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Report and Accounts 31 December 2024
Cincinnati Global
Syndicate 0318
Cincinnati Global Syndicate 0318 has traded at Lloyd’s for over forty years. In that
time the Syndicate has grown and evolved to meet the changing demands of its clients
and is well positioned to take advantage of the opportunities seen in today’s increasingly
volatile marketplace. Over time, the Syndicate has built up longstanding relationships
with, and offered continuity to, its brokers, clients and capital providers alike. The
combination of its experienced team of underwriting, claims and support personnel, and
the ability to make the best use of increasingly sophisticated statistical techniques in
support of its decisions, maximises the offering it presents to each of its counterparties.
2024 Annual accounts
1 Financial highlights
2 Directors and administration
3 Report of the directors of the managing agent
17 Statement of managing agent’s responsibilities
18 Independent auditor’s report
22 Statement of profit or loss and total comprehensive income
24 Balance sheet
26 Statement of changes in members’ balances
27 Statement of cash flows
28 Notes to the financial statements
2022 Underwriting year of account
75 Financial highlights
76 Managing agent’s report
79 Statement of managing agent’s responsibilities
80 Independent auditor’s report
84 Statement of profit or loss account
86 Balance sheet
88 Statement of changes in members’ balances
89 Statement of cash flows
90 Notes to the accounts
103 Seven year summary
0318
Cincinnati Global Syndicate 0318 1
Financial highlights
2024 calendar year
£301.4m(2023: £289.8m)
gross premiums written
£72.0m
(2023: £66.4m profit
for the year)
profit for year
74.8%(2023: 75.9%)
Combined ratio including Managing Agency fee
and profit commissions
£14.9m(2023: £12.7m)
annual investment return
£375m(2023: £299m)
2024 capacity
Note:
·
The combined ratio is net claims incurred (inclusive
of IBNR) and net operating expenses (excluding
profit/loss on exchange) expressed as a
percentage of net earned premiums.
2 Cincinnati Global Syndicate 0318
Directors and administration
MANAGING AGENCY:
DIRECTORS AND ADMINISTRATION
Syndicate 0318 and is authorised by the Prudential Regulation Authority and regulated by the
Financial Conduct Authority and the Prudential Regulation Authority.
Directors:
T.C. Cracas (non-executive)
D.C. Eales
M.A. Langston
R.A. Pexton (non-executive chairman)
G.M. Tuck
G.A.M. Bonvarlet (non-executive)
R.B. Scott (non-executive)
Company secretary
R. Allibone (appointed 22 February 2024)
The registered office of Cincinnati Global Underwriting Agency Limited is One Minster Court, Mincing
Lane, London EC3R 7AA. The registered number of Cincinnati Global Underwriting Agency Limited
is 4039137.
Syndicate
Active underwriter
N.M. Chalk
Bankers
Citibank, N.A.
Royal Bank of Canada
Lloyds Banking Group Plc
Investment manager
Amundi (UK) Ltd
Actuary
Deloitte MCS Limited
Independent auditor
Deloitte LLP
1 New Street Square
London, EC4A 3HQ
United Kingdom
0318
Cincinnati Global Syndicate 0318 3
Report of the directors of the managing agent
for the year ended 31 December 2024
Introduction
The directors of the Managing Agent present
their Managing Agent’s 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.
However, since the Syndicate benefits from a
capital base that includes traditional names, as
well as corporate members, where possible and
appropriate, we have endeavoured to explain
the events of the calendar year in the context of
the applicable underlying years of account.
Managing Agents are also required to prepare a
Managing Agent’s report, financial statements
and related notes, and supporting disclosure for
members participating on the 2022 underwriting
year of account, which closed at 31 December
2024. These are incorporated into this
document on pages 75 to 102.
Result for the 2024 Calendar Year
For the year ended 31 December 2024,
Syndicate 0318 has generated an overall profit
of £72.0m compared to a profit of £66.4m in
2023, and a combined ratio of 74.8%
(2023: 75.9%).
An analysis of the contribution to the overall
result made by the individual underwriting years
of account is as follows:
2022
and Prior
Years of
Account
£000
2023
Year of
Account
£000
2024
Year of
Account
£000
2024
Calendar
Year
Combined
£000
2023
Calendar
Year
Combined
£000
.....................................................................................................................................................................
Gross Earned Premiums 9,852 119,460 143,623 272,935 277,771
Reinsurer’s Share (3,625) (7,237) (35,009) (45,871) (49,164)
Net Earned Premiums 6,227 112,223 108,613 227,063 228,607
Gross Claims Paid (51,162) (28,769) (12,542) (92,473) (120,309)
Reinsurer’s Share 19,308 1,811 658 21,777 26,951
Net Claims Paid (31,854) (26,958) (11,884) (70,696) (93,358)
Change in provision for gross claims 80,501 (11,442) (54,075) 14,984 39,441
Change in provision for reinsurer’s share (23,476) (697) 1,693 (22,480) (35,893)
Change in provision for net claims 57,025 (12,139) (52,382) (7,496) 3,548
Net Operating Expenses (11,248) (41,483) (38,875) (91,606) (83,706)
Balance on Technical Account 20,150 31,643 5,472 57,265 55,091
Net Investment Income 7,291 6,359 1,275 14,925 12,726
Profit on exchange (631) 500 (46) (177) (1,440)
Profit for the financial year 26,810 38,502 6,701 72,013 66,377
Other comprehensive income –
currency translation 1,000 1,368 161 2,529 (2,061)
Total comprehensive income 27,810 39,870 6,862 74,542 64,316
4 Cincinnati Global Syndicate 0318
Report of the directors of the managing agent
for the year ended 31 December 2024 continued
Principal Activities
The principal activity of Syndicate 0318 is the
transaction of general insurance and
reinsurance business written in the United
Kingdom at Lloyd’s. The Syndicate has a core
Property account which is complimented by
Specialty lines of business, which provide the
Syndicate with the opportunity for growth as well
as diversification within the portfolio. The
Property account covers worldwide risks with a
high proportion of insureds’ domiciled in the US.
This account is subdivided into risks accepted
under direct and facultative policies, and
business written under binding authorities. The
Syndicate’s Specialty lines are Construction,
Contingency, Credit and Political Risk,
International Treaty, Political Violence, Specie,
CSUPR, and Consortia.
The CSUPR initiative has been developed with
the Managing Agency’s ultimate parent
company, Cincinnati Financial Corporation
“CFC”, and allows the Syndicate to introduce
business into the Lloyd’s Market from CFC’s
agency network. The Consortia arrangements
allow the Syndicate to access lines of business
where it doesn’t have dedicated underwriting
expertise.
Business review – financial
The business review provides a commentary on
the financial and non-financial performance of
the Syndicate in 2024. The review discusses the
business written and earned, as well as the
rating environment. We have also provided an
overview of the Syndicate’s claims experience,
including the performance and adequacy of
technical provisions. The effect of
non-underwriting transactions including
operating expenses, rate of exchange
movements, and returns from cash and
investments are also detailed. Where
appropriate, we have detailed the contribution to
the result of each individual underwriting year.
The Syndicate’s key performance indicators are
summarised in the table below:
KPI 2024 2023
...............................................................................
Gross premiums written £301.4m £289.8m
Reinsurance premiums
ceded £47.9m £49.0m
Profit for the year £72.0m £66.4m
Gross loss ratio 28.4% 29.1%
Net loss ratio 34.4% 39.3%
Operating expense ratio 40.4% 36.6%
Combined ratio 74.8% 75.9%
Annual investment return £14.9m £12.7m
Syndicate capacity £375m £299m
Notes:
·
Gross loss ratio expresses gross incurred claims
(including IBNR) as a percentage of gross earned
premiums.
·
Net loss ratio expresses net incurred claims
(including IBNR) as a percentage of net earned
premiums.
·
Operating expense ratio expresses net operating
expenses as a percentage of net earned
premiums.
Underwriting and reinsurance
The overall rating environment has continued to
stay at very good levels over the year, although
there was evidence of softening in some areas
of the book, particularly Property risks written on
a direct and facultative basis in the second half
of the year. Property risks written under
delegated authorities continued to see rate
increases as this part of the market has taken
longer for rates to harden.
0318
Cincinnati Global Syndicate 0318 5
The rating for Specialty lines has been relatively
flat over the year, although it remains at positive
levels. The Political Violence account is an area
where we have seen higher than average rate
increases, owing to continued geopolitical
uncertainty.
During the year, the Syndicate has started
underwriting Construction, and Treaty
Reinsurance lines of business as part of its
long-term diversification strategy.
There has been an increase in gross premiums
written during the year as the business has
continued to grow its Specialty lines. The most
notable areas of growth have come from
Consortia and CSUPR accounts. The addition
of the Construction account has also provided a
meaningful increase to the premium base.
However, we have seen a reduction in Property
premium income on Direct and Facultative risks
as competition in the market has increased over
the year. After adjusting for effects of rates of
exchange, gross premiums have increased by
£19.6m.
The effect of foreign exchange on the change in
the amount of premiums written in the year,
compared to the comparative period is shown in
the table below. The average rate of exchange
for US dollars, used to retranslate the profit and
loss account was 1.28 for the year ended
31 December 2024 compared to 1.24 for the
comparative period. The impact of the change in
average rate of Canadian dollars is much
smaller.
£000s
...............................................................................
Gross premiums written 2023 289,789
(Decrease) in premium income
from rate of exchange (7,958)
Increase in premiums in the year 19,575
Gross premiums written in 2024 301,406
Gross earned premiums for the year are
£272.9m, which is lower than £277.8m earned
in 2023. The premium earnings on Property
risks are accelerated over the windstorm
season, resulting in a higher proportion of
premiums being earned in the first year of
progression. The decrease in the volume of
Direct and Facultative business has
consequently resulted in a reduction in the
gross earned premiums year on year.
The composition of the account is relatively
similar to last year, although the portfolio is
less concentrated in Property lines of business
than in previous years. Other notable changes
have arisen from the expansion of the CSUPR
business, and Consortia arrangements.
Construction and Treaty Reinsurance lines of
business also appear on the segmental
analysis for the first time.
Gross premiums written
2024
%
2023
%
............................................................................
Property – Direct and
Facultative 45.8 56.6
Property – Binding
Authority 18.1 18.9
Credit and Political
Risk 5.4 4.7
Political Violence 3.7 2.7
Specie 5.8 5.1
Contingency 5.9 6.7
CSUPR 3.7 1.9
Consortia 8.0 3.4
Construction 3.1 –
Treaty Reinsurance 0.5 –
100% 100%
6 Cincinnati Global Syndicate 0318
Report of the directors of the managing agent
for the year ended 31 December 2024 continued
The reinsurance premiums ceded in the year
have decreased to £47.9m from £49m in 2023.
The Syndicate did reduce the spend on the
Property programme in the year but also
purchased reinsurance protection for the new
Construction line of business.
The reinsurance premium earned in the year of
£45.9m (2023: £49.2m) is marginally below the
reinsurance written. The main programme is
purchased to cover losses occurring during the
year, with earnings patterns weighted towards
the windstorm season, hence a large proportion
of the programme is earned at 31 December.
Technical Result
The calendar year technical result before
investment return comprises profits and losses
on the open and closing years of account. It has
been an another extremely good year for the
business, with the Syndicate reporting record
profits for a second successive year. The
Property account has continued to benefit from
a strong rating environment, and generated a
large proportion of the profits, despite incurring
material losses from Hurricanes Helene and
Milton. The book has benefited from low levels
of large and attritional losses as well as healthy
reserve releases from prior years of account.
The Specialty lines of business have also
performed well in the year and provided a
positive contribution to the overall result of the
Syndicate. Whilst some of the lines of business
have incurred some risk losses, they are not
outside the normal types of losses we would
expect.
Contribution of 2024 year of account to the
calendar year result
The 2024 year of account has contributed a
£5.5m profit for the calendar year, before
investment income, and currency exchange
gains and losses. The year has seen a strong
rating environment during the year across
almost all lines of business. Despite a relatively
active year for catastrophe losses, the premium
base has proven sufficient to generate a profit
for the year at the 12 months stage of
progression.
There is a significant technical surplus, which is
quite rare at this stage of progression.
Major losses (including IBNR) in the calendar
year, affecting the 2024 year of account are
summarised in the table below.
Loss
2024 YoA
Gross and net
£m
...............................................................................
Hurricane Helene 19.2
Hurricane Milton 10.3
29.5
The Syndicate continues to earn its acquisition
costs in line with gross earned premiums, whilst
administrative expenses, and Names expenses
are earned as they are incurred. Managing
agents’ profit commissions are earned in line
with cumulative profits to a year of account,
after allowances for the potential impact of
deficit clauses within the Agency Agreement.
Net operating expenses are £38.9m, which is a
decrease from the £44.1m charged to the 2023
underwriting year at the same stage. The
decrease is largely owing to lower profit
commissions accrued on the 2024 year.
The investment return for the year is £1.3m,
owing to positive yields in the year.
0318
Cincinnati Global Syndicate 0318 7
Losses on exchange, and currency retranslation
gains in the year stands at an overall gain of
£0.1m for the 2024 underwriting year.
Members’ balances stand at a surplus of £6.9m.
Contribution of 2023 year of account to the
calendar year result
The 2023 year of account has contributed a
£31.6m profit for the calendar year, before
investment income, and currency exchange
gains and losses. The year has had positive
releases from prior accident years as well as
good loss experience in the year. There has
been some catastrophe exposure from the
North Atlantic Windstorm Season, but these
losses have been comfortably absorbed by the
strong premium base.
Major losses (including IBNR) in the calendar
year, affecting the 2023 year of account are
summarised in the table below:
Loss
2023 YoA
Gross and net
£m
...............................................................................
Hurricane Helene 1.2
Hurricane Milton 3.4
4.6
Net operating expenses are £41.5m, against a
comparative figure of £32.6m in calendar year
2023. The growth in Specialty lines on the 2023
underwriting year has resulted in higher
amounts of brokerage, and the higher
profitability has led to more profit commissions
being accrued.
The investment return for the calendar year
attributable to the 2023 underwriting year of
account is £6.4m.
Profits on exchange, and currency retranslation
gains have produced an overall gain of £1.9m.
Members’ balances currently stand at an overall
surplus of £67.6m, after standard personal
expenses. We are forecasting a profit in the
range of 20.5% – 25.5% upon closure of the
2023 year of account. The Board have
considered the impact of the California Wildfires
which occurred in January 2025 when
calculating this range.
Contribution of 2022 year of account to the
calendar year result
The 2022 year of account has contributed a
profit for the calendar year, before investment
income, and currency exchange of £20.2m.
There has been a significant improvement of
£19.2m on closed year reserves in the year.
The reserves set on the 2022 pure year of
account at the end of last year have proved
robust, and we have experienced positive
claims development.
Net operating expenses are £11.2m. Most of
this movement is generated from brokerage on
premiums written under binding authorities
earned in the year and profit commissions
accrued.
The investment return for the year is £7.3m.
Losses on exchange, and currency retranslation
gains in the year have produced an overall gain
of £0.4m.
The 2022 year of account has closed at a profit
of £50.1m, and a result to a traditional name of
21.6% of Capacity.
8 Cincinnati Global Syndicate 0318
Report of the directors of the managing agent
for the year ended 31 December 2024 continued
Operating Expenses
2022
and Prior
Years of
Account
£000
2023
Year of
Account
£000
2024
Year of
Account
£000
2024
Calendar
Year
Combined
£000
2023
Calendar
Year
Combined
£000
.....................................................................................................................................................................
Acquisition Costs (Brokerage) (3,796) (27,621) (20,559) (51,976) (49,580)
Acquisition Costs (Other) (307) (3,317) (8,335) (11,959) (11,454)
Administrative Expenses (192) (577) (3,084) (3,853) (2,984)
Standard Personal Expenses – – (5,182) (5,182) (4,232)
Managing Agents Profit Commissions (6,953) (9,968) (1,715) (18,636) (15,456)
Net Operating Expenses (11,248) (41,483) (38,875) (91,606) (83,706)
As in previous years, acquisition costs
(brokerage) represent the largest single
expense item in 2024. Other operating
expenses under the control of the Managing
Agency have increased in the year owing to
additional staff and resources required to
expand the business, as well as the effects of
inflation. Standard Personal Expenses have
increased during the year. These expenses are
levied as a proportion of underwriting capacity
and gross premiums written, which have both
increased in 2024.
The Syndicate has accrued profit commissions
on the 2024, 2023, and 2022 years of account
in the calendar year. This is higher than the
comparative period owing to the increase in the
level of profits.
0318
Cincinnati Global Syndicate 0318 9
Profit and loss on exchange and currency translation differences
The aggregate profit on exchange for the year is £2.4m, compared to a loss of £3.5m in 2023. This
has largely arisen from currency translation differences from conversion of the opening balances and
calendar year result from average to closing rates of exchange. The gain from retranslating from a
US functional currency to a Sterling presentational currency is detailed in currency translation
differences. The Syndicate has also realised profits and losses on exchange from transactions in the
year, as well as having open currency positions at the year end. The table below provides a
breakdown of the profit and loss on exchange during the year.
2022
and Prior
Years of
Account
£000
2023
Year of
Account
£000
2024
Year of
Account
£000
Total
£000Profit and loss on exchange and currency translation
.....................................................................................................................................................................
(Loss)/profit on currency translation of opening
balances and calendar year profits (91) 583 (140) 352
(Loss)/profit on other transactions in the year (540) (83) 94 (529)
Other comprehensive income – currency translation 1,000 1,368 161 2,529
Profit on exchange and currency translation 369 1,868 115 2,352
Investment Performance
2024
’000 %
2023
’000 %
.....................................................................................................................................................................
Average Amount of Syndicate Funds £319,196 £247,999
Investment Return (excluding investment
manager’s fees) £15,126 4.7% £12,930 5.2%
By Currency:
Sterling: Average Funds £13,080 £12,047
Investment Return* £153 1.17% £284 2.35%
US Dollar: Average Funds US$371,206 US$274,777
Investment Return US$17,901 4.82% US$14,603 5.31%
Canadian Dollar: Average Funds Can$£28,193 Can$24,122
Investment Return Can$1,246 4.42% Can$1,119 4.64%
*Includes investment manager’s fees of £275,793 (2023: £204,123).
Average amount of Syndicate Funds converted at average rates of exchange.
10 Cincinnati Global Syndicate 0318
Report of the directors of the managing agent
for the year ended 31 December 2024 continued
Investment Policy
The Investment objective is to invest the
Premium Trust Funds in a manner calculated to
maximise return within agreed restraints and in
line with policies approved by the Managing
Agency Board. In consideration of this policy,
portfolios are predominantly invested in
short-term, high quality fixed income securities.
The investment manager has been instructed to
achieve a return above the agreed benchmark,
whilst maintaining agreed levels of liquidity,
security and a portfolio duration commensurate
with that of the Syndicate’s liabilities. They also
have discretion to invest in private sector
securities for a limited proportion of the portfolio
and within diversity limits for individual credits.
Limiting the target duration of the overall
portfolio controls the exposure of the
investments to adverse interest rate
movements. An Investment Committee and
formal procedures for monitoring investments
exist in line with the guidance from Lloyd’s.
Review of Calendar Year 2024
In 2024, fixed income assets experienced
another year of robust performance, driven by
inflation returning to central bank targets and
stronger-than-expected U.S. economic growth.
The high starting point for yields created a
favourable technical environment for fixed
income, attracting significant inflows into the
asset class and leading to a tightening of credit
spreads, which approached historical lows. This
occurred amidst record issuance that the market
absorbed with relative ease, despite heightened
geopolitical uncertainty.
As inflation moderated, central banks began to
unwind restrictive monetary policies. The
Federal Reserve implemented three rate cuts
starting in September, with the first cut being 50
basis points, resulting in a total reduction of 100
basis points in the Fed Funds range over the
year. Notably, the U.S. 2-year Treasury yield
ended 2024 at a similar level to where it began,
masking considerable volatility as it fluctuated
between 3.6% and 5%. In September, the
market anticipated ten rate cuts from the Fed in
2025, but this expectation diminished to fewer
than two by year-end. Additionally, 2024 marked
a transition to a more normalised,
upward-sloping yield curve, which had been
inverted for two years. The rate cuts lowered the
front end of the Treasury curve, while
longer-term uncertainties regarding debt
dynamics and inflation, coupled with stronger
growth, pushed longer yields higher. U.S.
investment-grade credit spreads tightened by 23
basis points over the year, settling at 83 basis
points – within the 5th percentile historically –
while all-in yields remained around the 60th
percentile.
Portfolios were initially positioned with a slightly
longer duration relative to benchmarks and were
lengthened mid-year to capitalise on higher
yields. Further extensions were made in Q4 to
take advantage of the normalising yield curve.
The corporate bond allocation was maintained
close to maximum limits, both in absolute terms
and per rating bucket, to optimise carry.
Portfolios remained overweight in financials,
which performed well as financial spreads
narrowed, eventually trading inside industrials in
Q4. However, we remain cautious about certain
areas of cyclical consumer credit, which exhibit
tight spreads, and real estate, which has
become more expensive despite borrowing
0318
Cincinnati Global Syndicate 0318 11
costs remaining high. The aggregate portfolio
achieved a return of nearly 5%, mirroring the
performance of 2023, which was the highest
investment return for the Syndicate in over a
decade. Our portfolios continue to focus on
high-quality, liquid issues.
Outlook for 2025
As we enter 2025, we are met with a positive
risk-on sentiment, yet several challenges loom.
The new Trump presidency is expected to
aggressively pursue its agenda, which includes
tariffs, anti-immigration policies, and tax cuts.
This approach may introduce unpredictability in
certain areas, namely tariffs, aimed at extracting
concessions from other nations. While some
policies may prove inflationary and detrimental
to short-term growth, there could be offsets from
deregulation. We anticipate an increase in
geo-economic fragmentation, characterised by
the re-routing of global supply chains and
deteriorating relations with key U.S. trading
partners, including Canada, Mexico, Europe,
and China.
Despite these challenges, we expect fixed
income to continue attracting inflows and
delivering solid returns, provided inflation
remains contained. Geopolitical tensions will
remain a focal point, with the Russia-Ukraine
conflict entering its third year, potential
skirmishes in the Middle East impacting energy
prices, and the tariff agenda possibly leading to
unintended consequences.
12 Cincinnati Global Syndicate 0318
Report of the directors of the managing agent
for the year ended 31 December 2024 continued
Business review – non-financial
In reviewing the performance of the business in the year, we have also assessed non-financial
metrics for underwriting, claims, human resources, and Solvency II. We have identified the
following criteria as important measures of performance for these areas. These are detailed in the
section below.
Underwriting non-financial indicators
The Syndicate views the proportion of the business that it leads and renews as important
non-financial measurements of its performance. The amount of business that the Syndicate is the
lead underwriter on provides a useful measure of market position in relation to its peers, although for
some lines of business it is not practical for the Syndicate to be a lead market. The level of renewal
business by the Syndicate is a good indicator of the continuity of the respective books of business,
as well as retention of clients. These are detailed for 2024 in the table below:
Property –
Direct and
Facultative
Property –
Binding
Authorities CPRI
Political
violence Specie
Contin-
gency CSUPR Consortia
.....................................................................................................................................................................
Proportion of business written
where the Syndicate is the
lead underwriter 55% 29% 27% 4% 24% 47% 100% 51%
Proportion of business written
which is a renewal to the
Syndicate 85% 94% 10% 66% 75% 59% 94% 62%
The proportions of written business lead and renewed by the Syndicate are consistent with last year.
The Board values experience in its underwriters. The table below details the experience of the
Syndicate’s senior underwriters in terms of the numbers of years they have worked at the Syndicate
and the number of years they have been active in the Lloyd’s market.
Name Position
Years at
Syndicate
Years in the
Insurance
Market
.....................................................................................................................................................................
Nick Chalk Active Underwriter 25 29
Steve Anderson Head of Delegated Underwriting 16 36
Simon Pope Head of Property Underwriting – Direct and
Facultative 22 24
Francis Hernandez Head of Contingency 4 37
James Steele-Perkins Head of Credit & Political Risk 5 27
Ian Seakens Head of Specie 4 39
Tom Gardner Head of War, Terrorism and Political Violence 5 12
Alex Coulton Head of Construction 1 10
James Braddock Head of Treaty Reinsurance 1 39
Note – Years of service have been rounded to the nearest full year.
0318
Cincinnati Global Syndicate 0318 13
Claims handling non-financial indicators
As part of the evaluation of the Syndicate’s
claims handling performance, various
measurements are monitored on a quarterly
basis. Management view responding to claims
notifications, adjusting and settling them on a
timely basis as key to the Syndicate’s servicing
of claims. It also places great importance on the
accuracy of its case reserving within a
prescribed range. The table below illustrates
some of the KPIs used by the Board.
Claims Measurement
Average score
in 2024
Average score
in 2023
...............................................................................
Percentage of claims
responded to within
target response time* 93.1% 87.5%
Percentage of claims
meeting internal
reserving accuracy
target 95.0% 93.8%
*Target response time is measured as within 4
workings days of ECF Presentation date.
Management are satisfied that the Syndicate
provides a comprehensive claims service to its
policyholders, but will endevour to improve the
performance against KPIs.
Human resources non-financial indicators
The Board view retention of staff, and vocational
training as key to the long term success of the
Syndicate. The staff turnover for the Syndicate
has been historically low, and the average
length of service for employees tends to be
longer than market sector average. Cincinnati
Global Underwriting Agency Limited (CGUAL)
also remains committed to staff training, with a
number of employees studying for professional
qualifications in disciplines including
accountancy, actuarial, insurance and law.
The health, safety, and welfare of our
employees, and the people they have contact
with, is of paramount importance to us. The
People and Culture Working Group has been
set up to ensure the continued wellbeing of our
employees.
Principle Risks and Uncertainties
The Syndicate is exposed to a variety of risks
when undertaking the activities associated with
the running of the business. The Board has
policies and procedures in place to identify and
manage the risks to the Syndicate. The key
risks to the Syndicate are: Insurance risk,
Concentration risk, Financial risk, Credit risk,
Liquidity risk, Market risk, Interest rate risk,
Currency risk, and Operational risk.
Definitions of these risks and further explanation
on how they affect the Syndicate are detailed in
Note 4 on page 40.
Corporate Governance and Risk Management
Reporting to the Board are a number of
Committees each with written terms of
reference which consider, monitor and report on
aspects of the Managing Agency’s business.
The Board retains overall responsibility for the
Syndicate’s business.
The Managing Agency maintains a risk
framework for the identification, assessment,
management and monitoring of the risks to
which it is exposed across all aspects of its
day-to-day business operations, and it maintains
a risk register based on the output of this
framework. The risk framework encompasses all
core risk areas in the business. Various controls
operate in respect of these risk areas, and their
performance and continued suitability are
monitored via the Risk Function and are
overseen by the relevant sub-committee, or the
board and through the use of key risk and
control indicators.
14 Cincinnati Global Syndicate 0318
Report of the directors of the managing agent
for the year ended 31 December 2024 continued
Audit Committee
The Audit Committee has the delegated
authority of the Board to consider all aspects and
matters pertaining to the internal and external
audit of the Managing Agency and the managed
Syndicate. This includes an assessment of the
performance, effectiveness and suitability of
these functions. All members of this committee
are independent non-executive directors.
Risk and Compliance Committee
The Risk and Compliance Committee has the
delegated authority of the Board to consider all
aspects and matters pertaining to the
identification, assessment, monitoring and
mitigation of risk within the Managing Agency
and the managed Syndicate. This includes an
assessment of the performance, effectiveness
and suitability of the risk management function
and the risk framework. The Committee is
responsible for the consideration of operational
risk issues and maintains the Managing
Agency’s risk register, environmental, social and
governance issues as well as all compliance
matters affecting the Managing Agency, and the
Syndicate are also reviewed by the Committee.
Executive Committee
The Executive Committee has the delegated
authority of the Board to consider matters
defined by the Board or any matters that do not
require consideration by the full Board. In
general, the committee considers the more
day-to-day administrative and operational issues
relating to the Managing Agency and the
managed Syndicate.
Investment Committee
The Investment Committee has the delegated
authority of the Board to recommend, monitor
and oversee the appropriateness of the
investment policy, investment guidelines and
performance measures for the managed
Syndicate; for assessing the performance,
effectiveness and continued suitability of the
investment managers; and for ensuring
compliance with relevant rules and regulations.
The Investment Committee has specific
responsibility for the consideration of the market,
liquidity and concentration risk relating to the
investment of the managed Syndicate’s assets.
The Committee also assesses the suitability of
the portfolio from a prudent principle, and an
environmental, social, and governance
perspective.
Claims Committee
The Claims Committee has responsibility for
reviewing and monitoring all aspects of the
managed Syndicate’s claims performance and
claims service delivery.
Reserving Committee
The Reserving Committee assists the Board
in reviewing and approving the quarterly
reserves of the Syndicate for UK GAAP and
Solvency II.
Underwriting Committee
The Underwriting Committee has the delegated
authority of the Board to consider, monitor and
review all aspects of the underwriting and
reinsurance strategy, management and
performance of the managed Syndicate. This
includes environmental, social, and governance
considerations, particularly around policies with
exposure to fossil fuels. The Underwriting
Committee considers insurance and reinsurance
risks.
0318
Cincinnati Global Syndicate 0318 15
Remuneration Committee
The Remuneration Committee has the
delegated authority of the Board to support and
assist the Agency in its objective to determine
and oversee the appropriateness of the policy
and framework which can attract and retain the
right talents. As such, the Remuneration
Committee oversees the determination of the
remuneration, benefits and bonus
arrangements of the senior executives and
officers of the Managing Agency and the
managed Syndicate, for the review and
approval of the general level of remuneration
and benefits for other staff and for ensuring
that remuneration arrangements are consistent
with principles of sound risk management and
corporate governance.
Product Oversight and Governance Committee
The Product Oversight and Governance (POG)
committee has the delegated authority of the
Board to provide guidance and critical
assessment of conduct risk issues thereby
ensuring compliance with Lloyd’s and the FCA’s
principles concerning conduct, and to assist the
Board in this regard. As such, the POG
supports the Board in establishing a positive
corporate culture in respect of Conduct Risk
which ensures that customers are treated fairly
at all times.
People and Culture Working Group
The People and Culture Working Group reports
directly to the Board. Its goal is to promote the
development of our employees, and ensure
their continued wellbeing.
Future Developments
The Syndicate will commence underwriting
Marine Cargo business in the Spring of 2025,
following the recruitment of an established
Lloyd’s Underwriter. The Board will continue to
look to grow and diversify the business, whilst
remaining mindful of changes to market
conditions over the coming year.
Directors
The directors and officers of the Managing
Agent who held office up to the date of the
signing of the balance sheet were as follows:
Directors:
T.C. Cracas (non-executive)
D.C. Eales
M.A. Langston
R.A. Pexton (non-executive chairman)
G.M. Tuck
G.A.M. Bonvarlet (non-executive)
R.B. Scott (non-executive)
Company secretary
R. Allibone (appointed 22 February 2024)
Syndicate annual general meeting
As permitted under the Syndicate Meetings
(Amendment No.1) Byelaw (No.18 of 2000)
CGUAL does not propose holding a Syndicate
Annual General Meeting of the members of the
Syndicate. Members may object to this proposal
within 21 days of the issue of these accounts.
Any such objection should be addressed to G.
M. Tuck, Chief Finance Officer, at the registered
office of Cincinnati Global Underwriting Agency
Limited.
18 Cincinnati Global Syndicate 0318
Independent auditor’s report to the Members of Syndicate 0318
Report on the audit of the syndicate annual
financial statements
Opinion
In our opinion the syndicate annual financial
statements of Syndicate 0318 (the ‘syndicate’):
·
give a true and fair view of the state of the
syndicate’s affairs as at 31 December 2024
and of its profit for the year then ended;
·
have been properly prepared in accordance
with United Kingdom Generally Accepted
Accounting Practice, including Financial
Reporting Standard 102 “The Financial
Reporting Standard applicable in the UK
and Republic of Ireland”; and
·
have been prepared in accordance with the
requirements of The Insurance Accounts
Directive (Lloyd’s Syndicate and Aggregate
Accounts) Regulations 2008 and section 1
of the Syndicate Accounts Instructions
Version 2.0.
We have audited the syndicate annual financial
statements which comprise:
·
Statement of profit or loss and total
comprehensive income;
·
the balance sheet;
·
the statement of changes in members’
balances;
·
the statement of cash flows; and
·
the related notes 1 to 26.
The financial reporting framework that has been
applied in their preparation is applicable law and
United Kingdom Accounting Standards,
including Financial Reporting Standard 102 “The
Financial Reporting Standard applicable in the
UK and Republic of Ireland” (United Kingdom
Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs
(UK)), applicable law and the Syndicate Accounts
Instructions. Our responsibilities under those
standards are further described in the auditor's
responsibilities for the audit of the syndicate
annual financial statements section of our report.
We are independent of the syndicate in
accordance with the ethical requirements that
are relevant to our audit of the syndicate annual
financial statements in the UK, including the
Financial Reporting Council’s (the ‘FRC’s’)
Ethical Standard, and we have fulfilled our other
ethical responsibilities in accordance with these
requirements. We believe that the audit
evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have
concluded that the managing agent’s use of the
going concern basis of accounting in the
preparation of the financial statements is
appropriate.
Based on the work we have performed, we
have not identified any material uncertainties
relating to events or conditions that, individually
or collectively, may cast significant doubt on the
syndicate’s ability to continue in operations for a
period of at least twelve months from when the
syndicate financial statements are authorised for
issue.
Our responsibilities and the responsibilities of
the managing agent with respect to going
concern are described in the relevant sections
of this report.
0318
Cincinnati Global Syndicate 0318 19
Other information
The other information comprises the information
included in the annual report, other than the
syndicate annual financial statements and our
auditor’s report thereon. The managing agent is
responsible for the other information contained
within the annual report. Our opinion on the
syndicate annual financial statements does not
cover the other information and, except to the
extent otherwise explicitly stated in our report,
we do not express any form of assurance
conclusion thereon.
Our responsibility is to read the other
information and, in doing so, consider whether
the other information is materially inconsistent
with the syndicate annual financial statements
or our knowledge obtained in the course of the
audit, or otherwise appears to be materially
misstated. If we identify such material
inconsistencies or apparent material
misstatements, we are required to determine
whether this gives rise to a material
misstatement themselves. If, based on the work
we have performed, we conclude that there is a
material misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of managing agent
As explained more fully in the managing agent’s
responsibilities statement, the managing agent
is responsible for the preparation of the
syndicate annual financial statements and for
being satisfied that they give a true and fair
view, and for such internal control as the
managing agent determines is necessary to
enable the preparation of syndicate annual
financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the syndicate annual financial
statements, the managing agent is responsible
for assessing the syndicate’s ability to continue
in operation, disclosing, as applicable, matters
related to the syndicate’s ability to continue in
operation and to use the going concern basis of
accounting unless the managing agent intends
to cease the syndicate’s operations, or has no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
syndicate annual financial statements
Our objectives are to obtain reasonable
assurance about whether the syndicate annual
financial statements as a whole are free from
material misstatement, whether due to fraud or
error, and to issue an auditor's report that
includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement
when it exists. Misstatements can arise from
fraud or error and are considered material if,
individually or in the aggregate, they could
reasonably be expected to influence the
economic decisions of users taken on the basis
of these syndicate annual financial statements.
A further description of our responsibilities for
the audit of the syndicate annual financial
statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
Extent to which the audit was considered
capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of
non-compliance with laws and regulations. We
design procedures in line with our
responsibilities, outlined above, to detect
material misstatements in respect of
irregularities, including fraud. The extent to
which our procedures are capable of detecting
irregularities, including fraud is detailed below.
20 Cincinnati Global Syndicate 0318
Independent auditor’s report to the Members of Syndicate 0318 continued
We considered the nature of the syndicate and
its control environment, and reviewed the
syndicate’s documentation of their policies and
procedures relating to fraud and compliance
with laws and regulations. We also enquired of
management, internal audit and those charged
with governance about their own identification
and assessment of the risks of irregularities.
We obtained an understanding of the legal and
regulatory framework that the syndicate
operates in, and identified the key laws and
regulations that:
·
had a direct effect on the determination of
material amounts and disclosures in the
financial statements. These included the
Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts)
Regulations 2008 and the Lloyd’s Syndicate
Accounting Byelaw (no. 8 of 2005); and
·
do not have a direct effect on the financial
statements but compliance with which may
be fundamental to the syndicate’s ability to
operate or to avoid a material penalty.
These included the requirements of
Solvency UK.
We discussed among the audit engagement
team including relevant internal specialists such
as actuarial, and IT specialists regarding the
opportunities and incentives that may exist
within the organisation for fraud and how and
where fraud might occur in the financial
statements.
As a result of performing the above, we
identified the greatest potential for fraud or
non-compliance with laws and regulations in the
valuation of the gross claims incurred but not
reported (“IBNR”) balance, specifically around
assumptions for certain classes of business.
Our specific procedures performed to address it
are described below:
·
Evaluated the design and implementation of
internal controls around the reserving cycle.
We have tested the controls over data,
model, assumptions, methodology and
results as per ISA 540R;
·
Performed attribute testing on the data used
in the IBNR calculations. We selected a
sample of items and traced selections to
underlying Syndicate records to ensure the
data is complete and accurate;
·
Involved our actuarial specialists to develop
independent estimates of the technical
provisions.Performed benchmarking of the
major catastrophe events from across the
industry based on market data and
compared incurred to ultimate ratios by
event using data as at 31 December 2024;
·
Performed a sample test over the major
catastrophe events to test the the
appropriateness of the valuation of IBNR; and
·
Performed a ‘stand back’ assessment to
consider all the evidence received from
audit procedures performed and conclude if
there is any evidence of overall
management bias.
In common with all audits under ISAs (UK), we
are also required to perform specific procedures
to respond to the risk of management override.
In addressing the risk of fraud through
management override of controls, we tested the
appropriateness of journal entries and other
adjustments; assessed whether the judgements
made in making accounting estimates are
indicative of a potential bias; and evaluated the
business rationale of any significant transactions
that are unusual or outside the normal course of
business.
In addition to the above, our procedures to
respond to the risks identified included the
following:
·
reviewing financial statement disclosures by
testing to supporting documentation to as