is consistent with the syndicate annual accounts; and
• the managing agent’s report has been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the syndicate and its environment obtained in the course of the audit, we
have not identified material misstatements in the managing agent’s report.
We have nothing to report in respect of the following matters where The Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008 requires us to report to you, if in our opinion:
• the managing agent in respect of the syndicate has not kept adequate accounting records; or
• the syndicate annual accounts are not in agreement with the accounting records; or
• certain disclosures of the managing agents’ emoluments specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of the managing agent
As explained more fully in the Statement of Managing Agent’s Responsibilities set out on page 17 the managing agent is
responsible for the preparation of the syndicate annual accounts and for being satisfied that they give a true and fair view, and
for such internal control as the managing agent determines is necessary to enable the preparation of the 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
in operation, disclosing, as applicable, matters related to its ability to continue in operation and using the going concern basis
of accounting unless the managing agent either intends to cease to operate the syndicate, or has no realistic alternative but to
do so.
Auditor’s 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 auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these syndicate annual accounts
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including fraud. 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. However, the
primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the managing
agent and management.
www.beazley.com Beazley | Syndicate 623 Annual report 2024
19
Independent auditor’s report to the
members of Syndicate 623 continued
Our approach was as follows:
• We obtained a general understanding of the legal and regulatory frameworks that are applicable to the syndicate and
determined that the most significant are direct laws and regulations related to elements of Lloyd’s Byelaws and Regulations,
and the financial reporting framework (UK GAAP), and requirements referred to by Lloyd’s in the Syndicate Accounts
instructions. Our considerations of other laws and regulations that may have a material effect on the syndicate annual
accounts included permissions and supervisory requirements of Lloyd’s of London, the Prudential Regulation Authority (‘PRA’)
and the Financial Conduct Authority (‘FCA’).
• We obtained a general understanding of how the syndicate is complying with those frameworks by making enquiries of
management, internal audit, and those responsible for legal and compliance matters of the syndicate. In assessing the
effectiveness of the control environment, we also reviewed significant correspondence between the syndicate, Lloyd’s of
London and other UK regulatory bodies; reviewed minutes of the Board and Risk Committee of the managing agent; and
gained an understanding of the managing agent’s approach to governance.
• For direct laws and regulations, we considered the extent of compliance with those laws and regulations as part of our
procedures on the related syndicate annual accounts’ items.
• For both direct and other laws and regulations, our procedures involved: making enquiries of the Directors of the managing
agent and senior management for their awareness of any non-compliance of laws or regulations, enquiring about the policies
that have been established to prevent non-compliance with laws and regulations by officers and employees, enquiring about
the managing agent’s methods of enforcing and monitoring compliance with such policies, inspecting significant
correspondence with Lloyd’s, the FCA and the PRA, and involvement of relevant specialists, including forensics specialists
and inquiring about the appointment of external advisers, including legal counsel, as applicable.
• The syndicate operates in the insurance industry which is a highly regulated environment. As such the Senior Statutory
Auditor considered the experience and expertise of the engagement team to ensure that the team had the appropriate
competence and capabilities, which included the use of .specialists where appropriate.
• We assessed the susceptibility of the syndicate’s annual accounts to material misstatement, including how fraud might occur
by considering the controls that the managing agent has established to address risks identified by the managing agent, or
that otherwise seek to prevent, deter or detect fraud. We also considered areas of significant judgement, complex
transactions, performance targets, economic or external pressures and the impact these have on the control environment.
Where this risk was considered to be higher, we performed audit procedures to address each identified fraud risk, including:
– Reviewing accounting estimates for evidence of management bias. Supported by our Actuaries, we assessed if there
were any indicators of management bias in the valuation of insurance liabilities and the recognition of estimated premium
income.
– Evaluating the business rationale for significant and/or unusual transactions.
• These procedures included testing manual journals and were designed to provide reasonable assurance that the syndicate
annual accounts were free from fraud or error.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matter
Our opinion on the syndicate annual accounts does not cover the iXBRL tagging included within these syndicate annual
accounts, and we do not express any form of assurance conclusion thereon.
Use of our report
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. Our audit work has been undertaken so that we might state to the
syndicate’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the syndicate and the
syndicate’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Niamh Byrne (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
5 March 2025
20
Beazley | Syndicate 623 Annual report 2024 www.beazley.com
Statement of comprehensive income
for the year ended 31 December 2024
| 2024 | 2023 | ||
Notes | $'000 | $'000 | |
| Gross premiums written | 3 | | |
| Outward reinsurance premiums | ( | ( | |
| Premiums written, net of reinsurance | | | |
Changes in unearned premium | |||
| Change in the gross provision for unearned premiums | 17 | ( | ( |
Change in the provision for unearned premiums, reinsurers’ share | 17 | | ( |
| Net change in the provision for unearned premiums | ( | ( | |
| Earned premiums, net of reinsurance | | | |
Allocated investment return transferred from the non-technical account | 7 | | |
Claims paid | |||
Gross amount | 17 | ( | ( |
Reinsurers’ share | 17 | | |
| Net claims paid | ( | ( | |
Change in the provision for claims | |||
| Gross amount | 17 | ( | ( |
| Reinsurers' share | 17 | | ( |
| Net change in provision for claims | ( | ( | |
| Claims incurred, net of reinsurance | ( | ( | |
Net operating expenses | 4 | ( | ( |
| Balance on technical account - general business | | | |
| Investment income | 7 | | |
| Investment expenses and charges | 7 | ( | ( |
| Realised gains/(losses) on investments | 7 | | ( |
| Unrealised gains on investments | 7 | | |
| Total investment return | | | |
| Allocated investment return transferred to general business technical account | ( | ( | |
| Loss on foreign exchange | ( | ( | |
| Other income | | | |
| Total comprehensive income for the financial year | | |
There were no other comprehensive gains or losses in the year.
The notes on pages 25 to 52 form part of these financial statements.
www.beazley.com Beazley | Syndicate 623 Annual report 2024
21
Balance sheet
as at 31 December 2024
2024
2023
*restated
Notes
$'000 $'000
Assets
Investments
Financial investments
9 1,364,868 1,272,643
Deposits with ceding undertakings 850 1,756
Reinsurers' share of technical provisions
Provision for unearned premiums 17 87,496 82,892
Claims outstanding 17 374,477 365,017
Debtors
Debtors arising out of direct insurance operations
11
Debtors arising out of reinsurance operations
12
Other debtors 13 37,181 34,978
Other assets
Cash at bank and in hand 14
Prepayments and accrued income
Deferred acquisition costs 15 121,990 117,230
Other prepayments and accrued income 15,637 14,402
Total assets
Capital and reserves
Members' balances 201,643 188,592
Liabilities
Technical provisions
Provision for unearned premiums 17 542,731 510,038
Claims outstanding 17 1,423,896 1,303,922
Creditors
Creditors arising out of direct insurance operations 18 2,876 2,459
Creditors arising out of reinsurance operations 19 117,492 106,274
Other creditors 20 191,266 156,357
Accruals and deferred income 17,743 18,775
Total liabilities
Total liabilities, capital and reserves
*Certain balances have been restated due to a voluntary change in accounting policy. Refer to note 24.
The notes on pages 25 to 52 form part of these financial statements.
The syndicate annual accounts on pages 21 to 52 were approved and signed by the Board of Beazley Furlonge Limited on
5 March 2025 and were signed on its behalf by:
P J Bantick C C J Wong
Director Chief Financial Officer
22
Beazley | Syndicate 623 Annual report 2024 www.beazley.com
Statement of changes in members’ balances
for the year ended 31 December 2024
2024 | 2023 *restated | |
| $'000 | $'000 | |
| Members’ balances brought forward at 1 January | | ( |
| Total comprehensive income for the financial year | | |
| Payments of profit to members' personal reserve funds | ( | |
| Losses collected in relation to distribution on closure of underwriting year | | |
| Member agent fees | ( | ( |
| Other | ( | ( |
| Members’ balances carried forward at 31 December | | |
*Certain balances have been restated due to a voluntary change in accounting policy. Refer to note 24.
Members participate in syndicates by reference to year of account ('YOA') and their ultimate result, assets and liabilities are
assessed with reference to policies incepting in that YOA in respect of their membership of a particular year.
The notes on pages 25 to 52 form part of these financial statements.
www.beazley.com Beazley | Syndicate 623 Annual report 2024
23
Cash flow statement
for the year ended 31 December 2024
2024 | 2023 *restated | ||
Notes | $'000 | $'000 | |
Cash flows from operating activities | |||
| Total comprehensive income | | | |
Adjustments for: | |||
Increase in gross technical provisions | 17 | | |
(Increase)/decrease in reinsurers' share of gross technical provisions | 17 | ( | |
| Increase in debtors | ( | ( | |
| Movement in other assets/liabilities | ( | ( | |
| Increase in creditors | | | |
Investment return | 7 | ( | ( |
| Foreign exchange | ( | ||
| Net cash flow from operating activities | | | |
Cash flows from investing activities | |||
| Purchase of equity and debt securities | ( | ( | |
| Sale of equity and debt securities | | | |
| Investment income received | | | |
Net cash flow from investing activities | ( | ( | |
Cash flows from financing activities | |||
| Distribution of profit | ( | | |
| Collection of losses | | | |
| Other | ( | ( | |
Net cash flow from financing activities | ( | | |
Net increase/(decrease) in cash and cash equivalents | | ( | |
| Cash and cash equivalents at the beginning of the year | | | |
| Foreign exchange on cash and cash equivalents | ( | | |
Cash and cash equivalents at the end of the year | 14 | | |
*Certain balances have been restated due to a voluntary change in accounting policy. Refer to note 24.
The notes on pages 25 to 52 form part of these financial statements.
24
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1 Accounting policies
Basis of preparation
Syndicate 623 (the ‘syndicate’) comprises a group of members of the Society of Lloyd’s that underwrites insurance business in
the London Market. The managing agent of the syndicate is Beazley Furlonge Limited ('BFL'), whose registered address and
principal place of business is 22 Bishopsgate, London, EC2N 4BQ. The ultimate controlling party of BFL is Beazley plc, a
company incorporated in England and Wales.
The syndicate annual accounts have been prepared in accordance with the Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008, applicable Accounting Standards in the United Kingdom and the Republic of Ireland,
including Financial Reporting Standard 102 ('FRS 102'), Financial Reporting Standard 103 ('FRS 103') in relation to insurance
contracts, and the Lloyd’s Syndicate Accounts Instructions Version 2.1 as modified by the Frequently Asked Questions Version
1.1 issued by Lloyd’s.
The financial statements have been prepared on the historic cost basis, except for financial assets at fair value through profit or
loss ('FVTPL') which are measured at fair value. The principal accounting policies applied in the preparation of these financial
statements are set out below. The policies have been consistently applied to all periods presented, unless otherwise stated. All
amounts presented are stated in US dollars, being the syndicate’s functional currency, and in thousands, unless noted
otherwise. Previously, these financial statements were presented in millions of US dollars. The change from presenting in
millions to presenting in thousands has been applied for the first time in these financial statements for the year ended 31
December 2024.
Going concern
The financial statements of the syndicate have been prepared on a going concern basis. The syndicate’s business activities,
together with the factors likely to affect its future development, performance and position, are set out in the Strategic report of
the managing agent (refer to pages 2 - 10). In addition, note 2 includes the syndicate’s risk management objectives and the
entity’s objectives, policies and processes for managing its capital. 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. In assessing
the syndicate’s going concern position as at 31 December 2024, the managing agent has considered a number of factors,
including the current statement of financial position and the syndicate’s strategic and financial plan. The assessment concluded
that, for the foreseeable future, the syndicate has sufficient capital and liquidity for the 12 months from the date the financial
statements are authorised for issue.
Use of estimates and judgements
The preparation of financial statements requires the use of estimates and judgements that affect the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from those on which management’s estimates are based.
Estimates and assumptions are continually evaluated and are based on historical experience and other factors. For example,
estimates which are sensitive to economic, regulatory and geopolitical conditions could be impacted by significant changes in
the external environment such as the volatile macroeconomic environment, climate change, international conflicts, and
significant changes in legislation. Any revisions to accounting estimates are recognised in the period in which the estimate is
revised and in any future periods affected.
Specific to climate change, since responses to it are still developing, it is not possible to consider all possible future outcomes
when determining asset and liability valuations, and timing of future cash flows, as these are not yet known. Nevertheless, the
current management view is that reasonably possible changes arising from climate risks would not have a material impact on
asset and liability valuations at the year-end date.
(a) Valuation of insurance contract liabilities
The most critical estimate included within the syndicate’s balance sheet is the estimate for insurance losses incurred but not
reported (‘IBNR’), which is included within total technical provisions and reinsurers’ share of technical provisions in the balance
sheet and note 17. This estimate is critical as it outlines the current liability for future expenses expected to be incurred in
relation to claims. If this estimation was to prove inadequate then an exposure would arise in future years where a liability has
not been provided for. The best estimate of the most likely ultimate outcome is used when calculating notified claims. This
estimate is based upon the facts available at the time, in conjunction with the claims manager’s view of likely future
developments. The total estimate of gross IBNR as at 31 December 2024 included within claims outstanding on the balance
sheet is $1,065,289k (2023: $968,413k).
Notes to the syndicate annual accounts
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1 Accounting policies continued
(b) Valuation of unquoted and illiquid financial assets
Determination of fair value of unquoted and illiquid assets involves judgement in model valuations, through the incorporation of
both observable and unobservable market inputs. These inputs include assumptions that lead to the existence of a range of
plausible valuations. Further detail on the methodologies and inputs used is described in note 9 and note 10.
(c) Premium estimates
Premium written is initially based on the estimated premium income (‘EPI’) of each contract. Where premium is sourced through
binders, the binder EPI is pro-rated across the binder period. Judgement is involved in determining the ultimate estimates in
order to establish the appropriate premium value and, ultimately, the cash to be received. EPI estimates are updated to reflect
changes in an underwriters expectation through consultation with brokers and third-party coverholders, changes in market
conditions, historic experience and to reflect actual cash received for a contract.
Due to the nature of Lloyd’s business and the settlement patterns of the underlying business it is also not uncommon for some
contracts to take a number of years to finalise and settle, and a receivable on the balance sheet remains. The amount of
estimated future premium that remains in debtors relating to years of account that are more than three years developed at 31
December 2024 is $5,358k (2023: $4,336k).
Significant accounting policies
The financial statements have been prepared on an annual basis of accounting, whereby the incurred cost of claims,
commissions and related expenses are charged against the earned proportion of premiums, net of reinsurance as follows:
(a) Premiums written
Gross premiums written comprise premiums on contracts incepted during the financial year together with adjustments to
premiums written in previous accounting periods and estimates for premiums from contracts entered into during the course of
the year. Gross written premiums are stated before the deduction of brokerage, taxes, duties levied on premiums and other
deductions.
(b) Unearned premiums
A provision for unearned premiums (gross of reinsurance) represents the part of the gross premiums written that is estimated to
be earned in the following financial periods. It is calculated using the daily pro-rata method, under which the premium is
apportioned over the period of risk.
(c) Claims provisions and related reinsurance recoveries
Claims represent the cost of claims and claims handling expenses paid during the financial year, together with the movement in
provisions for outstanding claims, claims IBNR and future claims handling provisions. The provision for outstanding claims
comprises amounts set aside for claims advised and IBNR.
The IBNR amount is based on estimates calculated using widely accepted actuarial techniques which are reviewed quarterly by
the group actuary and annually by the independent syndicate reporting actuary. The techniques generally use projections, based
on past experience of the development of claims over time, to form a view on the likely ultimate claims to be experienced. For
more recent underwriting, regard is given to the variations in the business portfolio accepted and the underlying terms and
conditions. Thus, the critical assumptions used when estimating claims provisions are that the past experience is a reasonable
predictor of likely future claims development and that the rating and other models used to analyse current business are a fair
reflection of the likely level of ultimate claims to be incurred.
A provision is made at the year end for the estimated cost of claims incurred but not settled at the balance sheet date,
including the cost of claims incurred but not yet reported to the managing agent. The managing agent takes all reasonable
steps to ensure that it has appropriate information regarding its claims exposures. However, given the uncertainty in
establishing claims provisions, it is likely that the final outcome will prove to be different from the original liability established.
Notes to the Syndicate annual accounts continued
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1 Accounting policies continued
(d) Liability adequacy testing
At each reporting date, liability adequacy tests are performed to ensure the adequacy of the claims liabilities net of deferred
acquisition costs and unearned premium reserves. In performing these tests, current best estimates of future contractual cash
flows, claims handling and administration expenses as well as investment income from the assets backing such liabilities are
used.
Any deficiency is subsequently charged to the statement of comprehensive income by establishing an unexpired risk reserve
provision for losses arising from liability adequacy tests.
(e) Acquisition costs
Acquisition costs comprise brokerage, premium levies, and staff related costs of the underwriters acquiring the business. The
proportion of acquisition costs in respect of unearned premiums is deferred at the balance sheet date and recognised in later
periods when the related premiums are earned.
(f) Foreign currencies
Foreign currency transactions are translated into the functional currency using average exchange rates applicable to the period
in which the transactions take place and where the syndicate considers these to be a reasonable approximation of the
transaction rate. Foreign exchange gains and losses resulting from the settlement of such transactions and from translation at
the period end of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of
comprehensive income.
(g) Investment return
Investment return comprises all investment income, realised investment gains and losses and movements in unrealised gains
and losses, net of investment expenses, charges and interest.
Realised gains and losses on investments carried at market value are calculated as the difference between sale proceeds and
the original cost of the investment. Movements in unrealised gains and losses on investments represent the difference between
the valuation at the balance sheet date, and the valuation at the previous period end or purchase value during the 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 to reflect the investment return on funds supporting underwriting business.
(h) Ceded reinsurance
These are contracts entered into by the syndicate with reinsurers under which the syndicate is compensated for losses on
contracts issued by the syndicate and that meet the definition of an insurance contract. Insurance contracts entered into by the
syndicate under which the contract holder is another insurer (inwards reinsurance) are included with insurance contracts.
Any benefits to which the syndicate is entitled under its reinsurance contracts held are recognised as reinsurance assets. These
consist of balances due from reinsurers relating to claims and also includes the provision for unearned premiums, reinsurers’
share. Balances due relating to the reinsurers share of claims are based on calculated amounts of outstanding claims
recoveries 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 period and the current security rating of the reinsurer involved.
Reinsurance liabilities are primarily premiums payable for reinsurance contracts and are recognised as an expense when due.
Reinsurance assets are assessed for impairment at each reporting date. If there is objective evidence of impairment, then the
carrying amount is reduced to its recoverable amount and the impairment loss is recognised in the statement of comprehensive
income.
(i) Financial instruments
Recognition and derecognition
Financial instruments are recognised on the balance sheet at such time that the syndicate becomes a party to the contractual
provisions of the financial instrument. A financial asset is derecognised when:
• the contractual rights to receive cash flows from the financial assets expire;
• the financial assets have been transferred, together with substantially all the risks and rewards of ownership; or
• despite having retained some, but not substantially all, risks and rewards of ownership, control of the asset is transferred to
another party and the other party has the practical ability to sell the asset in its entirety to an unrelated third party.
Financial liabilities are derecognised if the syndicate’s obligations specified in the contract expire, are discharged or cancelled.
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1 Accounting policies continued
Financial assets and liabilities measurement
On acquisition of a financial asset or liability, the company will measure the asset or liability at transaction price, except for
those financial assets and liabilities at FVTPL, which are initially measured at fair value. The exception to this is when the
arrangement constitutes a financing transaction however, the company does not make use of any such arrangements.
Except for derivative financial investments, all financial investments are designated as FVTPL upon initial recognition because
they are managed and their performance is evaluated on a fair value basis. Information about these financial instruments is
provided internally on a fair value basis to key management. The investment strategy is to invest and evaluate their performance
with reference to their fair values.
Fair value measurement
Fair value is the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market
participants at the measurement date. Fair value is a market-based measure and in the absence of observable market prices in
an active market, it is measured using the assumptions that market participants would use when pricing the asset or liability.
The best evidence of the fair value of a financial instrument at initial recognition is the transaction price, i.e., the fair value of
the consideration given or received, unless the fair value of that instrument is evidenced by comparison with other observable
current market transactions in the same instrument (i.e., without modification or repackaging) or based on a valuation technique
whose variables include only data from observable markets.
When the transaction price provides the best evidence of fair value at initial recognition, the financial instrument is initially
measured at the transaction price and any difference between this price and the value initially obtained from a valuation model
is subsequently recognised in the statement of comprehensive income depending on the individual facts and circumstances of
the transaction but not later than when the valuation is supported wholly by observable market data or the transaction is closed
out.
Upon initial recognition, attributable transaction costs relating to financial instruments at FVTPL are recognised in the statement
of comprehensive income when incurred. Financial assets at FVTPL are continuously measured at fair value, and changes
therein are recognised in the statement of comprehensive income. Net changes in the fair value of financial assets at FVTPL
exclude interest and dividend income, as these items are accounted for separately.
Hedge funds, equity funds, collateralised loan obligations, and illiquid credit assets
The syndicate participates in a number of hedge funds and related financial instruments for which there are no readily available
quoted market prices. The valuation of these hedge funds is based on fair value techniques (as described above). The fair value
of our hedge fund portfolio is calculated by reference to the underlying net asset values of each of the individual funds.
Consideration is also given in valuing these funds to any restriction applied to distributions, the existence of side pocket
provisions, and the timing of the latest available valuations. At certain times, the syndicate will have uncalled unfunded
commitments in relation to its illiquid credit assets. These uncalled unfunded commitments are actively monitored by the
syndicate and are disclosed in notes 2.3 and 9 to the financial statements. The additional investment into its illiquid credit
asset portfolio is recognised on the date that this funding is provided. These instruments are included within shares and other
variable yield securities and units in unit trusts. The syndicate also invests in a number of collateralised loan obligations
('CLOs'). The valuation of of these CLOs is based on fair value techniques (as described above). The CLOs are included within
debt securities and other fixed income securities.
(j) Insurance debtors and creditors
Insurance debtors and creditors include amounts due to and from agents, brokers and insurance contract holders. These are
classified as debt instruments as they are non-derivative financial assets with fixed or determinable payments that are not
quoted on an active market. Insurance debtors are measured at amortised cost less any provision for impairments. Insurance
creditors are stated at amortised cost. The syndicate does not have any debtors directly with policyholders, all transactions
occur via an intermediary. For information on reinsurance debtors and creditors, refer to section (h) above.
(k) Other debtors
Other debtors principally consist of intercompany debtor balances and sundry debtors and are carried at amortised cost less
any impairment losses.
(l) Other creditors
Other creditors principally consist of amounts due to syndicates 2623, 6107 and other related entities, and profit commissions
payable. These are stated at amortised cost determined using the effective interest rate method.
Notes to the Syndicate annual accounts continued
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1 Accounting policies continued
(m) Derivative financial instruments
Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently
remeasured at their fair value. The best evidence of fair value of a derivative at initial recognition is the transaction price. Fair
values are obtained from quoted market prices in active markets, recent market transactions, and valuation techniques which
include discounted cash flow models. All derivatives are carried as assets when fair value is positive and as liabilities when fair
value is negative.
Derivative assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable
right to set off the recognised amounts and the parties intend to settle on a net basis, or realise the assets and settle the
liability simultaneously. Derivative assets are included within Financial investments in the Balance Sheet. Derivative liabilities
are included within Other creditors.
(n) Impairment of financial assets
Assessment is made at each reporting date whether there is objective evidence that a financial asset or group of financial
assets measured at amortised cost is impaired. A financial asset or group of financial assets is impaired and impairment
losses are incurred only if there is objective evidence of impairment as a result of one or more events that have occurred after
the initial recognition of the assets and that event has an impact on the estimated cash flows of the financial asset or group of
financial assets that can be reliably estimated.
If there is objective evidence that impairment exists, the amount of the loss is measured as the difference between the assets
carrying amount and the value of the estimated future cash flows discounted at the financial asset’s original effective interest
rate. Where a loss is incurred this is recognised in the statement of comprehensive income.
(o) Cash and cash equivalents
Cash and cash equivalents are comprised of cash at bank and in hand, in addition to deposits held at call with banks and other
short-term highly liquid investments with maturities of three months or less from the acquisition date. Only cash at bank and in
hand is presented separately on the face of the balance sheet, while cash equivalents are included within the 'financial
investments' line. Cash and cash equivalents are shown in aggregate on the cash flow statement and at note 14. These are
carried at amortised cost less impairment losses.
(p) 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 (20%) 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 US 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.
(q) Pension costs
Pension contributions relating to staff who act on behalf of the syndicate are charged to the syndicate and included within net
operating expenses.
(r) Profit commission
Profit commission is charged by the managing agent at a rate of 17.5% of the profit on a YOA basis subject to the operating of a
three-year deficit clause. This is charged to the syndicate as incurred but does not become payable until after the appropriate
YOA closes, normally at 36 months.
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2 Risk management
The managing agent has identified the risks arising from its activities and has established policies and procedures to manage
these items in accordance with its risk appetite. The sections below outline the syndicate’s risk appetite and explain how the
managing agent defines and manages each category of risk. The risk management framework is discussed in the managing
agent's report.
2.1 Insurance risk
The syndicate’s insurance business assumes the risk of loss from persons or organisations that are directly exposed to an
underlying loss. Insurance risk arises from this risk transfer due to inherent uncertainties about the occurrence, amount and
timing of insurance liabilities. The four key components of insurance risk are underwriting, reinsurance, claims management and
reserving. Each element is considered below.
(a) Underwriting risk
Underwriting risk comprises four elements that apply to all insurance products offered by the syndicate:
• cycle risk – the risk that business is written without full knowledge as to the (in)adequacy of rates, terms and conditions;
• event risk – the risk that individual risk losses or catastrophes lead to claims that are higher than anticipated in plans and
pricing;
• pricing risk – the risk that the level of expected loss is understated in the pricing process; and
• expense risk – the risk that the allowance for expenses and inflation in pricing is inadequate.
The syndicate’s underwriting strategy is to seek a diverse and balanced portfolio of risks in order to limit the variability of
outcomes. This is achieved by accepting a spread of business over time, segmented between different products, geography and
size. The annual business plans for each underwriting team reflect the syndicate’s underwriting strategy, and set out the
classes of business, the territories and the industry sectors in which business is to be written. These plans are approved by the
Board of BFL and monitored by the Underwriting Committee. BFL’s underwriters calculate premiums for risks written based on a
range of criteria tailored specifically to each individual risk. These factors include but are not limited to the financial exposure,
loss history, risk characteristics, limits, deductibles, terms and conditions and acquisition expenses.
The managing agent also recognises that insurance events are, by their nature, random, and the actual number and size of
events during any one year may vary from those estimated using established statistical techniques. To address this, the
managing agent sets out the exposure that it is prepared to accept in certain territories to a range of events such as natural
catastrophes and specific scenarios which may result in large industry losses. This is monitored through regular calculation of
Realistic Disaster Scenarios. The aggregate position is monitored at the time of underwriting a risk, and reports are regularly
produced to highlight the key aggregations to which the syndicate is exposed.
The managing agent uses a number of modelling tools to monitor its exposures against the agreed risk appetite set and to
simulate catastrophe losses in order to measure the effectiveness of its reinsurance programmes. Stress and scenario tests
are also run using these models. The range of scenarios considered include natural catastrophes, marine, liability, political,
terrorism and war events.
One of the largest types of event exposure relates to natural catastrophe events such as windstorms or earthquake. With the
increasing risk from climate change impacting the frequency and severity of natural catastrophes, the managing agent continues
to monitor its exposure. Where possible the managing agent measures geographic accumulations and uses its knowledge of
the business, historical loss behaviour and commercial catastrophe modelling software to assess the expected range of losses
at different return periods. Upon application of the reinsurance coverage purchased, the key gross and net exposures are
calculated on the basis of extreme events at a range of return periods.
To manage underwriting exposures, the managing agent has developed limits of authority and business plans which are binding
upon all staff authorised to underwrite and are specific to underwriters, classes of business and industry. These authority limits
are enforced through a comprehensive sign-off process for underwriting transactions including dual sign-off for all line
underwriters and peer review for all risks exceeding individual underwriters authority limits. Exception reports are also run
regularly to monitor compliance. All underwriters also have a right to refuse renewal or change the terms and conditions of
insurance contracts upon renewal. Rate monitoring details, including limits, deductibles, exposures, terms and conditions and
risk characteristics are also captured and the results are combined to monitor the rating environment for each class of
business.
Notes to the Syndicate annual accounts continued
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2 Risk management continued
Binding authority contracts
A proportion of the syndicate’s insurance risks is transacted by third parties under delegated underwriting authorities. Each third
party is thoroughly vetted by the managing agent's coverholder approval group before it can bind risks, and is subject to rigorous
monitoring to maintain underwriting quality and confirm ongoing compliance with contractual guidelines.
(b) Reinsurance risk
Reinsurance risk to the syndicate arises where reinsurance contracts, put in place to reduce gross insurance risk, do not
perform as anticipated, result in coverage disputes or prove inadequate in terms of the vertical or horizontal limits purchased.
Failure of a reinsurer to pay a valid claim is considered a credit risk which is detailed separately below.
The syndicate’s reinsurance programmes complement the underwriting team's business plans and seek to protect syndicate
capital from an adverse volume or volatility of claims on both a per risk and per event basis. In some cases the syndicate
deems it more economic to hold capital than to purchase reinsurance. These decisions are regularly reviewed as an integral
part of the business planning and performance monitoring process.
The Reinsurance Security Committee examines and approves all reinsurers to ensure that they possess suitable security. The
syndicate’s ceded reinsurance team ensures that these guidelines are followed, undertakes the administration of reinsurance
contracts, monitors and instigates responses to any erosion of the reinsurance programmes.
(c) Claims management risk
Claims management risk may arise within the syndicate in the event of inaccurate or incomplete case reserves and claims
settlements, poor service quality or excessive claims handling costs. These risks may damage the Beazley brand and
undermine its ability to win and retain business or incur punitive damages. These risks can occur at any stage of the claims life-
cycle. The syndicate’s claims teams are focused on delivering quality, reliability and speed of service to both internal and
external clients. Their aim is to adjust and process claims in a fair, efficient and timely manner, in accordance with the policy’s
terms and conditions, the regulatory environment, and the business’s broader interests. Prompt and accurate case reserves are
set for all known claims liabilities, including provisions for expenses.
(d) Reserving and ultimate reserves risk
Reserving and ultimate reserves risk occurs within the syndicate where established insurance liabilities are insufficient through
inaccurate forecasting, or where there is inadequate allowance for expenses and reinsurance bad debt provisions.
To manage reserving and ultimate reserves risk, the managing agent's actuarial team uses a range of recognised techniques to
project gross premiums written, monitor claims development patterns and stress test ultimate insurance liability balances. An
external independent actuary also performs an annual review to produce a statement of actuarial opinion for the syndicate.
The objective of the syndicate’s reserving policy is to produce accurate and reliable estimates that are consistent over time and
across classes of business. The estimates of gross premiums written and claims prepared by the actuarial department are
used through a formal quarterly peer review process to independently test the integrity of the estimates produced by the
underwriting teams for each class of business. These meetings are attended by senior management, senior underwriters,
actuarial, claims, and finance representatives.
The syndicate monitors its exposure to insurance risk by location. The geographical breakdown of written premiums is disclosed
in note 3.
A set increase or decrease in total claims liabilities would have the following impact on profit and members' balances:
Sensitivity to insurance risk (claims reserves)
Impact on profit and members' balances
2024 2023
$'000 $'000
Claims outstanding - gross of reinsurance
1,423,896 1,303,922
Claims outstanding - net of reinsurance
1,049,419
938,905
5% increase in gross claims reserve
(71,195)
(65,196)
5% decrease in gross claims reserve
71,195
65,196
5% increase in net claims reserve
(52,471)
(46,945)
5% decrease in net claims reserve
52,471
46,945
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2 Risk management continued
2.2 Market risk
Market risk arises where the value of assets and liabilities changes as a result of movements in foreign exchange rates,
interest rates and market prices.
Foreign exchange risk
The functional and presentational currency of the syndicate is the US dollar. The effect of this on foreign exchange risk is that
the syndicate is exposed to fluctuations in exchange rates for non-dollar denominated transactions and net assets. Foreign
exchange risk is actively managed as described below.
The syndicate has four main settlement currencies: US dollars, sterling, Canadian dollars and euro. Transactions in all
currencies are converted to US dollars on initial recognition and revalued at the reporting date.
The syndicate’s assets are broadly matched by currency to the principal underlying settlement currencies of its insurance
liabilities. This helps mitigate the risk that future movements in exchange rates would materially impact the syndicate’s assets
required to cover its insurance liabilities.
The following table summarises the carrying value of total assets and total liabilities categorised by currency:
CAD $ EUR € UK £ AUD $ Other Subtotal US $ Total
31 December 2024 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Investments 90,810 719 113,361 14,681 23,090 242,661 1,123,057 1,365,718
Reinsurers' share of
technical provisions
17,793 13,549 36,033 — — 67,375 394,598 461,973
Debtors 5,331 33,651 65,535 — — 104,517 386,925 491,442
Other assets 444 1,156 2,248 — — 3,848 37,039 40,887
Prepayments and accrued
income
3,549 6,527 26,112 — — 36,188 101,439 137,627
Total assets 117,927 55,602 243,289 14,681 23,090 454,589 2,043,058 2,497,647
Technical provisions (69,591) (102,473) (235,146) — — (407,210) (1,559,417) (1,966,627)
Creditors (9,436) (20,559) (69,896) — — (99,891) (211,743) (311,634)
Accruals and deferred
income
(84) (273) (11,784) — — (12,141) (5,602) (17,743)
Total liabilities (79,111) (123,305) (316,826) — — (519,242) (1,776,762) (2,296,004)
Total Capital and Reserves 38,816 (67,703) (73,537) 14,681 23,090 (64,653) 266,296 201,643
CAD $ EUR € UK £ AUD $ Other
Subtotal US $ Total
31 December 2023* $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Investments 96,246 1,036 114,796 14,158 19,453 245,689 1,028,710 1,274,399
Reinsurers' share of
technical provisions
10,183 13,776 39,876 — — 63,835 384,074 447,909
Debtors 9,119 24,759 50,057 — — 83,935 341,938 425,873
Other assets 1,467 1,394 1,807 — — 4,668 1,936 6,604
Prepayments and accrued
income
3,919 3,987 15,663 — — 23,569 108,063 131,632
Total assets 120,934 44,952 222,199 14,158 19,453 421,696 1,864,721 2,286,417
Technical provisions (61,059) (83,088) (197,942) — — (342,089) (1,471,871) (1,813,960)
Creditors (11,131) (19,537) (25,459) — — (56,127) (208,963) (265,090)
Accruals and deferred
income
(246) (283) (9,086) — — (9,615) (9,160) (18,775)
Total liabilities (72,436) (102,908) (232,487) — — (407,831) (1,689,994) (2,097,825)
Total Capital and Reserves 48,498 (57,956) (10,288) 14,158 19,453 13,865 174,727 188,592
*Certain balances have been restated due to a voluntary change in accounting policy. Refer to note 24.
Notes to the Syndicate annual accounts continued
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2 Risk management continued
Sensitivity analysis - foreign exchange risk
In 2024, the managing agent managed the syndicate's foreign exchange risk by periodically assessing its non-dollar exposures
and hedging these to a tolerable level while targeting net assets to be entirely US dollar denominated. As part of this hedging
strategy, exchange rate derivatives were used to rebalance currency exposure. Details of foreign currency derivative contracts
entered into with external parties are disclosed in note 10. On a forward looking basis an assessment is made of expected
future exposure development and appropriate currency trades put in place to reduce risk.
Fluctuations in the syndicate’s trading currencies against the US dollar would result in a change to profit and members'
balances. The table below gives an indication of the impact on profit and members balances of a percentage change in relative
strength of US dollar against the value of sterling, Canadian dollar, Australian dollar and euro, simultaneously.
Impact on profit and members' balances
2024 2023
Change in exchange rate of sterling, Canadian dollar, Australian dollar and euro relative to US dollar
$'000 $'000
Dollar weakens 10% against other currencies (3,575) (508)
Dollar strengthens 10% against other currencies 3,575 508
Interest rate risk
Some of the syndicate’s financial instruments, including financial investments, cash and borrowings, are exposed to
movements in market interest rates.
The managing agent manages interest rate risk by primarily investing in short duration financial investments and cash. The
Investment Committee monitors the duration of these assets on a regular basis.
The following table shows the average duration at the reporting date of the financial instruments that are exposed to
movements in market interest rates. Duration is a commonly used measure of volatility which gives a better indication than
maturity of the likely sensitivity of our portfolio to changes in interest rates.
Duration <1 yr 1-2 yrs 2-3 yrs 3-4 yrs 4-5 yrs 5-10 yrs >10 yrs Total
31 December 2024 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Debt securities and other fixed income
securities
338,248 381,433 185,000 77,193 19,760 31,909 –
1,033,543
Participation in investment pools 13,349 – – – – – – 13,349
Shares and other variable yield securities
and unit trusts*
– – – 83,830 – – – 83,830
Overseas deposits 67,440 – – – – – – 67,440
Cash at bank in hand 40,887 – – – – – – 40,887
Derivative financial instruments 1,955 – – – – – – 1,955
Syndicate loans to central fund 5,864 – – – – – – 5,864
Total
467,743 381,433 185,000 161,023 19,760 31,909 –
1,246,868
*Excluding equity securities.
Duration <1 yr 1-2 yrs 2-3 yrs 3-4 yrs 4-5 yrs 5-10 yrs >10 yrs Total
31 December 2023 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Debt securities and other fixed income
securities
270,490 405,209 207,768 91,832 18,256 6,452 –
1,000,007
Participation in investment pools 8,295 – – – – – – 8,295
Shares and other variable yield securities
and unit trusts*
– – – 62,730 – – – 62,730
Overseas deposits 57,130 14,150 8 – – – – 71,288
Cash at bank in hand 6,604 – – – – – – 6,604
Derivative financial instruments 1,008 – – – – – – 1,008
Syndicate loans to central fund 1,535 5,265 – – – – – 6,800
Total
345,062 424,624 207,776 154,562 18,256 6,452 –
1,156,732
*Excluding equity securities.
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2 Risk management continued
Sensitivity analysis - interest rate risk
The syndicate holds financial assets and liabilities that are exposed to interest rate risk. Changes in interest yields, with all
other variables constant, would result in changes in the capital value of debt and derivative financial instruments. This will affect
reported profits and members' balances as indicated in the table below.
Impact on profit for the year
ended
Impact on members'
balances
2024 2023 2024 2023
Shift in yield (basis points) $'000 $'000 $'000 $'000
50 basis point increase (9,538) (10,138) (9,538) (10,138)
50 basis point decrease 9,538 10,138 9,538 10,138
Price risk
Financial assets and derivatives that are recognised on the balance sheet at their fair value are susceptible to losses due to
adverse changes in prices. This is referred to as price risk.
Financial assets include fixed and floating rate debt securities, hedge funds, equity funds and derivative financial assets. The
fixed income securities are well diversified across high quality, liquid securities. The price risk associated with these securities
is predominantly interest, foreign exchange and credit risk related. The sensitivity to price risk that relates to the syndicate’s
hedge fund investments and equity linked funds is presented below. The Investment Committee has established comprehensive
guidelines with investment managers setting out maximum investment limits, diversification across industries and
concentrations in any one industry or company.
Listed investments are recognised on the balance sheet at quoted bid price. If the market for the investment is not considered
to be active, then the syndicate establishes fair value using valuation techniques (refer to note 9). This includes using recent
arm’s length market transactions, reference to current fair value of other investments that are substantially the same,
discounted cash flow models and other valuation techniques that are commonly used by market participants.
Impact on profit for the year
ended
Impact on members
balances
2024 2023 2024 2023
Change in fair value of hedge funds, equity linked funds & illiquid credit assets $'000 $'000 $'000 $'000
5% increase in fair value 7,944 6,126 7,944 6,126
5% decrease in fair value (7,944) (6,126) (7,944) (6,126)
2.3 Credit risk
Credit risk arises from the failure of another party to perform its financial or contractual obligations to the syndicate in a timely
manner. The primary sources of credit risk for the syndicate are:
• reinsurers – whereby reinsurers may fail to pay valid claims against a reinsurance contract held by the syndicate;
• brokers and coverholders – whereby counterparties fail to pass on premiums or claims collected or paid on behalf of the
syndicate; and
• investments – whereby issuer default results in the syndicate losing all or part of the value of a financial instrument and
derivative financial instrument.
The syndicate’s core business is to accept significant insurance risk and the appetite for other risks is low. This protects the
syndicate’s capital from erosion so that it can meet its insurance liabilities.
The managing agent limits exposure to a single counterparty or a group of counterparties and analyses the geographical
locations of exposures when assessing credit risk.
An approval system also exists for all new brokers, and broker performance is carefully monitored. Regular exception reports
highlight trading with non-approved brokers, and the syndicate’s credit control function frequently assesses the ageing and
collectability of debtor balances. Any large, aged items are prioritised and where collection is outsourced, incentives are in place
to support these priorities.
Notes to the Syndicate annual accounts continued
34
Beazley | Syndicate 623 Annual report 2024 www.beazley.com
2 Risk management continued
The Investment Committee has established comprehensive guidelines for the syndicate’s investment managers regarding the
type, duration and quality of investments acceptable to the syndicate. The performance of investment managers is regularly
reviewed to confirm adherence to these guidelines.
The managing agent has developed processes to formally examine all reinsurers before entering into new business
arrangements. New reinsurers are approved by the Reinsurance Security Committee, which also reviews arrangements with all
existing reinsurers at least annually. Vulnerable or slow-paying reinsurers are examined more frequently.
The following tables summarise the syndicate’s concentrations of credit risk for assets with credit risk:
AAA AA A BBB Other
Not rated Total
31 December 2024
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Investments
Shares and other variable yield
securities and units in unit trusts
– – – – 83,830 158,887 242,717
Debt securities and other fixed income
securities
133,524 391,993 338,327 145,287 – 24,412
1,033,543
Participation in investment pools – – 13,349 – – – 13,349
Derivative assets – – – – – 1,955 1,955
Syndicate loans to central fund – – 5,864 – – – 5,864
Other investments – – 67,440 – – – 67,440
Deposits with ceding undertakings – – 850 – – – 850
Total investments 133,524 391,993 425,830 145,287 83,830 185,254
1,365,718
Reinsurers’ share of claims outstanding 4,986 248,032 118,417 1 – 3,041 374,477
Debtors arising out of direct insurance
operations
– – – – – 330,083 330,083
Debtors arising out of reinsurance
operations
69 12,100 15,342 – – 96,667 124,178
Cash at bank and in hand 14,582 – 26,305 – – – 40,887
Other debtors and accrued interest 4,729 579 499 214 – 46,797 52,818
Total
157,890 652,704 586,393 145,502 83,830 661,842
2,288,161
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2 Risk management continued
AAA AA A BBB Other
Not rated Total
31 December 2023
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Investments
Shares and other variable yield
securities and units in unit trusts
– – – – 62,730 122,515 185,245
Debt securities and other fixed income
securities
473,631 115,171 298,078 113,127 – –
1,000,007
Participation in investment pools – 8,295 – – – – 8,295
Derivative assets – – – – – 1,008 1,008
Syndicate loans to central fund – – 6,800 – – – 6,800
Other investments – – 71,288 – – – 71,288
Deposits with ceding undertakings – – 1,756 – – – 1,756
Total investments 473,631 123,466 377,922 113,127 62,730 123,523
1,274,399
Reinsurers’ share of claims outstanding 4,955 247,771 110,229 86 – 1,976 365,017
Debtors arising out of direct insurance
operations
– – – – – 307,421 307,421
Debtors arising out of reinsurance
operations
138 16,647 18,398 39 – 48,252 83,474
Cash at bank and in hand – – 6,604 – – – 6,604
Other debtors and accrued interest* 5,176 1,259 3,257 1,236 3,701 34,751 49,380
Total 483,900 389,143 516,410 114,488 66,431 515,923
2,086,295
*Certain balances have been restated due to a voluntary change in accounting policy. Refer to note 24.
Financial investments falling within the unrated category comprise hedge funds for which there is no readily available market
data to allow classification within the respective tiers. Additionally, some debtors are classified as unrated in accordance with
Lloyd’s guidelines.
The syndicate has insurance debtors and reinsurance assets that are past due but not impaired at the reporting date. An aged
analysis of these is presented below:
Neither past due
nor impaired
Past due but not
impaired
Gross value of
impaired assets
Impairment
allowance Total
31 December 2024 $'000 $'000 $'000 $'000 $'000
Investments
Shares and other variable yield securities
and units in unit trusts
242,717 – – – 242,717
Debt securities and other fixed income
securities
1,033,543 – – – 1,033,543
Participation in investment pools 13,349 – – – 13,349
Derivative assets 1,955 – – – 1,955
Syndicate loans to central fund 5,864 – – – 5,864
Other investments 67,440 – – – 67,440
Deposits with ceding undertakings 850 – – – 850
Total Investments 1,365,718 – – – 1,365,718
Reinsurers’ share of claims outstanding 374,477 – 871 (871) 374,477
Debtors arising out of direct insurance
operations
300,546 29,537 – – 330,083
Debtors arising out of reinsurance operations 112,014 12,164 3,396 (3,396) 124,178
Cash at bank and in hand 40,887 – – – 40,887
Other debtors and accrued interest 52,818 – – – 52,818
Total
2,246,460 41,701 4,267 (4,267) 2,288,161
Notes to the Syndicate annual accounts continued
36
Beazley | Syndicate 623 Annual report 2024 www.beazley.com
2 Risk management continued
Neither past due
nor impaired
Past due but not
impaired
Gross value of
impaired assets
Impairment
allowance Total
31 December 2023
$'000 $'000 $'000 $'000 $'000
Investments
Shares and other variable yield securities
and units in unit trusts
185,245 – – – 185,245
Debt securities and other fixed income
securities
1,000,007 – – – 1,000,007
Participation in investment pools 8,295 – – – 8,295
Loans secured by mortgages – – – – –
Loans and deposits with credit institutions – – – – –
Derivative assets 1,008 – – – 1,008
Syndicate loans to central fund 6,800 – – – 6,800
Other investments 71,288 – – – 71,288
Deposits with ceding undertakings 1,756 – – – 1,756
Total investments 1,274,399 – – – 1,274,399
Reinsurers’ share of claims outstanding 365,017 – 905 (905) 365,017
Debtors arising out of direct insurance
operations
272,905 34,516 – – 307,421
Debtors arising out of reinsurance operations 75,444 8,030 3,286 (3,286) 83,474
Cash at bank and in hand 6,604 – – – 6,604
Other debtors and accrued interest* 49,380 – – – 49,380
Total
2,043,749 42,546 4,191 (4,191) 2,086,295
*Certain balances have been restated due to a voluntary change in accounting policy. Refer to note 24.
The table below sets out a reconciliation of changes in impairment allowance during the period for each class of financial asset
at the balance sheet date:
Impairment allowance
Opening balance
Impairment
charged during the
year
Impairment
released during
the year
Foreign exchange
and other
movements Total
31 December 2024 $'000 $'000 $'000 $'000 $'000
Debtors arising out of reinsurance operations 3,286 79 – 31 3,396
Reinsurers’ share of outstanding claims 905 – – (34) 871
Total
4,191 79 – (3) 4,267
Impairment allowance
Opening balance
Impairment
charged during the
year
Impairment
released during
the year
Foreign exchange
and other
movements Total
31 December 2023 $'000 $'000 $'000 $'000 $'000
Debtors arising out of reinsurance operations 3,422 – (145) 9 3,286
Reinsurers’ share of outstanding claims 902 – – 3 905
Total
4,324 – (145) 12 4,191
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2 Risk management continued
The table below sets out the age analysis of financial assets that are past due but not impaired at the balance sheet date:
Past due but not impaired assets
0 - 3 months past
due
3 - 6 months past
due
6 - 12 months
past due
Greater than 1
year past due Total
31 December 2024 $'000 $'000 $'000 $'000 $'000
Debtors arising out of direct insurance
operations
20,068 3,820 3,807 1,842 29,537
Debtors arising out of reinsurance operations – 6,386 1,473 4,305 12,164
Total
20,068 10,206 5,280 6,147 41,701
Past due but not impaired assets
0 - 3 months past
due
3 - 6 months past
due
6 - 12 months
past due
Greater than 1
year past due Total
31 December 2023 $'000 $'000 $'000 $'000 $'000
Debtors arising out of direct insurance
operations
25,652 5,056 1,912 1,896 34,516
Debtors arising out of reinsurance operations – 3,441 3,650 939 8,030
Total
25,652 8,497 5,562 2,835 42,546
2.4 Liquidity risk
Liquidity risk arises where cash may not be available to pay obligations when due at a reasonable cost. The syndicate is
exposed to daily calls on its available cash resources, principally from claims arising from its insurance business. In the majority
of the cases, these claims are settled from the premiums received.
The syndicate’s approach is to manage its liquidity position so that it can reasonably survive a significant individual or market
loss event. This means that the syndicate maintains sufficient liquid assets, or assets that can be translated into liquid assets
at short notice and without any significant capital loss, to meet expected cash flow requirements. These liquid funds are
regularly monitored using cash flow forecasting to ensure that surplus funds are invested to achieve a higher rate of return.
The maturity analysis presented in the table below shows the remaining contractual maturities for the syndicate’s insurance
contracts and financial instrument liabilities. For insurance and reinsurance contracts, the contractual maturity is the estimated
date when the gross undiscounted contractually required cash flows will occur. For financial liabilities, it is the earliest date on
which the gross undiscounted cash flows (including contractual interest payments) could be paid assuming conditions are
consistent with those at the reporting date.
Maturity
Carrying
amount
No maturity
stated 0-1 yrs 1-3 yrs 3-5 yrs >5yrs Total
31 December 2024
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Claims outstanding 1,423,896 – 418,936 505,853 269,393 229,714 1,423,896
Derivative liabilities 3,314 – 3,314 – – – 3,314
Creditors 308,320 19,224 289,096 – – – 308,320
Other liabilities 17,743 – 17,743 – – – 17,743
Total
1,753,273 19,224 729,089 505,853 269,393 229,714 1,753,273
Maturity
Carrying
amount
No maturity
stated 0-1 yrs 1-3 yrs 3-5 yrs >5yrs Total
31 December 2023 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Claims outstanding 1,303,922 – 390,176 463,119 243,126 207,501 1,303,922
Derivative liabilities 1,078 – 1,078 – – – 1,078
Creditors 264,012 26,202 237,810 – – – 264,012
Other liabilities 18,775 – 18,775 – – – 18,775
Total
1,587,787 26,202 647,839 463,119 243,126 207,501 1,587,787
Notes to the Syndicate annual accounts continued
38
Beazley | Syndicate 623 Annual report 2024 www.beazley.com
2 Risk management continued
2.5 Capital management
Capital framework at Lloyd’s
The Society of Lloyd’s is a regulated undertaking and subject to the supervision of the Prudential Regulation Authority under the
Financial Services and Markets Act 2000.
Within this supervisory framework, Lloyd’s applies capital requirements at member level and centrally to ensure that Lloyd’s
complies with Solvency II, and beyond that to meet its own financial strength, license and ratings objectives. Although, as
described below, the 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 an overall and member level respectively, not at a
syndicate level. Accordingly the capital requirement in respect of Syndicate 623 is not disclosed in these financial statements.
Lloyd’s capital setting process
In order to meet Lloyd’s requirements, each syndicate is required to calculate its Solvency Capital Requirement (SCR) for the
prospective underwriting year. This amount must be sufficient to cover a 1 in 200 year loss, reflecting uncertainty in the
ultimate run-off of underwriting liabilities (SCR to ultimate). The syndicate must also calculate its SCR at the same confidence
level but reflecting uncertainty over a one year time horizon (one year SCR) for Lloyd’s to use in meeting Solvency II
requirements. The SCRs of each syndicate are subject to review by Lloyd’s and approval by the Lloyd’s Capital and Planning
Group.
A syndicate comprises one or more underwriting members of Lloyd’s. Each member is liable for its own share of underwriting
liabilities on the syndicate(s) on which it participates but not other members’ shares. Accordingly, the capital requirement that
Lloyd’s sets for each member operates on a similar basis. Each member’s SCR shall thus be determined by the sum of the
member’s share of the syndicate SCR ‘to ultimate’. Where a member participates on more than one syndicate, a credit for
diversification is provided to reflect the spread of risk, but consistent with determining an SCR which reflects the capital
requirement to cover a 1 in 200 year loss ‘to ultimate’ for that member. Over and above this, Lloyd’s applies a capital uplift to
the member’s capital requirement, known as the Economic Capital Assessment (‘ECA’). The purpose of this uplift, which is a
Lloyd’s not a solvency II requirement, is to meet Lloyd’s financial strength, license and ratings objectives. The capital uplift
applied for 2024 was 35% (2023: 35%) of the member’s SCR to ultimate.
Provision of capital by members
Each member may provide capital to meet its ECA either by assets held in trust by Lloyd’s specifically for that member (funds at
Lloyd’s), held within and managed within a syndicate (funds in syndicate) and/or as the member’s share of the Solvency II
members’ balances on each syndicate on which it participates.
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39
3 Analysis of underwriting result
Gross premiums
written
Gross premiums
earned
Gross claims
incurred
Net operating
expenses*
Reinsurance
balance
Underwriting
result
2024 $'000 $'000 $'000 $'000 $'000 $'000
Direct Insurance
Third party liability
398,747 428,932 (196,474) (164,122) (39,902) 28,434
Fire and other damage to
property
237,783 233,667 (78,226) (82,134) (34,237) 39,070
Marine, aviation and transport
128,004 105,154 (68,994) (49,062) 10,680 (2,222)
Credit and suretyship
41,388 34,272 (8,423) (15,271) (3,912) 6,666
Total direct insurance
805,922 802,025 (352,117) (310,589) (67,371) 71,948
Reinsurance acceptances
242,791 213,388 (138,809) (70,344) (24,869) (20,634)
Total direct insurance and
reinsurance accepted
1,048,713 1,015,413 (490,926) (380,933) (92,240) 51,314
Gross premiums
written
Gross premiums
earned
Gross claims
incurred
Net operating
expenses
Reinsurance
balance
Underwriting
result
2024 $'000 $'000 $'000 $'000 $'000 $'000
Additional analysis
Fire and damage to property of
which is:
Specialities
17,584 14,366 1,305 (6,630) (5,806) 3,235
Energy
— — — — — —
Third party liability of which is:
Energy
— — — — — —
17,584 14,366 1,305 (6,630) (5,806) 3,235
Gross premiums
written
Gross premiums
earned
Gross claims
incurred
Net operating
expenses*
Reinsurance
balance
Underwriting
result
2023 $'000 $'000 $'000 $'000 $'000 $'000
Direct Insurance
Third party liability 465,764 458,293 (239,271) (140,136) (60,006) 18,880
Fire and other damage to
property 238,522 200,120 (60,397) (60,762) (37,963) 40,998
Marine aviation and transport 71,281 70,223 (21,912) (26,155) 347 22,503
Credit and suretyship 30,792 26,320 7,469 (11,731) (11,669) 10,389
Total direct insurance
806,359 754,956 (314,111) (238,784) (109,291) 92,770
Reinsurance acceptances
168,354 159,837 (36,713) (58,010) (36,716) 28,398
Total direct insurance and
reinsurance accepted
974,713 914,793 (350,824) (296,794) (146,007) 121,168
Gross premiums
written
Gross premiums
earned
Gross claims
incurred
Net operating
expenses
Reinsurance
balance
Underwriting
result
2023 $'000 $'000 $'000 $'000 $'000 $'000
Additional analysis
Fire and damage to property of
which is:
Specialities 10,821 10,471 8,219 (4,464) (10,544) 3,682
Energy — — — — — —
Third party liability of which is:
Energy
— — — — — —
10,821 10,471 8,219 (4,464) (10,544) 3,682
*Included in net operating expenses is income arising from overrider commissions from reinsurance operations of $16,570K
(2023: 23,074K).
Notes to the Syndicate annual accounts continued
40
Beazley | Syndicate 623 Annual report 2024 www.beazley.com
3 Analysis of underwriting result continued
All business was concluded in the UK. No gains or losses were recognised in profit or loss during the year on buying
reinsurance (2023: nil). The gross premiums written by destination of risk is presented in the table below
2024 2023
$'000 $'000
United Kingdom 72,533 56,445
US 402,961 499,942
European Union member states 88,651 64,509
Rest of world 241,777 185,463
Gross premiums written
805,922 806,359
4 Net operating expenses
2024 2023
$'000 $'000
Acquisition costs
255,694 237,398
Change in deferred acquisition costs (4,902) (19,902)
Administrative expenses 127,270 91,336
Members’ standard personal expenses 19,441 11,036
Reinsurance commission and profit participation (16,570) (23,074)
Total
380,933 296,794
Included within administrative expenses are profit commissions payable to the managing agent of $27,703k (2023:$29,435k).
Acquisition costs include commissions for direct insurance business as shown below:
2024 2023
$'000 $'000
Total commission for direct insurance business
196,502 187,268
Administrative expenses include:
2024 2023
$'000 $'000
Fees payable to the syndicate’s auditor for the audit of these syndicate annual accounts 816 743
Other services pursuant to legislation
355 316
Total
1,171 1,059
Fees payable to the syndicate's auditor in relation to other services pursuant to legislation primarily relate to the review and
audit of syndicate regulatory returns along with the statement of actuarial opinion.
5 Key management personnel compensation
The Directors of BFL received the following aggregate remuneration charged to Syndicate 623 and included within net operating
expenses:
2024 2023
$'000 $'000
Directors' emoluments
2,615 1,955
The active underwriter received the following aggregate remuneration charged to Syndicate 623
2024 2023
$'000 $'000
Emoluments 1,095 768
1,095 768
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41
6 Staff costs
The syndicate has no employees. All staff are employed by Beazley Management Limited ('BML'), a related company to the
managing agent, both of which operate within the Beazley Group. The average number of persons employed by BML and working
for the syndicate in some capacity are as follows.
Number of employees
2024 2023
Administration and finance 870 799
Underwriting 239 234
Claims 88 75
Investments 8 8
Total
1,205 1,116
The following amounts were recharged to the syndicate in respect of staff costs:
2024 2023
$'000 $'000
Wages and salaries 32,467 21,805
Social security 11,832 6,771
Pension costs 9,750 5,580
Short-term incentive payments 31,256 14,661
Total
85,305 48,817
7 Investment return
2024 2023
$'000 $'000
Interest and similar income
From financial instruments designated at fair value through profit or loss
Interest and similar income 39,473 26,042
From financial instruments classified at amortised cost
Interest on cash at bank 1,799 850
Other income from investments
From financial instruments designated at fair value through profit or loss
Gains on the realisation of investments 20,152 4,164
Losses on the realisation of investments (4,841) (18,823)
Unrealised gains on investments 46,355 61,403
Unrealised losses on the investments (29,794) (12,824)
Investment management expenses (1,605) (954)
Total investment return
71,539 59,858
Transferred to the technical account from the non-technical account 71,539 59,858
8 Distribution and open years of account
A distribution of $106,544K to members will be proposed in relation to the closing year of account 2022 (2023: distribution of
$104,331K for year of account 2021).
Notes to the Syndicate annual accounts continued
42
Beazley | Syndicate 623 Annual report 2024 www.beazley.com
9 Financial investments
Carrying value Cost
2024 2023 2024 2023
$'000 $'000 $'000 $'000
Shares and other variable yield securities and units in unit
trusts
242,717 185,245 215,749 156,958
Debt securities and other fixed income securities
1,033,543 1,000,007 1,024,197 1,001,509
Participation in investment pools
13,349 8,295 13,240 8,389
Derivative assets
1,955 1,008 — —
Syndicate loans to central fund
5,864 6,800 5,757 6,901
Other investments
67,440 71,288 67,112 71,839
Total financial investments 1,364,868 1,272,643 1,326,055 1,245,596
The table below presents an analysis of financial investments by their measurement classification.
2024 2023
$'000 $'000
Financial assets measured at fair value through profit or loss 1,364,868 1,272,643
Total financial investments 1,364,868 1,272,643
A breakdown of derivative financial instruments is disclosed in note 10 on page 45.
Valuation hierarchy
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair
value hierarchy described as follows, based on the lowest level input that is significant to the fair value measurement as a
whole. If the inputs used to measure the fair value of an asset or a liability could be categorised in different levels of the fair
value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the
lowest level input that is significant to the entire measurement.
Level 1 – Valuations based on quoted prices in active markets for identical instruments. An active market is a market in which
transactions for the instrument occur with sufficient frequency and volume on an ongoing basis such that quoted prices reflect
prices at which an orderly transaction would take place between market participants at the measurement date.
Level 2 – Valuations based on quoted prices in markets that are not active, or based on pricing models for which significant
inputs can be corroborated by observable market data, directly or indirectly (e.g. interest rates, exchange rates). Level 2 inputs
include:
• Quoted prices similar assets and liabilities in active markets;
• Quoted prices for identical or similar assets and liabilities in markets that are not active, the prices are not current, or price
quotations vary substantially either over time or among market makers, or in which little information is released publicly;
• Inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and yield curves
observable at commonly quoted intervals, implied volatilities and credit spreads); and
• Market corroborated inputs. Included within level 2 are government bonds and treasury bills, equity funds and corporate
bonds which are not actively traded, hedge funds and senior secured loans.
Level 3 – Valuations based on inputs that are unobservable or for which there is limited market activity against which to
measure fair value. The availability of financial data can vary for different financial assets and is affected by a wide variety of
factors, including the type of financial instrument, whether it is new and not yet established in the marketplace, and other
characteristics specific to each transaction. To the extent that valuation is based on models or inputs that are unobservable in
the market, the determination of fair value requires more judgement. Accordingly the degree of judgement exercised by
management in determining fair value is greatest for instruments classified in level 3. The syndicate uses prices and inputs that
are current as of the measurement date for valuation of these instruments.
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43
9 Financial investments continued
Valuation approach
The valuation approach for fair value assets and liabilities classified as level 2 is as follows:
(a) For the level 2 debt securities, our fund administrator obtains the prices used in the valuation from independent pricing
vendors. The independent pricing vendors derive an evaluated price from observable market inputs. These inputs are verified in
their pricing assumptions such as weighted average life, discount margins, default rates, and recovery and prepayments
assumptions for mortgage securities.
(b) For our hedge funds, the pricing and valuation of each fund is undertaken by administrators in accordance with each
underlying fund’s valuation policy. Individual fund prices are communicated by the administrators to all investors via the monthly
investor statements. The fair value of the hedge fund portfolios are calculated by reference to the underlying net asset values of
each of the individual funds.
The valuation approach for fair value assets and liabilities classified as level 3 is as follows:
(a) Our illiquid credit fund investments are managed by third party managers (generally closed ended limited partnerships or
open ended funds). While the funds provide full transparency on their underlying investments, the investments themselves are
predominantly in private and unquoted instruments. The valuation techniques used by the fund managers to establish the fair
value of the underlying private/unquoted investments may incorporate discounted cash flow models or a more market-based
approach, whilst the main inputs might include discount rates, fundamental pricing multiples, recent transaction prices, or
comparable market information to create a benchmark multiple.
(b) The syndicate loans are loans provided to the Central Fund at Lloyd’s. These instruments are not tradeable and are valued
using discounted cash flow models, designed to appropriately reflect the credit and illiquidity risk of the instruments.
(c) Certain collateralised loan obligation securities included within "Debt securities and other fixed income securities" have
been classified within level 3. These represent instruments which were issued late in 2024 and have been priced at par,
predominantly as these had not settled at the balance sheet date. As this is deemed to be an unobservable input these have
been classified within level 3. We expect these instruments to move into Level 2 in the near term as these begin to be priced by
our pricing vendors using models with observable market inputs.
The table below shows the fair values of financial instruments at 31 December 2024 and 31 December 2023 , including
their levels in the fair value hierarchy:
Level 1 Level 2 Level 3
Assets held at
amortised
cost Total
2024 $'000 $'000 $'000 $'000
$'000
Shares and other variable yield securities and units in unit
trusts
128,140 114,493 84 – 242,717
Debt securities and other fixed income securities 533,713 489,580 10,250 – 1,033,543
Participation in investment pools 13,349 – – – 13,349
Derivative assets 1,955 – – – 1,955
Syndicate loans to central fund – – 5,864 – 5,864
Other investments 67,440 – – – 67,440
Total financial investments
744,597 604,073 16,198 – 1,364,868
Derivative financial liabilities (3,314) – – – (3,314)
Total
741,283 604,073 16,198 – 1,361,554
Notes to the Syndicate annual accounts continued
44
Beazley | Syndicate 623 Annual report 2024 www.beazley.com
9 Financial investments continued
Level 1 Level 2 Level 3
Assets held at
amortised
cost
Total
2023 $'000 $'000 $'000
$'000 $'000
Shares and other variable yield securities and units in unit
trusts
98,917 82,580 3,748 — 185,245
Debt securities and other fixed income securities 563,424 436,583 — — 1,000,007
Participation in investment pools 8,295 — — — 8,295
Derivative assets 1,008 — — — 1,008
Syndicate loans to central fund — — 6,800 — 6,800
Other investments 71,288 — — — 71,288
Total financial investments 742,932 519,163 10,548 — 1,272,643
Derivative financial liabilities (1,078) — — — (1,078)
Total 741,854 519,163 10,548 — 1,271,565
Transfers between levels in the fair value hierarchy are determined by assessing the categorisation at the end of the reporting
period. The following transfers between levels 1 & 2 for the year ended 31 December 2024 reflect the level of trading activities
including frequency and volume derived from market data obtained from an independent external valuation tool. There were no
transfers into or out of level 3 in the year ended 31 December 2024 (2023: nil).
Level 1 Level 2
31 December 2024 vs 31 December 2023 transfer from level 1 to level 2 $'000 $'000
Debt securities and other fixed income securities
(70,667) 70,667
Level 1 Level 2
31 December 2024 vs 31 December 2023 transfer from level 2 to level 1 $'000 $'000
Debt securities and other fixed income securities
57,404 (57,404)
Additional information is obtained from fund managers relating to the underlying assets within individual hedge funds. The
syndicate identified that 80% (2023: 75%) of these underlying assets were level 1 and the remainder level 2. If the inputs used
to measure the fair value of an asset or a liability could be categorised in different levels of fair value hierarchy, then the fair
value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is
significant to the entire measurement. This enabled us to categorise hedge funds as level 2.
10 Derivative financial instruments
In 2024 and 2023, the syndicate entered into over-the-counter and exchange traded derivative contracts in order to
economically hedge the foreign currency exposure resulting from transactions and balances held in currencies that are different
to the functional currency of the syndicate. The syndicate had the right and intention to settle each contract on a net basis.
2024 2023
Notional Notional
contract contract
amount Fair value amount Fair value
Derivative financial instruments
$'000 $'000 $'000 $'000
Foreign exchange forward contract - assets 85,085 1,955 68,000 1,008
Foreign exchange forward contract - liabilities 111,939 3,314 75,100 1,079
www.beazley.com Beazley | Syndicate 623 Annual report 2024
45
11 Debtors arising out of direct insurance operations
2024 2023
$'000 $'000
Due within one year 329,973 307,376
Due after one year 110 45
330,083 307,421
12 Debtors arising out of reinsurance operations
2024 2023
$'000 $'000
Due within one year
124,178 83,474
Due after one year
— —
124,178 83,474
13 Other debtors
2024
2023
*restated
$'000 $'000
Inter-syndicate balances
Amount due from syndicate 4321 263 168
Amount due from syndicate 5623 4,270 226
Total Inter-syndicate balances 4,533 394
Other 32,648 34,584
37,181 34,978
*Certain balances have been restated due to a voluntary change in accounting policy. Refer to note 24.
The balances listed above are due within one year.
14 Cash and cash equivalents
2024 2023
$'000 $'000
Cash at bank and in hand 40,887 6,604
Short term debt instruments presented within financial investments 13,349 8,296
54,236 14,900
Cash at bank and in hand includes $18.8m (2023:$2.2m) held in Lloyd's Singapore trust accounts which is only available for
use by the syndicate to meet local claim and expense obligations.
Short term deposits disclosed in this table are included within financial investments. Included within cash and cash equivalents
are the following amounts which are not available for use by the syndicate as they are held for regulatory purposes.
2024 2023
$'000 $'000
Short term debt instruments presented within other financial investments
13,349 8,296
Total cash and cash equivalents not available for use by the syndicate
13,349 8,296
15 Deferred acquisition costs
2024 2023
Gross Reinsurance Net
Gross Reinsurance Net
$'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 January
117,230
(10,469) 106,761 96,896 (15,584) 81,312
Incurred deferred acquisition costs
255,694
(5,148) 250,546 237,398 (8,612) 76,607
Amortised deferred acquisition costs
(250,792)
9,161 (241,631) (217,496) 13,759 (51,602)
Foreign exchange movements
(142) 1
(141) 432 (32) 444
Balance at 31 December
121,990 (6,455) 115,535 117,230 (10,469) 106,761
Notes to the Syndicate annual accounts continued
46
Beazley | Syndicate 623 Annual report 2024 www.beazley.com
16 Analysis of net debt
All amounts in $'000 At 1 January 2024 Cash flows Acquired
Fair value and
exchange
movements
Non-cash changes
At 31 December
2024
Cash at bank and in hand 6,604 34,266 — 17 — 40,887
Short term deposits 8,296 5,347 — (294) — 13,349
Cash and cash equivalents 14,900 39,613 — (277) — 54,236
Derivative financial liabilities (1,078) 1,078 — — (3,314) (3,314)
Total 13,822 40,691 — (277) (3,314) 50,922
All amounts in $'000 At 1 January 2023 Cash flows Acquired
Fair value and
exchange
movements
Non-cash changes
At 31 December
2023
Cash at bank and in hand 19,870 (13,352) — 86 — 6,604
Short term deposits 2,888 5,392 — 16 — 8,296
Cash and cash equivalents 22,758 (7,960) — 102 — 14,900
Derivative financial liabilities (2,473) 2,473 — — (1,078) (1,078)
Total 20,285 (5,487) — 102 (1,078) 13,822
17 Technical Provisions
The table below shows the changes in the insurance contract liabilities and assets from the beginning of the period to the end
of the period.
2024 2023
Gross Provisions
Reinsurance
assets Net
Gross
Provisions
Reinsurance
assets Net
Claims outstanding
$'000
$'000
$'000
$'000
$'000
$'000
Balance at 1 January 1,303,922 (365,017) 938,905 1,292,729 (409,647) 883,082
Claims paid during the year (368,591) 68,418 (300,173) (345,469) 78,737 (266,732)
Expected cost of current year claims 539,779 (100,771) 439,008 478,004 (101,130) 376,874
Change in estimates of prior year
provisions
(48,853) 22,448 (26,405) (127,180) 68,378 (58,802)
Effects of movements in exchange rate (2,361) 445 (1,916) 5,838 (1,355) 4,483
Balance at 31 December
1,423,896 (374,477)
1,049,419
1,303,922 (365,017) 938,905
2024 2023
Gross Provisions
Reinsurance
assets Net
Gross
Provisions
Reinsurance
assets Net
Unearned premiums
$'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 January 510,038 (82,892) 427,146 448,654 (103,328) 345,326
Premium written during the year 1,048,713 (175,161) 873,552 974,713 (158,040) 816,673
Premiums earned during the year (1,015,413) 170,563 (844,850) (914,793) 178,759 (736,034)
Effect of movements in exchange rate (607) (6) (613) 1,464 (283) 1,181
Balance at 31 December
542,731 (87,496) 455,235
510,038 (82,892) 427,146
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17 Technical Provisions continued
The following tables illustrate the development of the estimates of ultimate cumulative claims incurred, including claims notified
and IBNR, for each successive underwriting year, illustrating how amounts estimated have changed from the first estimates
made.
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Total
Gross amounts
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
$'000
12 months
228,912 246,310 316,289 314,430 326,156 398,277 458,778 542,861 558,118 604,990
24 months
217,005 244,825 321,990 335,310 385,773 442,847 501,138 470,212 494,911
36 months
202,850 233,151 329,888 355,256 363,964 459,933 439,238 454,961
48 months
194,871 225,713 322,423 352,446 366,027 420,672 413,127
60 months
193,754 221,325 324,980 360,370 359,200 411,631
72 months
204,846 219,913 333,162 366,668 366,033
84 months
209,099 220,975 330,256 365,702
96 months
212,227 228,502 333,319
108 months
207,429 231,145
120 months
206,292
Total ultimate losses
206,292 231,145 333,319 365,702 366,033 411,631 413,127 454,961 494,911 604,990 3,882,111
Provision in respect of prior
years (2014 and earlier)
34,900
Less gross claims paid
(193,182) (205,599) (303,905) (316,089) (290,377) (299,388) (201,045) (180,852) (99,531) (19,962) (2,109,930)
Gross claims reserves
(unearned)
13,110 25,546 29,414 49,613 75,656 112,243 212,082 274,109 395,380 585,028 1,807,081
Less unearned portion of
ultimate losses
— — — — — — (10,227) (14,140) (35,965) (322,853) (383,185)
Gross claims reserves
13,110 25,546 29,414 49,613 75,656 112,243 201,855 259,969 359,415 262,175 1,423,896
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Total
Net amounts
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
$'000
12 months
178,360 193,339 245,618 252,630 259,791 304,469 344,348 378,707 461,139 504,078
24 months
172,628 194,307 252,766 262,334 299,833 331,398 365,182 338,862 411,142
36 months
162,191 188,185 255,597 280,075 279,978 327,286 325,646 335,486
48 months
155,021 181,717 250,113 273,260 278,808 321,056 310,394
60 months
153,112 174,760 249,137 272,337 275,163 314,493
72 months
156,114 172,046 251,745 273,605 275,108
84 months
157,184 171,276 251,708 276,812
96 months
158,670 172,518 250,467
108 months
156,862 179,724
120 months
155,823
Total ultimate losses
155,823 179,724 250,467 276,812 275,108 314,493 310,394 335,486 411,142 504,078 3,013,527
Provision in respect of prior
years (2014 and earlier)
28,800
Less net claims paid
(154,162) (165,515) (239,437) (248,838) (227,198) (225,666) (157,012) (147,652) (86,434) (17,599)
(1,669,513)
Net claims reserves
(unearned)
1,661 14,209 11,030 27,974 47,910 88,827 153,382 187,834 324,708 486,479 1,372,814
Less unearned portion of
ultimate losses
— — — — — — (5,674) (9,521) (29,890) (278,310) (323,395)
Net claims reserves
1,661 14,209 11,030 27,974 47,910 88,827 147,708 178,313 294,818 208,169 1,049,419
Notes to the Syndicate annual accounts continued
48
Beazley | Syndicate 623 Annual report 2024 www.beazley.com
18 Creditors arising out of direct insurance operations
2024 2022
$'000 $'000
Due within one year
2,876 2,459
Due after one year
— —
2,876 2,459
19 Creditors arising out of reinsurance operations
2023 2022
$'000 $'000
Due within one year
117,492 106,274
Due after one year
— —
117,492 106,274
20 Other creditors
2024 2023
$'000 $'000
Inter-syndicate balances
Due to syndicate 2623 1,973 6,872
Due to syndicate 3623 4,314 296
Due to syndicate 6107 12,937 19,034
Total inter-syndicate balances 19,224 26,202
Profit commissions payable 68,341 40,638
Other related party balances (non-syndicate) 78,757 87,224
Derivative liabilities 3,314 1,078
Other liabilities 21,630 1,215
Total other creditors 191,266 156,357
The above other creditors balances are payable within one year with the exception of profit commissions which are payable
once the related YOA closes. Profit commissions of $45,203k (2023: $26,999K) are payable within one year, with the
remaining balance payable after one year.
21 Related parties transactions
Beazley Furlonge Limited ('BFL'), the managing agent of Syndicate 623, is a wholly-owned subsidiary of Beazley plc. The
Directors of BFL who have participated in syndicate 623 indirectly through Beazley Staff Underwriting Limited are disclosed in
the managing agent’s report on page 16.
Certain Directors of BFL have shareholdings in Beazley plc which provides capacity for Syndicates 2623, 3622, 3623, 4321
and 5623. Syndicate 623 writes in parallel with Syndicate 2623.
Beazley plc has the following service companies ('managing general agents'), which underwrite on behalf of Syndicates 623 and
2623 (the ‘syndicates’) and write business either directly for the syndicates or via Lloyd’s Brussels:
• Beazley Solutions Limited – (UK & Europe);
• Beazley Solutions International Limited – (Europe);
• Beazley USA Services, Inc. – (USA);
• Beazley Canada Limited – (Canada);
• Beazley Pte Limited – (Singapore); and
• Beazley Labuan Limited – (Malaysia).
The syndicates are charged commissions for the type of business underwritten by these companies. The commission is based
on the costs incurred by these service companies in generating and servicing the business on behalf of the syndicates. As
Beazley plc owns 100% of the share capital, it could receive profits from these entities in the future from the business
underwritten by the names on Syndicate 623.
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21 Related parties transactions continued
The syndicate is charged fees from BFL in respect of management services provided. Both Beazley Management Limited and
BFL, the managing agent of the syndicate, are ultimately controlled by Beazley plc.
Since 2010, Syndicate 623, alongside Syndicate 2623, has ceded part of its international reinsurance account to Syndicate
6107 at Lloyd's, and since 2017 has also ceded part of its cyber business to Syndicate 6107. Syndicate 6107 is a special
purpose syndicate managed by BFL and commissions are received by the syndicate in respect of these transactions.
The intercompany positions with other syndicates managed by BFL at 31 December 2024 are disclosed above in note 13 and
note 20.
The syndicate, alongside Syndicate 2623, has written a new intra-group quota-share reinsurance contract with Bidac which
incepted 1 January 2024. The contract reinsures business from syndicate 623 and 2623 to Bidac.
The total amount due to Bidac at 2024 year end was $3,420k. Outward reinsurance premiums of $26,066k and reinsurers
share of claims paid of $1,628k were recognised in the year.
Beazley has a 25% equity interest in Falcon Money Management Holdings Limited ('Falcon'), an investment management
company. Syndicate 623 invests in certain funds managed by Falcon, as part of which management fees are deducted.
Profit related remuneration for Syndicate 623’s underwriting staff is charged to the syndicate. At the balance sheet date, the
syndicate has amounts due (to)/from the managing agent of $(21,709)k (2023: $657k). In addition to this amount, the
syndicate is also carrying a profit commission payable to the managing agent of $68,341k (2023: $40,638k).
The managing agent recharged expenses and fees of $159,252k (2023: $104,253k) to the syndicate in the current year.
BFL as the managing agent of the syndicate is responsible for settling intercompany balances with other managed syndicates
and net amounts due to/from other related entities.
22 Subsequent events
The syndicate was impacted by the California wildfires which occurred in January 2025. The impact is not expected to be
material. The managing agent continues to monitor the impact and record this ins 2025.
The proposed distribution to members is disclosed in note 8.
23 Funds at Lloyd's
Every member is required to hold capital at Lloyd’s which is held in trust and known as Funds at Lloyd’s (‘FAL’). These funds are
intended primarily to cover circumstances where syndicate assets prove insufficient to meet participating members’
underwriting liabilities. The level of FAL that Lloyd’s requires a member to maintain is determined by Lloyd’s based on Prudential
Regulatory Authority requirements and resource criteria. The determination of FAL has regard to a number of factors including
the nature and amount of risk to be underwritten by the member and the assessment of the reserving risk in respect of
business that has been underwritten. Since FAL is not under the management of the managing agent, no amount has been
shown in these Financial Statements by way of such capital resources. However, the managing agent is able to make a call on
the Member’s FAL to meet liquidity requirements or to settle losses.
24 Changes in accounting policies - presentation
The 2023 syndicate accounts were prepared in line with the relevant accounting standards and regulatory requirements and
received an unqualified audit opinion from the syndicate’s auditor. However, the managing agent has voluntarily elected to
enact certain changes in accounting policy relating to the presentation of various items in the financial statements for this
syndicate for the year ended 31 December 2024. The changes are intended to align the presentation of the syndicate’s
accounts with the proforma disclosures set out by Lloyd's during the year as part of their effort to rationalise and standardise
reporting across the Lloyd’s market. These changes have been applied on a retrospective basis and have no impact on the
measurement of assets or liabilities, reported profit or the combined ratio. Further details of each change have been included
below. This has impacted certain comparative notes also.
Balance sheet reclassification
The amounts under financial liabilities have been reclassified to the other creditors. This change is purely presentational.
Notes to the Syndicate annual accounts continued
50
Beazley | Syndicate 623 Annual report 2024 www.beazley.com
24 Changes in accounting policies - presentation continued
Members’ agent fees
Members agent fees are typically funded by the syndicate and then recouped at the time the YOA closes. Historically, the
syndicate has treated these as a separate receivable (recognised within Other debtors on the balance sheet), whereas the
managing agent now presents these as a deficit to members balances. This change in policy has no impact on the settlement
of a YOA and is entirely presentational.
Cash flow statement – presentation and classification
The managing agent has elected to change the presentation and classification of several lines within the cash flow statement in
order to align with the proforma disclosures set out by Lloyd’s. These changes can be summarised as follows:
• Several lines are now combined under a single heading (Movement in other assets/liabilities) where previously these were
presented separately.
• Purchases and sales of equities are now presented separately where historically these have been combined.
• Foreign exchange amounts have been reclassified from investing to operating activities and presented separately.
• Transfer from/to members in respect of underwriting operations has been disaggregated where previously the total movement
was presented under one line.
The impact of this change of accounting policy on financial statement line items if the old accounting policy had been applied is
demonstrated below:
Previously
disclosed
Adjustment Adjustment
Restated
Balance sheet
Members’ agent
fees
Financial
liabilities
$'000 $'000 $'000 $'000
Other debtors
47,940 (12,962) — 34,978
Total assets 2,299,379 (12,962) — 2,286,417
Members’ balances
201,554 (12,962) — 188,592
Total capital and reserves 201,554 (12,962) — 188,592
Other creditors
155,279 — 1,078 156,357
Financial liabilities
1,078 — (1,078) —
Total liabilities 2,097,825 — — 2,097,825
Previously
disclosed
Adjustment Adjustment
Restated
Statement of changes in members' balances
Members’ agent
fees
Financial
liabilities
$'000 $'000 $'000 $'000
Members' balances brought forward at 1 January
12,455 (12,638) — (183)
Loss collected on closure of underwriting year
8,287 4,471 — 12,758
Member agent fees
— (4,628) — (4,628)
Other
— (167) — (167)
Members' balances carried forward at 31 December 201,554 (12,962) — 188,592
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24 Changes in accounting policies - presentation continued
Statement of cash flows
Previously disclosed
Adjustment
Restated
$'000 $'000 $'000
Increase/decrease in deposits with ceded undertakings
(575) 575 —
Increase/decrease in debtors, prepayments and accrued income
(35,550) 5,878 (29,672)
Increase in net technical provisions
137,643 (137,643) —
Increase/(decrease) in gross technical provisions
— 72,577 72,577
(Increase)/decrease in reinsurers' share of gross technical
provisions
— 65,066 65,066
Increase/decrease in deferred acquisition costs
(20,280) 20,280 —
Increase/decrease in creditors, accruals and deferred income
19,899 6,507 26,406
Movement in other assets/liabilities
— (34,311) (34,311)
Foreign exchange
— (102) (102)
Net cash flows from operating activities 222,091 (1,173) 220,918
Net purchase of investments
(249,617) 249,617 —
Purchase of equity and debt securities
— (1,035,810) (1,035,810)
Sale of equity and debt securities
— 787,690 787,690
Net cash flows from investment activities (238,338) 1,497 (236,841)
Transfer to/from members in respect of underwriting
participations
8,287 (8,287) —
Collection of losses
— 12,758 12,758
Other
— (4,795) (4,795)
Net cash flows from financing activities 8,287 (324) 7,963
Net increase/(decrease) in cash and cash equivalents (7,960) — (7,960)
Cash and cash equivalents at the end of the year 14,900 — 14,900
25 Foreign exchange rates
The syndicate used the following exchange rates to translate foreign currency assets, liabilities, income and expenses into US
dollars, being the syndicate’s presentational currency:
2024 2023
Start of period End of period Average rate Start of period End of period Average rate
Sterling 0.80 0.78 0.78 0.82 0.80 0.81
Euro 0.93 0.95 0.92 0.95 0.93 0.93
US dollar 1.00 1.00 1.00 1.00 1.00 1.00
Canadian dollar 1.36 1.41 1.36 1.37 1.36 1.35
Australian dollar 1.52 1.57 1.51 1.48 1.52 1.51
Notes to the Syndicate annual accounts continued
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Beazley | Syndicate 623 Annual report 2024 www.beazley.com
2022 underwriting
year of account for
Syndicate 623
54
Managing agent’s report
55
Statement of managing agent’s responsibilities
56
Independent auditor’s report to the members of
Syndicate 623 – 2022 closed year of account
59
Profit or loss account
60
Statement of changes in members balances
61
Balance sheet
62
Cash flow statement
63
Notes to the syndicate underwriting year of
accounts
69
Seven year summary of closed year results at
31 December 2024
70
Managing agent's corporate information
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53
Managing agent’s report
The syndicate underwriting year accounts have been prepared under the Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008 (the ‘Lloyd’s Regulations’) and in accordance with the Syndicate Accounting Byelaw
(No.9 of 2005), including Financial Reporting Standard 102 (FRS 102) and 103 Insurance Contracts (FRS 103) in accordance
with the provisions of Schedule 3 of the Large and Medium-size Companies and Groups (Accounts and Reports) Regulations
relating to insurance companies.
Members participate on a syndicate by reference to a year of account ('YOA') and each syndicate YOA is a separate annual
venture. These accounts relate to the 2022 YOA which has been closed by reinsurance to close at 31 December 2024;
consequently the balance sheet represents the assets and liabilities of the 2022 YOA and the profit or loss account reflects the
transactions for that YOA during the 36 months period until closure. The 2022 closed YOA profit of $106.5m includes a
reinsurance to close surplus from the 2021 YOA of $3.2m (note 6). The profit on the 2022 YOA represents a return on capacity
of 14.2% and includes the impact of personal members expenses of $3.7m. Return on capacity excluding these expenses
would be 14.7%.
Principal activity
The principal activity of Syndicate 623 is the transaction of a range of specialised insurance business at Lloyd’s, including the
underwriting of professional indemnity, cyber liability, property, marine, reinsurance, accident and life, and political risks and
contingency business.
Directors
A list of Directors of the managing agent who held office during the current year can be found on page 70 of the syndicate
annual accounts.
Disclosure of information to the auditor
The Directors of the managing agent who held office at the date of approval of this managing agent’s 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.
Auditor
Pursuant to Section 14(2) of Schedule 1 of the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008, the auditor will be deemed to be reappointed and Ernst & Young LLP will therefore continue in office.
On behalf of the Board
C C J Wong
Chief Financial Officer
5 March 2025
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Beazley | Syndicate 623 Annual report 2024 www.beazley.com
Statement of 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 By law. 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
YOA, ensure a treatment which is equitable between the members of the syndicate affected is used;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable 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.
On behalf of the Board
C C J Wong
Chief Financial Officer
5 March 2025
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55
Independent auditor’s report to the members
of Syndicate 623 2022 closed year of account
Opinion
We have audited the syndicate underwriting year accounts for the 2022 year of account of syndicate 623 (‘the syndicate’) for
the three years ended 31 December 2024 which comprise the Statement of Comprehensive Income, the Statement of
Members’ Balances, Balance Sheet, the Statement of Cash Flows and the related notes 1 to 16, including a summary of
significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law
and United Kingdom Accounting Standards including FRS 102 “The Financial Reporting Standard applicable in the UK and
Republic of Ireland” and FRS 103 “Insurance Contracts” (United Kingdom Generally Accepted Accounting Practice).
In our opinion, the syndicate underwriting year accounts:
• give a true and fair view of the profit for the 2022 closed year of account;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of The Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008 and have been properly prepared in accordance with 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 under those standards are further described in the Auditor’s responsibilities for the audit of the syndicate
underwriting year accounts section of our report. We are independent of the syndicate in accordance with the ethical
requirements that are relevant to our audit of the syndicate underwriting year accounts in the UK, including the FRC’s Ethical
Standard as applied to other entities of public interest, and we have fulfilled our other ethical responsibilities in accordance
with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of matter – closure of the 2022 year of account
We draw attention to the Note 1 which explains that the 2022 year of account of syndicate 623 has closed and all assets and
liabilities transferred to the 2023 year of account by reinsurance to close at 31 December 2024.
As a result, the syndicate underwriting year accounts for the 2022 year of account of syndicate 623 have been prepared under
basis other than going concern.
Our opinion is not modified in respect of this matter.
Other information
The other information comprises the information included in the Underwriting Year report and accounts, other than the
syndicate underwriting year accounts and our auditor’s report thereon. The managing agent is responsible for the other
information contained within the Underwriting Year report and accounts.
Our opinion on the syndicate underwriting year accounts does not cover the other information and, except to the extent
otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the syndicate underwriting year accounts or our knowledge obtained in the course of the audit or otherwise
appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material misstatement in the syndicate underwriting year accounts
themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other
information, we are required to report that fact.
We have nothing to report in this regard.
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Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where The Lloyd’s Syndicate Accounting Byelaw (no. 8 of 2005)
requires us to report to you, if in our opinion:
• the managing agent in respect of the syndicate has not kept adequate accounting records; or
• the syndicate underwriting year accounts are not in agreement with the accounting records.
Responsibilities of the managing agent
As explained more fully in the Statement of Managing Agent’s Responsibilities set out on page 55, the managing agent is
responsible for the preparation of 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 (no. 8 of 2005)
and for being satisfied that they give a true and fair view, and for such internal control as the managing agent determines is
necessary to enable the preparation of the syndicate underwriting year accounts that are free from material misstatement,
whether due to fraud or error.
In preparing the syndicate underwriting year accounts, the managing agent is responsible for assessing the syndicate’s ability
to realise its assets and discharge its liabilities in the normal course of business, disclosing, as applicable, any matters that
impact its ability to do so.
Auditor’s responsibilities for the audit of the Syndicate underwriting year accounts
Our objectives are to obtain reasonable assurance about whether the syndicate underwriting year accounts as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK)
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these syndicate underwriting year accounts.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including fraud. 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. However, the
primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the managing
agent and management.
Our approach was as follows:
• We obtained a general understanding of the legal and regulatory frameworks that are applicable to the syndicate and
determined that the most significant are direct laws and regulations related to elements of Lloyd’s Byelaws and Regulations,
and the financial reporting framework (UKGAAP) and requirements referred to by Lloyd’s in the Instructions. Our
considerations of other laws and regulations that may have a material effect on the syndicate underwriting year accounts
included permissions and supervisory requirements of Lloyd’s of London, the Prudential Regulation Authority (‘PRA’) and the
Financial Conduct Authority (‘FCA’).
• We obtained a general understanding of how the syndicate is complying with those frameworks by making enquiries of
management, internal audit, and those responsible for legal and compliance matters of the syndicate. In assessing the
effectiveness of the control environment, we also reviewed significant correspondence between the syndicate, Lloyd’s of
London and other UK regulatory bodies; reviewed minutes of the Board and Risk Committee of the managing agent; and
gained an understanding of the managing agent’s approach to governance.
• For direct laws and regulations, we considered the extent of compliance with those laws and regulations as part of our
procedures on the related syndicate underwriting year accounts’ items.
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57
Independent auditor’s report to the members
of Syndicate 623 2022 closed year of account continued
• For both direct and other laws and regulations, our procedures involved: making enquiries of the directors of the managing
agent and senior management for their awareness of any non-compliance of laws or regulations, enquiring about the policies
that have been established to prevent non-compliance with laws and regulations by officers and employees, enquiring about
the managing agent’s methods of enforcing and monitoring compliance with such policies, and inspecting significant
correspondence with Lloyd’s, the FCA and the PRA, and involvement of relevant specialists, including forensics specialists
and inquiring about the appointment of external advisers, including legal counsel, as applicable.
• The syndicate operates in the insurance industry which is a highly regulated environment. As such the Senior Statutory
Auditor considered the experience and expertise of the engagement team to ensure that the team had the appropriate
competence and capabilities, which included the use of specialists where appropriate.
• We assessed the susceptibility of the syndicate’s underwriting year accounts to material misstatement, including how fraud
might occur by considering the controls that the managing agent has established to address risks identified by the managing
agent, or that otherwise seek to prevent, deter, or detect fraud. We also considered areas of significant judgement, complex
transactions, performance targets, economic or external pressures and the impact these have on the control environment.
Where this risk was considered to be higher, we performed audit procedures to address each identified fraud risk including,
– Reviewing accounting estimates for evidence of management bias. Supported by our Actuaries we assessed if there were
any indicators of management bias in the valuation of insurance liabilities and the recognition of estimated premium
income.
– Evaluating the business rationale for significant and/or unusual transactions.
• These procedures included testing manual journals and were designed to provide reasonable assurance that the syndicate
underwriting year accounts were free from fraud or error.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the syndicate’s members, as a body, in accordance with The Lloyd’s Syndicate Accounting Byelaw
(no. 8 of 2005) and The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008. Our audit
work has been undertaken so that we might state to the syndicate’s members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the syndicate and the syndicate’s members as a body, for our audit work, for this report, or
for the opinions we have formed.
Niamh Byrne (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
5 March 2025
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Beazley | Syndicate 623 Annual report 2024 www.beazley.com
Profit or loss account
2022 year of account for the 36 months ended 31 December 2024
Notes
2022 year
of account
$m
Gross premiums written 3 858.0
Outward reinsurance premiums (198.0)
Earned premiums, net of reinsurance 660.0
Allocated investment return transferred from the non-technical account 42.6
Reinsurance to close premiums received, net of reinsurance 4 500.0
Investment return and reinsurance adjusted premium 542.6
Reinsurance to close premiums payable, net of reinsurance 5 (550.9)
Gross claims paid (359.2)
Reinsurers’ share 74.7
Claims incurred, net of reinsurance (835.4)
Net operating expenses 7 (260.2)
Balance on the technical account 107.0
Investment income 30.5
Investment expenses and charges 11 (1.2)
Realised gain on investments 3.4
Unrealised gain on investments 9.9
Net investment return
42.6
Allocated investment return transferred to the technical account (42.6)
Other income 0.2
Loss on foreign exchange (0.7)
Profit for the 2022 closed YOA
6
106.5
Syndicate allocated capacity (£m) 587.3
Profit for the 2022 closed YOA (£m) 83.6
Return on capacity 14.2 %
There were no other comprehensive gains or losses in the accounting period.
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59
Statement of changes in members’ balances
for the year ended 31 December 2024
2022 year
of account
$'m
Profit for the 2022 closed YOA 106.5
Amounts due to members at 31 December 2024 106.5
Members participate in syndicates by reference to YOA and their ultimate result, assets and liabilities are assessed with
reference to policies incepting in that YOA in respect of their membership of a particular year.
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Beazley | Syndicate 623 Annual report 2024 www.beazley.com
Balance sheet
closed at 31 December 2024
Notes
2022 year
of account
$'m
Assets
Financial investments 12 678.5
Deposits with ceding undertakings 0.8
Debtors 13 11.8
Reinsurance recoveries anticipated on gross reinsurance
to close premiums payable to close the account
5 260.4
Cash at bank and in hand 21.5
Prepayments and accrued income 9.1
Deferred acquisition costs 6.4
Total assets
988.5
Members' balances and liabilities
Members' balances
Amounts due to members 14 106.5
Liabilities
Reinsurance to close premium payable to close the account – gross amount 5 824.0
Creditors 15 53.9
Accruals and deferred income 4.1
Total liabilities
988.5
The underwriting year accounts on pages 59 to 68 were approved by the Board of Directors on 5 March 2025 and were signed
on its behalf by:
P J Bantick
Director
C C J Wong
Chief Financial Officer
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61
Cash flow statement
2022 year of account for the 36 months ended 31 December 2024
2022 year
of account
$'m
Cash flows from operating activities
Total comprehensive income for 2022 YOA 106.5
Increase in gross technical provisions 824.0
Increase in reinsurers' share of gross technical provisions (260.4)
Increase in debtors (11.8)
Movement in other assets/liabilities (12.2)
Increase in creditors 53.9
Investment return (42.6)
Net cash flow from operating activities 657.4
Cash flows from investing activities
Purchase of equity and debt securities (678.5)
Investment income received 42.6
Net cash flow from investing activities (635.9)
Cash flows from financing activities
Net cash flow from financing activities
—
Net increase in cash and cash equivalents
21.5
Cash and cash equivalents at the beginning of the year 2022 —
Foreign exchange on cash and cash equivalents —
Cash and cash equivalents at the end of the year 2022
21.5
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Beazley | Syndicate 623 Annual report 2024 www.beazley.com
1 Accounting policies
Basis of preparation
These underwriting accounts have been prepared in accordance with the Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008 (‘the Regulations’) and applicable Accounting Standards in the United Kingdom,
including Financial Reporting Standard 102 ('FRS 102') and Insurance Contracts ('FRS 103'). They have also been prepared in
accordance with Lloyd’s Syndicate Accounting Byelaw (N.8 of 2005) and in accordance with the provisions of Schedule 3 of the
Large and Medium-size Companies and Groups (Accounts and Reports) Regulations relating to insurance companies.
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 2022 YOA which closed on 31 December 2024. The accumulated profits of the 2022 YOA will be distributed shortly after
publication of these accounts. Therefore the 2022 YOA is not continuing to trade and, accordingly, the Directors have not
adopted the going concern basis in the preparation of these accounts. The amounts reported would be identical if the accounts
had been prepared on a going concern basis as the 2022 YOA will be closed by payment of a reinsurance to close premium, as
outlined in note (a) below, which is consistent with the normal course of business for a Lloyd’s syndicate and with the approach
applied to earlier underwriting years.
The principal accounting policies applied in the preparation of these underwriting accounts are set out below. The policies have
been consistently applied to all periods presented, unless otherwise stated. All amounts presented are stated in US dollars,
being the syndicate’s functional currency, and in millions, unless noted otherwise.
Underwriting transactions
(a) The underwriting accounts for each YOA are normally kept open for three years before the result of that year is determined.
At the end of the three-year period, outstanding liabilities can normally be determined with sufficient accuracy to permit the
YOA to be closed by payment of a reinsurance to close premium to the successor YOA.
(b) Gross premiums are allocated to YOA on the basis of the inception date of the policy. Commission and brokerage are
charged to the YOA to which the relevant policy is allocated. Policies written under binding authorities, lineslips or
consortium arrangements are allocated to the YOA into which the arrangement incepts. Additional and return premiums
follow the YOA of the original premium. Premiums in respect of reinsurance ceded are attributed to the same year as the
original risk being protected. Gross premiums are stated before the deduction of brokerage, taxes and duties levied on
them. Estimates are made for pipeline premiums, representing amounts due to the syndicate not yet notified.
(c) Gross claims paid are allocated to the same YOA that to which the corresponding premiums are allocated and include
internal and external claims settlement expenses. Reinsurance recoveries are allocated to the YOA to which the claim was
charged.
(d) The reinsurance to close premium is determined by reference to outstanding liabilities, including claims incurred but not yet
reported, relating to the closed year and to all previous closed years reinsured therein. Although the estimate of net
outstanding liabilities is considered to be fair and reasonable, it is implicit in the estimation procedure that the ultimate
liabilities will be at variance from the premium so determined. The reinsurance to close premium includes a provision for
unearned premiums and unexpired risks at the balance sheet date, net of deferred acquisition costs.
(e) Please refer to note 1 Accounting policies in Syndicate 623 annual accounts for details around measurement of insurance
contracts.
Comparatives
(f) Comparatives are not provided in these syndicate underwriting year accounts as each syndicate YOA is a separate annual
venture.
Investment return
(g) Investment return comprises investment income, realised investment gains and losses and movements in unrealised gains
and losses, net of investment expenses, charges and interest. Investment return arising in each calendar year is allocated
to years of account in proportion to the average funds available for investment attributable to those years. Investment
returns in respect of overseas deposits are allocated to the YOA which funded these deposits.
Notes to the syndicate underwriting year accounts
closed at 31 December 2024
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63
1 Accounting policies continued
(h) The investment return is wholly allocated to the technical account.
(i) Investments are valued at market value at the balance sheet date. Movements in unrealised gains and losses on
investments represent the difference between the valuation at the balance sheet date, and the valuation at the previous
period end or purchase value during the period.
Syndicate operating expenses
(j) Acquisition costs comprise brokerage, premium levies, and staff related costs of the underwriters acquiring the business.
Costs incurred by the managing agent in respect of the syndicate are charged to the syndicate. Where expenses do not
relate to any specific YOA they are apportioned between YOA on a basis which reflects the benefit obtained by each YOA
from each type of expense.
(l) Where expenses are incurred jointly by the managing agent and the syndicate, they are apportioned as follows:
• salaries and related costs – according to the staff time spent on dealing with syndicate matters;
• accommodation costs – proportioned based on the overall staff costs allocation above; and
• other costs – as appropriate in each case.
Taxation
(m) 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 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. It is the responsibility of members to agree and settle their
individual tax liabilities with the Inland Revenue.
(n) No provision has been made for any US federal income tax payable on the 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. Members resident
overseas for tax purposes are responsible for agreeing and settling any tax liabilities with the taxation authorities of their
country of residence.
Basis of currency translation
(o) The functional and presentational currency of the syndicate is US dollars. Non-USD denominated items going through the
profit or loss account are translated to US dollars at the three years’ average rates of exchange. Assets and liabilities
denominated in foreign currencies at the balance sheet date are retranslated to the functional currency at the foreign
exchange rate at that date.
2 Risk management
The 2022 YOA has closed and all assets and liabilities have been transferred to a reinsuring YOA. The risks that it is exposed
to in respect of the reported financial position and financial performance are significantly less than those relating to the open
YOA's as disclosed in the syndicate annual accounts. Accordingly, these underwriting year accounts do not have associated risk
disclosures as required by section 34 of FRS 102. Full disclosures relating to these risks are provided in the syndicate annual
accounts.
Notes to the syndicate underwriting year accounts
closed at 31 December 2024 continued
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3 Analysis of underwriting result
An analysis of the underwriting result before investment return is set out below:
Gross
premiums
written
*Gross
premiums
earned
Gross claims
incurred
Net operating
expenses
*Reinsurance
balance
Underwriting
result
$m $m $m $m $m $m
Direct Insurance
Marine aviation and transport 94.3 92.9 (39.7) (36.3) (3.2) 13.7
Fire and other damage to property 154.4 152.1 (75.0) (54.7) (14.3) 8.1
Third party liability 497.6 490.0 (264.6) (131.2) (51.5) 42.7
Miscellaneous 34.4 33.8 (13.2) (12.1) (2.4) 6.1
Total Direct Insurance 780.7 768.8 (392.5) (234.3) (71.4) 70.6
Reinsurance accepted 77.3 76.1 (48.5) (25.9) (7.9)
(6.2)
Total Direct and Reinsurance accepted 858.0 844.9 (441.0) (260.2) (79.3) 64.4
*A net earnings adjustment of $8.6m is included within Reinsurance to close premiums payable, net of reinsurance on the
Profit or loss account.
All business was concluded in the UK.
4 Reinsurance to close premiums received
2022 year
of account
$m
Gross reinsurance to close premiums received 710.5
Reinsurance recoveries anticipated (210.5)
Reinsurance to close premiums received, from 2021 and earlier, net of reinsurance
500.0
5 Reinsurance to close premiums payable
2022 year
of account
$m
Gross reinsurance to close premiums through profit and loss 805.4
Reinsurance recoveries anticipated through profit and loss (254.5)
Foreign exchange 12.7
Reinsurance to close premiums payable to 2023 net of reinsurance
563.6
Reported
Unearned
premium reserve IBNR Total
$m $m $m $m
Gross reinsurance to close premium payable
217.3 39.0 567.7 824.0
Reinsurance recoveries anticipated
(48.6) (10.6) (201.2) (260.4)
Reinsurance to close premiums payable, net of reinsurance
168.7 28.4 366.5 563.6
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6 Analysis of the 2022 YOA result
2022 year
of account
$m
Amount attributable to business allocated to the 2022 YOA 103.3
Surplus on the reinsurance to close for the 2021 YOA 3.2
106.5
7 Net operating expenses
2022 year
of account
$m
Acquisition costs 195.7
Reinsurance commissions and profit participation (27.4)
Administrative expenses 91.9
260.2
Administrative expenses include:
$m
Audit services 0.6
8 Emoluments of the Directors of BFL
An allocation of remuneration to the 2022 underwriting YOA for the Directors of BFL is based on the amounts paid between
2022 and 2024 as follows:
2022 year
of account
$m
Emoluments and fees 1.9
1.9
9 Staff costs
All staff are employed by Beazley Management Limited, with the majority of these costs incurred in sterling. The following
amounts were recharged to the 2022 underwriting YOA in respect of staff costs:
2022 year
of account
$m
Wages and salaries 30.8
Social security 11.5
Pension costs 9.2
Short term incentive payments 13.5
65.0
10 Active underwriter's emoluments
An allocation of the active underwriter’s remuneration to the 2022 underwriting YOA is based on the amounts paid between
2022 and 2024 as follows:
2022 year
of account
$m
Emoluments and fees 0.7
0.7
Notes to the syndicate underwriting year accounts
closed at 31 December 2024 continued
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11 Investment expenses and charges
2022 year
of account
$m
Investment management expenses 1.2
1.2
12 Financial Assets
Level 1 Level 2 Level 3 Total
2022 $m $m $m $m
Financial investments
Shares and other variable yield securities and units in unit
trusts 62.9 56.2 — 119.1
Debt securities and other fixed income securities 261.8 245.2 — 507.0
Participation in investment pools 6.5 — — 6.5
Loans and deposits with credit institutions — — — —
Derivative assets 1.0 — — 1.0
Syndicate loans to central fund — — 5.9 5.9
Other investments 39.0 — — 39.0
Total financial assets at fair value
371.2 301.4 5.9 678.5
Derivative financial instruments (1.6) — — (1.6)
Total
369.6 301.4 5.9 676.9
13 Debtors
2022 year
of account
$m
Debtors arising out of direct insurance operations – intermediaries 1.7
Debtors arising out of reinsurance operations 8.3
Other debtors 1.8
11.8
These balances are due within one year.
14 Amounts due to members
2022 year
of account
$m
Profit for the 2022 closed YOA before standard personal expenses 110.2
Members personal expenses (3.7)
Amounts due to members at 31 December 2024
106.5
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15 Creditors
2022 year
of account
$m
Creditors arising out of direct insurance operations 2.2
Creditors arising out of reinsurance operations 3.3
Amounts due to syndicate 2623 2.9
Amounts due to syndicate 6107 6.2
Other creditors including taxation 39.3
53.9
The above balances are payable within one year.
16 Related parties transactions
BFL, the managing agent of Syndicate 623, is a wholly-owned subsidiary of Beazley plc. The Directors of BFL who have
participated in Syndicate 623 indirectly through Beazley Staff Underwriting Limited are disclosed in the managing agent’s report
of the annual accounts on page 16
The intercompany positions with other syndicates managed by BFL at 31 December 2024 are included in note 15 of the
syndicate underwriting year accounts.
BFL as the managing agent of the syndicate is responsible for settling intercompany balances with other managed syndicates
and net amounts due to/from other related entities.
Notes to the syndicate underwriting year accounts
closed at 31 December 2024 continued
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Beazley | Syndicate 623 Annual report 2024 www.beazley.com
Seven-year summary of closed year results
(unaudited)
at 31 December 2024
2022 2021 2020 2019 2018 2017 2016
Syndicate allocated capacity – £’m 587.3 514.8 422.6 366.2 350.9 304.5 257.3
Syndicate allocated capacity – $’m 810.4 638.3 536.6 483.3 456.2 408.0 403.9
Capacity utilised 64 % 79 % 93 % 89% 86% 88% 79%
Aggregate net premiums – $’m 514.5 501.7 388.6 330.4 312.1 278.7 251.6
Underwriting profit as a percentage
of gross premiums
18.1 % 21.1 % 4.5 % 5.9% 0.9% 0.2% 19.3%
Return on capacity 14.2 % 16.1 % (2.5) % 3.1% (2.7%) (2.4%) 8.7%
Results for an illustrative £10,000 share
Gross premiums – $’000s 12.1 12.6 11.8 11.7 11.2 11.8 12.5
Net premiums 8.8 9.7 9.2 9.0 8.9 9.2 9.8
Reinsurance to close from an earlier account 8.5 8.9 9.9 10.2 9.3 9.8 12.0
Net claims (4.8) (5.2) (6.8) (6.0) (6.5) (7.1) (6.7)
Reinsurance to close the YOA (9.4) (10.0) (10.9) (11.6) (10.5) (10.7) (11.7)
Underwriting profit 3.1 3.4 1.4 1.7 1.1 1.2 3.5
Profit/(loss) on foreign exchange — (0.1) (0.1) 0.1 (0.2) – (0.1)
Syndicate operating expenses (1.4) (1.3) (1.4) (1.5) (1.5) (1.9) (2.1)
Balance on technical account 1.7 2.0 (0.1) 0.3 (0.6) (0.7) 1.3
Gross investment return 0.7 0.5 – 0.5 0.4 0.6 0.4
Profit/(Loss) before personal expenses 2.4 2.5 (0.1) 0.8 (0.2) (0.1) 1.7
Illustrative personal expenses
Illustrative personal expenses (0.2) (0.1) (0.2) (0.2) (0.2) (0.2) (0.2)
Managing agent’s profit commission (0.4) (0.4) – (0.1) – – (0.2)
Profit/(loss) after illustrative profit
commission and personal expenses ($)
1.8 2.0 (0.3) 0.4 (0.4) (0.3) 1.1
Profit/(loss) after illustrative profit
commission and personal expenses (£)
1.4 1.6 (0.2) 0.3 (0.3) (0.2) 0.9
Notes:
1 The illustrative profit commission and personal expenses are estimates of amounts which might be charged on an illustrative share of £10,000. The agency
agreements for 1991 and subsequent years of account only provide for the deduction of fees and profit commission on behalf of the managing agent.
2 The effect of any minimum charges on personal expenses or deficit clauses on profit commission have been ignored.
3 Internal claims settlement expenses have been included in ‘net claims’.
4 The above figures are stated before members’ agents’ fees.
5 Profit after illustrative profit commission and personal expenses is shown in dollars and converted to sterling at the closing rate.
6 Gross and net premium amounts shown above are net of brokerage expenses.
7 The summary of closed years results are on a 'pure year' basis.
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69
Managing agent's corporate information
Beazley Furlonge Limited has been the managing agent of Syndicate 623 throughout the period covered by this report and the
registered office is 22 Bishopsgate, London, EC2N 4BQ, United Kingdom.
Directors
R A Stuchbery* - Chair
A P Cox - Chief Executive Officer and Active Underwriter
G P Blunden* (resigned 31/03/2024)
C C R Bannister* (resigned 31/03/2024)
A J Reizenstein*
N Wall*
L Santori*
R S Anarfi
R J Clark* - (appointed 23/05/2024)
P J Bantick - (appointed 07/06/2024)
C C J Wong - (appointed 17/09/2024)
S M Lake - (resigned 30/06/2024)
R E Quane - (resigned 04/10/2024)
* Non-Executive Director.
Company secretary
R Yeoman
Managing agent’s registered office
22 Bishopsgate
London
EC2N 4BQ
United Kingdom
Registered number
01893407
Syndicate number
Auditor
Ernst & Young LLP
25 Churchill Place
London
E14 5EY
Banker
Deutsche Bank AG
Winchester House
London
1 Great Winchester Street
EC2N 2DB
70
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71
Beazley Furlonge Limited
Syndicate 623 at Lloyd’s
22 Bishopsgate
London
EC2N 4BQ
T +44 (0)20 7667 0623
info@beazley.com
www.beazley.com
Syndicate 623
annual report 2024
investor.relations.beazley.com
