Ki Syndicate 1618
Annual Report 2024
Ki Syndicate 1618 Annual Report 2024
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Ki Syndicate 1618 Annual Report 2024 1
Contents
Ki Syndicate 1618 Annual Report 2024 1
Report of the Directors of the Former Managing Agent 2
Statement of Managing Agent’s Responsibilities 8
Independent Auditors’ Report to the Member of Syndicate 1618 9
Income Statement – Technical Account 13
Income Statement – Non-Technical Account 14
Statement of Financial Position - Assets 15
Statement of Financial Position - Liabilities 16
Statement of Changes in Member’s Balances 17
Statement of Cash Flows 18
Notes to the Accounts 19
Directors of the Managing Agent 54
Report of the Directors of the Former Managing Agent
Ki Syndicate 1618 Annual Report 2024 2
The Managing Agent of Ki Syndicate 1618 (the Syndicate) during the year ended 31 December 2024 was Brit
Directors of the Former Managing Agent present the report and annual accounts of the Syndicate for the year
ended 31 December 2024. Following novation, with effect from 1 January 2025, the Managing Agent is now
Asta Managing Agency Limited (Asta).
These 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).
Amounts are reported in thousands of US dollars ($’000) unless otherwise stated.
Principal activity and review of the business
The principal activity of the Syndicate is the transaction of general insurance and reinsurance business in the
United Kingdom at Lloyd’s of London and through the Lloyd’s Brussels platform (collectively known as Lloyd’s).
Utilising Ki Financial Limited’s (Ki Group or Ki) platform and algorithm, Syndicate 1618 is the first fully digital,
algorithmically driven syndicate at Lloyd’s. The Syndicate trades through the Lloyd’s worldwide licences and
rating. It also benefits from the Lloyd’s brand.
Lloyd’s has an A+ (Superior) rating from AM Best, AA- (Very Strong) from S&P and AA- (Very Strong) rating
from Fitch.
The Syndicate has written a balanced portfolio of business during 2024, in line with its business plan.
The result for the 2024 calendar year is a profit of $101,568k (2023: $100,788k), comprising an underwriting
profit of $66,390k (2023: $66,664k) with a combined ratio of 90.0% (2023: 89.7%), and a net investment return
of $37,671k (2023: $35,946k). The result reflects a resilient underwriting result despite a competitive market
environment and the impact of higher levels of major losses and a number of large attritional losses, supported
by a consistent level of investment income. Foreign exchange losses for the year of $2,493k (2023: $1,822k)
were as a result of unfavourable core currency rates of exchange movements against the US dollar. Net
investment return includes losses on currency derivatives of $2,550k (2023: $3,837k gain), which the Syndicate
utilises to effectively manage its currency exposure.
The Syndicate’s key performance indicators during the year were as follows:
2024
2023
$’000
$’000
Gross premiums written (GWP)
800,973
877,003
Net premiums written
713,637
649,643
Earned premiums, net of reinsurance (NEP)
664,664
648,060
Underwriting result
66,390
66,664
Technical account investment income
37,671
35,946
Technical result for the financial year
104,061
102,610
Profit / (loss) on exchange
(2,493)
(1,822)
Non-technical account for the financial year
(2,493)
(1,822)
Result for the Financial Year
101,568
100,788
Combined ratio (CoR)
1
90.0%
89.7%
1
The total of net claims and net operating expenses as a percentage of net earned premium.
Report of the Directors of the Former Managing Agent (continued)
Ki Syndicate 1618 Annual Report 2024 3
Our mission – disrupt using technology and data
“Ki’s vision is to be the market leading digital and data-led specialty insurance business”
Ki’s vision remains as a pioneer in the future of digital insurance which revolutionises the commercial Property
and Casualty (P&C) market, and Lloyd’s in particular. Our diverse team combines insurance expertise,
technology, and algorithmic science to offer insurance coverage to our clients in an efficient and scalable
manner. It is our belief that the wider Lloyd’s market can benefit significantly from our digital proposition.
In 2024, technology development at Ki focused on ensuring a successful first year of the Ki Digital platform,
through which the Syndicate binds all its business. Our team of leading data scientists and engineers continues
to prioritise developing new capabilities at pace with a spirit of continuous improvement that defines our
business model.
Our technology is partnered with a strong underwriting culture, with a focus on sustainable profitability and
discipline embedded in the business. The Portfolio Underwriting function at Ki is focused on managing our
portfolio as well as servicing our brokers and clients to ensure we remain focused on the fundamentals of
specialty insurance.
The Syndicate is backed by its capital partners, Blackstone Tactical Opportunities (Blackstone) and Fairfax
Financial Holdings Limited (Fairfax).
Significant effort was undertaken during 2024 in relation to the establishment of Ki as an independent entity
within the Fairfax Group and to enable the successful novation of the Syndicate to Asta as Managing Agent
from 1 January 2025.
Outlook
We look forward to 2025, building on the successes and profitability achieved in 2024.
Further information can be found at www.ki-insurance.com.
2024 results
2024 was a year of continuing profitability for the Syndicate with a full year CoR of 90.0% (2023: 89.7%) and
profit for the financial year of $101,568k (2023: $100,788k). 2024 had lower topline revenue, with GWP
decreasing 8.7% to $800,973k (2023: $877,003k) reflecting portfolio remediation in a number of historically
volatile classes, a reduction in prior year gross premium estimates, as well as competitive market conditions,
particularly in open market property. Due to lower reinsurance spend and higher prior underwriting year
earnings, NEP increased 2.6% to $664,664k (2023: $648,060k). As the market transitions to a softer market,
we are confident in the continued support from the Lloyd’s broking community for Ki’s unique offering.
Underwriting profitability has been broadly stable year on year despite higher major losses driven by Hurricanes
Milton and Helene, large attritional loss activity across each of the Property, Casualty and Specialty divisions
and a rebalancing of the portfolio towards longer tail classes. These impacts have been somewhat offset by
favourable experience emerging on the 2021 and 2022 years of accounts, reflecting benign experience in
certain Financial & Professional Liability classes. The net loss ratio (net loss ratio is net claims as a percentage
of net earned premium) is 62.5% (2023: 58.9%).
The Syndicate’s total expense ratio (expense ratio is total expenses as a percentage of net earned premium)
was 27.5% (2023: 30.8%). The reduction versus prior year reflects the evolution of the business model. The
majority of expenses are incurred in Ki Digital Services Limited (Ki Digital) which underwrites all business on
behalf of the Syndicate in return for a commission.
Outwards Reinsurance
Reinsurance expenditure in 2024 was $87,336k or 10.9% of Gross Premium Written (GWP) (2023: $227,360k
or 25.9%), a decrease of $140,024k.
The Syndicate’s outwards reinsurance strategy aims to protect against both individual losses and aggregations
of risk. Individual per risk programmes are purchased with comprehensive vertical cover and significant
sideways frequency protection. Per-occurrence and aggregate catastrophe protections are purchased to
manage aggregations in relevant classes, providing comprehensive balance sheet protection. Quota share
Report of the Directors of the Former Managing Agent (continued)
Ki Syndicate 1618 Annual Report 2024 4
protection is considered at a class and whole account level to manage overall net exposure and optimise capital
requirements. The Syndicate significantly reduced its appetite for quota share reinsurance in 2024, a strategy
which will continue into 2025.
Underwriting result
The Syndicate reported an underwriting profit of $66,390k (2023: profit of $66,664k) and a combined ratio of
90.0% (2023: 89.7%).
Claims
Major loss activity
The table below sets out the net impact of major losses on the Syndicate’s financial year result, analysed by
event:
2024
2023
Major losses - adverse/(favourable) impact
$’000
$’000
Hurricane Milton
27,337
-
Hurricane Helene
25,227
-
Hawaii Wildfires
-
15,846
Hurricane Idalia
-
5,192
Hurricane Otis
-
4,335
Total natural catastrophe events
52,564
25,373
Natural catastrophes
Worldwide natural disasters in 2024 resulted in economic losses of around $320bn (2023: $250bn), above the
five-year average of $261bn, while insured losses were in the region of $140bn (2023: $95bn), above the five-
year average of $106bn (Source: Munich Re).
The year’s costliest events included Hurricane Helene (economic losses of $56bn, with insured losses of $16bn)
and Hurricane Milton (economic losses of $38bn, with insured losses of $25bn).
The Syndicate’s major natural catastrophe losses in 2024 amounted to $52,564k and added 7.9% to the
Syndicate’s CoR (2023: $21,472k / 3.3%), driven by Hurricane Milton ($27,337k net) and Hurricane Helene
($25,227k net). The 2024 catastrophe events have not breached the Catastrophe Aggregate reinsurance
threshold.
On the prior years, overall, there was favourable claims experience driven by Hurricane Idalia (net ultimate
decrease of $3,902k net).
The Syndicate does not have material exposure to other catastrophe events which occurred during the year.
While some claims are anticipated to emerge, it is expected that these will be attritional in scale.
Attritional losses
The Syndicate’s underlying claims performance in 2024 remained robust, with an attritional claims ratio of
56.6%, (2023: 53.2%). The increase in the ratio year on year reflects the impact of a number of uncertainties
including competitive market conditions and adverse experience on some of the smaller classes.
The competitive market conditions have led to lower premium, which led to a reduction in expected overall
attritional losses. The decrease in premium is driven by Property business and this shift in mix away from lower
attritional loss ratios has led to an increase in the 2024 attritional loss ratio compared to 2023.
Included in the attritional losses are smaller natural catastrophe losses, the largest of which is Beryl ($8,616k
net). In addition, smaller classes were impacted by Speciality and Casualty large losses.
Report of the Directors of the Former Managing Agent (continued)
Ki Syndicate 1618 Annual Report 2024 5
Prior year development
The 2024 result includes $13,700k of prior year reserve releases (2.1% improvement on the combined ratio).
The release is due to favourable experience on Property and Speciality.
Net operating expenses
Net operating expenses include net commissions and administrative expenses. The net commission ratio (the
ratio of net commission to net earned premium) was 23.3%, 1.8% above 2023 (21.5%).
The increase in commission ratio and reduction in administrative expense ratio (the ratio of administrative
expense to net earned premium) are driven by the evolution of Ki’s group structure. Most administrative
expenses are incurred in group entities outside of the Syndicate, including Ki Digital. Ki Digital charges a
commission to the Syndicate in return for undertaking all of the underwriting on behalf of the syndicate.
Investment return
Net investment return for the 2024 financial year totalled $37,671k, a 4.8% increase on the prior year (2023:
$35,946k). The fixed income portfolio generated a gain of $31,755k (2023: loss of $27,036k).
The yield on the portfolio at the end of 2024 was 4.6% (2023: 4.7%). Whilst yields were materially unchanged
over the year, there was volatility during the period.
Member’s Balance
The Syndicate’s Member’s Balance comprise the cumulative results of the Syndicate for the open years of
account, plus any cash calls that the Syndicate has made on its Member. The Member’s balance as at 31
December 2024 was $196,723k (2023: $95,671k). The increase year on year includes the profit for the year of
$101,568k (2023: $100,788k).
Financial position
Net Technical Reserves
Preserving a strong financial position is critical to the long-term success of an insurance business. The
Syndicate’s net technical reserves have increased by $267,684k, or 30.1%, to $1,156,473k (2023: $888,789k).
The Syndicate maintains appropriate loss reserves to cover its estimated future liabilities. Reserves are
estimates that involve actuarial and statistical projections of the expected cost of the ultimate settlement and
administration of claims. The reserving process is robust and managed by the Chief Actuary of the Former
Managing Agent and under the oversight of the Reserving Committee. Reserving estimates are prepared
quarterly and are based on facts and circumstances then known, predictions of future developments, estimates
of future trends in claims frequency and severity and other variable factors such as inflation. Movement in these
reserves forms an integral element of the operating result.
The Syndicate’s reserving policy is to reserve to a best estimate and carry an explicit risk margin above that
best estimate. Maintaining reserves is critical to safeguard future obligations to policyholders and the
Syndicate’s approach provides a secure foundation. It also provides a secure foundation for the pricing of new
business which is particularly critical in a soft rating environment.
Financial Investments and cash
The investment portfolio retains a large proportion of high-quality fixed income securities ($849,526k or 83.3%)
and an allocation to cash and cash equivalents ($169,947k or 16.7%), (2023: fixed income securities:
$649,055k or 88.3% and cash and cash equivalents: $86,049k or 11.7%).
Report of the Directors of the Former Managing Agent (continued)
Ki Syndicate 1618 Annual Report 2024 6
Syndicate Outlook
In Sterling, stamp capacity for the 2025 year of account has increased by 6.3% to £771,311k (2024 year of
account £725,462k). In US dollars, the 2024 year of account’s stamp utilisation decreased to 86.4% (2023 year
of account: 95.3%). As in previous years, Ki continues to actively manage the portfolios, to grow where the
market is strongest and the best opportunities to deliver on profitability are seen and taking action on the weaker
segments of the portfolio.
Environmental, Social and Governance (ESG)
Climate change is recognised as a risk with the potential to have a significant impact on the Syndicate and the
Ki Group, and all of their stakeholders. The syndicate and the Ki Group are committed to responsible business
practices and recognise that these are most effective when acting alongside others in the industry. We have
incorporated ESG into our regular monitoring and annual due diligence reviews of the investment managers
and hold regular discussions on the managers’ ESG capabilities, and their engagement with their stakeholders.
Employee matters and Talent management
Ki Group is building a new model in our market and at the centre of this model is a differentiated talent pool.
The business has deliberately brought together leaders in the disciplines of Underwriting, Data and Technology,
from a diverse range of backgrounds. Ki Group has built a culture where these talented experts can collaborate
and thrive as equal partners, rather than the traditional underwriter-led Lloyd’s culture.
All ‘Ki staff’ are employed by Ki Group Services Limited (‘KGSL’) and recharged to the other legal entities of the
Ki Group.
Ki has also continued to invest in its team, and the quality of talent attracted from both the tech and insurance
industries is testament to Ki’s exciting vision. We hired 124 people during 2024 (2023: 94).
Going Concern
Following a review of the financial performance and position of the Syndicate, and following representations
from the new Managing Agent, Asta Managing Agency Limited, the Directors have a reasonable expectation
that the Syndicate has adequate resources to continue in operational existence for the foreseeable future. For
this reason, they continue to adopt the going concern basis in preparing the report and accounts.
Principal risks and uncertainties
The information on principal risks and uncertainties is disclosed in note 3 to the accounts.
Directors
The names of the current Directors of Brit Syndicates Limited, the Former Managing Agent, and those who
have served during 2024, are shown on page 54.
Independent Auditors
PricewaterhouseCoopers LLP will be reappointed as the Syndicate’s auditors following novation. With effect
from 1 January 2025, the Managing Agent is now Asta Managing Agency Limited.
Report of the Directors of the Former Managing Agent (continued)
Ki Syndicate 1618 Annual Report 2024 7
Statement of disclosure of information to the Auditors
Each person who is a Director of the Former Managing Agent at the date of approval of this report confirms
that:
• so far as the Director is aware, there is no relevant audit information, being information needed by the
Syndicate’s auditors in connection with its report, of which the Syndicate’s auditors are unaware; and
• he or she has taken all the steps that he or she is obliged to take as a Director in order to make himself
or herself aware of any relevant audit information and to establish that the Syndicate’s auditors are
aware of that information.
On behalf of the Board
Gavin Wilkinson
Director, Brit Syndicates Limited
4 March 2025
Statement of Former Managing Agent’s Responsibilities
Ki Syndicate 1618 Annual Report 2024 8
The Former 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 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:
1. select suitable accounting policies and then apply them consistently;
2. make judgements and estimates that are reasonable and prudent;
3. 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
4. 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;
5. ensure the completeness and accuracy of the tagged data.
The Directors of the Former Managing Agent confirm that they have complied with the above requirement in
preparing the Syndicate annual accounts.
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 comply with the Insurance Accounts
Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008. 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.
A Managing Agent is responsible for the maintenance and integrity of the corporate and financial information
included on the business’ website. Legislation in the United Kingdom governing the preparation and
dissemination of annual accounts may differ from legislation in other jurisdictions.
The Directors of the Former Managing Agent are also responsible for the preparation and review of the iXBRL
tagging 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.
Independent auditors’ report to the
member of Syndicate 1618
Ki Syndicate 1618 Annual Report 2024 9
Report on the audit of the syndicate annual accounts
Opinion
In our opinion, Syndicate 1618’s syndicate annual accounts:
● give a true and fair view of the state of the syndicate’s affairs as at 31 December 2024 and of its profit and
cash flows for the year then ended;
● have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable
in the UK and Republic of Ireland”, and applicable law); and
● have been prepared in accordance with the requirements of The Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 and the requirements within the Lloyd’s Syndicate
Accounts Instructions version 2.0 as modified by the Frequently Asked Questions issued by Lloyd’s version
1.1 (“the Lloyd’s Syndicate Instructions”).
We have audited the syndicate annual accounts included within the Report and Accounts (the “Annual Report”),
which comprise: the Statement of Financial Position as at 31 December 2024; the Income Statement: Technical
Account – General Business, the Income Statement: Non-Technical Account, the Statement of Cash Flows,
and the Statement of Changes in Member’s Balance for the year then ended; and the notes to the syndicate
annual accounts, which include a description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”), and The
Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, the Lloyd’s
Syndicate Instructions and other applicable law. Our responsibilities under ISAs (UK) are further described in
the Auditors’ responsibilities for the audit of the syndicate annual accounts section of our report. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the syndicate in accordance with the ethical requirements that are relevant to our
audit of the syndicate annual accounts in the UK, which includes the FRC’s Ethical Standard, as applicable to
other entities of public interest, and we have fulfilled our other ethical responsibilities in accordance with these
requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical
Standard were not provided.
Other than those disclosed in note 5, we have provided no non-audit services to the syndicate in the period
under audit.
Independent Auditors’ Report to the Member of
Syndicate 1618 (continued)
Ki Syndicate 1618 Annual Report 2024 10
Conclusions relating to going concern
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the syndicate’s ability to continue as a
going concern for a period of at least twelve months from when the syndicate annual accounts are authorised
for issue.
In auditing the syndicate annual accounts, we have concluded that the Managing Agent’s use of the going
concern basis of accounting in the preparation of the syndicate annual accounts is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to
the syndicate's ability to continue as a going concern.
Our responsibilities and the responsibilities of the Managing Agent with respect to going concern are described
in the relevant sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the syndicate annual
accounts and our auditors’ report thereon. The Managing Agent is responsible for the other information. Our
opinion on the syndicate annual accounts does not cover the other information and, accordingly, we do not
express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance
thereon.
In connection with our audit of the syndicate annual accounts, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the syndicate annual
accounts or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify
an apparent material inconsistency or material misstatement, we are required to perform procedures to
conclude whether there is a material misstatement of the syndicate annual accounts or a material misstatement
of the other information. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report based on
these responsibilities.
With respect to the Report of the Directors of the Former Managing Agent (the “Managing Agent’s Report”), we
also considered whether the disclosures required by The Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008 have been included.
Based on our work undertaken in the course of the audit, The Insurance Accounts Directive (Lloyd’s Syndicate
and Aggregate Accounts) Regulations 2008 requires us also to report certain opinions and matters as described
below.
Managing Agent’s Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Managing
Agent’s Report for the year ended 31 December 2024 is consistent with the syndicate annual accounts and has
been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the syndicate and its environment obtained in the course of the
audit, we did not identify any material misstatements in the Managing Agent’s Report.
Independent Auditors’ Report to the Member of
Syndicate 1618 (continued)
Ki Syndicate 1618 Annual Report 2024 11
Responsibilities for the syndicate annual accounts and the audit
Responsibilities of the Managing Agent for the syndicate annual accounts
As explained more fully in the Statement of Former Managing Agent’s Responsibilities, the Managing Agent is
responsible for the preparation of the syndicate annual accounts in accordance with the applicable framework
and for being satisfied that they give a true and fair view. The Managing Agent is also responsible for such
internal control as they determine is necessary to enable the preparation of syndicate annual accounts that are
free from material misstatement, whether due to fraud or error.
In preparing the syndicate annual accounts, the Managing Agent is responsible for assessing the syndicate’s
ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the
going concern basis of accounting unless it is intended for the syndicate to cease operations, or it has no
realistic alternative but to do so.
Auditors’ responsibilities for the audit of the syndicate annual accounts
Our objectives are to obtain reasonable assurance about whether the syndicate annual accounts as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of these syndicate annual
accounts.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud, is detailed below.
Based on our understanding of the syndicate and industry, we identified that the principal risks of non-
compliance with laws and regulations related to breaches of regulatory principles, such as those governed by
the Prudential Regulation Authority and the Financial Conduct Authority, and those regulations set by the
Council of Lloyd’s, and we considered the extent to which non-compliance might have a material effect on the
syndicate annual accounts. We also considered those laws and regulations that have a direct impact on the
syndicate annual accounts such as The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate
Accounts) Regulations 2008 and the Lloyd’s Syndicate Instructions. We evaluated management’s incentives
and opportunities for fraudulent manipulation of the syndicate annual accounts (including the risk of override of
controls) and determined that the principal risks were related to the risk of fraud in revenue recognition and
management override of controls, including the potential for management bias in significant accounting
estimates. Audit procedures performed by the engagement team included:
● Discussions with the Board, management, internal audit and the compliance function of the Managing Agent,
including consideration of known or suspected instances of non-compliance with laws and regulations, and
fraud;
● Assessment of matters reported on the Managing Agent’s whistleblowing helpline and the results of the
investigation of such matters;
● Reviewing relevant meeting minutes and correspondence with regulatory authorities;
● Testing and challenging where appropriate the assumptions and judgements made in establishing significant
accounting estimates;
● Identifying and testing journal entries identified as potential indicators of fraud; and
● Designing audit procedures to incorporate unpredictability around the nature, timing and extent of testing.
Independent Auditors’ Report to the Member of
Syndicate 1618 (continued)
Ki Syndicate 1618 Annual Report 2024 12
There are inherent limitations in the audit procedures described above. We are less likely to become aware of
instances of non-compliance with laws and regulations that are not closely related to events and transactions
reflected in the syndicate annual accounts. Also, the risk of not detecting a material misstatement due to fraud
is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment
by, for example, forgery or intentional misrepresentations, or through collusion.
A further description of our responsibilities for the audit of the syndicate annual accounts is located on the FRC’s
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the syndicate’s member in accordance
with part 2 of The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008
and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
Other required reporting
Under The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 we
are required to report to you if, in our opinion:
● we have not obtained all the information and explanations we require for our audit; or
● adequate accounting records have not been kept by the Managing Agent in respect of the syndicate; or
● certain disclosures of Managing Agent remuneration specified by law are not made; or
● the syndicate annual accounts are not in agreement with the accounting records.
We have no exceptions to report arising from this responsibility.
Other matter
We draw attention to the fact that this report may be included within a document to which iXBRL tagging has
been applied. This auditors’ report provides no assurance over whether the iXBRL tagging has been applied in
accordance with section 2 of the Lloyd’s Syndicate Instructions version 2.0.
Paul Pannell (Senior statutory auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
5 March 2025
Income Statement
Technical Account - General Business for the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 13
| 2024 | 2023 | ||
Note | $’000 | $’000 | |
Gross premiums written | 4 | ||
Outward reinsurance premiums | ( | ( | |
Net premiums written | |||
Change in the gross provision for unearned premiums | 12 | ( | |
Change in the provision for unearned premiums, reinsurers’ share | 12 | ( | |
Net change in the provision for unearned premiums | ( | ( | |
Earned premiums, net of reinsurance | | ||
Allocated investment return transferred from the non-technical | |||
account | |||
Total technical income | 702,335 | 684,006 | |
Claims paid: | |||
Gross amount | 13 | ( | ( |
| Reinsurers’ share | 13 | ||
Net claims paid | ( | ( | |
Change in the provision for claims: | |||
Gross amount | ( | ( | |
| Reinsurers’ share | |||
Net change in the provision for claims | ( | ( | |
Claims incurred, net of reinsurance | 13 | ( | ( |
Net operating expenses | 5 | ( | ( |
Total technical charges | (598,274) | (581,396) | |
Balance on the technical account for general business |
The accompanying notes are an integral part of these accounts.
Income Statement
Non-Technical Account for the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 14
| 2024 | 2023* | ||
Note | $’000 | $’000 | |
Balance on the technical account for general business | |||
| Investment income | 8 | ||
Realised gains on investments | 8 | ||
Unrealised (loss) on investments | 8 | ( | ( |
Investment expenses and charges | 8 | ( | ( |
Total investment return | |||
Allocated investment return transferred to general business technical account | ( | ( | |
(Loss) on exchange | ( | ( | |
Profit for the financial year |
*Investment income, realised gains/losses, unrealised gains/losses and investment expenses and charges have been re-
presented from the prior year to align to the Lloyd’s Illustrative Accounts. In the prior year, realised gains were presented
within investment income, realised losses were presented within investment expenses and charges and unrealised gains
were presented separately to unrealised losses. Full disclosure of each of these balances can be found in Note 8.
There was no other comprehensive income or expense in the current or prior year. The total
comprehensive income for the financial year is equal to the profit for the financial year.
Statement of Financial Position
Assets
as at 31 December 2024
Ki Syndicate 1618 Annual Report 2024 15
| 2024 | 2023 | ||
Note | $’000 | $’000 | |
Assets | |||
Investments: | |||
Financial investments | 10 | ||
| Reinsurers’ share of technical provisions: | |||
Provision for unearned premium | 12 | ||
Claims outstanding | 13 | ||
Debtors: | |||
Debtors arising out of direct insurance operations | 15 | ||
Debtors arising out of reinsurance operations | 16 | ||
Other debtors | 17 | ||
Other assets: | |||
Cash at bank and in hand | 18 | ||
Other | 19 | ||
Prepayments and accrued income: | |||
Deferred acquisition costs | 20 | ||
Other prepayments and accrued income | |||
Total assets |
The accompanying notes are an integral part of these accounts.
Statement of Financial Position
Liabilities
as at 31 December 2024
Ki Syndicate 1618 Annual Report 2024 16
| 2024 | 2023 | ||
Note | $’000 | $’000 | |
| Member's balance and liabilities | |||
| Member's balance | |||
| Technical provisions: | |||
| Provision for unearned premium | 12 | ||
| Claims outstanding | 13 | ||
| Creditors: | |||
| Creditors arising out of direct insurance operations | 21 | ||
| Creditors arising out of reinsurance operations | 22 | ||
| Other creditors | 23 | ||
| Accruals and deferred income | |||
| Total liabilities | |||
| Total member's balance and liabilities |
The accompanying notes are an integral part of these accounts.
The annual accounts on pages 13 to 54 were approved by the Board of Brit Syndicates Limited on 4 March
2025 and signed on its behalf by:
Gavin Wilkinson Martin Thompson
Director Director
Statement of Changes in Member’s Balance
for the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 17
The Member’s balance comprises the following:
| 2024 | 2023 | ||
Note | $’000 | $’000 | |
| Member’s balance brought forward at 1 January | ( | ||
Total comprehensive income for the financial year | |||
Closed year of account Distribution | 9 | ( | |
Other non-standard personal expenses | ( | ||
| Member’s balance carried forward at 31 December |
The accompanying notes are an integral part of these accounts.
Statement of Cash Flows
for the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 18
| 2024 | 2023 | ||
Note | $’000 | $’000 | |
| Cash flows from operating activities | |||
| Profit for the financial year | |||
| Increase in gross technical provisions | |||
| Decrease in reinsurers’ share of technical provisions | ( | ||
| Decrease in debtors | ( | ||
| Decrease in creditors | ( | ||
| Movement in other assets/liabilities | ( | ( | |
Net investment return | ( | ( | |
| Foreign exchange on operating activities | ( | ||
| Net cash flows from operating activities | |||
Cash flows from investing activities | |||
| Purchase of equity and debt instruments | ( | ( | |
| Sale of equity and debt instruments | |||
Purchase of derivatives | ( | ||
| Investment income received | |||
| Net cash flows from investing activities | ( | ( | |
| Cash flows from financing activities | |||
| Distribution | ( | ||
| Other | ( | ||
| Net cash flows from financing activities | ( | ||
| Net increase in cash and cash equivalents | ( | ||
| Cash and cash equivalents at 1 January | |||
| Foreign exchange on cash and cash equivalents | ( | ||
| Cash and cash equivalents at 31 December | 18 |
The accompanying notes are an integral part of these accounts.
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 19
1 Accounting policies, statement of compliance and basis of preparation
1.1 Statement of compliance and basis of preparation
The financial statements have been prepared in compliance with FRS 102 and FRS 103, being the applicable
UK GAAP accounting standards, and in accordance with The Insurance Accounts Directive (Lloyd’s Syndicate
and Aggregate Accounts) Regulations 2008 (The Regulations 2008), and where appropriate the provisions of
Schedule 3 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008
(The Regulations) relating to insurance companies. The financial statements have also been prepared in
accordance with the Lloyd’s Syndicate Accounts Instructions version 2.0, as modified by the Frequently Asked
Questions version 1.1 issued by Lloyd’s.
The principal accounting policies applied in the preparation of these financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
The financial statements are prepared under the historical cost convention, as modified by the recognition of
certain financial assets and liabilities measured at fair value. The annual basis of accounting has been applied
to all classes of business written by the Syndicate.
The Directors of the Former Managing Agent have prepared the annual accounts on the going concern basis
that the Syndicate will continue to write future business.
The financial statements are reported in US dollars ($), which is the functional and presentational currency of
the Syndicate, and rounded to the nearest $’000, unless otherwise stated.
The 2023 accounts were rounded to the nearest $0.1m, unless otherwise stated. The 2023 comparatives have
therefore been re-presented to the nearest $1,000 in this document, which may lead to minor rounding differences
compared to the prior year accounts.
Furthermore, 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 re-
presented to ensure consistency with current year presentation and compliance with the Lloyd's Syndicate
Accounts Instructions. These changes have been detailed within the impacted financial statements and note
disclosures. The changes have been applied retrospectively and have no impact on previously reported profit,
total comprehensive income, total assets, total liabilities or total capital and reserves.
1.2 Product classification
Insurance contracts are those contracts that transfer significant insurance risk. The significance of insurance risk
is dependent on both the probability of an insured event and the magnitude of its potential effect to the
policyholder. Once a contract has been classified as an insurance contract, it remains an insurance contract for
the remainder of its lifetime, even if the insurance risk reduces significantly during this period.
1.3 Significant accounting policies
1.3.1 Insurance contracts
a. Premiums
Premiums written relate to business incepted during the year, together with any differences between booked
premiums for prior years and those previously accrued and include estimates of premiums due but not yet
receivable or notified, less an allowance for cancellations. Premiums are accreted to the technical account (i.e.
earned) on a pro rata basis over the term of the related policy, except for those contracts where the period of risk
differs significantly over the contract period. In these circumstances, premiums are recognised over the period of
risk in proportion to the amount of insurance protection provided. Reinstatement premiums are accreted to the
technical account on a pro rata basis over the term of the original policy to which it relates. Premiums are shown
net of premium taxes and other levies on premiums. Pipeline premium estimates (estimated premium income)
are derived from ultimate premium estimates which are typically based on standard actuarial projection
techniques (e.g. Basic Chain Ladder) on the key assumption that historical development of premiums is
representative of future development.
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 20
1 Accounting policies, statement of compliance and basis of preparation (continued)
b. Profit commissions
Profit commission income arising from whole account quota share contracts is recognised when the economic
benefits are highly probable. These are netted off against commission costs which are included within the
‘acquisition costs’ line in the technical account.
c. Deferred acquisitions costs
Commission and other acquisition costs incurred during the financial period that are related to securing new
insurance contracts and/or renewing existing insurance contracts, but which relate to subsequent financial
periods, are deferred to the extent that they are recoverable out of future revenue margins. Deferred acquisition
costs are capitalised and amortised over the life of the policy to which they relate on a basis consistent with the
earnings pattern of that policy.
d. Claims
Claims incurred comprise claims and claims handling costs paid in the year and changes in the outstanding
claims provisions, including provisions for claims incurred but not reported (IBNR) and related expenses, together
with any adjustments to claims from prior years. Claims handling costs are mainly external costs related to the
negotiation and settlement of claims.
Internal costs to negotiate, manage, and settle claims (unallocated loss adjustment expenses) are apportioned
to paid claims. The apportionment utilises the annual ULAE assumption that is agreed by the Reserving
Committee.
Outstanding claims represent the estimated ultimate cost of settling all claims (including direct and indirect claims
settlement costs) arising from events which have occurred up to the date of the statement of financial position,
including IBNR, less any amounts paid in respect of those claims. The Syndicate does not discount its liabilities
for unpaid claims, the ultimate cost of which cannot be known with certainty at the date of the statement of
financial position.
Claims provisions have been established on an individual class of business basis. The underwriting and
management teams conduct a quarterly review of each class of business. Claims are projected to the ultimate
position and provision is made for known claims and claims IBNR.
While the Directors consider that the estimate of claims outstanding is fairly calculated based on the information
currently available to them, there is inherent uncertainty in relation to the ultimate liability which will vary as a
result of subsequent information and events. Adjustments to the amounts of the claims provisions established in
prior years are reflected in the technical account for the period in which the adjustments are made.
e. Provision for unearned premiums
The proportion of written premiums that relate to unexpired terms of policies in force at the date of the statement
of financial position is deferred as a provision for unearned premiums, generally calculated on a time apportioned
basis. The movement in the provision is taken to the technical account in order that revenue is recognised over
the period of the risk.
f. Unexpired risks provision
Provision is made for any deficiencies arising when unearned premiums, net of related deferred acquisition costs,
are insufficient to meet expected claims and expenses. The expected claims are calculated having regard to
events that are relevant to the provision at the date of the statement of financial position.
Unexpired risk surpluses and deficits are offset where business classes are managed together, and a provision
is made if an aggregate deficit arises. At 31 December 2024, the Syndicate reported an unexpired risks
provision of $nil (2023: $nil).
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 21
1 Accounting policies, statement of compliance and basis of preparation (continued)
g. Reinsurance
The Syndicate assumes and cedes reinsurance in the normal course of business. Premiums and claims on
reinsurance assumed are recognised in the technical account along the same basis as direct business, taking
into account the product classification. Reinsurance premiums ceded and reinsurance recoveries on claims
incurred are included in the respective expense and income accounts. Reinsurance outwards premiums are
earned according to the nature of the cover. ‘Losses occurring during’ policies are earned evenly over the policy
period. ‘Risks attaching’ policies are expensed on the same basis as the inwards business being protected.
Reinstatement premiums on both inwards and outwards business are accreted to the technical account on a pro
rata basis over the term of the original policy to which they relate.
Reinsurance assets include amounts recoverable from reinsurance companies for paid and unpaid losses and
loss adjustment expenses and ceded unearned premiums. Amounts recoverable from reinsurers are calculated
with reference to the claims liability associated with the reinsured risks. Revenues and expenses arising from
reinsurance agreements are therefore recognised in accordance with the underlying risk of the business
reinsured.
Gains or losses on buying reinsurance are recognised immediately in the technical account.
If a reinsurance asset is impaired, the Syndicate reduces its carrying amount accordingly and will immediately
recognise the impairment loss in the technical account. A reinsurance asset will be deemed to be impaired if
there is objective evidence, as a result of an event that occurred after initial recognition of that asset, that the
Syndicate may not receive all amounts due to it under the terms of the contract, and that the event has a reliably
measurable impact on the amounts that the Syndicate will receive from the reinsurer.
Gains or losses on buying retroactive reinsurance are recognised immediately in the technical account and are
not deferred and amortised. Premiums ceded and claims reimbursed are presented on a gross basis in the
technical account and statement of financial position as appropriate.
h. Expenses and other income receivable
An outsourcing arrangement was in place until 31
st
December 2024 with BSL whereby the Former Managing
Agent has borne all the management expenses of the Syndicate, other than those related to the direct cost of
underwriting and all investment management charges. The Former Managing Agent has charged the Syndicate
for services provided on the following basis:
• Ki staff costs are direct costs of employing the Ki team and are charged at cost to the Syndicate.
All Ki employees were employed by Brit Group Services Limited (‘BGSL’), with effect from 1 August 2024 all
Ki staff were transferred to Ki Group Services Limited (‘KGSL’) via a ‘Transfer of Undertakings Protection of
Employment’ arrangement.
• The Former Managing Agent charged an outsourcing fee to cover the support and overhead costs for the
Syndicate.
• A Managing Agency fee was charged for services rendered.
Investment management charges are netted off against investment return, as disclosed in note 8. Any internal or
external claims adjustment or settlement costs are included within gross claims paid.
1.3.2 Investments
a. Financial investments
The Syndicate has designated on initial recognition its financial assets held for investment purposes
(investments) at fair value through profit or loss (FVTPL). This is in accordance with the Syndicate’s documented
investment strategy and consistent with investment risk being assessed on a portfolio basis. Information relating
to investments is provided internally to the Directors of the Former Managing Agent and management personnel
on a fair value basis.
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 22
1 Accounting policies, statement of compliance and basis of preparation (continued)
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value of financial assets and liabilities traded in
active markets (which are the principal markets or the most advantageous markets that maximise the amount
that would be received to sell the asset or minimises the amount that would be paid to transfer the liability) is
based on quoted market bid and ask price for both financial assets and financial liabilities respectively.
The fair value of financial assets and liabilities that are not traded in an active market, including over-the-counter
derivatives, is determined using valuation techniques. The Syndicate uses a variety of methods and makes
assumptions that are based on market conditions existing at each reporting date. Valuation techniques include
the use of comparable recent arm’s length transactions, reference to other instruments that are substantially the
same, discounted cash flow analysis, option pricing models and others commonly used by market participants
and which make the maximum use of observable inputs.
Gains and losses on investments designated as FVTPL are recognised through the technical account. Interest
income from investments in bonds and short-term investments is recognised at the effective interest rate.
b. Investment return
Investment return comprises all investment income, interest receivable, dividend income, overseas deposit
income and realised and unrealised investment gains and losses and investment expenses and charges. Interest
income is recognised using the effective interest rate method.
Realised gains and losses on investments carried at market value are calculated as the difference between sale
proceeds and purchase price and are recognised when the sale transaction occurs. Unrealised gains and losses
on investments represent the difference between the valuation at the date of the statement of financial position
and their valuation at the previous statement of financial position, or purchase price if acquired during the year,
together with the reversal of unrealised gains and losses recognised in earlier accounting periods in respect of
investment disposals in the current period. Investment expenses and charges relate to those costs incurred in
relation to investment activities.
Investment return is initially recorded in the non-technical account. A transfer is made from the non-technical
account to the general business technical account to reflect the investment return on funds supporting
underwriting business. All investment return is considered to arise on such funds except to the extent that
investment income arises on Funds at Lloyd’s retained at the Syndicate level, also known as ‘Funds in Syndicate’
(FIS), that income remains in the non-technical account.
1.3.3 Measurement of other financial assets and financial liabilities
Other financial assets and financial liabilities are initially recognised at transaction price and subsequently
measured at amortised cost using the effective interest rate method.
1.3.4 Recognition and derecognition of financial assets and financial liabilities
Financial assets and financial liabilities are recognised when the Syndicate becomes a party to the contractual
provisions of the contract. A financial asset is derecognised when either the contractual rights to the asset’s cash
flows expire, or the asset is transferred, and the transfer qualifies for derecognition under a combination of risks
and rewards and control tests.
A financial liability is derecognised when it is extinguished which is when the obligation in the contract is
discharged, cancelled or expired.
All ‘regular way purchases and sales’ of financial assets are recognised on the trade date, i.e. the date that the
Syndicate commits to purchase or sell the asset. Regular way purchases and sales are purchases and sales of
financial assets that require delivery of assets within the time frame generally established by regulation or
convention in the marketplace.
If the carrying value of an asset is impaired, it is reduced to the recoverable amount by an immediate charge to
the income statement. The recoverable amount is the higher of an asset’s fair value less costs to sell and value
in use.
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 23
1 Accounting policies, statement of compliance and basis of preparation (continued)
1.3.5 Derivatives
Derivative financial instruments include foreign exchange contracts, forward rate agreements, interest rate
futures, currency and interest rate swaps and other financial instruments that derive their value mainly from
underlying interest rates, foreign exchange rates, credit indices, commodity values or equity instruments. All
derivatives are initially recognised in the statement of financial position at their fair value, which represents their
cost. They are subsequently remeasured at their fair value, with movements in this value recognised in the
technical account. Fair values are obtained from quoted market prices or, if these are not available, by using
valuation techniques such as discounted cash flow models or option pricing models.
All derivatives are carried as assets when the fair values are positive and as liabilities when the fair values are
negative. Derivative contracts may be traded on an exchange or over-the-counter (OTC). Exchange-traded
derivatives are standardised and include certain futures and option contracts. OTC derivative contracts are
individually negotiated between contracting parties and include forwards and swaps.
Derivatives are subject to various risks including market, liquidity and credit risk, similar to those related to the
underlying financial instruments. Many OTC transactions are contracted and documented under International
Swaps and Derivatives Association (ISDA) master agreements or their equivalent, which are designed to provide
legally enforceable set-off in the event of default, reducing the Syndicate’s exposure to credit risk. The notional
or contractual amounts associated with derivative financial instruments are not recorded as assets or liabilities
on the statement of financial position as they do not represent the fair value of these transactions.
1.3.6 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 the Former Managing Agents and consequently the distribution made to members, or their
members agents is gross of tax. Capital appreciation falls within trading income and is also distributed gross of
tax.
No provision has been made for any United States Federal Income Tax payable on underwriting results or
investment earnings. Any payments on account made by the Syndicate during the year are included in the
statement of financial position under the heading ‘Member’s balance’.
No provision has been made for any overseas tax payable by the member on underwriting results.
1.3.7 Pension costs
Until 1 August 2024 Brit Group Services Limited was operating a defined contribution pension scheme on behalf
of the Former Managing Agent. With effect from 1
st
of August 2024, Ki Group Services Limited is operating a
defined contribution pension scheme on behalf of the Managing Agent. Contributions are recharged to the
Syndicate as part of Ki’s staff costs.
1.3.8 Foreign currencies
In accordance with FRS102, the functional currency is the currency of the primary economic environment in which
the Syndicate operates. The functional currency for Syndicate 1618 is the United States dollar ($). Items included
in the annual accounts are measured using the functional currency which is also the Syndicate’s presentational
currency.
Unless otherwise stated, transactions in sterling, Canadian dollars and Euros are translated into the functional
currency at the average rates of exchange. Transactions in foreign currencies other than sterling, US dollars,
Canadian dollars and Euros are translated at the rate of exchange ruling at the date the transaction is processed.
Monetary assets and liabilities in currencies other than the functional currency are translated at the rate of
exchange ruling at 31 December of each year. Exchange profits or losses arising on the translation of foreign
currency amounts relating to the Syndicate insurance operations are included within the non-technical account
as prescribed by FRS 103.
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 24
1 Accounting policies, statement of compliance and basis of preparation (continued)
1.3.9 Offsetting of financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial position only
when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a
net basis, or to realise the assets and settle the liability simultaneously.
2 Critical accounting estimates and judgements in applying accounting policies
The Syndicate makes various assumptions about the future, and other major sources of estimation uncertainty
at the end of the reporting period, that have a significant risk of resulting in a material adjustment to the reported
amounts of assets and liabilities within the next financial year.
Estimates and judgements are regularly re-evaluated and are based on a combination of historical experience
and other factors, including exposure analysis, expectations of future experience and expert judgement.
Developing on experience and exposure, during the last 4 years, Syndicate 1618 has also benchmarked directly
against Syndicate 2987, allowing for any specific features of Syndicate 1618 which support deviation. Syndicate
2987 is considered an appropriate benchmark as it is an established syndicate with a reliable data history.
Syndicate 2987 is a key lead of the source of business on which Syndicate 1618 participates and shares several
services with Syndicate 2987; therefore, the historic experience is relevant to the Syndicate. From 1
st
January
2025 onwards in line with the novation of the managing agency to Asta, Syndicate 1618 will no longer have
access to Syndicate 2987 reserving data for benchmarking purposes.
2.1 Estimation and judgement in relation to determining the ultimate liability arising from claims
made under Insurance contracts
The estimation of the ultimate liability arising from claims made under insurance contracts is the Syndicate’s most
critical accounting estimate. There are several sources of uncertainty that need to be considered in the estimate
of the amounts that the Syndicate will ultimately pay to settle such claims. Significant areas requiring estimation
and judgement include:
• Estimates of the amount of any liability in respect of claims notified but not settled and incurred but not
reported claims (IBNR) to be included within provisions for inwards insurance and reinsurance contracts;
• The corresponding estimate of the amount of outwards reinsurance recoveries which will become due
as a result of the estimated claims on inwards business;
• The recoverability of amounts due from reinsurers; and
• Estimates of the proportion of exposure which has expired in the period as represented by the earned
proportion of premiums written.
The assumptions used and the manner in which these estimates and judgements are made are set out below,
including the reserving process for the estimation of gross, and net of reinsurance, ultimate premiums and claims:
• Quarterly statistical data is produced in respect of gross and net premiums and claims (paid and
incurred);
• Projections of ultimate premiums, reinstatement premiums and claims are produced by the internal
actuarial department using standard actuarial projection techniques (e.g. Basic Chain Ladder,
Bornhuetter- Ferguson, Initial Expected Loss Ratio). The Basic Chain Ladder and Bornhuetter-Ferguson
projection methods are based on the key assumption that historical development of premiums and
claims is representative of future development. Claims inflation is taken into account in the initial
expected loss ratio selections but is otherwise assumed to be in line with historical inflation trends,
unless explicit adjustments for other drivers of inflation such as legislative developments are deemed
appropriate;
• Some classes of business have characteristics which do not necessarily lend themselves easily to
statistical estimation techniques e.g. due to low data volumes. In such cases, for example, a policy-by-
policy review may also be carried out to supplement statistical estimates;
• In the event of catastrophe losses, and prior to detailed claims information becoming available, claims
provision estimates are compiled using a combination of output from specific recognised modelling
software and detailed reviews of contracts exposed to the event in question.
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 25
2 Critical accounting estimates and judgements in applying accounting policies (continued)
• The initial attritional ultimate selections derived by the actuarial department, along with the underlying
key assumptions and methodology, are discussed with class underwriters and the claims team at ‘pre-
committee’ meetings. The actuarial department may make adjustments to the initial ultimates following
these meetings;
• Following the completion of the ‘pre-committee’ meetings and peer review process within the actuarial
department, the ultimate catastrophe and attritional selections (actuarial estimate), assumptions,
methodology and uncertainties are presented to the Reserving Committee for discussion and debate;
and
• Following review of the actuarial estimate, the Reserving Committee recommends the Committee
estimates to be adopted in the financial statements.
The estimates and judgements are applied in line with the overall reserving philosophy and seek to state the
claims provisions on a best estimate, undiscounted basis. A management risk margin is also applied over and
above the actuarial best estimate to allow for the inherent uncertainty within the best estimate reserve position.
The Syndicate has carefully considered the impact of the higher levels of inflation. The Syndicate’s reserves
continue to be set at a margin above the actuarial estimate which is set on a best estimate basis. As part of the
year-end reserving exercise, the impact of inflation has been considered in detail by the internal Actuarial team
to ensure that assumptions are consistent with the Syndicate’s forward looking expectations for claims inflation.
Various techniques have been considered in line with guidance from Lloyd’s and regulators.
In addition to claims provisions, the reserve for future loss adjustment expenses is also subject to estimation with
consideration being given to the level of internal and third-party loss adjustment expenses incurred annually. The
estimated loss adjustment expenses are expressed as a percentage of gross claims reserves and the
reasonableness of the estimate is assessed through benchmarking. Further judgements are made as to the
recoverability of amounts due from reinsurers. Provisions for bad debts are made specifically, based on the
solvency of reinsurers, internal and external ratings, payment experience with them and any disputes of which
the Syndicate is aware.
2.2 Estimation of pipeline premiums
Premium income reported by the Syndicate includes estimates for ultimate premiums for certain contracts, in
particular those written under delegated authority agreements. These ultimate premiums are written in line with
expected attachments of the underlying policies. The Syndicate considers relevant information when determining
estimates, including information provided by brokers and coverholders, past underwriting experience, market
conditions, and the contractual terms of policies. As updated information relating to such variables becomes
available, for example when bordereaux are received, adjustments to estimates are recorded in the period in
which they are determined and will impact gross premiums written and provisions for unearned premium in the
technical account.
Syndicate 1618, due to developing its own experience, has also benchmarked directly against Syndicate 2987,
allowing for any specific feature of Syndicate 1618 which supports deviation. Additionally, the actuarial team
works closely with other business functions, such as finance and underwriting, to ensure that the ultimate
premium estimates are appropriate given the actual premiums written and signed and the known pipeline of
policies bound.
2.3 Estimation of premium earnings
The Syndicate attributes earning of gross written premium to each period on the basis of the passage of time.
However, if the expected pattern of release of risk during the coverage period differs significantly from the
passage of time, for example a group of contracts that is exposed to large natural catastrophe risk concentrated
in the first or second half of the year, then the allocation is made on the basis of the expected timing of claims
incurred. At a portfolio level this is considered to provide a reasonable estimate for the full year of the pattern of
risk over the coverage period.
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 26
2 Critical accounting estimates and judgements in applying accounting policies (continued)
2.4 Estimation and judgements in respect of fair value of financial investments
Financial investments are carried in the statement of financial position at fair value. Determining the fair value of
certain investments requires estimation.
The Syndicate values investments using designated methodologies, estimations and assumptions. These
securities, which are reported at fair value on the statement of financial position, represent the majority of the
invested assets. The measurement basis for assets carried at fair value is categorised into a ‘fair value hierarchy’
in accordance with the valuation inputs and consistent with UK GAAP.
The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities
(level one); the middle priority to fair values other than quoted prices based on observable market information
(level two); and the lowest priority to unobservable inputs that reflect the assumptions that the Syndicate
considers market participants would normally use (level three). To the extent that valuation is based on models
or inputs that are unobservable in the market, the determination of fair value requires more judgement and
accordingly, those instruments included in level three will require a greater degree of judgement to be exercised
during valuation than for those included in level two or level one. As at 31 December 2024 (2023: nil), the
Syndicate does not hold any level three financial investments.
The classification within the fair value hierarchy is based on the lowest level of significant input to its valuation.
Any change to investment valuations may affect the Syndicate results of operations and reported financial
condition. For further information, refer to note 10.
3 Principal risks and uncertainties
3.1 Insurance risk
Insurance risk arises from the possibility of an adverse financial result due to actual experience being different
from that expected when an insurance product was designed and priced. The actual performance of insurance
contracts is subject to the inherent uncertainty in the occurrence, timing and amount of the final insurance
liabilities. This is the principal risk the Syndicate 1618 is exposed to as its primary function is to underwrite
insurance contracts. The risk arises due to the possibility of insurance contracts being under-priced, under-
reserved or subject to unforeseen catastrophe claims.
The areas of insurance risk discussed below include underwriting (including aggregate exposure management),
reinsurance and reserving.
a. Underwriting risk
Underwriting risk is the risk that insurance premiums will not be sufficient to cover the future losses and associated
expenses. It arises from the fluctuations in the frequency and severity of financial losses incurred through the
underwriting process by the Syndicate as a result of unpredictable events.
The Syndicate is also exposed to the risks resulting from its underwriters accepting risks for premiums which are
insufficient to cover the ultimate claims which result from such policies. The underwriting and economic
environment and the associated impact on premium rates, including trends due to the underwriting cycle and
inflation, are factored into the Syndicate’s pricing models and risk management tools, and is continually monitored
to assess whether any corrective action is required. Additional controls over the underwriting strategy are
described in the section below.
The Syndicate writes all its business through Lloyd’s and therefore can take advantage of Lloyd’s centralised
infrastructure and service support. Lloyd’s also has an established global distribution framework, with extensive
licensing agreements providing the Syndicate access to over 200 territories. Exclusively using the Lloyd’s
platform subjects the Syndicate to a number of resulting underwriting risks. The Syndicate relies on the efficient
functioning of the Lloyd’s market. In particular any damage to the brand or reputation of Lloyd’s or deterioration
in Lloyd’s asset base when compared with its liabilities may have a material adverse effect on the Syndicate’s
ability to write new business.
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 27
3 Principal risks and uncertainties (continued)
Syndicate 1618 also benefits from the ability to write business based on the Lloyd’s financial rating, which allows
the Syndicate to write more business as part of the Lloyd’s platform. A downgrade in Lloyd’s financial strength
ratings may have an adverse effect on the Syndicate.
(i) Controls over underwriting strategy
The Board sets the Syndicate’s underwriting strategy for accepting and managing underwriting risk. The Ki
Portfolio and Underwriting Committee meets regularly to drive the underwriting strategy and to monitor
performance. The assessment of underwriting performance is all-encompassing applying underwriting key
performance indicators (KPIs), technical pricing management information (MI), premium monitoring, and claims
monitoring. The risks are managed by the appropriate committees in line with the underwriting risk policy and
within the risk tolerance set by the relevant Boards. The underwriting risk policy also sets out a number of controls,
which are summarised below.
The Former Managing Agent carried out a detailed annual business planning process. The resulting plans set
out premium, territorial and aggregate limits and reinsurance protection thresholds for all classes of business and
represent a key tool in managing concentration risk. Performance against the plans is monitored on a regular
basis by the Ki Portfolio and 1618 Underwriting Committee as well as by the Board. A dedicated Risk Aggregation
team also performs catastrophe modelling and Realistic Disaster Scenarios (RDS) on a regular basis to ensure
that the Syndicate’s net losses remain within its risk appetite.
The Former Managing Agent has developed underwriting guidelines, limits of authority and business plans for
the Syndicate which are binding upon all underwriting activities. These are detailed and specific to classes of
business. Gross and net line size limits are in place for each class of business with additional restrictions in place
on catastrophe exposed business.
A proportion of the Syndicate’s 1618 insurance risks are written by third parties under delegated underwriting
authorities, with the remainder being written through individual risk acceptances or through reinsurance treaties.
The third parties are closely vetted in advance and are subject to tight reporting requirements. In addition, the
performance of these contracts is closely monitored by underwriters and/or portfolio managers, with regular audits
being carried out.
The technical pricing framework ensures that the pricing process in the Syndicate is appropriate. It ensures
pricing methodologies are demonstrable and transparent and that technical (or benchmark) prices are assessed
for each risk. The portfolio management, underwriting and actuarial functions work together to maintain the pricing
models and assess the difference between technical price and actual price. The framework also ensures that
sufficient data is recorded and checked by underwriters to enable the Syndicate to maintain an effective rate
monitoring process.
Business offered to Syndicate 1618 is rated by a proprietary algorithm before being underwritten. The algorithm
assesses the attractiveness of the business based on factors such as technical pricing and offers larger lines for
more attractive business. The Syndicate monitors its approved Nominated Syndicate panel to ensure that it is
following those that are market leaders in those areas.
A dedicated Portfolio Management function monitors the business written on a daily basis to ensure the portfolio
is balanced and aggregations are controlled. The Ki Portfolio and 1618 Underwriting Committee are responsible
for governance and oversight of the portfolio and the underwriting process.
Compliance is checked through both a peer review process and, periodically, by the Former Managing Agent’s
Internal Audit department which is entirely independent of the underwriting units.
In order to limit risk, the number of reinstatements per policy is limited, deductibles are imposed, policy exclusions
are applied and whenever allowed by statute, maximum indemnity limits are put in place per insured event.
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 28
3 Principal risks and uncertainties (continued)
(ii) Underwriting risk profile
The core insurance portfolio of Property, Specialty and Casualty covers a variety of largely uncorrelated events
and also provides some protection against the underwriting cycle as different classes are at different points in
the underwriting cycle. The underwriting portfolio is managed to target top quartile underwriting performance and
the mix of business is continually adjusted based on the current environment (including the current pricing
strength of each class). This assessment is conducted as part of the business planning process, which operates
annually, is an ongoing strategy process and uses inputs from the technical pricing framework. The business
plan is approved by the relevant Boards and is monitored on an ongoing basis.
(iii) Geographical concentration of premium
The Syndicate enters into policies with policyholders from all over the world, with the underlying risk relating to
premiums spread worldwide. This allows the Syndicate to benefit from a wide geographic diversification of risk.
The principal location of the Syndicate’s policyholders is the United States. The concentration of insurance
premium before and after reinsurance by the location of the underlying risk is summarised below:
Premiums written
Gross
Net
2024
$’000
$’000
United States
483,148
429,543
United Kingdom
130,901
115,731
Europe (excluding UK)
55,953
50,151
Canada
56,689
51,120
Other (including worldwide)
74,282
67,092
Total
800,973
713,637
Premiums written
Gross
Net
2023
$’000
$’000
United States
509,129
345,431
United Kingdom
49,346
43,062
Europe (excluding UK)
14,482
9,504
Canada
19,429
13,573
Other (including worldwide)
284,617
238,073
Total
877,003
649,643
The nature of the London Market business is such that the insured and reinsured are often operating on a multi-
territory or worldwide basis and hence coverage is often provided on a worldwide basis. Premiums written on a
multi-territory or worldwide basis are included in ‘Other’ in the table above.
(iv) Portfolio mix
The Syndicate’s breakdown of gross premium written by principal categories is summarised below:
2024
2023
$’000
$’000
Premium by portfolio
Direct
Reinsurance
Direct
Reinsurance
Casualty
9,887
117,617
19,556
104,674
Financial and Professional Liability
154,670
9,635
148,541
12,432
Programmes and Facilities
110,557
1,074
106,419
334
Property
200,883
77,244
249,077
115,491
Specialty
81,477
31,330
77,910
36,126
Other
6,599
-
6,443
-
Total
564,073
236,900
607,946
269,057
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 29
3 Principal risks and uncertainties (continued)
The Syndicate underwrites a business mix of both insurance and reinsurance, long and short tailed business
across a number of geographic areas which results in a diversification of the Syndicate’s portfolio. The business
mix is monitored on an ongoing basis and measured against plan.
(v) Aggregate exposure management
Syndicate 1618 closely monitors aggregation of exposure to natural catastrophe events against agreed risk
appetites using stochastic catastrophe modelling tools, along with knowledge of the business, historical loss
information, and geographical accumulations. Climate change impacts natural catastrophe events. Analysis and
monitoring also measures the effectiveness of the Syndicate’s reinsurance programmes. Risk appetites are set
by the Board on an annual basis.
Stress and scenario tests are also run, such as Lloyd’s and internally developed Realistic Disaster Scenarios
(RDSs). Below are the key RDS losses to the Syndicate for all classes combined as at 1
st
October 2024
(unaudited):
Lloyd’s Prescribed RDS Event
Estimated
Industry
Loss (i)
Modelled Syndicate
Loss at 1 October 2024
(i)
Modelled Syndicate
Loss at 1 October 2023
(i)
$’000
Gross
Net
Gross
Net
Gulf of Mexico Windstorm
111,000,000
141,000
63,000
173,000
85,000
Florida Miami Windstorm
131,000,000
136,000
57,000
164,000
59,000
US North East Windstorm
81,000,000
76,000
48,000
90,000
42,000
San Francisco Earthquake
80,000,000
215,000
94,000
243,000
99,000
Japan Earthquake
52,099,000
26,000
23,000
17,000
15,000
Japan Windstorm
11,119,000
2,000
1,000
2,000
2,000
European Windstorm
26,032,000
9,000
8,000
16,000
6,000
(i): At 31 December 2024 foreign exchange rates.
Actual results may differ materially from the losses above given the significant uncertainties within model
assumptions, techniques and simulations applied to calculate these event loss estimates. There could also be
non-modelled losses which result in actual losses exceeding these figures. Moreover, the portfolio of insured
risks changes dynamically over time.
(vi) Sensitivity to changes in risk margin
The following table presents the profit and loss impact of the sensitivity of the value of insurance liabilities
disclosed in the accounts to potential movements in the assumptions applied within the technical provisions.
Given the nature of the business underwritten by the Syndicate, the approach to calculating the technical
provisions for each class can vary and as a result the sensitivity performed is to apply a beneficial and adverse
risk margin to the total insurance liability. The amount disclosed in the table represents the profit or loss impact
of an increase or decrease in the insurance liability as a result of applying the sensitivity. The amount disclosed
for the impact on claims outstanding – net of reinsurance represents the impact on both the profit and loss for
the year and member’s balance.
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 30
3 Principal risks and uncertainties (continued)
General insurance business sensitivities as at 31 December 2024
Sensitivity
+5.0%
-5.0%
$’000
$’000
Claims outstanding – gross of reinsurance
49,305
(49,305)
Claims outstanding – net of reinsurance
39,712
(39,712)
General insurance business sensitivities as at 31 December 2023
Sensitivity
+5.0%
-5.0%
$’000
$’000
Claims outstanding – gross of reinsurance
36,628
(36,628)
Claims outstanding – net of reinsurance
28,614
(28,614)
b. Reinsurance risk
Syndicate 1618 purchases reinsurance to manage exposure to individual risks and aggregation of risks arising
from individual large claims and catastrophe events. This allows the Syndicate to mitigate exposure to insurance
losses against the risk appetite, reduce volatility of reported results and protect capital.
Proportional quota share reinsurance is purchased to provide protection against claims arising either from
individual large claims or aggregation of losses. Quota share reinsurance is also used to manage the Syndicate‘s
net exposure to classes of business where the Syndicate’s risk appetite is lower than the efficient operating scale
of the class of business on a gross of reinsurance basis. These placements are reviewed on the basis of market
conditions.
The Syndicate also has in place a comprehensive programme of excess of loss reinsurances to protect itself
from severe size or frequency of losses:
(i) Facultative reinsurance is used to reduce risk relating to individual contracts. The amount of cover bought
varies by class of business. Facultative reinsurance is also used as a tool to manage the net line size on
individual risks to within tolerance.
(ii) Risk excess of loss reinsurance is used to protect a range of individual inwards contracts which could give
rise to individual large claims. The optimal net retention per risk is assessed for each class of business given
the Syndicate’s risk appetite during the business planning exercise.
(iii) Aggregate Catastrophe excess of loss cover is in place to protect the Syndicate against combined property
claims from multiple policies resulting from catastrophe events. This is supplemented by specific covers for
peril regions, catastrophe swaps, catastrophe bonds and industry loss warranties where they are a cost-
efficient means to ensure that S1618 remains within its catastrophe risk appetite.
Given the fundamental importance of reinsurance protection to the Syndicate’s risk management, the Former
Managing Agent has in place internal controls and processes to ensure that the reinsurance arrangements
provide appropriate protection of capital and maintain the Syndicate’s ability to meet policyholder obligations. The
1618 Underwriting Committee oversees the purchase of reinsurance.
The Syndicate remains exposed to a number of risks relating to its reinsurance programme:
• It is possible for extremely severe catastrophe losses to exhaust the reinsurance purchased. Any losses
exceeding the reinsurance protection would be borne by the Syndicate.
• Some parts of the programme have limited reinstatements which limit the amount that may be
recovered from second or subsequent claims. If the entirety of the cover is exhausted, it may not be
possible to purchase additional reinsurance at a reasonable price.
• A dispute may arise with a reinsurer which may mean the recoveries received are lower than
anticipated.
• Basis risk on reinsurance which responds to something other than the Syndicate’s Ultimate Net Loss.
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 31
3 Principal risks and uncertainties (continued)
These risks are managed through a combination of techniques and controls including risk aggregation
management, capital modelling and internal actuarial review of outward reinsurance costs. The counterparty risk
in relation to reinsurance purchased was managed by the BSL Credit Committee. After separation from Brit, it
will be reviewed by the 1618 Underwriting Committee. This is further discussed in the Credit risk section below.
c. Reserving risk
Reserving risk arises where the actual cost of losses for policyholder obligations incurred before the reporting
date may differ from the established reserves due to inaccurate assumptions or unforeseen circumstances. This
is a key risk for the Syndicate as the reserves for unpaid losses represent a large component of the Syndicate’s
liabilities and are inherently uncertain. The S1618 Reserving Committee is responsible for the management of
the Syndicate’s reserving risk.
The Syndicate has a rigorous process for establishing reserves for insurance claim liabilities and a number of
controls are used to mitigate reserving risk. The reserving process starts with controls over claims data which
ensure complete and accurate recording of all paid and notified claims. Case reserves are set for notified claims
through following those set by the policy’s lead syndicate.
Whilst the case reserve is expected to be sufficient to meet the claims amount when it is settled, incurred but not
reported (IBNR) claims require additional reserves. This is particularly the case for the longest tailed classes of
business where the final settlement can occur several years after the claim occurred. Actuarial triangulation
techniques are employed by the Syndicate’s experienced actuaries to establish the IBNR reserves.
These techniques project IBNR reserves based on historical development of paid and incurred claims by
underwriting year. For the most uncertain claims, triangulation techniques are supplemented by additional
methods to ensure the established reserves are appropriate. The actuarial team work closely with other business
functions such as portfolio management and risk aggregation to ensure that they have a full understanding of the
emerging claims experience. Inflation is considered as part of reserve setting process.
The Syndicate’s reserving policy sets out the approach to estimating claims provisions and is designed to produce
accurate and reliable estimates that are consistent over time and across classes of business. The actuarial best
estimate set out in the policy is subject to Reserving Committee sign-off as part of the formal governance
arrangements. The estimate agreed by the committees is used as a basis for the financial statements. A
management risk margin may be applied over and above the actuarial best estimate to allow for the inherent
uncertainty within the best estimate reserve position and wider inherent uncertainty across the economic and
insurance environment. This margin increases the reserves reflected in the Syndicate financial statements above
the mean expectation. Finally, the reserves in the financial statements are presented to the Audit Committee for
recommendation to the BSL Board who are responsible for the final sign-off.
Reserve estimates may be more or less than is ultimately required to meet the claims arising from earned
business. The level of uncertainty varies significantly between classes but typically is highest for those classes
where there are significant delays in the settlement of the final claim amount. More specifically, the key areas of
uncertainty within the Syndicate’s reserves are considered to be claims from the long-tailed direct and long-tailed
reinsurance classes. The issues contributing to this heightened uncertainty are common to all entities which write
such business.
3.2 Liquidity risk
This is the risk the Syndicate may encounter difficulty in meeting obligations associated with financial liabilities
that are settled by delivering cash or another financial asset. The predominant liquidity risk the Syndicate faces
is the daily calls on its available cash resources in respect of claims arising from insurance contracts.
The Former Managing Agent monitors the levels of cash and cash equivalents on a daily basis, ensuring
adequate liquidity to meet the expected cash flow requirements due over the short-term.
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 32
3 Principal risks and uncertainties (continued)
The Syndicate also limits the amount of investment in illiquid securities in line with the investment policy set by
the Board. This involves ensuring sufficient liquidity to withstand claim scenarios at the extreme end of business
plan projections, by reference to modelled RDS.
The tables below present the undiscounted value of monetary liabilities of the Syndicate into their relevant
maturing groups based on the remaining period at the end of the year to their contractual maturities or expected
repayment dates.
As at 31 December 2024
Liabilities
(undiscounted values)
Up to a year
$’000
1-3 years
$’000
3-5 years
$’000
Over 5
years
$’000
Total
$’000
Claims outstanding
321,660
315,716
144,415
204,307
986,098
Derivative liabilities
1,646
-
-
-
1,646
Creditors*
68,233
-
-
-
68,233
Accruals and deferred income*
9,307
-
-
-
9,307
Total
400,846
315,716
144,415
204,307
1,065,284
As at 31 December 2023
Liabilities
(undiscounted values)
Up to a year
$’000
1-3 years
$’000
3-5 years
$’000
Over 5
years
$’000
Total
$’000
Claims outstanding
222,983
222,011
105,686
181,888
732,568
Derivative Liabilities
-
-
-
-
-
Creditors*
98,637
-
-
-
98,637
Accruals and deferred income*
62,046
-
-
-
62,046
Total
383,666
222,011
105,686
181,888
893,251
*The Creditors and Accruals and deferred income lines have been re-presented since prior year, to align to the Lloyd’s
Illustrative Accounts. In the prior year these lines were presented in aggregate as ‘Creditors’ in the table, with a footnote to
disclose the breakdown. Furthermore, Accruals and deferred income previously included Reinsurers’ share of deferred
acquisition costs, which is no longer included in the liquidity risk disclosure.
3.3 Credit risk
This is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to
discharge an obligation in a timely manner. The main sources of credit risk relate to:
• Reinsurers: through the failure to pay valid claims against a reinsurance contract held by the Syndicate;
• Brokers and coverholders: where counterparties fail to pass on premiums or claims collected or paid
on behalf of the Syndicate;
• Investments: through the issuer default of all or part of the value of a financial instrument or derivative
financial instrument; and
• Cash and cash equivalents: through the default of the banks holding the cash and cash equivalents.
The insurance and non-insurance related counterparty credit risks are managed separately by the Syndicate.
a. Investments credit risk
(i) Investment credit risk management process
The BSL Investment Committee was responsible for the management of investment credit risk. After separation,
1618 Investment Committee manages the investment credit risk. The Investment Guidelines and Investment
Policy set out clear limits and controls around the level of investment credit risk. The Syndicate has established
concentration guidelines that restrict the exposure to any individual counterparty. The investment guidelines
further limit the type, credit quality and maturity profile of both the Syndicate’s cash and investments.
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 33
3 Principal risks and uncertainties (continued)
In addition, the investment risk framework further limits potential exposure to credit risk through monitoring of the
aggregate investment risk limits.
Insurance Credit Risk management process
Insurance credit risk arises primarily from reinsurers (whereby reinsurers fail to pay recoveries due to the
Syndicate in a timely manner), direct policyholders (where policy holders fail to pay premium in a timely manner)
and brokers and coverholders (whereby intermediaries fail to pass on premiums due to the Syndicate in a timely
manner).
The BSL Credit Committee, chaired by the Brit Group Chief Financial Officer, was responsible for the
management of credit risk arising from insurance activities. This is managed by the 1618 Underwriting Committee
after separation from Brit.
Reinsurer credit risk is managed by transacting only with reinsurance counterparties that satisfy a minimum level
of financial strength or provide appropriate levels of collateral and have been approved for use by the BSL Credit
Committee. The reinsurer security list, which sets out the list of approved reinsurance counterparties, is reviewed
at least annually and following any significant change in risk profile, which includes any changes to reinsurers'
financial ratings. Credit risk appetite limits are set for reinsurance entities and groups to limit accumulations of
risk. These positions are monitored quarterly against current statement of financial position exposures and in
relation to a number of extreme loss scenarios.
Reinsurance aged debt is monitored and managed against the management risk appetite limits set by the BSL
Credit Committee. A bad debt provision is held against all non-rated reinsurers or any reinsurer where there is
deemed to be a specific risk of non-payment.
Any breaches of credit risk tolerance and/or appetite are reported to the BSL Risk Oversight Committee and the
Board on at least a quarterly basis.
(ii) Credit risk profile
A summary of the credit risk exposures for the Syndicate is set out in the tables below:
$’000
AAA
AA
A
BBB*
Other*
Not
Rated
Total
As at 31 December 2024
Financial Investments
Shares and other variable
yield securities and units in
unit trusts
80,342
27,644
-
-
-
37,772
145,758
Debt securities
529,461
18,204
140,296
72,159
-
89,406
849,526
Derivative assets
-
-
-
-
-
617
617
Total investments
609,803
45,848
140,296
72,159
-
127,795
995,901
Reinsurers’ share of
claims outstanding
-
125,675
51,463
-
-
14,722
191,860
Debtors arising out of
direct insurance
operations
-
-
-
-
-
197,714
197,714
Debtors arising out of
reinsurance operations
-
-
-
-
-
68,138
68,138
Cash at bank
-
-
22,610
1,579
-
-
24,189
Other assets
22,951
2,794
3,361
1,642
5,766
-
36,514
Other debtors and accrued
interest
-
-
-
-
-
8,438
8,438
Total
632,754
174,317
217,730
75,380
5,766
416,807
1,522,754
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 34
3 Principal risks and uncertainties (continued)
*The columns in this table have been re-presented since prior year, to align to the Lloyd’s Illustrative Accounts. In particular,
in the prior year, ‘BBB and below’ were grouped into one column, which has now been split out into ‘BBB’ and ‘Other’.
Collateral of $85,134k (2023: $51,800k) is held in third party trust accounts or as a letter of credit (‘LOC’) to
guarantee Syndicate 1618 against reinsurance counterparties and is available for immediate drawdown in the
event of a default. As at 31 December 2024, collateral of $11,228k (2023: $18,700k) had been drawn against
reinsurance assets.
The table below shows the maximum exposure to credit risk for the components of the statement of financial
position. The maximum exposure is shown gross, before the effect of mitigation through agreements.
$'000
Neither past
due nor
impaired
assets
Past due
but not
impaired
assets
Gross
value of
impaired
assets
Impairment
allowance
Total
As at 31 December 2024
Shares and other variable yield
securities and units in unit trusts
145,758
-
-
-
145,758
Debt securities
849,526
-
-
-
849,526
Derivative assets
617
-
-
-
617
Other investments
Reinsurer' share of claims
outstanding
191,860
-
-
-
191,860
Debtors arising out of direct
insurance operations
197,714
-
-
-
197,714
Debtors arising out of reinsurance
operations*
65,685
2,453
-
-
68,138
Other debtors and accrued interest
136,569
136,569
Cash at bank and in hand
24,189
-
-
-
24,189
Other assets
36,472
-
-
-
36,472
Total
1,648,390
2,453
-
-
1,650,843
$’000
AAA
AA
A
BBB*
Other*
Not
Rated
Total
As at 31 December 2023
Financial Investments
Shares and other variable
yield securities and units in
unit trusts
38,845
2,026
7,727
7,511
-
-
56,109
Debt securities
436,049
29,339
86,743
96,924
-
-
649,055
Derivative assets
-
-
-
-
-
1,223
1,223
Total investments
474,894
31,365
94,470
104,435
-
1,223
706,387
Reinsurers’ share of
claims outstanding
-
100,419
37,664
-
-
22,215
160,298
Debtors arising out of
direct insurance
operations
-
-
-
-
-
208,607
208,607
Debtors arising out of
reinsurance operations
-
-
-
-
-
68,085
68,085
Cash at bank
-
-
29,855
-
-
-
29,855
Other assets
27,796
2,456
2,767
2,556
4,149
-
39,724
Other debtors and accrued
interest
-
-
-
-
-
4,879
4,879
Total
502,690
134,240
164,756
106,991
4,149
305,009
1,217,835
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 35
3 Principal risks and uncertainties (continued)
$'000
Neither past
due nor
impaired
assets
Past due
but not
impaired
assets
Gross
value of
impaired
assets
Impairment
allowance
Total
As at 31 December 2023
Shares and other variable yield
securities and units in unit trusts
56,109
-
-
-
56,109
Debt securities
649,055
-
-
-
649,055
Derivative assets
1,223
-
-
-
1,223
Reinsurer' share of claims
outstanding
160,298
-
-
-
160,298
Debtors arising out of direct
insurance operations
208,607
-
-
-
208,607
Debtors arising out of reinsurance
operations
67,955
130
-
-
68,085
Other debtors and accrued
interest
192,648
-
-
-
192,648
Cash at bank and in hand
29,855
-
-
-
29,855
Other assets
39,525
-
-
-
39,525
Total
1,405,274
130
-
-
1,405,404
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
0-3
months
past due
3-6
months
past due
6-12
months
past due
Greater
than 1
year
past due
Total
As at 31 December 2024
$'000
$'000
$'000
$'000
$'000
Debtors arising out of reinsurance operations
1,515
569
369
-
2,453
Total
1,515
569
369
-
2,453
Past due but not impaired
0-3
months
past due
3-6
months
past due
6-12
months
past due
Greater
than 1
year
past due
Total
As at 31 December 2023
$'000
$'000
$'000
$'000
$'000
Debtors arising out of reinsurance operations
-
-
-
130
130
Total
-
-
-
130
130
3.4 Market risk
This is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk.
Credit risk on financial investments and cash is covered in the credit risk section.
a. Currency risk
Currency risk is the risk that movements in exchange rates impact the financial performance or solvency position
of the Syndicate. The split of assets and liabilities for each of the Syndicate’s main currencies, converted to US
dollars, is set out in the tables below.
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 36
3 Principal risks and uncertainties (continued)
Converted $’000
UK £
US $
EUR €
CAD $
AUD $
Total
As at 31 December 2024
Investments
10,849
918,909
6,492
59,651
-
995,901
Reinsurers’ share of technical
provisions
17,367
184,026
11,620
5,448
-
218,461
Debtors
44,244
191,317
10,174
20,159
-
265,894
Other assets
14,023
26,845
231
8,718
10,844
60,661
Prepayments and accrued
income
19,146
81,127
3,805
5,848
-
109,926
Total assets
105,629
1,402,224
32,322
99,824
10,844
1,650,843
Technical provisions
(143,300)
(1,130,806)
(49,710)
(51,118)
-
(1,374,934)
Creditors
(5,861)
(43,728)
(8,802)
(11,079)
(409)
(69,879)
Accruals and deferred income
(3,187)
(5,641)
(214)
(265)
-
(9,307)
Total liabilities
(152,348)
(1,180,175)
(58,726)
(62,462)
(409)
(1,454,120)
Net assets / (liabilities)
excluding the effect of
currency derivatives
(46,719)
222,049
(26,404)
37,362
10,435
196,723
Adjustment for foreign
exchange derivatives
48,914
(48,971)
29,440
(29,383)
-
-
Adjusted net assets /
(liabilities)
2,195
173,078
3,036
7,979
10,435
196,723
*This table has been updated since prior year to align to the Lloyd’s Illustrative Accounts. In the prior year, the disclosure
included total assets and total liabilities only. The disclosure now shows the list of assets and liabilities as per the financial
position.
Converted $’000
UK £
US $
EUR €
CAD $
AUD $
Total
As at 31 December 2023
(restated)
Investments
8,323
634,841
7,062
56,160
-
706,387
Reinsurers’ share of technical
provisions
21,342
220,888
8,799
9,231
-
260,261
Debtors
43,305
198,076
14,080
21,430
-
276,891
Other assets
16,306
30,912
333
8,402
13,427
69,380
Prepayments and accrued
income
15,888
68,750
3,046
4,801
-
92,484
Total assets
105,165
1,153,468
33,319
100,023
13,427
1,405,403
Technical provisions
(125,535)
(928,357)
(42,763)
(52,393)
(1,149,050)
Creditors
(13,657)
(74,025)
(4,553)
(6,402)
-
(98,637)
Accruals and deferred income
(25,657)
(33,831)
(837)
(1,721)
-
(62,046)
Total liabilities
(164,850)
(1,036,213)
(48,153)
(60,516)
-
(1,309,733)
Net assets / (liabilities)
excluding the effect of
currency derivatives
(59,685)
117,255
(14,834)
39,507
13,427
95,671
Adjustment for foreign
exchange derivatives
76,685
(107,223)
30,538
-
-
-
Adjusted net assets /
(liabilities)
17,001
10,032
(15,704)
39,507
13,427
95,671
The note for the prior year has been restated to reflect the reclassification of inter currency account from total
liabilities to the adjusted net assets / (liabilities).
The non-US dollar denominated net assets of the Syndicate may lead to profit or losses (depending on the mix
relative to the liabilities), should the US dollars vary relative to these currencies.
The Syndicate manages its exposure in each of the main four currencies and the net asset position is rebalanced
periodically. Where mismatches occur, these may lead to foreign exchange gains and losses reported through
the income statement.
Foreign currency forward contracts may be used to achieve the desired exposure to each currency. From time
to time the Syndicate may also choose to utilise foreign currency derivatives to manage the risk of reported losses
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 37
3 Principal risks and uncertainties (continued)
due to changes in foreign exchange rates. The degree to which derivatives are used is dependent on the
prevailing cost versus the perceived benefit to the Syndicate from reducing the chance of a reported loss due to
changes in foreign exchange rates. The details of all foreign currency derivatives contracts entered into are given
in Note 11.
b. Sensitivity to changes in foreign exchange rates
The table below gives an indication of the impact on the result of a percentage movement in the relative strength
of the US dollar against the value of sterling, Canadian dollar and Euro simultaneously, after taking into
consideration the effect of hedged positions. The analysis is based on the information at 31 December of each
year end:
Impact on result for the financial year
and net assets
£’000
2024
2023
US dollar weakens
10% against other currencies
2,364
5,630
20% against other currencies
4,729
11,259
US dollar strengthens
10% against other currencies
(2,364)
(5,630)
20% against other currencies
(4,729)
(11,259)
c. Interest rate risk and price risk
Interest rate risk is the risk that the fair value and/or future cash flows of a financial instrument will fluctuate
because of changes in interest rates. The Syndicate is exposed to interest rate risk through its investment
portfolio, borrowings and cash and cash equivalents. The sensitivity of the price of these financial exposures is
indicated by their respective durations. This is defined as the modified duration which is the change in the price
of the security subject to a 100 basis points parallel shift in interest rates. The greater the duration of a security,
the greater the possible price volatility.
Insurance liabilities are measured on an undiscounted basis and therefore the reported liabilities are not sensitive
to changes in interest rates.
The Syndicate takes into account the duration of its required capital, targeting an investment portfolio duration
that, under a variation in interest rates, preserves the solvency ratio of the Syndicate. The duration of the
investment portfolio is then set within an allowable range relative to the targeted duration.
The analysis below is performed for reasonably possible movements in market indices on financial instruments
with all other variables held constant, showing the impact on the result before tax due to changes in fair value of
financial assets and liabilities (whose fair values are recorded in the profit and loss account) and members’
balances. The analysis is based on the information at 31 December of each year end:
$’000
2024 Impact
on results
before tax
2024 Impact
on members’
balances
2023 Impact
on results
before tax
2023 Impact
on members’
balances
$’000
$’000
$’000
$’000
Interest rate risk
+50 basis points shift in yield curves
(14,861)
(14,861)
(8,306)
(8,306)
-50 basis points shift in yield curves
14,861
14,861
8,306
8,306
Equity price risk
5% increase in equity prices
-
-
-
-
5% decrease in equity prices
-
-
-
-
3.5 Operational Risk
Operational risk is the potential for loss arising from the failure of people, process or technology or the impact of
external events. The nature of operational risk means that it is dispersed across all functional areas of the Ki
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 38
3 Principal risks and uncertainties (continued)
Group. Operational risk exposures are managed through a consistent set of management processes that drive
risk identification, assessment, control and monitoring.
The BSL Operations Committee was responsible for managing operational risk in line with the operational risk
policy and the risk tolerance and management appetite limits set by the relevant Boards and management
respectively. After separation, there are various committees responsible for managing operational risk in line with
the risk management principals, the risk tolerance and management appetite limits set by the Former Managing
Agent and management respectively. Since 1
January 2025, operational risk is managed by the 1618 Syndicate
Board and compiled for a Ki Group risk profile for Ki Executive Management. Each individual risk committee is
provided with relevant operational risk updates, and these committees include operational risk owners within
executive management who actively manage operational risk within their respective areas (such as Underwriting,
Claims, Investments and Finance).
With oversight from the Former Managing Agent, a Risk Management Framework is in place to ensure an
appropriate standard approach is taken to managing operational risk across the Syndicate. The key elements of
this framework are:
• Allocation of responsibility for the identification and assessment of operational risk. Standard tools are
used to facilitate these assessments;
• Definition of standard elements of sound operating controls that are expected to be in place to address
all identified operational risks;
• A process that integrates with S1618’s internal model to support the setting and monitoring of
operational risk appetite and tolerances;
• Governance, reporting and escalation for operational risk;
• Infrastructure supporting the operational risk management framework; and
• Operational risk management training and awareness.
The Syndicate operates with a new method of distribution (a broker-facing platform) and a new method of
selecting risks (the algorithm). The operational risks associated with the platform and algorithm have been
addressed as follows:
• The platform has been comprehensively tested. Monitoring software detects any failure, and IT support
is in place to rectify any issues together with a clear disaster recovery plan to be reviewed again in
2025. Policies can be manually underwritten for short periods if required;
• The algorithm has been subject to detailed review by the Actuarial and Risk functions in 2023, which
concluded it is suitable for use. Further review will be carried out in 2025. The risks underwritten are
monitored daily by the Portfolio Management team with detailed MI available. Refinement of the
algorithm is ongoing and subject to change management controls and will include further development
of risk monitoring capabilities; and
• A Conduct Risk Framework is in place to ensure products and services continue to meet the needs of
our customers.
3.6 Emerging risks
The Former Managing Agent undertakes a formal emerging risk review annually with the results reported to the
Risk Oversight Committee and included in the Own Risk & Solvency Assessment (ORSA) report and Commercial
Insurer’s Solvency Self-Assessment (CISSA) reports of the underwriting entities. After separation from Brit, the
Risk Management Function will be responsible for carrying out an emerging risk review and reporting it to the
dedicated Risk Committee. The review is an important part of the risk identification aspect of the Risk
Management Framework (RMF) and includes horizon scanning of the internal and external risk environment to
identify potential new or developing risks. These risks can then be included in the risk register and managed
appropriately as required.
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 39
3 Principal risks and uncertainties (continued)
The emerging risk review has previously identified risks such as climate change and cyber risk. These risks have
been managed throughout their development and are now monitored as part of the business-as-usual risk
management process.
3.6.1 Climate Change Risk
Risk Management Framework
Climate change is recognised as an emerging risk and has been identified as a high priority by emerging risks
analysis. Its potential impact on the insurance industry is also an area of focus for the wider insurance market
and its regulators.
The RMF sets out the methodology by which the Syndicate identifies, measures, and manages risks associated
with climate change. The Syndicate considers natural catastrophe risk, liability risk and investment risks to be
the most material risks. Using Board tolerances and management metrics, exposure to the above risk types is
managed and monitored on an ongoing basis.
The RMF is reviewed annually, and regulatory developments are monitored on an ongoing basis. Syndicate 1618
has been compliant with PRA Supervisory Statement SS3/19 since 2021 which sets expectations for firms
regarding their consideration of climate.
Climate risk management
Natural catastrophe risk
Natural catastrophe risk relates to the physical risks of increased frequency and severity of weather-related
natural catastrophes. This could result in additional claims. Climate change to date may already be affecting
present-day weather events and therefore claims.
Natural catastrophe modelling is leveraged in pricing and outwards reinsurance purchasing decisions. The
Syndicate seeks to ensure a balanced and well diversified portfolio (including exposure to weather perils). 1618
has reviewed its property underwriting strategy in recent years and has sought to reduce exposure in peak
catastrophe regions.
Natural Catastrophe risk is assessed using software provided by Verisk (developed by scientists and specialists)
for the most material and established perils. The modelling is supplemented using the ‘Brit View of Risk’ which is
a set of in-house adjustments used to apply Brit’s view of risk to vendor model output. Syndicate 1618 will
continue utilising Brit’s model in an ongoing year and plans to develop the ‘Ki’s View of Risk’ in the future. We
continuously monitor scientific studies and regularly review both the completeness of existing models and the
application of the Brit view of risk.
Syndicate’s exposure to natural catastrophe risks at an overall and peril-region level at key return periods is
monitored on an ongoing basis by the Risk Management Function. Board limits are in place to ensure 1618 is
not over-exposed to natural catastrophe risk, and reinsurance is purchased to manage tail risk.
Liability risk
Climate change could result in liability claims arising from litigation against Syndicate’s clients. For example,
claims could arise from firms being held responsible for directly contributing to climate change, not taking climate
change into account in business decisions or inadequate disclosures.
The Syndicate’s exposure is managed by use of limits on gross underwriting exposure, contract wording and
through the purchase of reinsurance. There is uncertainty over whether courts rule against insurers and if so,
over what time horizon. The number of climate change litigation related claims notifications is monitored to enable
early identification of any material increase.
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 40
3 Principal risks and uncertainties (continued)
Market risk
Investment losses have the potential to arise from exposure to industries contributing to climate change whose
market value could reduce as the economy transitions away from fossil fuels. This transition risk could occur over
the short or long-term depending on government policies and financial market movements.
The Syndicate has a diversified investment portfolio, with limits on exposure to individual issuers. Additionally,
the Syndicate has developed metrics to monitor investment exposure to potentially ‘at-risk’ industries such as oil
and gas or transport. An annual review of equity holdings is conducted which includes a review of the ESG
strategy of the underlying companies.
Climate scenario analysis and understanding climate risk
Climate scenario analysis is key to understanding the potential impact of climate-related risks. Analysis performed
to date has identified physical risks arising from natural catastrophes as having the highest potential for insured
losses therefore this is an area of greater focus.
Internal scenario analysis
In addition to the above, the Former Managing Agent performs climate change related scenario analysis in
Syndicate 1618’s ORSA which encompasses natural catastrophe, market and lability risk.
Building on CBES, a more detailed climate change related litigation risk scenario analysis was also performed
in 2022. This considered the potential gross and net impact of climate change related litigation under three
hypothetical scenarios.
The findings from the tests above have been integrated into:
• The internally developed ‘Brit View of Risk’ which is used by the syndicate to supplement natural
catastrophe modelling software (relates to Natural catastrophe risk);
• Brit’s Property Catastrophe underwriting strategy, identifying the regions and perils most sensitive to
climate change (relates to Natural catastrophe risk);
• Industry level exposure monitoring for Brit’s asset portfolio for ‘high risk’ sectors (relates to Natural
catastrophe risk);
• Clarity on potential losses to be accounted for in underwriting and business planning decisions (relates
to Natural catastrophe risk); and
• The ORSA process, to ensure climate change related risks are considered across relevant areas of the
business (relevant to all risks).
3.6.2 Geopolitics
Geopolitical events, such as the ongoing wars in Ukraine and the Middle East, have the potential to cause
insurance losses and disruption to financial markets. Insurance losses could arise either as a result of direct
damage from the conflicts or from second order impacts such as supply chain disruptions and economic
instability. There may also be a potential impact on the operational costs of the syndicate attributable to the
downstream effects of high inflation. The syndicate continues to monitor developments closely.
Geopolitical risk events may also impact the global economy, as discussed in section 3.6.3 below.
3.6.3 Global economic environment
Inflation in the USA and the UK has stabilised through 2024, however, it continues to remain above the target
levels. Interest rates have started to gradually decrease, but at a slower pace than anticipated by the markets,
and they remain at relatively high levels. Additionally, there is political uncertainty due to recent US elections
and geopolitical conflicts in Middle East and Eastern Europe.
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 41
3 Principal risks and uncertainties (continued)
Recessionary risks remain given these factors as well as geopolitical risks. Recessions may impact the frequency
and cost of claims, investment results, the likelihood of counterparty defaults and the potential for operational risk
events. Syndicate 1618 continues to actively monitor and respond to changes in the economic environment.
The Syndicate has considered the impact of the increased level of inflation and the economic downturn. Increased
focus has been placed on ensuring the pricing models adequately address current inflationary trends.
Feeding into these models is an enhanced framework assessing the key drivers of claim settlement costs for
each class of business. Inflationary impacts were also considered during the year end reserving process.
The Syndicate remains cognisant of the impact of inflation on the underlying portfolio. We continue to review the
key drivers of claim settlement costs and frequency by class of business, which in turn will further inform any
required recalibration of our pricing models. Our reserves continue to incorporate our current view of social and
economic inflation and include a risk adjustment to allow for uncertainty.
Capital framework at Lloyd’s
The Society of Lloyd’s (Lloyd’s) is a regulated undertaking and subject to the supervision of the Prudential
Regulatory Authority (PRA) under the Financial Services and Markets Act 2000, and in accordance with the
Solvency II framework.
Within this supervisory framework, Lloyd’s applies capital requirements at member level and centrally to ensure
that Lloyd’s complies with Solvency II, and beyond that to meet its own financial strength, licence and ratings
objectives.
Although, as described below, Lloyd’s capital setting processes use a capital requirement set at syndicate level
as a starting point, the requirement to meet Solvency II and Lloyd’s capital requirements apply at overall and
member level respectively, not at syndicate level. Accordingly, the capital requirement in respect of Syndicate
1618 is not disclosed in these financial statements.
Lloyd’s capital setting process
In order to meet Lloyd’s requirements, each syndicate is required to calculate its Solvency Capital Requirement
(SCR) for the prospective underwriting year. This amount must be sufficient to cover a 1 in 200 year loss,
reflecting uncertainty in the ultimate run-off of underwriting liabilities (SCR to ultimate). The syndicate must also
calculate its SCR at the same confidence level but reflecting uncertainty over a one year time horizon (one year
SCR) for Lloyd’s to use in meeting Solvency II requirements. The SCRs of each syndicate are subject to review
by Lloyd’s and approval by the Lloyd’s Capital and Planning Group.
3.7 Capital risk management
A syndicate may be comprised of one or more underwriting members of Lloyd’s. Each member is liable for its
own share of underwriting liabilities on the syndicate(s) on which it participates but not other members’ shares.
Accordingly, the capital requirement that Lloyd’s sets for each member operates on a similar basis. Each
member’s SCR shall thus be determined by the sum of the member’s share of the syndicate SCR to ultimate.
Where a member participates on more than one syndicate, a credit for diversification is provided to reflect the
spread of risk, but consistent with determining an SCR which reflects the capital requirement to cover a 1 in 200
year loss to ultimate for that member. Over and above this, Lloyd's applies a capital uplift to the member's capital
requirement to produce the Economic Capital Assessment (ECA). The purpose of this uplift, which is a Lloyd’s
not a Solvency II requirement, is to meet Lloyd’s financial strength, licence and ratings objectives. The capital
uplift applied for 2024 was 35% (2023: 35%) of the member’s SCR to ultimate.
Provision of capital by members
Each member may provide capital to meet its ECA either by assets held in trust by Lloyd’s specifically for that
member (funds at Lloyd’s), held within and managed within a syndicate (funds in syndicate) or as the member’s
share of the members’ balances on each syndicate on which it participates.
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 42
3 Principal risks and uncertainties (continued)
Funds in syndicate are not applicable to Syndicate 1618, as participants’ capital is held at member level.
Accordingly, all of the assets less liabilities of the Syndicate, as represented in the member’s balances reported
on the statement of financial position on page 17, represent resources available to meet member and Lloyd’s
capital requirements.
Capital calculation
The SCR to Ultimate is calculated using a stochastic risk-based capital model developed by the Ki Group which
allows the Board of the Former Managing Agent to identify an appropriate level of capital required. This capital
requirement is specific to the actual reserving history, reinsurance programme and business profile of Syndicate
1618 rather than being based on company market averages. The Board of the Former Managing Agent reviews
and approves all capital modelling submissions to Lloyd’s.
4 Analysis of underwriting result
An analysis of the underwriting result before investment return is presented in the following table:
Year ended 31
December 2024
Gross
premium
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
Result
$’000
$’000
$’000
$’000
$’000
$’000
Direct Insurance:
Accident and health
4,166
5,479
(1,241)
(2,016)
(1,182)
1,040
Marine, aviation and
transport
78,666
78,025
(56,001)
(17,364)
233
4,893
Fire and other
damage to property
303,414
325,504
(161,708)
(71,140)
(54,817)
37,839
Third party liability
164,870
160,852
(103,494)
(36,604)
(17,084)
3,670
Miscellaneous
12,957
12,372
(4,971)
(3,594)
(1,909)
1,898
Total Direct
Insurance
564,073
582,232
(327,415)
(130,718)
(74,759)
49,340
Reinsurance
acceptances
236,900
242,782
(160,350)
(75,628)
10,246
17,050
Total
800,973
825,014
(487,765)
(206,346)
(64,513)
66,390
Year ended 31
December 2023
Gross
premium
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
Result
$’000
$’000
$’000
$’000
$’000
$’000
Direct Insurance:
Accident and health
9,664
9,476
(5,075)
(4,104)
(1,210)
(913)
Marine, aviation and
transport
70,559
63,908
(32,888)
(13,996)
(7,657)
9,367
Fire and other
damage to property
374,052
345,064
(179,042)
(81,147)
(56,392)
28,483
Third party liability
137,420
156,536
(88,574)
(33,383)
(26,848)
7,731
Miscellaneous
16,251
17,089
(11,851)
(4,421)
(1,545)
(728)
Total Direct
Insurance
607,946
592,073
(317,430)
(137,051)
(93,652)
43,940
Reinsurance
acceptances
269,057
253,482
(144,885)
(93,644)
7,771
22,724
Total
877,003
845,555
(462,315)
(230,695)
(85,881)
66,664
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 43
4 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:
Year ended 31
December 2024
Gross
premium
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
Result
$’000
$’000
$’000
$’000
$’000
$’000
Additional analysis
Fire and other damage to property of which is:
Specialties
923
1,834
651
(257)
(693)
1,535
Energy
13,600
10,435
(7,075)
(3,243)
(1,051)
(934)
Third party liability of which is:
Energy
672
522
(321)
(157)
(55)
(11)
Year ended 31
December 2023
Gross
premium
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
Result
$’000
$’000
$’000
$’000
$’000
$’000
Additional analysis
Fire and other damage to property of which is:
Specialties
3,632
3,090
(98)
(938)
(609)
1,445
Energy
4,496
3,517
(1,962)
(941)
(551)
63
Third party liability of which is:
Energy
246
166
(99)
(45)
(56)
(34)
The concentration of insurance premium for direct business only, by location of the underlying risk, is summarised
below:
2024
2023
$’000
$’000
United States
355,951
352,933
United Kingdom
107,440
34,207
Europe (excluding UK)
34,319
10,039
Other (including worldwide)
66,363
210,767
Total
564,073
607,946
*This table has been updated since prior year to align to the Lloyd’s Illustrative Accounts. In the prior year, the disclosure
included the geographical locations for total gross written premium. The disclosure now shows the geographical location for
direct insurance only.
The geographical concentration of total gross written premium and net written premium can be found in Note
3.1(a)(iii).
5 Net operating expenses
2024
2023
$’000
$’000
Acquisition costs
192,877
171,470
Change in deferred acquisition costs
(14,885)
(892)
Administrative expenses*
17,200
47,797
Members’ standard personal expenses*
11,154
12,320
206,346
230,695
Reinsurance commissions income
(23,214)
(31,076)
Total
183,132
199,619
*Members’ standard personal expenses have been re-presented since the prior year, to align to the Lloyd’s Illustrative Accounts.
In the prior year, these expenses were shown within Administrative expenses in the table and separately disclosed in a footnote
below.
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 44
5 Net operating expenses (continued)
Total commission for direct insurance business for the year amounted to:
2024
2023
$’000
$’000
Total commission for direct insurance business
139,488
118,092
The auditors’ remuneration and audit services charged to the Syndicate within the annual fixed fee charged by
the Former Managing Agent and the auditors’ remuneration borne by another group company are as follows:
2024
2023
$’000
$’000
Audit of the Syndicate annual accounts
357
295
Other services pursuant to Regulations and Lloyd’s Byelaws
265
107
Total
622
402
6 Staff numbers and costs
Until 1
st
of August 2024, all Brit and Ki staff in the UK were employed by the Brit Group services company, Brit
Group Services Limited (BGSL). Amounts were recharged to the Syndicate as part of the outsourcing fee and
the direct cost of Ki specific staff cost.
With effect from 1 August 2024, all Ki staff were transferred to Ki Group Services Limited (‘KGSL’) via a ‘Transfer
of Undertakings Protection of Employment’ arrangement. Since then, all ‘Ki staff’ are employed by Ki Group
Services Limited (‘KGSL’) which recharges staff costs to the other legal entities of the Ki Group including the
Syndicate.
The full staff cost disclosures are included in the notes to those accounts. Amounts recharged to the Syndicate
are not separately identifiable.
7 Remuneration of the Directors of BSL, KFL and Active Underwriter
Directors’ Remuneration
No remuneration of the Directors of BSL or KFL has been charged to the Syndicate for the 2024 calendar year
(2023: nil). It is not practical to allocate these amounts to the underlying entities to which the Directors provide
services. The following table therefore represents the total emoluments paid to Directors by the managing agent.
There were no advances or credit granted by the Former Managing Agent to any of its Directors during the year.
2024
2023
$’000
$’000
Directors’ emoluments
6,090
4,800
Total
6,090
4,800
Underwriter’s Remuneration
The active underwriter received the following remuneration in respect of the Syndicate. This remuneration was
paid to the active underwriter by the Managing Agent from the annual fixed fee it charged to the Syndicate:
2024
2023
$’000
$’000
Aggregate remuneration
860
882
Total
860
882
The active underwriter also received $25k (2023: $10k) of pension contributions.
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 45
8 Investment income, expenses and charges
2024
2023
$’000
$’000
Interest and similar income
From financial instruments designated at fair value through profit and
loss
Interest and similar income*
34,117
21,896
Interest on cash at bank*
7,885
4,492
Other income from investments
From financial instruments designated at fair value through profit or
loss
Gains on the realisation of investments
7,487
5,564
Losses on the realisation of investments
(7,301)
(9,092)
Unrealised gains on investments
4,420
13,750
Unrealised losses on investments
(7,977)
(206)
Investment management expenses
(960)
(458)
Total investment return
37,671
35,946
Transferred to the technical account from the non-technical account
37,671
35,946
*The investment income has been re-presented from the prior year to align to the Lloyd’s Illustrative Accounts. In the prior
year, all investment income was presented as one line.
9 Distribution
A distribution to the corporate member of $75,802k will be proposed in relation to the closing year of account
2022. A distribution of $278k was made to the corporate member in relation to closing the 2021 year of account
in the 2024 financial year.
10 Financial investments
Carrying Value
Cost
2024
2023
2024
2023
$’000
$’000
$’000
$’000
Shares and other variable yield securities and units in
unit trusts
145,758
56,109
147,573
55,015
Debt securities
849,526
649,055
845,294
640,170
Derivative assets
617
1,223
-
-
Total
995,901
706,387
992,867
695,185
$995,284k (2023: $706,387k) of ‘Shares and other variable yield securities and units in unit trusts’ and ‘Debt
securities’ are listed. These comprise 99.9% (2023: 99.8%) of the total market value of investments.
All financial investments have been designated as held at fair value through profit or loss.
The following table shows financial investments recorded at fair value analysed between the three levels in the
fair value hierarchy:
Level 1
Level 2
Level 3
Total
Year ended 31 December 2024
$’000
$’000
$’000
$’000
Shares and other variable yield securities and units in
unit trusts
107,986
37,772
-
145,758
Debt securities
488,849
360,677
-
849,526
Derivative assets
-
617
-
617
Total financial investments
596,835
399,066
-
995,901
Derivative liabilities
-
(1,646)
-
(1,646)
Total
596,835
397,420
-
994,255
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 46
10 Financial investments (continued)
Level 1
Level 2
Level 3
Total
Year ended 31 December 2023
$’000
$’000
$’000
$’000
Shares and other variable yield securities and units in
unit trusts
56,109
-
-
56,109
Debt securities
412,700
236,355
-
649,055
Derivative assets
-
1,223
-
1,223
Total financial investments
468,809
237,578
-
706,387
Derivative liabilities
-
-
-
-
Total
468,809
237,578
-
706,387
a. Basis for determining the fair value hierarchy of financial instruments
The Syndicate has classified the fair value measurements using a fair value hierarchy that reflects the significance
of the inputs used in making those measurements. The fair value hierarchy comprises the following levels:
1. Level one – quoted prices (unadjusted) in active markets for identical assets
2. Level two – inputs other than quoted prices included within level one that are observable for the asset,
either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
3. Level three – inputs for the assets that are not based on observable market data (unobservable inputs).
Assets are categorised as level one where fair values determined in whole directly by reference to an active
market relate to prices which are readily and regularly available from an exchange, dealer, broker, industry group,
pricing service or regulatory agency and those prices represent actual and regularly occurring market
transactions on an arm’s length basis, i.e. the market is still active.
For assets and liabilities that are recognised at fair value on a recurring basis, the Syndicate determines whether
transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level
of input that is significant to the fair value measurement as a whole) at the end of each reporting period.
Fair values for level two and level three assets include:
• Values provided at the request of the Syndicate by pricing services, and which are not publicly
available, or values provided by external parties which are readily available but relate to assets for
which the market is not always active; and
• Assets measured on the basis of valuation techniques including a varying degree of assumptions
supported by market transactions and observable data.
For all assets not quoted in an active market or for which there is no active market, the availability of financial
data can vary and is affected by a wide variety of factors, including the type of financial instrument, whether it is
new and not yet established in the marketplace, and other characteristics specific to each transaction. To the
extent that valuation is based on the models or inputs that are unobservable in the market, the determination of
fair value requires more judgement. Accordingly, the degree of judgement exercised is higher for instruments
classified in level three and the classification between level two and level three depends highly on the proportion
of assumptions used, supported by market transactions and observable data.
b. Valuation techniques
Level one
These represent assets traded in an active market whose quoted price is readily and regularly available and
those prices represent actual and regular transactions on an arm’s length basis.
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 47
10 Financial investments (continued)
Level two
Inputs include directly or indirectly observable inputs (other than level one inputs) such as quoted prices for similar
financial instruments exchanged in active markets, quoted prices for identical or similar financial instruments
exchanged in inactive markets and other market observable inputs.
Level two securities contain certain investments in US and non-US government agency securities, US and non-
US corporate debt securities and specialised investment funds. US government agency securities are priced
using valuations from independent pricing vendors who use discounted cash flow models supplemented with
market and credit research to gather specific information. Market observable inputs for these investments may
include broker-dealer quotes, reported trades, issuer spreads and available bids. Non-US government agency
securities are priced with over-the-counter (OTC) quotes or broker-dealer quotes. Other market observable inputs
include benchmark yields and reported trades. Issuer spreads are also available for these types of investments.
US and non-US corporate debt securities are investment grade, and the information collected during pricing of
these instruments includes credit data as well as other observations from the market and the particular sector.
Prices for all these securities are based on a limited number of transactions (OTC prices/broker-dealer quotes)
so they are derived indirectly using inputs that can be corroborated by observable market data. These also include
certain private placement corporate debt securities which are valued with the use of discounted cash flow models.
Level two specialised investment funds contain credit opportunities funds that are valued based on the underlying
assets in the fund on a security-by-security basis. A number of direct and indirect inputs such as benchmark yield
curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates and
anticipated timing of principal repayments are considered during their valuation.
Level three
Level three securities contain investments in private equity/limited partnerships/debt where the fund’s underlying
investments are not traded/quoted in an active market. Pricing models factor in interest rates, bond or credit swap
spreads and volatility.
Level three specialised investment funds include securities that are valued using techniques appropriate to each
specific investment. The valuation techniques include fair value by reference to net asset values (NAVs) adjusted
and issued by fund managers based on their knowledge of underlying investments and credit spreads of
counterparties. In some instances, certain investment funds are classified as Level three because they may
require at least three months’ notice to liquidate. This requirement results in an adjustment to the reported value
for illiquidity which is unobservable.
Level three equities include investments in limited partnerships where the fund’s underlying investments are not
traded/quoted in an active market. In some instances, limited partnerships are classified as level three because
they may require at least three months of notice to liquidate. This requirement results in an adjustment to the
reported value for illiquidity which is unobservable.
11 Derivative contracts
The Syndicate purchases derivative financial instruments:
i. to hedge its foreign currency exposure on future commitments;
ii. as part of its investment management strategy.
The hierarchy of fair values of derivatives contracts is included within the Fair Value Hierarchy in note 10 above.
2024
2024
2023
2023
Notational
amount
Fair value
Notational
amount
Fair value
$’000
$’000
$’000
$’000
Foreign exchange forward contract assets
617
617
1,223
1,223
Foreign exchange forward contracts liabilities
(1,646)
(1,646)
-
-
Net value of derivatives at 31 December
(1,029)
(1,029)
1,223
1,223
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 48
12 Provision for unearned premium
Gross
Reinsurers’
share
Net
$’000
$’000
$’000
Balance at 1 January 2024
416,482
(99,963)
316,519
Premiums written in the year
800,973
(87,336)
713,637
Premiums earned in the year
(825,014)
160,350
(664,664)
Effect of movement in exchange rates
(3,605)
348
(3,257)
Balance at 31 December 2024
388,836
(26,601)
362,235
Gross
Reinsurers’
share
Net
$’000
$’000
$’000
Balance at 1 January 2023
381,400
(69,439)
311,961
Premiums written in the year
877,003
(227,360)
649,643
Premiums earned in the year
(845,556)
197,495
(648,061)
Effect of movement in exchange rates
3,635
(659)
2,976
Balance at 31 December 2023
416,482
(99,963)
316,519
13 Claims outstanding
Gross
Reinsurers’
share
Net
$’000
$’000
$’000
Balance at 1 January 2024
732,568
(160,298)
572,270
Claims incurred in relation to current underwriting
year
289,038
(27,975)
261,063
Claims incurred in relation to prior underwriting
years
198,727
(44,648)
154,079
Claims paid in the year
(227,606)
39,790
(187,816)
Effect of movement in exchange rates
(6,629)
1,271
(5,358)
Balance at 31 December 2024
986,098
(191,860)
794,238
Claims reported and loss adjustment expenses
279,821
(57,889)
221,932
Claims Incurred but not reported provisions
706,277
(133,971)
572,306
Balance at 31 December 2024
986,098
(191,860)
794,238
Gross
Reinsurers’
share
Net
$’000
$’000
$’000
Balance at 1 January 2023
452,723
(95,360)
357,363
Claims incurred in relation to current underwriting
year
253,792
(59,685)
194,107
Claims incurred in relation to prior underwriting
years
208,523
(20,853)
187,670
Claims paid in the year
(187,767)
16,333
(171,434)
Effect of movement in exchange rates
5,297
(733)
4,564
Balance at 31 December 2023
732,568
(160,298)
572,270
Claims reported and loss adjustment expenses
174,196
(40,937)
133,259
Claims Incurred but not reported provisions
558,372
(119,361)
439,011
Balance at 31 December 2023
732,568
(160,298)
572,270
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 49
14 Claims development tables
The following tables illustrate the development of the estimates of earned ultimate cumulative claims incurred,
including claims notified and IBNR, for each successive underwriting year, illustrating how amounts estimated
have changed from the first estimates made. Non-US dollar cumulative claims estimates and cumulative
payments are translated into US dollars at the period end rate as at 31 December 2024.
As these tables are on an underwriting year basis, there is an apparent large increase from amounts reported for
the end of the underwriting year to one year later as a large proportion of premiums are earned in the year of
account’s second year of development:
Estimate of cumulative net incurred claims
$’000
Underwriting year
2021
2022
2023
2024
At end of underwriting year
112,741
204,069
193,413
259,654
One year later
235,276
379,287
357,170
-
Two years later
247,165
374,996
-
-
Three years later
241,626
-
-
-
Current estimate of net cumulative
claims incurred
241,626
374,996
357,170
259,654
Cumulative payments
(145,284)
(177,875)
(85,738)
(30,311)
Net outstanding claims provision as
at 31 December 2024
96,342
197,121
271,432
229,343
15 Debtors arising out of direct insurance operations
2024
2023
$’000
$’000
Due within one year
197,714
208,607
Total
197,714
208,607
16 Debtors arising out of reinsurance operations
2024
2023
$’000
$’000
Due within one year
68,138
68,085
Total
68,138
68,085
$’000
Underwriting year
2021
2022
2023
2024
At end of underwriting year
122,067
272,338
252,898
287,327
One year later
264,706
476,548
464,608
-
Two years later
268,411
471,460
-
-
Three years later
260,289
-
-
-
Current estimate of gross cumulative
claims incurred
260,289
471,460
464,608
287,327
Cumulative payments
(153,495)
(213,155)
(100,523)
(30,413)
Gross outstanding claims provision
as at 31 December 2024
106,794
258,305
364,085
256,914
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 50
17 Other Debtors
2024
2023
$’000
$’000
Due within one year:
Investment receivable
42
166
Intercompany balances
-
33
Total
42
199
18 Cash and cash equivalents
2024
2023
$’000
$’000
Cash at bank and in hand
24,189
29,855
Short-term deposits
145,758
56,194
Total
169,947
86,049
Cash and cash equivalents comprises cash at bank and in hand, short-term deposits and other highly liquid
investments with a maturity of three months or less at the date of acquisition. Short-term deposits are presented
within Financial Investments on the statement of financial position.
Of the total cash and cash equivalents, $37,773k (2023: $399k) was held in regulated bank accounts in overseas
jurisdictions.
19 Other assets
Other assets comprise only overseas deposits which are lodged as a condition of conducting underwriting
business in certain countries.
20 Deferred acquisition costs
2024
2024
2023
2023
Gross
$’000
Reinsurance
$’000
Gross
$’000
Reinsurance
$’000
Balance at 1 January
87,606
(19,698)
85,761
(15,575)
Incurred acquisition costs
192,877
(6,924)
171,470
(36,208)
Amortised acquisition costs
(177,992)
23,214
(170,578)
31,076
Effect of movement in exchange rates
(1,003)
(19)
953
1,009
Balance at 31 December
101,488
(3,427)
87,606
(19,698)
*The change in deferred acquisition costs has been re-presented since the prior year to align to the Lloyd’s Illustrative
Accounts. In the prior year, the change due to incurred acquisition costs and amortised acquisition costs was presented as a
single line. Furthermore, the disclosure only included the Gross balances in the prior year.
21 Creditors arising out of direct insurance operations
2024
2023
$’000
$’000
Due within one year
3,349
637
Total
3,349
637
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 51
22 Creditors arising out reinsurance operations
2024
2023
$’000
$’000
Due within one year
46,678
91,776
Due after one year
-
5,881
Total
46,678
97,657
23 Other creditors
2024
2023
$’000
$’000
Due within one year:
Derivative Liabilities
1,646
-
Investment Payable
4,002
341
Intercompany balances
14,191
-
Taxation
13
2
Total
19,852
343
24 Related parties
Group companies
a. Brit Syndicates Limited (BSL or the Former Managing Agent)
The Former Managing Agent is a wholly owned subsidiary of Brit Insurance Holdings Limited, which in turn is a
subsidiary of Brit Limited. During the year, the Syndicate was charged $4,005k in managing agency fees (2023:
$4,400k), $500k in outsourcing fees (2023: $12,100k) and $4,731k in respect of direct costs (2023: $22,500k).
As at 31 December 2024, there were amounts outstanding of $4,210k (2023: $300k).
b. Ki Financial Limited (KFL)
There are no financial transactions between the Syndicate and Ki Financial Limited, the parent company of the
Ki Group of companies. There are no related party director disclosures to note for the year ended 31 December
2024.
c. Ki Member Limited (KML)
On 7 November 2024, KFL acquired the entire share capital of Ki Member Limited (KML) from Brit Limited for the
consideration of $1, and KML is now a subsidiary of the Company. KML’s main purpose is to provide capacity for
the Syndicate’s underwriting activity. The current capacity for the 2024 year of account is £725,462k (2023:
£740,131k).
d. Syndicate premium income derived from other related parties in the wider Brit/Ki groups
The following related parties in the wider Brit and Ki groups of companies introduced insurance business to the
Syndicate during 2024:
• Ki Digital Services Limited (Ki Digital)
• Camargue Underwriting Managers Proprietary Limited
• Sutton Specialty Risk Inc
The amounts in the income statement relating to trading with these related parties for the year ended 31
December 2024 included commission for introducing insurance business of $29,457k (2023: $1,900k).
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 52
24 Related parties (continued)
Amounts recorded in the statement of financial position in respect of premium net of commissions due from, and
fees payable, to these related parties as at 31 December 2024 and 2023 were $9,980k (2023: nil).
A brief description of the various related parties introducing insurance business to the Syndicate is as follows:
• Ki Digital Services Limited (Ki Digital)
Ki Digital Services Limited (Ki Digital), a subsidiary of KFL, commenced trading in 2024, acting as a
coverholder to bind Ki’s Syndicate 1618 risks incepting from 1 January 2024. Ki Digital acts as an
insurance intermediary on behalf of its partners (including S1618) and charges commission on the
insurance business introduced.
• Camargue Underwriting Managers Proprietary Limited
On 30 August 2016, the Brit Group acquired 50% of the share capital of the South African company,
Camargue Underwriting Managers Proprietary Limited (Camargue) and also entered into a call and a put
option to purchase the remaining 50% in 2021. On 4 October 2021, Camargue became a 100%
subsidiary of the Group and ceased to be an associated undertaking. Camargue is a leading managing
general underwriter of a range of specialised insurance products and specialist liability solutions in South
Africa and is an important trading partner for Brit. Trading with Camargue is undertaken on an arm’s
length basis and is settled in cash.
• Sutton Specialty Risk Inc
On 2 January 2019, Brit Insurance Holdings Limited, acquired 49% of the issued shares of Sutton
Specialty Risk Inc (Sutton) for a total purchase consideration of CAD$17,200k and entered into a forward
contract to purchase the remaining 51% in 2023. Sutton is a Canadian MGU, specialising in Accident
and Health business. The 49% shareholding in Sutton was sold on 8 March 2024 to Amynta Group. The
arms-length underwriting relationship between Sutton and the Syndicate continued post sale.
The following related party in the wider Brit and Ki groups of companies introduced insurance business to the
Syndicate during 2023:
• Ambridge Partners LLC
Ambridge Partners LLC is no longer considered a related party. It is a managing general underwriter of
transactional insurance products, writing business on behalf of a range of insurers including entities within
the Brit Limited group. On 10 May 2023 Ambridge was sold by the Brit Group to Amynta Group, which
included Ambridge Partners LLC. The arms-length underwriting relationship between Ambridge Partners
LLC and the Syndicate continued post sale.
25 Funds at Lloyd’s
Every member is required to provide capital at Lloyd’s which is held in trust and known as funds at Lloyd’s (FAL).
These funds are intended primarily to cover circumstances where Syndicate assets prove insufficient to meet
participating members’ underwriting liabilities.
The level of FAL that Lloyd’s requires a member to maintain is determined by Lloyd’s based on the UK Prudential
Regulation Authority (PRA) requirements and resource criteria. FAL has regard to a number of factors including
but not limited to 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 control of the
Managing Agent, no amount has been shown in these financial statements by way of such capital resources.
However, the Managing Agent is able to make a call on the member’s FAL to meet liquidity requirements or to
settle losses.
26 Ultimate Holding Company
The Former Managing Agent, BSL, is a wholly owned subsidiary of Brit Insurance Holdings Limited, a company
registered in England and Wales. The intermediate holding company, in which the Former Managing Agent’s
Notes to the Accounts
For the year ended 31 December 2024
Ki Syndicate 1618 Annual Report 2024 53
26 Ultimate Holding Company (continued)
result is consolidated, is Brit Limited (Brit), a company registered in England and Wales. Copies of Brit Limited’s
consolidated accounts can be obtained by writing to The Leadenhall Building, 122 Leadenhall Street, London
The ultimate parent undertaking at the year-end is Fairfax Financial Holdings Limited (Fairfax), a company
registered in Toronto. Copies of Fairfax consolidated accounts can be obtained by writing to 95 Wellington Street
27 Foreign exchange rates
| 2024 | 2023 | |||||
Start of period rate | Year-end rate | Average rate | Start of period rate | Year-end rate | Average rate | |
Sterling | ||||||
Euro | ||||||
US dollar | ||||||
Canadian dollar | ||||||
Australian dollar |
28 Events occurring after the reporting date
The Syndicate has potential exposures to claims resulting from the California wildfires of January 2025, which
will be accounted for in the period ending 31 December 2025. After taking into account potential reinsurance
recoveries and after reinstatement premiums, the initial estimates, based on information available at the date of
this report, is a net cost before tax of between $10,000k to $20,000k.
During 2024, Ki Group was established as an independent operating entity within the Fairfax Group. This has
also enabled the successful novation of Syndicate 1618 to Asta as Managing Agent with effect from 1 January
2025.
Directors of the Former Managing Agent
Ki Syndicate 1618 Annual Report 2024 54
Executive
Martin George Thompson
Gavin Leslie Wilkinson
Jonathan Michael Howson Sullivan
Non-Executive
Simon Philip Guy Lee
Caroline Frances Ramsay
Andrea Caroline Natascha Welsch
Pinar Yetgin (resigned 31 August 2024)
Hayley Robinson (appointed 15 April 2024)
Secretary
Tim James Harmer
Active Underwriter
Simon Bird (resigned 30 April 2024)
Matthew Bellamy (appointed 01 May 2024)
Registered Office
The Leadenhall Building
122 Leadenhall Street
London
EC3V 4AB
Independent Auditors
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
7 More London, Riverside
London
SE1 2RT
