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SYNDICATE 1994
ANNUAL REPORT AND ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Syndicate 1994
Contents
1
Page
Directors and administration
2
Syndicate annual accounts for the year ended 31 December 2024
Report of the directors of the managing agent
3
Statement of managing agent’s responsibilities
12
Independent auditor’s report to the m
ember of Syndicate 1994
13
Profit and loss account
17
Statement of
changes in member’s balances
19
Balance sheet
20
Statement of cash flows
22
Notes to the annual accounts
23
Syndicate 1994
Directors and administration
2
Managing agent
Registered office
One Bishopsgate
London
EC2N 3AQ
Company registration number
09181578
Company secretary
PC Bowden
Directors
AC Winther
(Non-Executive Chair)
FA Buckley
(Non-Executive Director)
M Cramér Manhem
(Non-Executive Director)
SR Davies
(Non-Executive Director)
SE Hill
(Non-Executive Director)
RD Littlemore
(Non-Executive Director)
DCB Ibeson
(Chief Executive Officer)
TL McHarg
VVV Mistry
JR Slaughter
Run-off manager
GM Crowley
Bankers
Citibank
NatWest
Royal Bank of Canada
Registered auditor
Forvis Mazars LLP
Statutory Auditor
30 Old Bailey
London
EC4M 7AU
Syndicate 1994
Report of the directors of the managing agent
3
The directors of the managing agent
(together, “the Board”)
present their annual report and audited annual
accounts, which incorporates the strategic review, for Syndicate 1994
(“the
s
yndicate”)
for the year ended 31
December 2024.
The annual accounts are prepared using the annual basis of accounting as required by Statutory Instrument No.
1950 of 2008, The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008
(“Lloyd’s Regulations 2008”)
and applicable United Kingdom Accounting Standards, including Financial Reporting
Standard 102: The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland (
“
FRS
102
”
) and Financial Reporting Standard 103: Insurance Contracts (
“
FRS 103
”
).
The managing agent does not prepare separate underwriting year accounts on the three-year accounting basis in
accordance with the Lloyd’s Syndicate Accounting Byelaw (No. 8 of 2005), as the
syndicate has a single Corporate
Member.
Principal activity
Syndicate 1994 is a
Lloyd’s
Reinsurance to C
lose (“RITC”)
syndicate, established to provide bespoke solutions for
Lloyd’s syndicates seeking to exit lines or classes of business, in addition to syndicates in run
-off seeking to obtain
finality for their capital providers. The syndicate is a strategic partnership with retrospective reinsurance specialist
Compre Group
(“Compre”)
. The first year of account
(“YoA”)
was 2021.
Syndicate 1994 trades through
the Society of Lloyd’s (‘’Lloyd’s'’) worldwide licences and has the benefit of the
Lloyd’s brand
and rating
. Lloyd’s has an A
+ (Superior) rating from A.M. Best, AA- (Very Strong) from Standard &
Poor’s and AA
- (Very Strong) from Fitch.
Apollo Syndicate Management Limited (“ASML”) is approved as a
managing a
gency at Lloyd’s and is authorised by
the Prudential Regulation
Authority (‘’PRA’’). ASML is regulated by the Financial Conduct Authority (‘’FCA’’) and the
PRA.
Compre Corporate Member 2 Limited is the sole member on Syndicate 1994 and provides the Funds at Lloyd’s
backing the syndicate. A syndicate management agreement is in place that sets out the partnership arrangements
and the services and reporting provided by Compre and ASML on behalf of the syndicate. Compre second the run-
off manager to ASML and undertake the underwriting, core reserving and the majority of claims handling.
Results
The financial year technical result (including expenses) is a loss of $11.2m (2023: $6.1m loss), predominantly due
to unfavourable claims development during the year. This result has been adjusted for a foreign exchange gain of
$0.2m (2023: $0.3m loss) to give an overall loss for the financial year of $11.0m (2023: $6.4m loss). These metrics
are reported, with commentary, in the quarterly management reporting to the Board and committees.
The syndicate's key financial performance indicators during the year were as follows:
2024
2023
$
’000
$
’000
Net technical provisions
76,303
92,108
Net claims incurred
(11,708)
(6,360)
Total recognised loss in the financial year
(11,048)
(6,376)
Financial investments, cash and overseas deposits have increased to $62.9m from $62.5m.
Review of the business
The syndicate has written no new business in the 2024 calendar year. The calendar year result reflects an
underwriting loss from unfavourable claims movements in respect of two RITC transactions written in 2021: a RITC
for the liabilities relating to the 2017 and prior YoAs of Syndicate 1969 and a RITC of the 2018 YoA of Syndicate
3330. Both transactions attached to the 2021 YoA of the syndicate, which was closed at the end of 2023. A new
2024 YoA was formed from 1 January 2024 to assume the RITC of the closed 2021 YoA.
Syndicate 1994
Report of the directors of the managing agent
4
The calendar year result reflects the consistent application of the reserving policy and reserve strengthening in
certain classes of the Syndicate 1969 book of business, in particular Non-Marine Liability, on the US Open Market
and Construction sub-classes. There are two large loss reserves on the Construction class which are being
continuously monitored.
The total result includes administrative expenses recharged by Compre and ASML. Syndicate expenses reflect the
fourth year of trading and have been allocated to the 2024 YoA.
The syndicate produces an annual
plan to Lloyd’s
and has a stated core focus on mid-market transactions with the
intent to grow gradually and carefully by underwriting new transactions that meet defined risk appetite and pricing
requirements. As a RITC syndicate, both ASML and Compre accept that, in the absence of suitable opportunities,
the syndicate may not underwrite any transactions in a particular year.
During the financial year, Compre has actively engaged with brokers and insurers in connection with legacy
transactions being brought to market. Whilst the syndicate has been invited to put forward a bid on a number of
transactions during 2024, after due consideration and discussion of the risks, it did not proceed to conclusion on
any additional transactions. This reflects a robust approach to pricing, including a disciplined approach to triaging
potential transactions and undertaking the necessary due diligence to understand and evaluate the risks to the
syndicate.
At the end of 2023, the 2021 YoA was closed with a loss of $51.2m.
Investment performance
The investment objective is to invest the premium trust funds in a manner designed primarily to preserve capital
values and provide liquidity.
The syndicate produced an investment return of $2.5m in the year (2023: investment return of $2.5m). At the
balance sheet date, the managed fixed income portfolio holdings totalled $35.0m (2023: $28.3m).
The syndicate’s investment policy is expected to remain broadly consistent with the position at the balance sheet
date.
Capital
The solvency
capital requirement for Syndicate 1994 in its first two years of operation was set by the Lloyd’s
Benchmark Model. During 2022, an internal capital model was developed for Syndicate 1994, which was approved
by Lloyd’s for capital setting from 2023.
The ultimate
solvency capital requirement (“
SCR
”)
is subject to an uplift
determined by Lloyd’s based on its assessment of the economic capital requirements for the Lloyd’s market in total.
The SCR, together with the Lloyd
’
s uplift, is referred to as the Economic
Capital Assessment (“ECA”).
Lloyd’s unique capital structure provides excellent financial security to policyholders and capital efficiency for
members. The Lloyd’s chain of security underlies the financial strength that ultimately backs insurance policies
written at Lloyd’s and has t
hree links:
1.
All premiums received by syndicates are held in trust as the first resource for settling policyholders’ claims
;
2.
Every member is required to hold capital in trust funds at Lloyd’s which are known as Funds at Lloyd’s (“FAL”).
FAL is intended primarily to cover circumstances where syndicate assets are insufficient to meet the
participating member
’
s underwriting liabilities. FAL is set with reference to the ECAs of the syndicates that the
member participates on. Since member FAL is not under the control of the managing agent, it is not shown in
the syndicate accounts. The managing agent is, however, able to make a call on the member
’
s FAL to meet
liquidity requirements or to settle underwriting losses if required; and
3.
Lloyd’s central assets are available at the discretion of the Council of Lloyd’s to meet any valid claim that cannot
be met through the resources of any member further up the chain. Lloyd’s also retains the right to request a
callable contribution equal to 5% of the member
’
s capacity on the syndicate.
Syndicate 1994
Report of the directors of the managing agent
5
Going concern
The performance of the syndicate, including the claims deterioration and losses, as detailed in the review of
business, has been considered as part of the going concern assessment. ASML is satisfied that the syndicate has
sufficient financial support, including FAL, to continue in operation as a going concern.
Principal risks and uncertainties
ASML has an established Enterprise Risk Management (
“
ERM
”
) function for the syndicate with clear terms of
reference from the ASML Board and its committees as part of a three lines of defence model. The ASML Board and
its committees review and approve the risk management policies and meet regularly to approve any commercial,
regulatory and organisational requirements of these policies.
The
syndicate’s
risk appetites are set annually as part of the annual planning process and are reviewed when
evaluating any new legacy transaction and the solvency capital requirement setting process. The ERM function is
also responsible for maintaining the
syndicate’s Own Risk and Solvency Assessment (“ORSA”) processes and
provides regular updates to the ASML Board. The syndicate ORSA report is approved by the ASML Board annually.
ASML
recognises that the syndicate’s business is to accept risk which is appropriate to enable it to meet its
objectives and that it is not realistic or possible to eliminate risk entirely. The principal risks and uncertainties facing
the syndicate have been identified as strategic risk, insurance (predominantly reserving) risk, regulatory risk,
operational risk, and financial risk (comprising credit risk, liquidity risk and market risk). A risk owner has been
assigned responsibility for each risk, and it is the responsibility of that individual periodically to assess the impact of
the risk and to ensure appropriate risk mitigation procedures and controls are in place and operating effectively.
External factors facing the business and the internal controls in place are routinely reassessed and changes made
when necessary. The overarching risk framework is overseen by the ASML Risk Committee on behalf of the ASML
Board. The risk culture of the business is Board led, with new initiatives requiring an objective risk assessment and
opinion prior to approval.
Strategic risk is the risk that inadequate, ineffective, or inappropriate business decisions result in negative impacts
on the ability to execute the
syndicate’s business’ objectives/strategy, and hence on the profitability of the syndicate.
The ASML Board has ultimate responsibility for overseeing the execution of the approved strategy and consequently
the associated strategic risk. All areas of the business are encouraged to identify areas of potential uncertainty that
could impact plan execution and to identify emerging risks.
Insurance risk refers to fluctuations in the timing, frequency and severity of insured events, relative to expectations
at the time of underwriting. The ASML Reserving Committee oversees the overall management of reserving risk.
Reserving risk is managed through the use of proprietary and standardised modelling techniques, internal and
external benchmarking, review of claims development and the ongoing oversight from an independent external
reserving process. An independent Statement of Actuarial Opinion is
commissioned each year in line with Lloyd’s
Valuation of Liabilities requirements. The reserving process is overseen by and reports through the ASML Audit
Committee.
Regulatory risk is the financial loss or inability to conduct normal business activities owing to a breach of regulatory
requirements or failure to respond to regulatory change. ASML is a regulated entity and therefore is required to
comply with the requir
ements of the PRA, FCA and Lloyd’s. Lloyd’s requirements include those imposed on the
Lloyd’s market by overseas regulators. ASML ensures that there is an appropriate level of skilled resources in place
to meet its regulatory obligations, including compliance, risk management and internal audit functions.
Operational risk is the risk of a loss resulting from inadequate or failed internal processes, people and systems or
from external events. The syndicate is constantly exposed to operational risk as this covers the uncertainties and
hazards of undertaking day-to-day business. Controls have been put in place and documented to try to ensure that
these risks are managed on a proportionate basis and within risk appetite. As operational risks apply across the
entire business, all committees have some level of oversight for operational risk. However, the ASML Operations
and Change Committee manage risks relating to changes in systems and processes, and
ASML’s
Board Risk
Committee has oversight of any risk events which require escalation.
Syndicate 1994
Report of the directors of the managing agent
6
Financial risk for the syndicate covers all risks related to financial investment and the ability to pay creditors, and
includes credit risk, liquidity risk and market risk. In relation to assets held, an investment mandate reflecting the
syndicate’s risk
appetite is in place and has been approved by the ASML Board. Compliance with this is controlled
through the investment manager’s systems and monitored through the
ASML Investment and Treasury Oversight
Group.
Credit risk is the risk of financial loss to the syndicate if a counterparty to a financial instrument or a reinsurance
agreement fails to discharge a contractual obligation. ASML manages credit risk by placing limits on exposure to a
single counterparty by reference to the credit rating of the counterparty. On a quarterly basis the ASML Finance
Committee reviews credit exposures, reinsurer security and counterparty limits, with further oversight provided by
the ASML Board and Audit Committee.
Liquidity risk is the risk that the syndicate’s assets are insufficient to fund the obligations arising from its insurance
contracts and financial liabilities as they fall due, or that they can only be met by incurring additional costs. ASML’s
approach to managing liquidity risk includes use of daily liquidity monitoring, quarterly cash flow forecasts and
management of asset duration. Contingency funding plans are in place to ensure that adequate liquid financial
resources are available to meet obligations as they fall due in the event of reasonably foreseeable abnormal
circumstances.
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market prices, excluding those that are caused by credit downgrades which are included under credit
risk. Market risk comprises three key components: interest rate risk, currency risk and investment risk. For each of
the major components of market risk the syndicate has policies and procedures in place which detail how each risk
should be managed and monitored. Investment management is outsourced and an investment mandate reflecting
the syndicate’s risk appetite is in place and has been approved by the
ASML Board. Compliance with this is
controlled through the investment manager’s systems and monitored through the monthly and quarterly reporting
process.
The use of financial derivativ
es is governed by ASML’s risk management policies and ASML does not use such
instruments for speculative purposes. The ASML Board has agreed key risk indicators and approved the
corresponding risk appetite for each measure.
A quantitative analysis of the risks set out above is included in note 4 to the annual accounts. A traffic light indicator
is used for monitoring current levels of risk based upon agreed thresholds and tolerances.
Principal risks
As the syndicate acquires portfolios of underwriting business written historically the principal risks faced by the
syndicate arise from:
•
Insurance operations
o
significant exposure to large claims on expired risks
o
fluctuations in the severity of claims compared with expectations
o
late reporting of claims
o
inadequate reserving
o
inadequate reinsurance protection (including the credit worthiness of major reinsurers)
•
Market risk impacts
o
interest rates
o
fixed income bond yield fluctuations
o
changes in exchange rates
•
Systemic risks
o
economic and social inflation
o
climate change
Climate change
The financial risks associated with climate change continue to be an area of focus for ASML. These risks include
physical, transition and liability risks. For Syndicate 1994, the main risks relate to liability risk within the existing
legacy portfolios.
Syndicate 1994
Report of the directors of the managing agent
7
As the syndicate has not written any new business in 2024, and the existing business is relatively mature, the level
of exposure to physical and transition risks is relatively limited. Liability risks may arise if policyholders, such as
energy companies, are held liable for losses to third parties resulting from climate risks. Legacy business is not
expected to be materially exposed to increased uncertainty as a result of climate change. There is some potential
for exposure with respect to climate change liability, although ASML does not believe that such a risk is material for
the current Syndicate 1994 portfolio. This is an area which continues to be closely monitored.
Management of climate change related risks is shared amongst several executives and ASML's Chief Risk Officer
has been given the responsibility for continuing to update the Board on the management of the financial risks of
climate change through the ASML Board Risk Committee. ASML has incorporated climate risk within its existing
ERM structures, including the addition of climate-related sub-risks which are assessed via the quarterly risk and
control self-assessment processes. The ERM team regularly reports to the Board Risk Committee in relation to
performance relative to regulatory expectations.
Inflation
A key emerging and thematic risk for the syndicate is the relatively high inflationary environment and the uncertainty
it can bring to forecasting within insurance. An understanding of the impact of inflation (with the specific drivers,
economic or legal awards) is important across multiple areas of the syndicate
’
s business including reserving.
The most common ways that inflation impacts insurance is through claims inflation and exposure inflation. As the
costs of goods increases the cost of indemnifying a client also increases and therefore underlying exposures can
also increase (up to policy limits). Inflation can mean that future claims deviate from historical performance, both in
terms of frequency and severity. A general high inflation environment could also have secondary impacts on
insurance such as the
potential to increase a client’s prop
ensity to claim, either because a loss is more likely to
exceed an excess or because they are under financial strain and require assistance so inflate a claim. Similarly,
inflation can drive a gearing effect of pushing claims above an attachment point which they were previously below.
Longer-tail insurance, to which the syndicate is exposed, may also be impacted more significantly by high inflation
as the ability to adapt prices may be slower. Inflation has fallen from its high in 2023, but should it remain elevated
over the next few years that could have a larger impact on long-tail classes.
Economic uncertainty may increase concerns around elevated global inflationary pressures and supply chain
issues. The ASML and Compre actuarial teams have worked collaboratively to understand the effects of
‘conventional economic’ and ‘social’ inflation on
the existing legacy portfolios, which in turn contribute to the
assessment of best estimate and held reserves.
Corporate governance
The ASML Board is chaired by Angus Winther, who is supported by five further non-executive directors and all
except Stuart Davies are independent. Monica Crámer Manhem was appointed as a Non-Executive Director on 6
June 2024. Martin Hudson stepped down on the 28 February 2025. Rob Littlemore was appointed as a Non-
Executive Director on 28 February 2025, subject to regulatory notifications. David Ibeson is the Chief Executive
Officer and there were three further executive directors as at 31 December 2024. With effect from 1 January 2024,
Taryn McHarg, the Apollo Chief Financial Officer, was appointed as an executive director and James MacDiarmid,
Hayley Spink and Simon White stepped down from the ASML Board, remaining on the Executive Committee of
ASML.
Defined operational and management structures are in place and terms of reference exist for the ASML Board and
all Board and Management Committees. Syndicate 1994 has a specific Syndicate Management Committee,
comprising members from ASML and Compre, that is responsible for the day to day running of the syndicate.
The ASML Board meets at least four times a year and more frequently when business needs require. The ASML
Board has a schedule of matters reserved for its decision and is supported by the Audit Committee, the Risk
Committee and the Remuneration and Nominations Committee. These supporting committees are comprised of
non-executive directors and with the exception of Stuart Davies, all members of the Audit Committee are
independent. All members of the Risk Committee and Remuneration and Nominations Committee are independent.
Syndicate 1994
Report of the directors of the managing agent
8
Section 172 statement
The directors adopt the responsibilities to promote the success of the syndicate as if s172 of the Companies Act
2006 were applicable and have acted in accordance with these responsibilities during the year. The ASML Board
has identified the following key stakeholders: capital providers to the managed syndicates, employees, the
shareholder of ASML, Lloyd’s
, regulators, policyholders and brokers.
Throughout the year the ASML Board considered the wider impact of strategic and operational decisions on its
stakeholders. Examples include the development and execution of the syndicate plans; the assessment and raising
of capital; communications with capital providers; and changes to Board composition. The ASML Board considers
that the interests of all stakeholders were aligned for these decisions.
Developing and maintaining relationships with brokers, other Lloyd’s market syndicates and parent corporate
entities is central to the success of the syndicate. In developing legacy insurance propositions and marketing them
with our broking partners, and in settling claims, we always seek to treat customers fairly.
ASML maintains
open and transparent relationships with our regulators and Lloyd’s,
with these relationships being
managed through our compliance team. Regular meetings are held with representatives of Lloyd’s and the PRA
and significant regulatory engagements are reported to the ASML Board.
Apollo’s
stated purpose
is “Enabling a resilient and sustainable world”. Through 202
4 we continued our work to
develop and document our Environmental, Social and Governance
(“
ESG
”)
principles and standards and assess
our current business model against these standards. There is a defined referral process for underwriting portfolios
to adhere to our ESG appetite and manage potential reputational risk. ESG considerations are integrated into the
design of the investment strategy and asset allocation, and ongoing attention is given to staff engagement,
particularly around
Diversity, Equity & Inclusion (‘’DEI’’)
. Further work on ESG activities will continue through 2025.
We have put in place arrangements to assist in managing the financial risks and opportunities associated with the
effects of climate change and to ensure adequate oversight and control of this area in relation to reserving,
investment management and operations. The business meets the requirements for PRA Supervisory Statement
3/19. Whilst the Chief Risk Officer retains overall accountability for coordinating the approach to managing this risk
within ASML, the responsibility is allocated to relevant managers of each business area. Further developments to
ensure appropriate management of these risks and opportunities will continue through 2025.
Staff matters
At ASML we believe that our people are our most valuable asset. Attracting, retaining, and nurturing talent is
essential to our success. We are committed, to creating a work environment where employees feel engaged through
communication, acknowledgment and ongoing growth opportunities. We actively support and promote DEI as well
as mental health and wellbeing to ensure that all staff members feel appreciated, supported and can perform at
their best.
ASML aspire to function as a team where respect and collaboration are standard practices. Our hybrid working aims
to empower employees and to encourage a culture of communication and cooperation. We have channels for staff
to express concerns and to share feedback making our workplace safe, encouraging and innovative.
ASML’s people practices remain highly competitive in the London
insurance market, providing compensation,
benefits, and terms designed to attract and retain top talent. A key focus is on ensuring our employees perform at
their best with opportunities for skill enhancement, to develop their capabilities and advance their careers within
ASML. This is an integral focus of our succession planning strategy.
Syndicate 1994
Report of the directors of the managing agent
9
Business operations
ASML aims to maintain a lean, efficient operating model utilising technology and outsourcing arrangements enabling
flexibility and scalability to meet the demands of the business. We continue to invest in resources across the
business in order to ensure that there is an effective operating model and robust three lines of defence model.
Lloyd’s Blueprint Two initiatives
will offer several processing efficiency gains for the market, and we believe we are
well positioned to adopt the new digital services to maximise the benefit to ASML, its syndicates and its capital
providers.
ASML continues to successfully maintain a hybrid working environment with all employees able to work effectively,
both remotely and from the office, with suitable access to business systems.
Aligned with the FCA’s and PRA’s Operational Resilience and Third
-Party Oversight policies, Apollo maintains a
disciplined approach to operational resilience. We continue to focus on ensuring we maintain robust and resilient
plans to prevent, respond and recover from operational disruptions with the primary objective to protect our
customers and the integrity of our business.
Environmental, Social and Governance
ASML
’s
Board-approved ESG strategy was reviewed in November 2024. The ASML Board drives the strategy,
which is aligned with our vision statement and purpose,
“Enabling a resilient and sustainable world”.
ASML’s ESG Committee reports directly to the Executive Committee and coordinates ESG
-related activities within
ASML.
The ESG Committee’s mandate is set out within ASML’s ESG Policy, but at a high
-level seeks to identify
areas of improvement and to ensure progress against the ESG strategy approved by the ASML Board.
ASML is committed to a long-term sustainable approach to protecting the environment, balancing environmental
considerations and social responsibility with our overall business goals. ASML’s underwriting and investment
practices are governed by ESG risk appetites that were originally implemented in 2022 and are reviewed at least
annually. ASML is also working to identify new opportunities that support the transition to a low carbon sustainable
economy, including through Lloyd’s new Transition TCX class.
The ESG strategy is reviewed by the ASML Board annually. During 2024, ASML’s key achievements have included:
•
integrating climate risk formally into the ERM and governance frameworks which included enhancements
to climate related stress and scenario testing,
•
implementing new Investment Guidelines to avoid investing in sectors that do not align with the ESG risk
appetites,
•
joining the Partnership for Carbon Accounting Financials and commencing
work to baseline ASML’s
insurance-associated emissions, and
•
e
nhancing ASML’s approach to managing ESG risks in the underwriting process.
At Apollo our people are at the heart of everything we do. We operate a zero-tolerance policy to bullying, harassment
and discrimination. This includes protected characteristics under the Equality Act of 2010, as well as neurodiversity,
parental and caring responsibilities, socio-economic status and working patterns.
ASML is dedicated to fostering a diverse, equitable, and inclusive workplace, with a focus on inclusive hiring
practices. We are proud sponsors and supporters of six Lloyd’s market inclusion networks. As such, we have
implemented several inclusion initiatives and have a comprehensive DEI strategy in place. Employees have access
to mental health and wellbeing resources through independent partners, as well as additional support through
private medical services.
ASML monitors gender and racial diversity metrics, employee satisfaction, and governance related metrics. This
information is used by the ASML Board to track progress against the ESG Strategy. Several DEI related metrics at
year-end 2024 are summarised below.
Syndicate 1994
Report of the directors of the managing agent
10
2024
2023
Total
number
Proportion of
total category
(all employees,
senior
managers,
board)
Total
number
Proportion of
total category
(all employees,
senior
managers,
board)
Employees that are women
109
39%
92
39%
Senior managers that are women
14
31%
10
28%
Board directors that are women
4
40%
3
27%
Employees that are from ethnic minorities
45
16%
33
14%
Senior managers that are from ethnic minorities
3
7%
1
3%
Board directors that are from ethnic minorities
2
20%
2
18%
Notes: At the end of 2024, ASML had 281 employees in total (2023: 234), of which 45 (2023: 36) were senior managers. There were 10 board
directors (2023: 11).
From an environmental perspective, Apollo Group
’s
carbon footprint is monitored across different types of emissions
sources and we have separately aligned with greenhouse gas emissions (“GHG”) protocol scopes 1 and 2 and
several scope 3 categories (which cover purchased goods and services, fuel and energy-related activities, waste
generated in operations, employee commuting, and upstream leased assets). GHG emissions currently exclude
our scope 3 underwriting emissions as we look to develop an appropriate methodology. Our Scope 1 and 2 GHG
emissions are reported to UK Companies House under the Streamline Energy and Carbon Reporting framework.
ASML’s scope 1, 2, and 3 GHG emissions for year
-end 2024 are disaggregated by source below.
2024
2023
Emissions source
Kg CO
₂
Proportion of total
Kg CO
₂
Proportion of total
Scope 1
Heating
31,459
4.9%
30,834
5.5%
Personal mileage
4,116
0.6%
2,180
0.4%
35,575
5.5%
33,014
5.9%
Scope 2
Electricity
53,979
8.4%
60,143
10.7%
53,979
8.4%
60,143
10.7%
Scope 3
Business travel/commuting
496,712
76.9%
426,964
76.2%
Office materials/waste
40,364
6.3%
26,708
4.8%
Fuel-related activities
18,987
2.9%
13,591
2.4%
556,063
86.1%
467,263
83.4%
Total
100%
100%
Directors and d
irectors’
interests
The directors who held office at the date of signing this report are shown on page 2. The directors do not participate
on Syndicate 1994.
Annual general meeting
The directors do not propose to hold an Annual General Meeting for the syndicate. If the member of the syndicate
wishes to meet with them the directors are happy to do so.
Syndicate 1994
Report of the directors of the managing agent
11
Disclosure of information to the auditor
Each person who is a director of the managing agent at the date of approving this report confirms that:
•
so far as the director is aware, there is no relevant audit information of which the syndicate's auditor is unaware;
and
•
each director has taken all the steps that they ought to have taken as a director in order to make themselves
aware of any relevant audit information and to establish that the syndicate's auditor is aware of that information.
Auditor
Forvis Mazars
LLP has indicated its willingness to continue in office as the syndicate’s auditor. The managing agent
hereby gives formal notification of a proposal to re-appoint Forvis Mazars LLP as auditor of Syndicate 1994 for a
further year.
Events after the balance sheet date
The ASML Board has considered events after the balance sheet date which, by their nature, are material to the
syndicate and no items have been identified for disclosure.
Future developments
We continue to look for suitable opportunities in the market to write RITC and other legacy reinsurance transactions,
which fit our pricing requirements and underwriting strategy.
I would like to take this opportunity to thank our staff and partners at Compre for their hard work and commitment
to the business during the last year.
Approved by the Board.
DCB Ibeson
Chief Executive Officer
28 February 2025
Syndicate 1994
Statement of managing agent’s responsibilities
12
The Managing Agent is responsible for preparing the syndicate annual accounts in accordance with applicable law
and regulations.
The Insurance Accounts Directive (Lloyd's Syndicate and Aggregate Accounts) Regulations 2008 require the
managing agent to prepare syndicate annual accounts as at 31 December each year in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The
syndicate annual accounts are required by law to give a true and fair view of the state of affairs of the syndicate as
at that date and of its profit or loss for that year.
In preparing the syndicate annual accounts, the managing agent is required to:
•
select suitable accounting policies and then apply them consistently;
•
make judgements and estimates that are reasonable and prudent;
•
state whether applicable UK Accounting Standards have been followed, subject to any material departures
disclosed and explained in the notes to the syndicate annual accounts; and
•
prepare the syndicate annual accounts on the basis that the syndicate will continue to write future business
unless it is inappropriate to presume that the syndicate will do so.
The Managing Agent is responsible for the preparation and review of the iXBRL tagging that has been applied to
the Syndicate Accounts in accordance with the instructions issued by Lloyd’s, including designing, implementing,
and maintaining systems, processes and internal controls to result in tagging that is free from material non-
compliance with the instructions issued by Lloyd’s, whether due to fraud or error.
The Managing Agent is responsible for keeping proper accounting records which disclose with reasonable accuracy
at any time the financial position of the syndicate and enable it to ensure that the syndicate annual accounts comply
with the 2008 Regulations. It is also responsible for safeguarding the assets of the syndicate and hence for taking
reasonable steps for prevention and detection of fraud and other irregularities.
Legislation in the UK governing the preparation and dissemination of annual accounts may differ from legislation in
other jurisdictions.
Syndicate 1994
Independent auditor’s report to the member of Syndicate 1994
13
Opinion
We have audited the syndicate annual accounts of Syndicate 1994 (the “syndicate”) for the year ended 31
December 2024 which comprise
the Profit and loss account, the Statement of changes in member’s balances, the
Balance sheet, the Statement of cash flows and notes to the syndicate annual accounts, 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 The Syndicate accounts instructions Version 2.0 as modified by the Frequently
Asked Questions Version 1.1 issu
ed by Lloyd’s (the “Lloyd’s Syndicate Accounts Instructions”),
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 annual accounts:
•
give a true and fair view of the state of the syndicate’s affairs as at 31 December 2024 and of its loss 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 requirements within Lloyd’s 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 Lloyd’s 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 in
terest, and we have
fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other matter
–
iXBRL tagging
In forming our opinion on the syndicate annual accounts, which is not modified, we draw attention to the fact that
this report may be included within a document to which iXBRL tagging has been applied. This auditor’s report
provides no assurance over wheth
er the iXBRL tagging has been applied in accordance with the Lloyd’s Syndicate
Accounts Instructions.
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 at least twelve 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.
Syndicate 1994
Independent auditor’s report to the member of Syndicate 1994
14
Other information
The other information comprises the information included in the Syndicate Annual Report and Accounts, other than
the syndicate annual accounts and our auditor’s report thereon. The managing agent is responsible for the other
information. Our opinion on the syndicate annual accounts does not cover the other information and, 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 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. 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.
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 report of the directors of managing agent for the financial year for which the
syndicate annual accounts are prepared is consistent with the syndicate annual accounts; and
•
the report of the directors of managing agent has been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In 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 report of the directors of managing agent.
We have nothing to report in respect of the following matters in relation to which 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 agent’s remuneration 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 pag
e 12, 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 as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the managing agent either intends for the syndicate to cease operations, 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 the syndicate annual accounts.
Syndicate 1994
Independent auditor’s report to the member of Syndicate 1994
15
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
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.
Based on our understanding of the syndicate and its industry, we considered that non-compliance with the following
laws and regulations might have a material effect on the syndicate annual accounts: permissions and supervisory
requirements of the Prudentia
l Regulation Authority (“PRA”) and the Financial Conduct Authority (“FCA”), and
regulations set by the Council of Lloyd’s.
To help us identify instances of non-compliance with these laws and regulations, and in identifying and assessing
the risks of material misstatement in respect to non-compliance, our procedures included, but were not limited to:
•
gaining an understanding of the legal and regulatory framework applicable to the syndicate and the industry in
which it operates, and considering the risk of acts by the syndicate which were contrary to the applicable laws
and regulations, including fraud;
•
i
nquiring of directors and management of the managing agent and the syndicate’s management as to whether
the syndicate is in compliance with laws and regulations, and discussing their policies and procedures regarding
compliance with laws and regulations;
•
inspecting correspondence, if any, with relevant licensing or regulatory authorities including the PRA, FCA and
the Council of Lloyd’s;
•
reviewing minutes of meetings of the managing agent in the year; and
•
discussing amongst the engagement team the laws and regulations listed above, and remaining alert to any
indications of non-compliance.
We also considered those laws and regulations that have a direct effect on the preparation of the syndicate annual
accounts such as United Kingdom Generally Accepted Accounting Practice, The Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, and the Lloyd’s Syndicate Accounts Instructions.
In addition, we evaluated the directors’ and management of the managing agent’s and the syndicate management’s
incentives and opportunities for fraudulent manipulation of the syndicate annual accounts, including the risk of
management override of controls and determined that the principal risks related to posting manual journal entries
to manipulate financial performance, management bias through judgements and assumptions in significant
accounting estimates, in particular in relation to the valuation of the claims outstanding, specifically incurred but not
reported, and significant one-off or unusual transactions.
Our audit procedures in relation to fraud included but were not limited to:
•
making enquiries of the directors and management of the managing agent and syndicate management on
whether they had knowledge of any actual, suspected or alleged fraud;
•
gaining an understanding of the internal controls established to mitigate risks related to fraud;
•
discussing amongst the engagement team the risks of fraud;
•
addressing the risks of fraud through management override of controls by performing journal entry testing;
•
reviewing the accounting estimate in relation to valuation of Claims outstanding, specifically Incurred but not
reported (“IBNR”) claims for evidence of management bias; and
•
designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing.
The primary responsibility for the prevention and detection of irregularities, including fraud, rests with both those
charged with governance and management.
As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery,
intentional omissions, misrepresentations or the override of internal controls.
A further description of our responsibilities is available on the Financial Reporting Council’s website at
www.frc.org.uk/auditorsresponsibilities
.
This description forms part of our auditor’s report.
Syndicate 1994
Independent auditor’s report to the member of Syndicate 1994
16
Use of the audit 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.
Bill Schiller (Senior Statutory Auditor)
for and on behalf of Forvis Mazars LLP
Chartered Accountants and Statutory Auditor
30 Old Bailey
London
EC4M 7AU
28 February 2025
Bill Schiller (Feb 28, 2025 16:09 GMT)
Syndicate 1994
Profit and loss account
for the year ended 31 December 2024
17
2024
2023
Technical account
–
general business
Note
$
’000
$
’000
Gross premiums written
5
Outwards reinsurance premiums
(327 )
Premiums written, net of reinsurance
Change in the provision for unearned premiums:
Gross amount
18
Reinsurers’ share
18
(56 )
(125 )
Net change in provisions for unearned premiums
Earned premiums, net of reinsurance
Allocated investment return transferred from the non-
technical account
9
Claims paid
Gross amount
18
(41,011 )
(36,626 )
Reinsurers’ share
18
Net claims paid
(26,472 )
(24,696 )
Change in the provision for claims
Gross amount
18
Reinsurers’ share
18
(3,959 )
(10,558 )
Net change in provision for claims
Claims incurred, net of reinsurance
(11,708 )
(6,360 )
Net operating expenses
6
(3,460 )
(3,030 )
Balance on the technical account
–
general business
(11,191 )
(6,054 )
All operations relate to continuing activities.
The accompanying notes on pages 23 to 54 form an integral part of these annual accounts.
Syndicate 1994
Profit and loss account
for the year ended 31 December 2024
18
Restated
2024
2023
Non-technical account
Note
$
’000
$
’000
Balance on the technical account
–
general business
(11,191 )
(6,054 )
Investment income
9
Realised gains on investments
9
Unrealised gains on investments
9
Investment expenses and charges
9
(34 )
(61 )
Total investment return
Allocated investment return transferred to the technical
account
–
general business
(2,528 )
(2,470 )
Gain/(Loss) on foreign exchange
(322 )
Loss for the financial year
(11,048 )
(6,376 )
There were no amounts recognised in other comprehensive income in the current or preceding year other than
those included in the profit and loss account.
Syndicate 1994
Statement of changes in member
’
s balances
for the year ended 31 December 2024
19
2024
2023
$
’000
$
’000
Member’s balance brought forward at 1 January
(26,172 )
(44,796 )
Loss for the financial year
(11,048 )
(6,376 )
Losses collected in relation to distribution on closure of underwriting year
Cash calls from member
Other
(5 )
Member’s balance carried forward at 31 December
(11,054 )
(26,172 )
Syndicate 1994
Balance sheet
at 31 December 2024
20
Restated
2024
2023
Assets
Note
$
’000
$
’000
Investments
Financial investments
4,11
Deposits with ceding undertakings
4
Reinsurers’ share of technical provisions
Provision for unearned premiums
18
Claims outstanding
18
Debtors
Debtors arising out of direct insurance operations
12
Debtors arising out of reinsurance operations
13
Other debtors
14
Other assets
Cash and cash equivalents
22
Other
–
overseas deposits
16
Prepayments and accrued income
Accrued interest and rent
Deferred acquisition costs
15
Other prepayments and accrued income
Total assets
Syndicate 1994
Balance sheet
at 31 December 2024
21
2024
2023
Liabilities, capital and reserves
Note
$
’000
$
’000
Capital and reserves
Member’s balances
(11,054 )
(26,172 )
Total capital and reserves
(11,054 )
(26,172 )
Technical provisions
Provision for unearned premiums
18
Claims outstanding
18
Creditors
19
Creditors arising out of direct insurance operations
Creditors arising out of reinsurance operations
20
Other creditors including taxation and social security
21
Accruals and deferred income
Total liabilities
Total liabilities, capital and reserves
The syndicate annual accounts on pages 17 to 54 were approved by the Board of Apollo Syndicate Management
Limited and were signed on its behalf by:
TL McHarg
Chief Financial Officer
28 February 2025
Syndicate 1994
Statement of cash flows
for the year ended 31 December 2024
22
Restated
2024
2023
Note
$
’000
$
’000
Cash flows from operating activities
Loss for the financial year
(11,048 )
(6,376 )
Adjustments for:
Decrease in gross technical provisions
(20,012 )
(28,771 )
Decrease in reinsurers’ share of technical provisions
Decrease/(increase) in debtors
(5,164 )
(Decrease)/increase in creditors
(2,789 )
Movement in other assets/liabilities
Investment return
(2,528 )
(2,470 )
Net cash flows from operating activities
(27,397 )
(27,677 )
Cash flows from investing activities
Purchase of equity and debt instruments
(50,781 )
(39,639 )
Sale of equity and debt instruments
Investment income received
Other
(243 )
Net cash flows from investing activities
(2,649 )
Cash flows from financing activities
Collection of losses
Open year cash calls
Other
(5 )
Net cash flows from financing activities
Net increase in cash and cash equivalents
(5,326 )
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
22
Syndicate 1994
Notes to the accounts
23
1. Basis of preparation
Syndicate 1994 is managed by ASML.
The address of the syndicate’s managing agent, Apollo Syndicate
Management Limited, is One Bishopsgate, London EC2N 3AQ.
The annual accounts have been prepared in accordance with The Insurance Accounts Directive (Lloyd’s Syndicate
and Aggregate Accounts) Regulations 2008, and applicable accounting standards in the United Kingdom and the
Republic of Ireland, including
Financial Reporting Standard 102 (“
FRS 102
”)
,
Financial Reporting Standard (“
FRS
103
”)
in relation to insurance contracts, and the Lloyd’s Syndicate Accounts Instructions Version 2.0 as modified by
the Frequently Asked Questions Version 1.1 issued by Lloyd’s.
The annual accounts have been prepared on the historical cost basis, except for financial assets which are
measured at fair value through profit or loss.
The annual accounts are presented in US Dollars, which is also the s
yndicate’s functional currency.
All amounts have been rounded to the nearest thousand and are stated in US Dollars unless otherwise indicated.
Restatement of comparative information
During 2024, Lloyd's introduced changes to the syndicate accounts process to rationalise and standardise financial
reporting across the market. As a result, certain comparative information has been restated to ensure consistency
with current year presentation and compliance with the Lloyd's Syndicate Accounts Instructions. The changes
comprise:
Reclassification changes
Certain financial statement line items have been reclassified whilst the underlying amounts remain unchanged. The
principal change is the reclassification of deposits with ceding undertakings as a separate line item in investments,
previously it formed part of other debtors. Another principal change is the reclassification of overseas deposits as
movement in other assets/liabilities in cash flows from operating activities, previously it formed part of cashflows
from investing activities as a separate line item. The comparative balances in note 4 and note 14 have been
represented to align with the current period presentation.
Aggregation changes
To align with Lloyd's reporting requirements whilst maintaining FRS 102 compliance, certain items have been
aggregated or disaggregated within the financial statements and related notes. Realised and unrealised gains and
losses on investments have been disaggregated in the non-technical account of the profit and loss account.
Deposits with ceding undertakings have been disaggregated from other debtors on the balance sheet and shown
as an investment with a corresponding impact on the statement of cash flows.
Note presentation changes
There have been changes to the format, presentation and order of the notes. Additional granularity has been added
to several notes including the risk disclosures in note 4 and the technical provisions in note 18. Further segmental
information has been provided in note 5.
The reclassification, aggregation and note presentation changes have been applied retrospectively and had no
impact on previously reported profit, total comprehensive income, total assets, total liabilities, or total capital and
reserves.
Going concern
The syndicate has financial resources to meet its financial needs and manages its portfolio of insurance risk. The
directors have continued to review the plans, liquidity and operational resilience of the syndicate and are satisfied
that the syndicate is well positioned to manage its business risks in the current economic environment. The
syndicate has sufficient capital for each year of account provided by the syndicate member as FAL. There is no
intention to cease underwriting or cease the operations of the syndicate.
Accordingly, the directors of the managing agent continue to adopt the going concern basis in preparing the annual
accounts.
Syndicate 1994
Notes to the accounts
24
2. Critical accounting judgements and key sources of estimation uncertainty
In preparing these annual accounts, the directors of the managing agent have made judgements, estimates and
assumptions that affect the application of the syndicate’s accounting policies and the reported amounts of assets,
liabilities, income and expenses. Several of the estimates are based on actuarial assumptions underpinned by
historical experience, market data and other factors that are considered to be relevant. The measurement of the
provision for claims outstanding, specifically IBNR involves judgements and assumptions about the future that have
the most significant effect on the amounts recognised in the annual accounts.
Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to estimates are recognised in the period in which they are identified where the revision affects
only that period, and in future periods where the revision affects both current and future periods.
Critical judgements in applying the syndicate’s accounting policies
There are no critical judgements, apart from those involving estimations (which are dealt with separately below), in
the process of applying the syndicate’s accounting policies.
Key sources of estimation uncertainty
The key assumptions and other key sources of estimation uncertainty at the balance sheet date that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year relate principally to claims outstanding, in particular
IBNR, and the related reinsurers’ share.
Claims outstanding
The measurement of the provision for claims outstanding and the related reinsurance recoveries requires
assumptions to be made about the future that have a significant effect on the amounts recognised in the annual
accounts.
The provision for claims outstanding comprises the estimated cost of settling all claims incurred but unpaid at the
balance sheet date and includes IBNR and a confidence margin. This is a complex area due to the subjectivity
inherent in estimating the impact of claims events that have occurred but for which the eventual outcome remains
uncertain. The estimate of IBNR is generally subject to a greater degree of uncertainty than that for reported claims.
The amount included in respect of IBNR is based on statistical techniques of estimation applied by the managing
agent’s in
-house actuaries in conjunction with the Compre actuarial team. These techniques normally involve
projecting based on past experience the development of claims over time, to form a view of the likely ultimate claims
to be expected. Where there is limited prior experience of the specific business written, considerable use is made
of information obtained in the course of pricing individual risks accepted and experience of analogous business.
Account is taken of variations in business accepted and the underlying terms and conditions. The provision for
claims also includes amounts in respect of internal and external claims handling costs.
Syndicate 1994
Notes to the accounts
25
2.
Critical accounting judgements and key sources of estimation uncertainty (continued)
Accordingly, the most critical assumptions as regards to claims provisions are that the past is a reasonable indicator
of the likely level of claims development, that the notified claims estimates are reasonable and that the rating,
inflation and other models used for current business are based on fair reflections of the likely level of ultimate claims
to be incurred. The level of uncertainty with regard to the estimations within these provisions generally decreases
with the length of time elapsed since the underlying contracts were on risk. The reserving uncertainty will be greatest
for liability business which is described as long-tail, reflecting the time it takes for losses to be identified by claimants
and settled.
The reserve setting process is integrated into Apollo’s governance framework. The proposed best estimate reserves
are reviewed in detail by the Reserving Committee on a quarterly basis and specific management margin added to
increase the probability that the reserves are sufficient to meet liabilities so far as they can reasonably be foreseen.
These reserves, including margins, are then subject to further review by the Audit Committee on behalf of the Board.
The directors consider that the provisions for gross claims and related reinsurance recoveries are fairly stated on
the basis of the information currently available. The ultimate liability will vary as a result of subsequent information
and events, which may result in significant adjustments to the amounts provided. The estimate of the provision for
claims outstanding will develop over time and the estimated claims expense will continue to change until all the
claims are paid. The historical development of claims incurred estimates is set out in the loss development triangles
by the inherited pure YoA in note 17. The adjustment in the current year for the revision to the prior year estimate
of the provision for claims outstanding is disclosed in note 18.
3. Significant accounting policies
The following significant accounting policies have been applied consistently in accounting for items which are
considered material in relation to the syndicate
’s
annual accounts.
RITC received from a third party syndicate
When the syndicate accepts a RITC premium from another syndicate it records the premium and associated claims
movements in the technical account and the assets and liabilities transferred in the balance sheet at fair value on
the date the RITC agreement is effective. Any unearned gross and reinsurance premiums included in the RITC
transaction are deferred and earned over the remaining lives of the relevant contracts. The RITC transaction has
no impact on the syndicate's profit or net assets at the time it is first recorded.
Gross premiums written
Gross premiums written comprise third party RITC premiums received from contracts completed during the financial
year and subsequent adjustments to premiums on policies transferred under RITC contracts.
Gross premium adjustments include changes made in the year to pipeline premium estimates, including amounts
due to the syndicate not yet received or notified, for policies transferred under RITC contracts.
Premiums are shown gross of brokerage payable and are exclusive of taxes and duties thereon.
Syndicate 1994
Notes to the accounts
26
3.
Significant accounting policies (continued)
Outwards reinsurance premiums
Premiums comprise adjustments arising in the accounting period in respect of reinsurance contracts transferred
under RITC contracts. Under some policies, reinsurance premiums payable are adjusted retrospectively in the light
of claims experience. Where written premiums are subject to an increase retrospectively, any potential increase is
recognised as soon as there is an obligation to the reinsurer.
Provisions for unearned premiums
Written premiums are recognised as earned over the life of the underlying policies and computed using the daily
pro-rata method. Unearned premiums represent the proportion of premiums written that relate to unexpired terms
of policies in force at the balance sheet date, calculated using a time apportionment earnings pattern reflecting the
risk profile of the underlying policies.
Outwards reinsurance premiums are earned in the same accounting period as the premiums for the related direct
or inwards business being reinsured.
Claims provisions and related reinsurance recoveries
Gross claims incurred comprise the estimated cost of all claims occurring during the year, whether reported or not,
including related direct and indirect claims handling costs and adjustments to claims outstanding from previous
years.
Incurred claims outstanding are reduced by anticipated salvage and other recoveries from third parties. The amount
of any salvage and subrogation recoveries is separately identified and, where material, reported as a receivable.
The provision for claims outstanding is assessed on an individual case by case basis and is based on the estimated
ultimate cost of all claims notified but not settled by the balance sheet date, together with the provision for related
claims handling costs. The provision also includes the estimated cost of IBNR claims as well as claims incurred but
not enough reported and a confidence margin above best estimate.
The reinsurers’ share of provisions for claims is based on
amounts of claims outstanding and projections for IBNR,
net of estimated irrecoverable amounts, having regard to the reinsurance programme in place for the class of
business, the claims experience for the year and the current security rating of the reinsurance companies involved.
Where the security rating provides an indication that the recoverable amount may be impaired a proportion of the
balance will be provided for as a provision for bad debt by applying a percentage based on historical experience.
Adjustments to the amounts of claims provisions established in prior years are reflected in the annual accounts for
the period in which the adjustments are made. The provisions are not discounted for the investment earnings that
may be expected to arise in the future on the funds retained to meet the future liabilities. The methods used, and
the estimates made, are reviewed regularly.
Unexpired risks provision
A provision for unexpired risks is made where claims and related expenses likely to arise after the end of the financial
period in respect of contracts concluded before that date are expected, in the normal course of events, to exceed
the unearned premiums and premiums receivable under these contracts after the deduction of any acquisition costs
deferred.
A provision for unexpired risks is calculated separately by reference to classes of business which are regarded as
managed together after taking into account relevant investment return. All the classes of the syndicate are
considered to be managed together.
Financial assets and liabilities
The syndicate has chosen to apply the provisions of Section 11 (Basic Financial Instruments) and Section 12 (Other
Financial Instruments Issues) of FRS 102 for the treatment and disclosure of financial assets and liabilities.
Syndicate 1994
Notes to the accounts
27
3.
Significant accounting policies (continued)
Classification
The accounting classification of financial assets and liabilities determines the way in which they are measured and
changes in those values are presented in the statement of profit or loss and other comprehensive income. Financial
assets and liabilities are classified on their initial recognition.
The initial classification of a financial instrument takes into account contractual terms including those relating to
future variations. Once the classification of a financial instrument is determined at initial recognition, re-assessment
is only required when there has been a modification of contractual terms that is relevant to an assessment of the
classification.
The syndicate’s investments comprise holdings of short
-dated government and corporate bonds, collective
investment schemes and cash and cash equivalents. The loan to Lloyd’s Central Fund is included as a syndicate
investment. The syndicate may hold derivative financial instruments for risk management purposes in line with the
investment strategy. Hedge accounting is not adopted.
The syndicate does not hold any non-derivative financial assets or financial liabilities for trading purposes. When
derivatives are determined to be liabilities, they are categorised as held for trading and reported within other
creditors in the balance sheet.
Deposits with credit institutions, debtors, and accrued interest are classified as loans and receivables.
Recognition
Financial assets and liabilities are recognised when the syndicate becomes a party to the contractual provisions of
the instrument. Financial liabilities and equity instruments are classified according to the substance of the
contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the
assets of the entity after deducting all of its liabilities. The syndicate does not hold any equity instruments.
Measurements
All financial assets and liabilities are initially measured at transaction price (including transaction costs), except for
those financial assets classified as held at fair value through profit or loss, and so initially measured at fair value
(which is normally the transaction price excluding transaction costs), unless the arrangement constitutes a financing
transaction.
Investments and derivative instruments are measured at fair value through the profit or loss. All other financial
assets and liabilities are held at cost. The syndicate does not hold any non-current debt instruments and does not
classify debt instruments as payable or receivable within one financial year.
Realised and unrealised gains and losses arising from changes in the fair value of investments are initially presented
in the non-technical profit and loss account in the period in which they arise. Interest income is recognised as it
accrues. Investment management and other related expenses are recognised when incurred. The overall
investment return is subsequently transferred to the technical account to reflect the investment return on funds
supporting the underwriting business.
Derecognition of financial assets and liabilities
Financial assets are derecognised when and only when:
•
the contractual rights to the cash flows from the financial asset expire or are settled;
•
the syndicate transfers to another party substantially all the risks and rewards of ownership of the financial
asset; or
•
the syndicate, despite having retained some significant risks and rewards of ownership, has transferred control
of the asset to another party and the other party has the practical ability to sell the asset in its entirety to an
unrelated third party and is able to exercise that ability unilaterally and without needing to impose additional
restrictions on the transfer.
Financial liabilities are derecognised only when the obligation specified in the contract is discharged, cancelled or
expires.
Syndicate 1994
Notes to the accounts
28
3.
Significant accounting policies (continued)
Fair value measurement
The best evidence of fair value is a quoted price for an identical asset in an active market. When quoted prices are
unavailable, the price of a recent transaction for an identical asset provides evidence of fair value as long as there
has not been a significant change in economic circumstances or a significant lapse of time since the transaction
took place. If the market is not active and recent transactions of an identical asset on their own are not a good
estimate of fair value, the company estimates the fair value by using a valuation technique.
Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market
participants use to make valuation decisions, including assumptions about risk. Inputs may include price information,
volatility statistics, yield curves, credit spreads, liquidity statistics and other factors.
The use of different valuation techniques could lead to different estimates of fair value. FRS 102 section 11.27
establishes a fair value hierarchy that prioritises the inputs to valuation techniques used to measure fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities
(Level 1) and the lowest priority to unobservable inputs (Level 3). More information on the hierarchy is included in
note 11.
Impairment of financial instruments measured at amortised cost
For financial assets carried at amortised cost, the amount of an
impairment is the difference between the asset’s
carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original
effective interest rate.
For financial assets carried at cost less impairment, the impairment loss is the difference between the asset’s
carrying amount and the best estimate of the amount that would be received for the asset if it were to be sold at
arm’s length on the reporting
date.
Where indicators exist for a reversal in impairment loss, and the reversal can be related objectively to an event
occurring after the impairment was recognised, the prior impairment loss is tested to determine reversal. An
impairment loss is reversed on an individual impaired financial asset to the extent that the revised recoverable value
does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised. The
amount of the reversal is recognised in profit and loss.
Off-setting
Financial assets and financial liabilities are off-set, and the net amount presented in the balance sheet when, and
only when, the syndicate has a legal right to set off the amounts and intends either to settle on a net basis or to
realise the asset and settle the liability simultaneously.
Deposits with ceding undertakings
Deposits with ceding undertakings are funds held by Lloyd's Insurance Company S.A.
(“Lloyd’s Europe”)
by on
behalf of the syndicate to settle Part VII claims. These funds are held at amortised cost in the balance sheet.
Debtors and creditors
Debtors and creditors are recognised when due. These include amounts due to and from agents, brokers and
insurance contract holders which are classified as insurance debtors and creditors as they are non-derivative
financial assets with fixed or determinable payments that are not quoted on an active market. Insurance debtors
are measured at amortised cost less any provision for impairments. Bad debts are provided for only where specific
information is available to suggest a debtor may be unable or unwilling to settle its debt to the syndicate. The
provision is calculated on a case-by-case basis. Insurance creditors are stated at amortised cost.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from
the acquisition date that are subject to an insignificant risk of changes in fair value and are used by the syndicate in
the management of its short-term commitments.
Cash and cash equivalents are carried at amortised cost in the statement of financial position.
Syndicate 1994
Notes to the accounts
29
3.
Significant accounting policies (continued)
Bank overdrafts that are repayable on demand and form an integral part of the syndicate
’s cash management are
included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
Investment return
Investment return comprises investment income, realised investment gains and losses, movements in unrealised
gains and losses, investment expenses and charges, and interest payable.
Realised gains and losses represent the difference between the net proceeds on disposal and the purchase price
(net of transaction costs).
Unrealised gains and losses on investments represent the difference between the fair value at the balance sheet
date and their net purchase price. Movements in unrealised investment gains and losses comprise the
increase/decrease in the reporting period in the value of the investments held at the reporting date and the reversal
of unrealised investment gains and losses recognised in earlier reporting periods in respect of investment disposals
of the current period.
Investment return is initially recorded in the non-technical account and subsequently transferred to the technical
account to reflect the investment return on funds supporting the underwriting business.
Net operating expenses
Net operating expenses include acquisition costs, administrative expenses and member
’
s standard personal
expenses.
Reinsurers’ commissions and profit participations
represent contributions towards operating expenses
and are reported accordingly.
Costs incurred by the managing agent and the member on behalf of the syndicate are recognised on an accruals
basis. No mark-up is applied.
Acquisition costs
Acquisition costs represent costs arising from the conclusion of insurance contracts such as brokerage and
commission.
Acquisition costs are earned in line with the earning of the gross premiums to which they relate. The deferred
acquisition cost asset represents the proportion of acquisition costs which corresponds to the proportion of gross
premiums written that is unearned at the balance sheet date.
Reinsurers’ commissions and profit participations
Under certain outwards reinsurance contracts the syndicate receives a contribution towards the expenses incurred.
The outwards reinsurance contracts may allow the ceding of acquisition costs and in certain instances an allocation
of administrative expenses. Reinsurance arrangements can also pay an overriding or profit commission.
The reinsurers’ share of expenses is included within operating expenses and earned in line with the related expense.
The reinsurers’ share of deferred acquisition cost
s liability corresponds to the gross deferred acquisition costs at
the balance sheet date.
Managing agent’s fees
The managing agent charges a management fee based on premium income; this is disclosed in note 23. This
expense is recognised over the 12 months following commencement of the underwriting year to which it relates. In
the absence of a new legacy transaction attaching to a YoA (as is the case for the 2024 YoA in calendar year 2024)
the management fee will be charged as 5% of total managing agency expenses.
Syndicate 1994
Notes to the accounts
30
3.
Significant accounting policies (continued)
Foreign currencies
Transactions in foreign currencies are translated into US Dollars which is the functional and presentational currency
of the syndicate. Transactions in foreign currencies are translated using the exchange rates at the date of the
transaction. The syndicate
’s monetary assets and liabilities denominated in foreign currencies are translated into
the functional currency at the rates of exchange at the balance sheet date. Non-monetary assets and liabilities
denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the
exchange rate at the date that the fair value was determined. Non-monetary items denominated in foreign currencies
that are measured at amortised cost are translated to the functional currency using the exchange rate at the date
of the transaction. For the purposes of foreign currency translation, unearned premiums and deferred acquisition
costs are treated as monetary items.
Foreign exchange differences arising on translation of foreign currency amounts are included in the non-technical
account.
Pension costs
Apollo operates a defined contribution pension scheme. Pension contributions relating to managing agency staff
working on behalf of the syndicate are charged to the syndicate and included within net operating expenses.
Taxation
Under Schedule 19 of the Finance Act 1993 managing agents are not required to deduct basic rate income tax from
trading income. In addition, all UK basic rate income tax deducted from syndicate investment income is recoverable
by managing agents and consequently the distribution made to the member is gross of tax. Capital appreciation
falls within trading income and is also distributed gross of tax.
No provision has been made for any United States Federal Income Tax payable on underwriting results or
investment earnings. Any payments on account made by the syndicate during the year on behalf of the member
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.
Other prepayment and accrued income
Other prepayments are recognised as assets when the payment is made and the syndicate expects to receive the
economic benefit from the prepayment in future periods. They are initially recognised at cost and are amortised
over the period in which the economic benefit is consumed.
Accrued income are recognised as assets for services received whether or not billed to the syndicate. They are
initially recognised at fair value and subsequently measured at amortised cost.
4.
Risk and capital management
Introduction and overview
This note presents information about the nature and extent of insurance and financial risks to which the syndicate
is exposed, the managing agent’s objectives, policies and processes for measuring and managing insurance and
financial risks, and for managin
g the syndicate’s
solvency capital.
The nature of the syndicate’s exposures to risk and its objectives and policies for managing risk have not changed
significantly from the prior year.
Material risk profile change
The ASML ERM framework below has been designed on the basis of the current Syndicate 1994 risk profile, which
is predominantly made up of 2017 & prior reserves from Syndicate 1969 (as well as a small book from Syndicate
3330 relating to the 2014 & prior pure years). However, the Syndicate 1994 business model is to purchase RITC
portfolios from third parties, which could include new risks, classes of business, geographical locations or customer
types that are not currently covered by the Syndicate 1994 ERM and capital management framework.
Syndicate 1994
Notes to the accounts
31
4.
Risk and capital management (continued)
The framework has therefore been designed to be as adaptable as possible in order to minimise the impact should
a new portfolio be purchased which is outside of the current framework. It is possible that should the portfolio be
materially different and of a material size that it could require an update to the existing framework and controls. The
Syndicate Management Committee would consider any implications to the broader risk framework as part of the
purchase process.
Enterprise Risk Management framework
The ASML ERM framework has been adopted and embedded by the syndicate. The primary objective of the ERM
framework is to protect the syndicate’s member from events that could impede sustainable growth and achievement
of consistent financial performance, including failing to maximise opportunities through informed and appropriate
risk taking. All staff providing services to the syndicate are trained to recognise the critical importance of having
efficient and effective ERM systems in place.
The ASML Board has overall responsibility for the establishment and oversight of the ERM framework. The ASML
Board has established an Audit Committee and a Board Risk Committee which oversee the operation of the
syndicate’s
ERM framework and review and monitor the management of the risks to which the syndicate is exposed.
ASML has established an ERM function, together with terms of reference for the ASML Board, its committees and
the associated Executive Management Committees, which identify the risk management obligations of each. The
function is supported by a clear organisational structure with documented authorities and responsibilities from the
Board to Executive Management Committees and senior managers using a ‘three lines of defence’ model. The
framework sets out the risk appetites for the syndicate and includes controls and business conduct standards.
Under the ERM framework, ASML’
s Board Risk Committee oversees the first line ownership of risk at an executive
level. The management of specific risk grouping is delegated to several executive committees: the Underwriting
Committee and the Reserving Committee are responsible for developing and monitoring insurance risk
management policies; the management of financial risks is the responsibility of the Finance Committee and the
Investment and Treasury Oversight Group. In addition, the syndicate is exposed to consumer and operational risks
and the management of these risks is the responsibility of the Underwriting Committee and the Operations
Committee respectively. Accordingly, the executive members responsible for these risks provide the Board Risk
Committee with a first line view of the risk and the ERM function provides a second line challenge and oversight.
ASML’s
Internal Audit function provides assurance through their role as the third line of defence.
The ERM function reports quarterly to the ASML Board and Board Risk Committee on its activities and provides a
forward-looking view of the upcoming assurance activities. The Reserving Committee, Underwriting Committee,
Finance Committee, Investment and Treasury Oversight Group, Operations Committee and Change Committee
report regularly to the Executive Committee and work closely with the ERM function on their activities as well as
reporting to the Board and the relevant Board committees. The Syndicate 1994 Management Committee meets on
a monthly basis. This committee has representation from all the core functions of ASML and Compre, the strategic
partner on the syndicate.
Climate risk relates to the range of complex physical, transition and liability risks arising from climate change. This
includes the risk of higher claims due to more frequent and more intense natural catastrophes; the financial risks
which could arise from the transition to a lower-carbon economy; and the risk that those who have suffered loss
from climate change might then seek to recover those losses from others who they believe may have been
responsible. Climate change-related risk is not considered a standalone risk, but a cross-cutting risk with potential
to amplify each existing risk type. Specific climate sub-risks are incorporated into the quarterly ERM processes to
ensure they receive appropriate attention.
Insurance risk
Insurance risk refers to fluctuations in the timing, frequency and severity of insured events, relative to expectations
at the time of underwriting. It is comprised of premium risk and reserving risk.
Syndicate 1994
Notes to the accounts
32
4.
Risk and capital management (continued)
Reserve risk
Reserve risk is the risk that the reserves established in respect of insurance claims incurred are insufficient to settle
the claims and associated expenses in full.
Management of insurance risk
The principal risk the syndicate faces under insurance contracts is that the amount of claims and benefit payments,
or the timing thereof, differs from expectations. This is influenced by the frequency of claims, severity of claims,
actual benefits paid and subsequent development of claims.
A key component of the management of underwriting risk for the syndicate is a disciplined selection strategy that is
focused on writing quality business and not writing for volume. Robust due diligence is conducted, often in
partnership with external exper
ts, to support each legacy transaction’s investigative, quote, and review stage.
The Reserving Committee oversees the management of reserving risk. The use of proprietary and standardised
modelling techniques, internal and external benchmarking and the review of claims development are all instrumental
in mitigating reserving risk.
An actuarial reserving analysis is undertaken on a quarterly basis with relevant internal and external expert input.
The aim of this exercise is to produce a probability-weighted average of the expected future cash outflows arising
from the settlement of incurred claims and claims on unearned premium. These projections include an analysis of
claims development compared to the previous ‘best estimate’ projections.
The Reserving Committee performs a comprehensive review of the projections, both gross and net of reinsurance.
Following this review, the Reserving Committee makes recommendations to the Audit Committee and ASML Board
as to the claims provisions to be established.
In arriving at the level of claims provisions a margin is applied over and above the actuarial best estimate to increase
the probability that the reserves are sufficient to meet liabilities. This considers the risks associated with the business
and inflation.
The level of year end reserves is validated by external consulting actuaries through their report to management and
their provision of a Statement of Actuarial Opinion to ASML
and Lloyd’s on gross and net reserves by YoA at 31
December 2024.
The claims development table in note 17 shows the actual claims incurred to previous estimates for the last ten
years
.
Sensitivity to insurance risk
The liabilities established could be significantly lower or higher than the ultimate cost of settling the claims arising.
This level of uncertainty varies between the classes of business and the nature of the risk being underwritten and
can arise from developments in case reserving for attritional losses, large losses and catastrophes, or from changes
in estimates of IBNR claims.
Syndicate 1994
Notes to the accounts
33
4.
Risk and capital management (continued)
The following table presents the sensitivity of the value of insurance liabilities disclosed in the accounts to potential
movements in the assumptions applied within the technical provisions. A five percent increase or decrease in the
ultimate cost of settling claims arising from a change in actuarial assumptions is considered reasonably possible at
the reporting date. A five percent increase or decrease in total earned claims liabilities due to a change in
assumptions would have the following effect on profit or loss and member
’
s balances.
Sensitivity
General insurance business sensitivities
+ 5.0%
- 5.0%
2024
$’000
$’000
Claims outstanding
–
gross of reinsurance
5,682
(5,682)
Claims outstanding
–
net of reinsurance
3,805
(3,805)
Sensitivity
General insurance business sensitivities
+ 5.0%
- 5.0%
2023
$’000
$’000
Claims outstanding
–
gross of reinsurance
6,672
(6,672)
Claims outstanding
–
net of reinsurance
4,588
(4,588)
On a net of reinsurance basis, the effects are more complex depending on the nature of the loss and its interaction
with other losses already incurred. The incidence of profit commission payable to intermediaries may also affect the
gross and net impact on results and member
’
s balances.
Financial risk
The financial risk faced by the syndicate is managed by ensuring that its financial assets are sufficient to fund the
obligations arising from its insurance contracts as they fall due. The primary objective of the investment
management process is to maintain capital value, which is of particular importance in volatile financial market
conditions. A secondary objective is to optimise the risk-adjusted total return whilst being constrained by capital
preservation and liquidity requirements. ASML currently implements a relatively low-risk investment policy and the
syndicate assets have been invested in short dated fixed income government and corporate bonds and money
market funds.
The investment management of the short dated fixed income bond portfolio is outsourced to a third party. An
investment mandate reflecting ASML’s risk appetite is in place and has been approved by the Board. Compliance
with this is controlled through the in
vestment manager’s systems and monitored through the monthly and quarterly
reporting process.
Credit risk
Credit risk is the risk of financial loss to the syndicate if a counterparty fails to discharge a contractual obligation.
The syndicate is exposed to credit risk in respect of the following:
•
holdings in collective investment schemes;
•
short dated fixed income government and corporate bonds;
•
r
einsurers’ share of insurance liabilities;
•
amounts due from intermediaries;
•
amounts due from reinsurers in respect of settled claims;
•
cash and cash equivalents; and
•
other debtors and accrued interest.
Management of credit risk
The investment portfolio is invested in securities which are rated BBB or above. The bond portfolio is managed to
single issuer limits set by credit rating and there is a limit to the overall exposure to BBB rated securities. The
syndicate limits the amount of cash and cash equivalents that can be deposited with a single counterparty and
maintains an authorised list of counterparties.
Syndicate 1994
Notes to the accounts
34
4.
Risk and capital management (continued)
ASML manages reinsurer credit risk through outwards reinsurance purchase guidelines. The guidelines place limits
on exposure to a single counterparty based on
the credit rating of the counterparty and the counterparty’s market
reputation and recent performance. The syndicate’s exposure to reinsurance counterparties is monitored by the
reinsurance team as part of their credit control processes. On a quarterly basis the Finance Committee reviews the
credit exposures to reinsurance counterparties.
ASML assesses the creditworthiness of all reinsurers by reviewing public rating information and by internal
investigations. The impact of reinsurer default is regularly assessed and managed accordingly. Where reinsurance
is transacted with unrated reinsurers, the reinsurer is required to fully collateralise its exposure through depositing
funds in trust for the syndicate.
ASML reviews intermediary performance against the terms of business agreements by the compliance function.
The status of intermediary debt collection is reported to the Finance Committee.
Exposure to credit risk
The carrying amount of financial and reinsurance assets represents the maximum credit risk exposure.
The following table analyses the credit rating by investment grade of financial investments, reinsurers’ share of
claims outstanding, debtors arising out of direct insurance and reinsurance operations, cash and cash equivalents
and other debtors and accrued interest.
Debtors arising out of direct and reinsurance operations are comprised of pipeline premiums and balances relating
to outstanding receipts from Lloyd’s Central Accounting. By their nature, it is not possible to classify these balances
by credit rating and therefore they are included as not rated in the following tables.
2024
AAA
AA
A
BBB
Other
Not rated
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Shares and other variable yield securities
and unit trusts
12,682
-
6,899
-
-
-
19,581
Debt securities and other fixed income
securities
9,229
3,212
18,149
4,445
-
-
35,035
Deposits with ceding undertakings
-
-
222
-
-
-
222
Reinsurers’ share of claims outstanding
-
11,264
24,557
-
-
1,709
37,530
Debtors arising out of direct insurance
operations
-
-
-
-
-
753
753
Debtors arising out of reinsurance
operations
-
1,233
2,857
-
-
200
4,290
Cash and cash equivalents
-
-
4,424
-
-
-
4,424
Other debtors and accrued interest
2,207
508
438
331
202
936
4,622
Total
24,118
16,217
57,546
4,776
202
3,598
106,457
Syndicate 1994
Notes to the accounts
35
4.
Risk and capital management (continued)
2023
AAA
AA
A
BBB
Other
Not rated
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Shares and other variable yield
securities and unit trusts
743
16,216
9,087
-
-
-
26,046
Debt securities and other fixed income
securities
10,684
2,419
14,610
568
-
-
28,281
Deposits with ceding undertakings
-
-
264
-
-
-
264
Reinsurers’ share of claims
outstanding
-
588
40,084
213
-
796
41,681
Debtors arising out of direct insurance
operations
-
-
-
-
-
2,323
2,323
Debtors arising out of reinsurance
operations
-
638
4,042
12
-
-
4,692
Cash and cash equivalents
-
-
3,374
-
-
-
3,374
Other debtors and accrued interest
2,795
418
392
344
521
2,895
7,365
Total
14,222
20,279
71,853
1,137
521
6,014
114,026
Financial assets that are past due or impaired
The syndicate has debtors arising from direct insurance and reinsurance operations that are past due but not
impaired at the reporting date. These debtors have been individually assessed for impairment by considering
information such as the occurrence of s
ignificant changes in the counterparty’s financial position, patterns of
historical payment information, disputes and compliance with ASML terms and conditions.
An analysis of the carrying amounts of past due or impaired assets is presented in the table below. There are no
other financial assets that are considered past due or impaired.
Neither past
due nor
impaired
assets
Past due
but not
impaired
assets
Gross
value of
impaired
assets
Impairment
allowance
Total
2024
$’000
$’000
$’000
$’000
$’000
Shares and other variable yield securities
and unit trusts
19,581
-
-
-
19,581
Debt securities and other fixed income
securities
35,035
-
-
-
35,035
Deposits with ceding undertakings
222
-
-
-
222
Reinsurers' share of claims outstanding
37,530
-
453
(453)
37,530
Debtors arising out of direct insurance
operations
-
753
-
-
753
Debtors arising out of reinsurance
operations
692
3,598
41
(41)
4,290
Cash at bank and in hand
4,424
-
-
-
4,424
Other debtors and accrued interest
4,691
-
-
-
4,691
Total
102,175
4,351
494
(494)
106,526
Syndicate 1994
Notes to the accounts
36
4.
Risk and capital management (continued)
Neither past
due nor
impaired
assets
Past due
but not
impaired
assets
Gross
value of
impaired
assets
Impairment
allowance
Total
2023
$’000
$’000
$’000
$’000
$’000
Shares and other variable yield securities
and unit trusts
26,046
-
-
-
26,046
Debt securities and other fixed income
securities
28,281
-
-
-
28,281
Deposits with ceding undertakings
264
-
-
-
264
Reinsurers' share of claims outstanding
41,681
-
463
(463)
41,681
Debtors arising out of direct insurance
operations
71
2,252
-
-
2,323
Debtors arising out of reinsurance
operations
2,912
1,780
43
(43)
4,692
Cash at bank and in hand
3,374
-
-
-
3,374
Other debtors and accrued interest
7,529
-
-
-
7,529
Total
110,158
4,032
506
(506)
114,190
There are no material impaired debtors arising from direct insurance or reinsurance operations.
The table below sets out the age analysis of financial assets that are past due but not impaired at the balance sheet
date:
Past due but not impaired assets
0-3
months
3-6
months
6-12
months
> 12
months
Total
2024
$’000
$’000
$’000
$’000
$’000
Debtors arising out of direct insurance operations
1
-
752
-
753
Debtors arising out of reinsurance operations
872
1,867
948
(89)
3,598
Total
873
1,867
1,700
(89)
4,351
Past due but not impaired assets
0-3
months
3-6
months
6-12
months
> 12
months
Total
2023
$’000
$’000
$’000
$’000
$’000
Debtors arising out of direct insurance operations
-
-
2,252
-
2,252
Debtors arising out of reinsurance operations
1,195
452
88
45
1,780
Total
1,195
452
2,340
45
4,032
Syndicate 1994
Notes to the accounts
37
4.
Risk and capital management (continued)
Impairment analysis
The table below sets out a reconciliation of changes in impairment allowance during the period for each class of
financial asset at the balance sheet date:
1 Jan
New
Impairment
charges
added in year
Changes in
impairment
charges
Release to
profit and
loss
account
Foreign
Exchange
31 Dec
2024
$’000
$’000
$’000
$’000
$’000
$’000
Reinsurers' share of claims
outstanding
463
-
(7)
-
(3)
453
Debtors arising out of
reinsurance operations
43
-
(2)
-
-
41
Total
506
-
(9)
-
(3)
494
1 Jan
New
Impairment
charges
added in year
Changes in
impairment
charges
Release to
profit and
loss
account
Foreign
Exchange
31 Dec
2023
$’000
$’000
$’000
$’000
$’000
$’000
Reinsurers' share of claims
outstanding
646
-
(184)
-
1
463
Debtors arising out of
reinsurance operations
21
-
22
-
-
43
Total
667
-
(162)
-
1
506
Liquidity risk
Liquidity r
isk is the risk that the syndicate’s assets are insufficient to fund the obligations arising from its insurance
contracts and financial liabilities as they fall due or can only be met by incurring additional costs. The syndicate is
exposed to daily calls on its available cash resources mainly from claims arising from insurance contracts and its
ongoing expenses.
The nature of the s
yndicate’s exposures to liquidity risk and its objectives, policies and processes for managing
liquidity risk have not changed significantly from the prior year.
Management of liquidity risk
The syndicate’s approach to managing liquidity risk is to ensure, as far as
is reasonable, that it will have sufficient
liquidity to meet its liabilities when they fall due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the syndicate’s reputation.
ASML’s approach to managing liquidity risk is as follows:
•
forecasts are prepared and revised on a regular basis to predict cash outflows from insurance contracts and
overheads over the short, medium and long term;
•
the syndicate purchases assets with durations not greater than its estimated insurance contract liabilities and
expense outflows;
•
assets purchased by the syndicate are required to satisfy specified marketability requirements;
•
the syndicate maintains cash and liquid assets to meet daily outgoing payments;
•
the syndicate regularly updates its contingency funding plans to ensure that adequate liquid financial resources
are in place to meet obligations as they fall due in the event of reasonably foreseeable abnormal circumstances;
and
•
liquidity stress testing is performed for the syndicate, looking both at cash flow liquidity and shock loss scenarios.
Syndicate 1994
Notes to the accounts
38
4.
Risk and capital management (continued)
The syndicate holds sufficient premium trust funds in cash, US treasuries, and a Euro money market fund, to meet
daily liquidity. Holdings in money market funds are well diversified, very liquid and generally low risk. There is,
however, a risk that the Euro money market fund does not have sufficient liquidity to meet all redemptions in extreme
conditions. The fixed income short dated government and corporate bond portfolio is relatively liquid and can be
realised within a matter of days under normal market conditions.
The syndicate is able to make cash calls from Compre Corporate Member 2 Limited, to fund losses in the event
that funds are needed ahead of closing the YoA. In extreme circumstances, ASML syndicates could also apply to
utilise the Lloyd’s
central fund as a last resort to pay liabilities.
Maturity analysis of syndicate liabilities
The
maturity analysis presented in the table below shows the remaining contractual maturities for the syndicate’s
insurance contracts and financial instruments. For insurance and reinsurance contracts, the contractual maturity is
the estimated date when the gross undiscounted contractually required cash flows will occur. For financial liabilities
it is the earliest date on which the gross undiscounted cash flows (including contractual interest payments) could
be paid assuming conditions are consistent with those at the reporting date.
Carrying
amount
Less than 1
year
1-3 years
3-5 years
More than
5 years
2024
$’000
$’000
$’000
$’000
$’000
Claims outstanding
113,637
35,575
40,797
21,946
15,319
Creditors
3,653
3,653
-
-
-
Total liabilities
117,290
39,228
40,797
21,946
15,319
Carrying
amount
Less than 1
year
1-3 years
3-5 years
More than
5 years
2023
$’000
$’000
$’000
$’000
$’000
Claims outstanding
133,432
55,810
39,137
22,743
15,742
Creditors
6,442
6,442
-
-
-
Total liabilities
139,874
62,252
39,137
22,743
15,742
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market prices, excluding those that are caused by credit downgrades which are included under credit
risk. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk.
The objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimising the return on risk within the framework set by
ASML’s investment policy.
Syndicate 1994
Notes to the accounts
39
4.
Risk and capital management (continued)
Management of market risk
For each of the major components of market risk the syndicate has policies and procedures in place which detail
how each risk should be managed and monitored. The management of each of these major components of market
risk and the exposure of the syndicate at the reporting date to each major component are addressed below.
Interest rate risk
Interest rate risk arises primarily from the syndicate’s exposure to financial investments and overseas deposits.
Exposure to significant fluctuations in market value due to changes in bond yields is managed through investment
in short duration securities. Investment types include short dated fixed income bonds and money market funds.
2024
2023
Impact on
profit for the
financial
year
Impact on
member
’
s
balances
Impact on
profit for the
financial
year
Impact on
member
’
s
balances
$’000
$’000
$’000
$’000
Impact of a 50 basis point increase
(312)
(312)
(258)
(258)
Impact of a 50 basis point decrease
312
312
258
258
Currency risk
Currency risk is the risk that the fair value or future cash flows of
the syndicate’s assets and liabilities
will fluctuate
because of changes in foreign exchange rates.
The syndicate liabilities are primarily in Sterling, Euros, US Dollars, Australian Dollars and Canadian Dollars and is
therefore exposed to currency risk arising from fluctuations in the exchange rates of its functional currency (US
Dollars) against these currencies. If a future RITC portfolio is purchased which materially deviated from these
currencies or shifted the functional currency of the syndicate away from US Dollars, then management will consider
if new currency stress testing should be conducted.
The foreign exchange policy is to maintain assets in the currency in which the cash flows from liabilities are to be
settled in order to hedge the currency risk inherent in these contracts so far as is allowed by regulatory requirements
and for any profit or loss to be reflected in the net assets of the functional currency. Occasionally, the syndicate may
make limited use of foreign exchange derivative instruments to manage future currency cash flow requirements.
Regulatory capital requirements and liquidity impact the ability to match in currency. Regulatory funding
requirements are calculated on the basis of gross data and as a result a net currency asset can arise. Net assets
in currency are not a direct indication of the liquidity in a currency. The syndicate can undertake currency trades
either to help match in currency or meet liquidity needs.
Syndicate 1994
Notes to the accounts
40
4.
Risk and capital management (continued)
The table below summarises the carrying value of the syndicate’s assets and liabilities, at the
reporting date:
Sterling
US Dollar
Euro
Canadian
Dollar
Australian
Dollar
Total
2024
$000s
$000s
$000s
$000s
$000s
$000s
Investments
5
50,171
185
4,477
-
54,838
Reinsurers' share of technical
provisions
674
34,523
393
1,797
189
37,576
Debtors
2,267
2,345
(71)
190
495
5,226
Other assets
1,393
3,085
498
923
2,419
8,318
Prepayments and accrued income
-
558
-
10
-
568
Total assets
4,339
90,682
1,005
7,397
3,103
106,526
Technical provisions
(3,620)
(101,612)
(2,348)
(4,204)
(2,095)
(113,879)
Creditors
(750)
(2,576)
(106)
18
(239)
(3,653)
Accruals and deferred income
(4)
(39)
-
-
(5)
(48)
Total liabilities
(4,374)
(104,227)
(2,454)
(4,186)
(2,339)
(117,580)
Total capital and reserves
(35)
(13,545)
(1,449)
3,211
764
(11,054)
Sterling
US Dollar
Euro
Canadian
Dollar
Australian
Dollar
Total
2023
$000s
$000s
$000s
$000s
$000s
$000s
Investments
13
48,230
557
5,791
-
54,591
Reinsurers' share of technical
provisions
586
38,558
422
2,088
129
41,783
Debtors
2,351
6,185
(276)
144
709
9,113
Other assets
1,992
1,617
1,090
1,369
2,097
8,165
Prepayments and accrued income
30
494
-
14
-
538
Total assets
4,972
95,084
1,793
9,406
2,935
114,190
Technical provisions
(4,969)
(117,041)
(3,742)
(5,475)
(2,664)
(133,891)
Creditors
(994)
(4,877)
(168)
11
(414)
(6,442)
Accruals and deferred income
-
(23)
-
-
(6)
(29)
Total liabilities
(5,963)
(121,941)
(3,910)
(5,464)
(3,084)
(140,362)
Total capital and reserves
(991)
(26,857)
(2,117)
3,942
(149)
(26,172)
Sensitivity analysis to market risks
An analysis
of the syndicate’s sensitivity to currency risk is presented in the table below. The table shows the effect
on profit or loss of reasonably possible changes in the relevant risk variable. The sensitivity analysis assumes that
all other variables remain constant and that the exchange rate movement occurs at the end of the reporting period.
The impact of exchange rate fluctuations could differ significantly over a longer period. The occurrence of a change
in foreign exchange rates may lead to changes in other market factors as a result of correlations.
Syndicate 1994
Notes to the accounts
41
4.
Risk and capital management (continued)
2024
2023
Impact on
profit for the
financial year
Impact on
member
’
s
balances
Impact on
profit for the
financial year
Impact on
member
’
s
balances
Currency risk
$’000
$’000
$’000
$’000
10 percent strengthening of GBP against USD
(4)
(4)
(110)
(110)
10 percent weakening of GBP against USD
3
3
90
90
10 percent strengthening of Euro against USD
(161)
(161)
(235)
(235)
10 percent weakening of Euro against USD
132
132
192
192
Other price risk
The syndicate investments comprise holdings in short dated fixed income government and corporate bonds and
money market funds. The bond portfolio is relatively low risk being both short dated and investment grade securities
and therefore it has limited sensitivity to market movements.
The money market funds are near cash and therefore have minimal exposure to market movements.
A fair value hierarchy is provided in note 11 which categorises the syndicate according to the level of judgement
exercised in valuation.
Capital management
Capital framework at Lloyd’s
Lloyd’s is a regulated undertaking and subject to supervision by the
PRA under the Financial Services and Markets
Act 2000, and in accordance with the Solvency II Framework.
Within this supervisory framework, Lloyd’s applies capital requirements at member level and centrally to ensure that
Lloyd’s compl
ies with the Solvency II requirements, and beyond that to meet its own financial strength, licence and
ratings objectives.
Although, as described below, Lloyd’s capital setting processes use a capital requirement set at syndicate level as
a starting point, the requirement to meet Solvency II and Lloyd’s capital requirements apply
respectively at overall
and member level only, not at syndicate level. Accordingly, the capital requirement in respect of the syndicate’s
member is not disclosed in these annual accounts.
Lloyd’s capital setting process
In order to meet Lloyd’s requirements, each syndicate is required to calculate its SCR for the prospective
underwriting year. This amount must be sufficient to cover a 1 in 200 year loss, reflecting uncertainty in the ultimate
run-off of underwriting liabi
lities (SCR ‘to ultimate’). The syndicate must also calculate its SCR at the same
confidence level but reflecting uncertainty over a one year time horizon (
“
one year
”
SCR) for Lloyd’s to use in
meeting Solvency II requirements. The SCRs of each syndicate a
re subject to review and approval by Lloyd’s.
ASML uses an internal model developed in house to calculate the SCR for the syndicate as opposed to adopting a
standard formula. The SCR is reviewed and approved by the Board through the ORSA process and an independent
annual internal model validation process.
The member is liable for its own share of underwriting liabilities on the syndicates on which it participates.
Accordingly, the capital requirements that Lloyd’s sets a member operate on a similar basis.
The
member’s
SCR is
based on the member’s share of the syndicate’s SCR ‘to ultimate’.
Syndicate 1994
Notes to the accounts
42
4.
Risk and capital management (continued)
Where a member participates on more than one syndicate, Lloyd’s sums together each syndicate’s SCR but a credit
for diversification is allowed to reflect the spread of risk consistent with determining an SCR which reflects the capital
requirement to cover
a 1 in 200 year loss ‘to ultimate’ for that member. Over and above
this
, Lloyd’s applies a capital
uplift to the member’s capital requirement, known as the
ECA
. The purpose of this uplift, which is a Lloyd’s rather
than a Solvency II requirement, is to sup
port Lloyd’s financial strength, licence and ratings objectives.
Provision of capital by the member
A member may provide capital to meet their ECA by assets held in trust by Lloyd’s
specifically for that member
(Funds at Lloyd’s), assets held and managed within a syndicate (Funds in Syndicate), or as the member’s balances
on each syndicate on which they participate.
Accordingly all of the assets less liabilities of the syndicate, as represented in the member’s balances reported on
the balance sheet, represent resources available to meet member’s and Lloyd’s capital requirements.
Funds at Lloyd’s are not under the management of the managing agent are not shown in the syndicate accounts.
The managing agent is, however, able to make a call on member’s FAL to meet liquidity requirements or to settle
underwriting losses if required.
5.
Analysis of underwriting result
An analysis of the underwriting result before investment return is set out in the table below:
The below is an
additional disclosure for Lloyd’s reporting purposes and is included to facilitate the classification
of the above segments into the Lloyd’s aggregate classes of business:
Gross
premiums
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expense
Reinsurance
balance
Underw
riting
result
2024
$’000
$’000
$’000
$’000
$’000
$’000
Direct insurance
Accident and Heath
-
2
(594)
(634)
632
(594)
Motor (other classes)
-
(2)
-
(2)
5
1
Marine, aviation and transport
20
378
138
(510)
511
517
Fire and other damage to
property
22
429
1,421
(262)
(515)
1,073
Third-party liability
(132)
(2,526)
(23,684)
(1,340)
10,801
(16,749)
Credit and suretyship
-
(5)
-
(6)
(48)
(59)
(90)
(1,724)
(22,719)
(2,754)
11,386
(15,811)
Reinsurance
Reinsurance acceptances
101
1,941
431
(621)
341
2,092
11
217
(22,288)
(3,375)
11,727
(13,719)
Gross
premiums
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expense
Reinsurance
balance
Underw
riting
result
2024
$’000
$’000
$’000
$’000
$’000
$’000
Additional analysis
Fire and damage to property of
which is
Specialties
1
1
-
-
(180)
(179)
Energy
-
-
-
-
(16)
(16)
Third-party liability of which is
Energy
-
-
-
-
(4)
(4)
Syndicate 1994
Notes to the accounts
43
5.
Analysis of underwriting result (continued)
The
below is an additional disclosure for Lloyd’s reporting purposes and is included to facilitate the classification
of the above segments into the Lloyd’s aggregate classes of business:
The designation reflects the class of the original business reinsured to close by the syndicate. R
einsurers’
commissions and profit participations are included in the reinsurance balance and disclosed in note 6 net operating
expenses.
The gross premiums written for direct insurance by destination of risk is presented in the table below:
2024
2023
Gross written premium for direct insurance analysed by source
$’000
$’000
European Union Member States
(25)
6
United Kingdom
189
29
United States of America
(329)
222
Rest of the world
75
43
Total
(90)
300
Gross
premiums
written
Gross
premiums
Earned
Gross
claims
incurred
Gross
operating
expense
Reinsurance
balance
Underw
riting
result
2023
$’000
$’000
$’000
$’000
$’000
$’000
Direct insurance
Motor (other classes)
3
5
(1)
(1)
(2)
1
Marine, aviation and transport
44
93
115
(141)
(16)
51
Fire and other damage to
property
269
566
(2,024)
(249)
(30)
(1,737)
Credit and suretyship
1
1
-
(5)
-
(4)
Third-party liability
(17)
(35)
(5,817)
(2,111)
1,180
(6,783)
300
630
(7,727)
(2,507)
1,132
(8,472)
Reinsurance
Reinsurance acceptances
327
688
(5)
(523)
(212)
(52)
627
1,318
(7,732)
(3,030)
920
(8,524)
Gross
premiums
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expense
Reinsurance
balance
Underw
riting
result
2023
$’000
$’000
$’000
$’000
$’000
$’000
Additional analysis
Fire and damage to property of
which is
Specialties
(8)
(8)
-
-
174
166
Energy
(2)
(2)
(32)
(4)
20
(18)
Third-party liability of which is
Energy
-
-
3
-
4
7
Syndicate 1994
Notes to the accounts
44
6.
Net operating expenses
2024
2023
$
’000
$
’000
Acquisition costs
(15)
(130)
Change in deferred acquisition costs
40
114
Gross acquisition costs
25
(16)
Administrative expenses
3,247
3,158
Member
’
s standard personal expenses
103
113
Reinsurers’ commissions and profit participations
85
(225)
Net operating expenses
3,460
3,030
Commission on direct insurance gross premiums written during 2024 was $8,000 (2023: $36,000).
Administrative expenses include:
2024
2023
$
’000
$
’000
Audit fees
Fees payable to the syndicate’s auditor for the audit of the syndicate’s annual
accounts
277
261
Non-audit fees
Fees payable to the s
yndicate’s auditor and its associates in respect of other
services pursuant to legislation
44
68
Impairment losses on debtors:
Arising out of reinsurance operations
(2)
22
7.
Emoluments of the directors of the managing agent
For the purposes of FRS 102, the directors of ASML are deemed to be the key management personnel.
For the period ending 31 December 2024, the remuneration recharged to the syndicate for the directors of ASML is
$29,000 (2023: $81,000) which is charged as a syndicate expense.
Included in the remuneration charged to the syndicate are emoluments paid to the highest paid director amounting
to $8,000 (2023: $60,000).
The run-off manager is an employee of the Compre Group seconded to ASML and there is no specific expense
allocation of their emoluments to the syndicate.
Syndicate 1994
Notes to the accounts
45
8.
Staff numbers and costs
All staff are employed by a related company of ASML and Compre. The following amounts were incurred by the
syndicate in respect of salary costs:
2024
2023
$
’000
$
’000
Wages and salaries
1,490
2,139
Social security costs
90
231
Pension costs
87
133
Total
1,667
2,503
The syndicate and ASML have no employees. Staff are employed
by Apollo Partners LLP (“APL”)
and Compre
Services (UK) Limited and recharged as part of the total costs disclosed in note 23.
During 2024 there were six (2023: seven) non-executive directors on the ASML board who allocated their time to
the syndicate.
9. Investment income
2024
2023
$’000
$’000
Interest and similar income
From financial instruments designated at fair value through profit or loss
Interest and similar income
1,169
1,511
Interest on cash at bank
582
892
Other income from investments
From financial instruments designated at fair value through profit or loss
Gains on the realisation of investments
162
82
Losses on the realisation of investments
-
(35)
Unrealised gains on investments
649
81
Unrealised losses on the investments
-
-
Other relevant gains/(losses)
-
-
Investment management expenses
(34)
(61)
Total investment return
2,528
2,470
Transferred to the technical account from the non-technical account
2,528
2,470
Impairment losses on debtors recognised in administrative expenses
2
(22)
The investment return was wholly allocated to the technical account.
The total annual investment yield for the year was 4.0% (2023: 3.9%).
Syndicate 1994
Notes to the accounts
46
10. Distribution
$26,171,000 was collected from the member on closure of the 2021 year of account. $15,000,000 was collected as
a cash call and $11,171,000 was collected through the distribution process.
11. Financial Investments
The carrying values of the syndicate
’s financial assets and liabilities are summarised by
category below:
Carrying Value
Cost
2024
2023
2024
2023
$’000
$’000
$’000
$’000
Shares and other variable yield securities and
units in unit trusts
19,581
26,046
19,581
26,046
Debt securities and other fixed income securities
35,035
28,281
35,232
28,727
Total
54,616
54,327
54,813
54,773
The table below presents an analysis of financial investments by their measurement classification.
2024
2023
$’000
$’000
Financial assets
Measured at fair value through profit and loss
Financial investments
54,616
54,327
Total financial assets
54,616
54,327
Syndicate 1994
Notes to the accounts
47
11. Financial investments (continued)
All investments are measured at fair value through profit or loss. The valuation technique used for determination of
the fair value of financial instruments can be classified by the following hierarchy:
•
level 1
–
Quoted prices for an identical asset in an active market. Quoted in an active market in this context
means quoted prices are readily and regularly available and those prices represent actual and regularly
occurring market transactions on an arm’s length basis.
•
level 2
–
When quoted prices are unavailable, the price of a recent transaction for an identical asset provides
evidence of fair value as long as there has not been a significant change in economic circumstances or a
significant lapse of time since the transaction took place. If it can be demonstrated that the last transaction price
is not a good estimate of fair value (e.g. because it reflects the amount that an entity would receive or pay in a
forced transaction, involuntary liquidation or distress sale), that price is adjusted.
•
level 3
–
If the market for the asset is not active and recent transactions of an identical asset on their own are
not a good estimate of fair value, the fair value is estimated by using a valuation technique. The objective of
using a valuation technique is to estimate what the transaction price would have been on the measurement
date in an arm’s length exchange motivated by normal business considerations.
The table below analyses financial instruments held at fair value in the syndicate’s balance sheet at the reporting
date by its level in the fair value hierarchy.
Level 1
Level 2
Level 3
Total
2024
$’000
$’000
$’000
$’000
Shares and other variable yield securities and units in unit
trusts
-
19,581
-
19,581
Debt securities and other fixed income securities
12,566
22,469
-
35,035
Total
12,566
42,050
-
54,616
Level 1
Level 2
Level 3
Total
2023
$’000
$’000
$’000
$’000
Shares and other variable yield securities and units in unit
trusts
-
26,046
-
26,046
Debt securities and other fixed income securities
11,183
17,098
-
28,281
Total
11,183
43,144
-
54,327
Information on the methods and assumptions used to determine fair values for each major category of financial
instrument measured at fair value is provided below.
Holdings in collective investment schemes are generally valued using prices provided by external pricing vendors.
The categorisation of the fair value level has been determined by considering the fair value techniques used to price
the collective investment schemes. Pricing vendors will often determine prices by consolidating prices of recent
trades for identical or similar securities obtained from a panel of market makers into a composite price. The pricing
service may make adjustments for the elapsed time from a trade date to the valuation date to take into account
available market information. Where recently reported trades are not available, pricing vendors will use modelling
techniques to determine a security price.
Some government and supranational securities are listed on recognised exchanges and are generally classified as
level 1 in the fair value hierarchy. Those that are not listed on a recognised exchange are generally based on
composite prices of recent trades in the same instrument and are generally classified as level 2 in the fair value
hierarchy.
Syndicate 1994
Notes to the accounts
48
11. Financial investments (continued)
Corporate bonds, including asset backed securities that are not listed on a recognised exchange or are traded in
an established over-the-counter market are also mainly valued using composite prices. Where prices are based on
multiple quotes and those quotes are based on actual recent transactions in the same instrument the securities are
classified as level 2, otherwise they are classified as level 3 in the fair value hierarchy.
Management monitor movements in the valuation of the investment portfolio on a quarterly basis and investigation
is undertaken when these are outside of expectations. The short dated fixed income portfolio valuations are provided
by the fund manager and compared with valuations provided independently by the custodian.
12. Debtors arising out of direct insurance operations
2024
2023
$
’000
$
’000
Due within one year
753
2,323
Total
753
2,323
13. Debtors arising out of reinsurance operations
2024
2023
$
’000
$
’000
Due within one year
4,286
4,692
Due after one year
4
-
Total
4,290
4,692
14. Other debtors
2024
2023
$’000
$’000
Inter syndicate balances
-
92
Other
183
2,006
Total
183
2,098
Syndicate 1994
Notes to the accounts
49
15. Deferred acquisition costs
The table below shows changes in deferred acquisition costs from the beginning of the period to the end of the
period.
Gross
Reinsurance
Net
2024
$’000
$’000
$’000
At 1 January
62
-
62
Incurred deferred acquisition costs
(15)
87
72
Amortised deferred acquisition costs
(25)
(85)
(110)
Foreign exchange adjustments
1
(2)
(1)
At 31 December
23
-
23
Gross
Reinsurance
Net
2023
$’000
$’000
$’000
At 1 January
174
-
174
Incurred deferred acquisition costs
(130)
(225)
(355)
Amortised deferred acquisition costs
16
225
241
Foreign exchange adjustments
2
-
2
At 31 December
62
-
62
16. Other assets
Overseas deposits are advanced as a condition of conducting underwriting business in certain countries and
therefore are restricted assets. The balance of the overseas deposits as at 31 December 2024 was $3,894,000
(2023: $4,791,000)
17. Claims development
The majority of
the reserves held by Syndicate 1994 (>90%) relate to the transfer of reserves from Syndicate 1969’s
2017 & prior YoAs. The level of reserving uncertainty varies significantly from class to class. The Third Party Liability
class, which comprises both Non-Marine Liability and Marine & Energy Liability books, lengthened the tail of the
Syndicate 1969 book as a whole. Whilst Syndicate 1969 wrote a significant book of property business this had a
short-tailed risk profile and this business does not make up a significant proportion of the reserves.
The following loss development table shows the estimate of cumulative incurred claims, including both claims
notified and IBNR for each successive underwriting year at each reporting date, together with cumulative payments
to date for the syndicates reinsured to close. Syndicate 1994 has only been operating for three years and therefore
the table reflects the inherited development of the business in the reinsured syndicates. The development is
impacted by adjustments in the reserves pre and post the reinsurance to close transaction.
The following tables show the estimates of cumulative incurred claims, including both claims notified and IBNR for
each successive underwriting year at each reporting date, together with cumulative payments to date.
The balances are shown in the year in which the business was originally underwritten and have been translated at
exchange rates prevailing at 31 December 2024 in all cases.
Syndicate 1994
Notes to the accounts
50
17. Claims development (continued)
Gross claims development as at 31 December 2024:
2014
2015
2016
2017
2018
Total
Pure underwriting year
$’
000
$’
000
$’
000
$’
000
$’
000
$’
000
Estimated gross claims*
At end of underwriting year
53,361
58,235
84,150
178,157
308,694
one year later
115,933
137,654
218,180
302,710
309,775
two years later
133,614
154,388
268,879
327,114
302,543
three years later
127,529
184,262
288,075
326,789
315,246
four years later
127,111
183,351
287,892
340,227
311,865
five years later
126,060
182,487
297,829
359,660
311,186
six years later
124,118
185,623
307,205
376,244
309,238
seven years later
126,688
185,842
302,040
394,485
eight years later
127,604
184,269
301,082
nine years later
127,347
183,306
ten years later
127,370
Estimate of gross claims reserve*
127,370
183,306
301,082
394,485
309,238
1,315,481
Provision in respect of prior years
2,958
Less gross claims paid
(123,671)
(174,248)
(269,378)
(332,036)
(305,469)
(1,204,802)
Gross claims reserve
3,699
9,058
31,704
62,449
3,769
113,637
*Includes inherited development of the business in the reinsured syndicates.
Net claims development as at 31 December 2024:
2014
2015
2016
2017
2018
Total
Pure underwriting year
$’
000
$’
000
$’
000
$’
000
$’
000
$’
000
Estimated net claims*
At end of underwriting year
45,087
44,684
69,349
112,068
283,813
one year later
87,916
110,161
169,401
205,040
287,255
two years later
106,352
127,169
195,927
217,985
281,914
three years later
103,647
140,478
204,901
215,735
294,384
four years later
102,748
138,919
203,482
216,713
291,138
five years later
101,638
139,001
204,117
226,943
291,030
six years later
99,942
141,455
211,203
236,292
289,262
seven years later
102,289
140,398
209,389
245,261
eight years later
103,236
140,299
208,941
nine years later
103,094
139,127
ten years later
102,694
Estimate of net claims reserve*
102,694
139,127
208,941
245,261
289,262
985.285
Provision in respect of prior years
2,773
Less net claims paid
(99,985)
(132,474)
(190,022)
(203,742)
(285,728)
(911,951)
Net claims reserve
2,709
6,653
18,919
41,519
3,534
76,107
*Includes inherited development of the business in the reinsured syndicates.
All balances presented are in respect of premiums earned to the balance sheet date and therefore reflect the pattern
of earnings and risk exposed over a number of calendar years.
Syndicate 1994
Notes to the accounts
51
18. Technical provisions
The table below shows changes in the insurance contract liabilities and assets from the beginning of the period to
the end of the period.
There has been no material change to the method of reserving during the year under review.
No new business was written during 2024 and therefore the net claims incurred of $11,708,000 (2023: $6,360,000)
represents a deterioration in the claims reserves established at the prior year end.
Gross
provisions
Reinsurance
assets
Net
2024 - Claims outstanding
$’000
$’000
$’000
Balance at 1 January
133,432
(41,681)
91,751
Claims paid during the year
(41,011)
14,539
(26,472)
Change in estimates of prior year provisions
22,288
(10,580)
11,708
Effect of movements in exchange rate
(1,072)
192
(880)
Balance at 31 December
113,637
(37,530)
76,107
Gross
provisions
Reinsurance
assets
Net
2023 - Claims outstanding
$’000
$’000
$’000
Balance at 1 January
161,524
(52,101)
109,423
Claims paid during the year
(36,626)
11,930
(24,696)
Change in estimates of prior year provisions
7,732
(1,372)
6,360
Effect of movements in exchange rate
802
(138)
664
Balance at 31 December
133,432
(41,681)
91,751
Gross
provisions
Reinsurance
assets
Net
2024
–
Unearned premium
$’000
$’000
$’000
Balance at 1 January
459
(102)
357
Premiums written during the year
11
1,288
1,299
Premiums earned during the year
(217)
(1,232)
(1,449)
Effect of movements in exchange rate
(11)
-
(11)
Balance at 31 December
242
(46)
196
Syndicate 1994
Notes to the accounts
52
18. Technical provisions (continued)
Gross
provisions
Reinsurance
assets
Net
2023
–
Unearned premium
$’000
$’000
$’000
Balance at 1 January
1,138
(233)
905
Premiums written during the year
627
(327)
300
Premiums earned during the year
(1,318)
452
(866)
Effect of movements in exchange rate
12
6
18
Balance at 31 December
459
(102)
357
Refer to Note 4 for the sensitivity analysis performed over the value of insurance liabilities, disclosed in the accounts,
to potential movements in the assumptions applied within the technical provisions.
19. Creditors arising out of direct insurance operations
2024
2023
$
’000
$
’000
Due within one year
561
2,416
Total
561
2,416
20. Creditors arising out of reinsurance operations
2024
2023
$
’000
$
’000
Due within one year
2,385
3,952
Total
2,385
3,952
21. Other creditors including taxation and social security
2024
2023
$’000
$’000
Other related party balances (non-syndicates)
707
74
Total
707
74
Syndicate 1994
Notes to the accounts
53
22. Cash and cash equivalents
2024
2023
$’000
$’000
Cash at bank and in hand
4,424
3,374
Total cash and cash equivalents
4,424
3,374
23. Related parties
All business with
related parties is transacted on an arm’s length basis.
ASML is a wholly owned subsidiary of Apollo Group Holdings Limited (“AGHL”).
Apollo Partners LLP (“
APL
”)
, a wholly owned subsidiary of AGHL, employs all Apollo group staff, including
underwriters, claims and reinsurance staff. APL provides the services of these staff to ASML to enable it to function
as managing agent for the syndicate. APL is an appointed representative of ASML. APL also incurs a large
proportion of the expenses in respect of operating the syndicate. The cost of these services and expenses are
recharged to ASML which in turn recharges these to the syndicate on a basis that reflects its usage of resources,
all recharges being without any mark up on cost.
In accordance with the Managing Agent’s Agreement, ASML received a managing agent’s fee for the management
of the syndicate (5% of total costs of the managing agent).
Syndicate 1994 underwrote a reinsurance to close of Syndicate 1969, a syndicate managed by ASML. The
reinsurance to close of Syndicate 1969 was undertaken by a split reinsurance to close of the 2018 YoA. The
liabilities associated with the 2017 and prior YoA were reinsured to Syndicate 1994 therefore transferring the risk
associated with the run-off of this business from Syndicate 1969. The reinsurance to close agreement included a
provision to pay 50% of loss funds recovered to Syndicate 1969. Balances due for settlement reflect the small levels
of ongoing transactions received by Syndicate 1969 but belonging to Syndicate 1994.
Compre Corporate Member 2 Limited is the sole corporate member on Syndicate 1994 and provides the Funds at
Lloyd’s backing the syndicate.
There is no link between this member and any Apollo owned companies. A service
management agreement is in place to set out the partnership arrangement and the services and reporting provided
to the Compre Group by ASML, and vice versa.
Compre Services (UK) Limited has seconded Gary Crowley to ASML as run-off manager since 1 January 2023 and
the cost has been recharged to the syndicate. Services provided by Compre Services (UK) Limited include the
underwriting of new legacy business, claims handling, reserving and oversight.
The related party transactions, and the amounts outstanding at the balance sheet date, are shown below:
Syndicate 1969
ASML
Compre Services
(UK) Limited
2024
$
’000
$
’000
$
’000
Managing agent’s fee
-
(103)
-
Expense recharges
-
(1,872)
(1,326)
Loss fund rebate
(161)
-
-
Other creditor
-
(382)
(325)
Syndicate 1994
Notes to the accounts
54
23. Related parties (continued)
Syndicate 1969
ASML
Compre Services
(UK) Limited
2023
$
’000
$
’000
$
’000
Managing agent’s fee
-
(113)
-
Expense recharges
-
(2,026)
(1,472)
Loss fund rebate
(53)
-
-
Other debtor/(creditor)
92
(74)
30
Cash calls totalling $26,171,000 (2023: $25,000,000) were made from Compre Corporate Member 2 Limited during
2024. A revolving credit facility ran from 4 November 2022 and expired on 4 October 2023. This was an agreement
between Syndicate 1994 through Compre Corporate Member 2 Limited (the Borrower), Compre Holdings Limited
(the Lender) and ASML (the Managing Agent). The agreement provided liquidity of up to $15m. The interest rate
was set at USD LIBOR (SOFR from June 2023) plus 3.25%. The revolving credit facility was not utilised.
24. Post balance sheet events
There are no events arising after the balance sheet date which require amendment or disclosure in these annual
accounts.
25. Foreign exchange rates
The following foreign exchange rates
have been used for the syndicate’s principal foreign currencies. The average
of the spot rates applied is disclosed.
2024
2023
Start of
period
rate
End of
period
rate
Average
rate
Start of
period
rate
End of
period
rate
Average
rate
Sterling
US Dollar
Euro
Canadian Dollar
26.
Funds at Lloyd’s
Every member is
required to hold capital at Lloyd’s which is held in trust and known as Funds at Lloyd’s
(“FAL”)
.
These funds are intended primarily to cover circumstances where syndicate assets prove insufficient to meet the
participating member
’s underwriting liabilities. The level of FAL that Lloyd’s requires a member to maintain is
determined by Lloyd’s based on
PRA requirements and resource criteria. The determination of FAL has regard to
a number of factors including the nature and amount of risk to be underwritten by the member and the assessment
of the reserving risk in respect of business that has been underwritten. Since FAL is not under the management of
the Managing Agent, no amount has been shown in these annual accounts by way of such capital resources.
However, the Managing Agent is able to make a call on the Member’s FAL to meet liquidity requirements or to settle
losses.