Munich Re Syndicate Limited 1840

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Munich Re Syndicate 1840

Annual Report and Accounts for the year ended

31 December 2024

Contents

31 December 2024

Directors and Administration

Report of the Directors of the Managing Agent

Statement of Managing Agent’s Responsibilities

Independent Auditor’s Report to the Members of Syndicate 1840

Statement of Profit or Loss

Balance Sheet – Assets

Balance Sheet – Liabilities

Statement of Changes in Members’ Balances

Statement of Cash Flows

Notes to the Financial Statements

Directors and Administration

31 December 2024

Managing Agent

Munich Re Syndicate Limited (‘MRSL’) is the Managing Agent for Munich Re Syndicate 1840

(the ‘Syndicate’) and is authorised by the Prudential Regulation Authority (‘PRA’) and

regulated by the Financial Conduct Authority (‘FCA’) and the Society of Lloyd’s (‘Lloyd’s’).

Directors

T E Artmann

Chief Executive Officer

S H Herrmann

Non-Executive Director

M C Hewett

Independent Non-Executive Director

G K Hill

Chief Financial Officer

D J R Hoare

Group Chief Underwriting Officer

K E Mitra

Independent Non-Executive Director

T C Morgan

Independent Non-Executive Director

K A Morris

Independent Non-Executive Director

R I White

Independent Non-Executive Chair

Company Secretary

C M Zaremba

Registered Office

1 Fen Court, London, EC3M 5BN

Telephone: 020 7886 3900

E-mail: MRSL-central@munichre.com

Website: www.munichre.com

Registered Number

01328742

Syndicate

Run-Off Manager

Sara Roberts

Bankers

Citibank N.A.

NatWest Group plc

Royal Bank of Canada

Registered Auditor

Ernst & Young LLP, London, E14 5EY

Report of the Directors of the Managing Agent

31 December 2024

The Directors of the Managing Agent (‘the Directors’) present their report for the year ended

31 December 2024.

This annual report is prepared using the annual basis of accounting as required by Statutory

Instrument No 1950 of 2008, the Insurance Accounts Directive (Lloyd’s Syndicate and

Aggregate Accounts) Regulations 2008 (’the 2008 Regulations’).

Results

The loss for calendar year 2024 is £0.2m (2023: Profit £0.2m). Losses will be cash called by

reference to the results of the individual underwriting year.

Principal Activity and Review of the Business

Munich Re Syndicate 1840 was established from the 1st January 2020 as the first Syndicate

in a Box (‘SiaB’) at Lloyd’s dedicated to the design, launch and incubation of innovative

insurance products. The Syndicate wrote no standard lines of business which could easily be

sourced, underwritten or distributed through existing channels. It focused on emerging risks,

products associated with supporting the development of green energy solutions, and

mitigating the financial impact of extreme weather events.

The Syndicate’s key financial indicators are as follows:

2024

2023

Gross Written Premium

(£0.3m)

£1.3m

(Loss)/Profit for the financial year

(£0.2m)

£0.2m

Combined Ratio

380.0%

88.4%

The combined ratio is the ratio of claims incurred (net of reinsurance) and operating expenses

to earned premiums (net of reinsurance).

To ensure a one voice approach to market, MRSL was brought under the newly created brand

of Munich Re Specialty in May 2024. The creation of a unified brand represents the ongoing

efforts of the global specialty insurance division to strengthen its leading position compared to

its peers.

Syndicate 1840 was placed in runoff on 31 December 2022 in line with the MRSL Board

decision taken in Q1 of that year.

The gross written premium split for 2024 was 51% Property, 22% in Pecuniary Loss, 19% in

Third Party Liability and 8% in Aviation (2023: 89% in Property, 7% in Pecuniary Loss and 4%

in Third Party Liability).

Principal Risks and Uncertainties

The Board of MRSL (‘the Board’) sets risk appetite annually as part of the Syndicate’s

business planning and Solvency Capital Requirement process. Adherence to risk appetite is

reviewed by the Board on a periodically.

Report of the Directors of the Managing Agent

(continued)

31 December 2024

Principal Risks and Uncertainties (continued)

Insurance Risk

Insurance risk, comprising underwriting risk and reserving risk, is the risk of loss arising from

the inherent uncertainties about the occurrence, amount and timing of insurance premiums

and liabilities. The Syndicate ceased to underwrite in 2022. The Group Actuary monitors

reserve adequacy. Detailed independent reviews of underwriting areas are conducted.

Credit Risk

Credit risk relates to the risk of loss if another party fails to perform its financial obligations or

fails to perform them in a timely fashion. Key counter-parties include reinsurers, brokers,

insureds, reinsureds, coverholders and investment counter-parties. The Board’s policy is that

the Syndicate will only reinsure with businesses that have been approved for that purpose. An

additional policy of the Board is that all brokers and coverholders have to be approved in

advance of being permitted to produce business for the Syndicate. Certain Executive Directors

of the Board assess and approve all new reinsurers before business is placed with them and

are also responsible for approval and monitoring of the financial strength of brokers who

remain on a risk transfer basis. The Syndicate’s investments are all held in cash and overseas

deposits.

Group Risk

Group risk is the potential of risk events, of any nature, arising in or from membership of a

corporate group.

Within Munich Re Specialty Group (‘MRSG’), MRSL operates as a standalone legal entity

regulated by Lloyd’s, the PRA and the FCA. MRSL operates and maintains its own Board and

governance structure, with defined terms of reference and clear lines of authority and

accountability. Independent effectiveness reviews of governance are performed on a periodic

basis with results reviewed by the Board.

Munich Re, Germany is the ultimate owner of the Managing Agent. Munich Re provides

reinsurance capacity on a quota share basis. Close dialogue exists with the Integrated Risk

Management (‘IRM’) division of Munich Re to discuss any necessary risk matters.

Liquidity Risk

Liquidity risk is the risk that sufficient financial resources are not maintained to meet liabilities

as they fall due under normal or stressed operating conditions. The MRSL CFO and entity

liquidity officer monitors liquidity on a regular basis and has an agreed minimum limit of readily

realisable assets. The majority of the Syndicate’s assets are presently held in cash.

Market Risk

Market risk is the risk that arises from fluctuations in values of or income from assets, in

interest rates or in exchange rates. The Syndicate settles 7% (2023: 12%) of its insurance

business in United States dollars which gives rise to a potential exposure to currency risk while

a substantial proportion of administrative and personnel expenses are incurred in Sterling.

The Syndicate mitigates this by adopting a policy of controlled matching of assets and

liabilities.

Report of the Directors of the Managing Agent

(continued)

31 December 2024

Principal Risks and Uncertainties (continued)

Operational Risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes,

people and systems, or from external factors such as those arising from legal and regulatory

requirements and generally accepted standards of corporate behaviour. The Syndicate’s

objective is to manage operational risks to balance financial losses and damage to the

Syndicate’s reputation with processes that are cost effective and efficient. Risks are managed

through policies and procedures, regular oversight and monitoring, and a structured

programme of independent reviews of adherence to policies and effectiveness of controls by

second and third line of defence functions. The day to day operations of the Syndicate are

provided by MRSG UK Services Limited (‘the Service Company’).

Other Key Enterprise Risks

Geopolitical Risks

Geopolitical uncertainty has continued to dominate the risk landscape and the Board is

cognisant and mindful of events which could lead to conflict escalation or economic

fragmentation and consequently, de-stabilisation of supply chains, financial markets, security

dynamics and political stability.

Against the backdrop of a volatile global geopolitical landscape, the Board continues to closely

monitor its exposures, particularly in respect of lines of business which may be further

impacted by conflicts or market known complexities around coverage. Aggregation of potential

or residual exposures are assessed periodically by the Exposure Management team using a

combination of Lloyd’s Realistic Disaster Scenarios and in-house scenarios shaped with

extensive underwriting expertise and protected through a 75% quota share reinsurance

programme with Munich Re. The Syndicate’s underwriting performance and financial position

is constantly monitored by the Board and through established reserving processes. Support

continues to be provided by the Compliance Advisory team with respect to sanctions, with

emerging risks informed by Risk-led activities such as cross-functional emerging risk

workshops activity. The risk of operational disruption from potential cyber related activity

continues to be monitored by the Munich Re Global Cyber Defence Centre.

Inflation

The global inflationary position improved during 2024 as previous external shocks that led to

high inflation were abated and monetary easing took effect in advanced economies. Notably,

during Q2 2024, the Bank of England briefly met its target 2% inflation rate.

However, there remain elevated concerns around the impact of inflation rates as inflation

dynamics are different across regions and influenced by various factors such as labour and

energy prices. Global economic volatility driven by geopolitical tensions or economic

fragmentation further fuel inflation uncertainty, as does uncertainty about the intensity and

timing of new trade disputes following the 2024 US presidential election. The Bank of England

expects inflation to rise temporarily to 3.7% in 2025 due to higher energy prices but then fall

back to the 2% target.

Whilst the economic outlook varies for China, the EU and the US,

overall, there is an expectation of modest global economic growth, lower annual average

inflation rates, and further monetary easing by major central banks. As the UK economy is

intrinsically linked with the global economy, it remains vulnerable to deterioration and

weakening.

Report of the Directors of the Managing Agent

(continued)

31 December 2024

Principal Risks and Uncertainties (continued)

Inflation (continued)

Inflation impacts insurers in a number of ways, including cost of claims, reserving, price

adequacy, investment returns and capital requirements. Inflation must not only be managed

carefully but carefully factored into decision making. Social inflation, driven by changing

behaviours, such as greater resort to litigation, must also be considered.

Given the Syndicate is in run-off, the primary consideration for inflation is around reserves. At

2024 year end, MRSL adopted a cautious approach to reserving in recognition of the inherent

uncertainty of forecasting inflationary impacts. This was informed through guidance provided

by Munich Re Central Reserving, and through regulatory guidance on claims inflation trends

relative to economic inflation.

Information Security Risk including Cyber Risk

Cyber threats and, consequentially, cyber risk, continues to trend upwards as cyber-criminals

seek to exploit potential vulnerabilities of businesses. Munich Re remains resilient in extending

and maintaining a secure platform in recognising the continuing threat of phishing attacks,

ransomware and fraud on its business. Security controls are based on Munich Re defined

standards and are continuously improved to keep pace with the evolving cyber threat,

including information security risk assessments of information technology third party vendors,

regular security and social engineering awareness communications, additional security

training and phishing reporting tools.

In 2024, whist there has been an increased trend of phishing attempts on both the Munich Re

network and third party vendors, the Board is aware of no breach to date. In the event of a

breach, there are established security incident response protocols and processes to ensure

the incident is contained, resolved and reported appropriately. With such incidents, response

and monitoring is provided by the MRSG Emergency Management Group, the Munich Re

Security Incident Response Team (SIRT) and information security risk specialists from the

Risk Management and Information Technology Shared Services Organisation (‘IT SSO’).

In addition, cyber threats are constantly monitored by the Munich Re Global Cyber Defence

Centre and threat intelligence is shared with MRSG and MRSL via quarterly IT SSO service

review meetings. Munich Re undertakes a regular programme of patching, vulnerability and

penetration testing of IT systems and appropriate actions are taken to address any

vulnerabilities identified. Security controls are regularly assessed for control design and

performance effectiveness as coordinated by the Munich Re IT & Risk Security team, with the

results reported to Munich Re Integrated Risk Management. The results of these assessments

as well as locally implemented controls are subject to independent review and challenge by

the MRSL Information Security Risk Manager with results reported to MRSL Executive.

Report of the Directors of the Managing Agent

(continued)

31 December 2024

Principal Risks and Uncertainties (continued)

Artificial Intelligence (AI)

Munich Re is committed to the responsible use of AI. AI can improve client service, simplify

and automate processes and enhance underwriting. Nevertheless, the use of AI systems

raises potential risks, such as inaccuracy, discrimination, inadequate data security or a lack of

transparency. These risks require responsible management across the entire value chain.

MRSG recognises the increasingly important role of AI across its operations. Therefore, a new

AI Governance Directive, published by Munich Re, setting out the framework for the use of AI

across the Group has been adopted. The AI Governance Framework includes the AI

Governance Directive and Intellectual Property Protection Policy, with roles and

responsibilities for AI and the processes to ensure the implementation of the framework. A

Single Point of Contact for AI has been nominated within the MRSG Operations team, with

the MRSG Risk Management and the Munich Re UK Data Protection Office providing second

line review and challenge to ensure compliance with the AI Governance Framework.

Climate Change Related Risk

The Managing Agent and the Syndicate keep themselves informed of climate change

developments in its regulatory environment to ensure requirements are embedded into the

appropriate business strategies and frameworks. These regulatory updates include the Lloyd’s

Insuring the Transition Roadmap 2.0 (October 2024) and PRA updates to its Supervisory

Statement (SS) 03/2019 on Managing Financial Risks in relation to Climate Change (Bank of

England PRA Insurance Supervision- 2025 Priorities, Jan 2025).

Following the November 2023 roadmap consultation for Insuring the Transition and its

Fundamental Principles for Underwriting Profitability regarding sustainability, environmental

and social risks, Lloyd’s maintains its expectations of managing agents for implementing a

guiding framework to support the sustainable transition to net zero. With respect to climate

change, the Syndicate will be expected to provide its own assessment of the impact of that

change from a strategic financial, reputational, business development and governance

perspective.

A cross functional team including Risk Management, ESG and Exposure Management

continue to progress the embedding of activities to address the PRA’s expectations on

Managing Financial Risks in relation to Climate Change. This includes embedding the stress

testing of physical risks and of the Syndicate’s investment portfolio, completing litigation risk

and transition risk-assessments.

MRSL has a risk management programme to monitor and manage some elements of climate

change related risks including aggregate exposure management. The Group Chief

Underwriting Officer (‘CUO’) as the senior management function holder is responsible for this

programme with support from the Risk function and ESG team. The Risk & Capital Committee

and the Board are apprised of developments.

Report of the Directors of the Managing Agent

(continued)

31 December 2024

Principal Risks and Uncertainties (continued)

Culture including Diversity, Equity & Inclusion (DEI)

Culture, including DEI, continues to feature high on the agenda of boards and regulators.

MRSL, as part of MRSG and the wider network of Munich Re entities in the UK and Ireland

region (UK&I), is active in its response to the challenges of “culture” related topics. Culture is

sponsored by the Board; and ESG is a standing agenda item on Board and Committee

meetings.

Launched in January 2023, our first DEI strategy and governance structure for the UK&I works

to embed DEI principles in the employee experience and to set DEI as a priority for all people

leaders.

MRSG has a DEI steering committee, comprising of the CEOs of our UK&I region businesses,

a DEI team, and a DEI Council and Champions Network, comprised of employees who actively

generate DEI awareness and engagement. MRSL takes into consideration the nuances in

cultures and business operations within UK&I.

Our multi-faceted strategy establishes three pillars to:

•

Attract workforce diversity through inclusive recruitment by creating a debiased and

building a diverse, sustainable, and engaged pipeline of candidates to recruit.

•

Increasing workplace equity through inclusive sponsorship by widening access to

sponsorship ensuring all colleagues, particularly those from marginalized backgrounds,

have access to career sponsors.

•

MRSL positions culture and continuous learning as a core competency with phased and

sustainable learning opportunities.

These three pillars are underpinned by four foundational elements:

•

Data: Our strategy utilises workforce demographic data, obtained through self-

identification, to determine that many diversity dimensions are represented in our

workforce. MRSG continue to focus our efforts on building our data set that will allow us

to identify solutions that consider the unique experiences of each group.

•

Multi-dimensionality and intersectionality: Allows us to see beyond one dimension of

diversity and all possible forms of marginalisation and discrimination.

•

Active employee engagement: Our strategy is steered by people leaders to promote

change from the top, and underpinned by engagement.

•

Consistent communications: To inform, educate and support all employees in contributing

to our DEI efforts

Report of the Directors of the Managing Agent

(continued)

31 December 2024

Principal Risks and Uncertainties (continued)

Culture including Diversity, Equity & Inclusion (DEI) (Continued)

MRSG have continued to deliver against our DEI strategy plans:

•

Delivered mandatory workshops for all new hires, DEI 101, designed to help colleagues

understand the basics of DEI, establish a shared language, and create a foundation for

ongoing conversations around DEI.

•

Introduced our bespoke Inclusive Mindset Framework and delivered learning workshops

to help employees understand and demonstrate Inclusive Mindset as a competency.

•

Undertaken an end-to-end assessment of our recruitment processes, developed and

rolled out a best practice guide to make them inclusive and equitable.

•

Our employee-led DEI Council continues to celebrate different aspects of identity through

speaker sessions, celebration events and awareness-building initiatives hosted for

International Women’s Day, Pride Month, Social Mobility Awareness Day, Black History

Month and International Day for Persons with Disabilities and other celebrations

throughout the year.

The Board's view is that an informed case exists not only for the commercial benefits of

strategic investment in DEI in the UK&I but also in support of our mission to align our values

and commitment to positive change with commercial success. The Board believes that

ensuring that all employees are treated fairly, with dignity, and with equal opportunity to

develop, progress, and be rewarded is key to achieving business success.

Directors

The Directors of the Managing Agent who held office during the year ended 31 December

2024 or as at the date of this report, were as follows:

T E Artmann

T Coskun (resigned 31 December 2024)

S H Herrmann (Non-Executive)

M C Hewett (Independent Non-Executive)

G K Hill

D J R Hoare

K E Mitra (Independent Non-Executive) (appointed 6 January 2025)

T C Morgan (Independent Non-Executive) (appointed 28 December 2024)

K A Morris (Independent Non-Executive)

R I White (Independent Non-Executive Chair)

Report of the Directors of the Managing Agent

(continued)

31 December 2024

Company Secretary

The company secretary of the Managing Agent who held office during the year ended 31

December 2024 was as follows:

C M Zaremba

Investments

Investment Policy and Managers

The Syndicate presently has all its assets in cash and overseas deposits.

Future Developments

Following the decision made in 2022 to not seek approval from Munich Re and Lloyd’s to

extend the Syndicate’s operations for a further three years, Syndicate 1840 was put in run-off

with 2022 year of account being the last year of underwriting.

The Board has approved the closure of the 2022 year of account into Syndicate 457’s 2023

year of account as at 1 January 2025, thus concluding the business of Syndicate 1840.

Syndicate Allocated Capacity and Membership of the Syndicate

The capacity of the Syndicate is based on Gross Net premiums. For the 2024 year of account

this was £nil (2023: £nil). As the business of the Syndicate is concluding, there is no further

requirement for Munich Re Capital Limited (’MRCL’), an indirect subsidiary of Munich Re, to

provide capital in 2025.

Going Concern

As of the date of approval of the annual accounts, the 2022 year of account of Syndicate 1840

has been closed and is being reinsured to close into Syndicate 457 as at 1 January 2025. On

this basis, the Syndicate is no longer a going concern. This does not affect the balance sheet

valuations in the annual accounts as the annual accounts have been prepared on the basis of

other than going concern.

Disclosure of Information to the Auditors

The Directors of the Managing Agent who held office at the date of approval of this Managing

Agent’s report confirm that, so far as they are each aware, there is no relevant audit

information of which the Syndicate’s auditor is unaware; and each Director has taken all the

steps that they ought to have taken as a Director to make themselves aware of any relevant

audit information and to establish that the Syndicate’s auditor is aware of that information.

Report of the Directors of the Managing Agent

(continued)

31 December 2024

Auditors

As Syndicate 1840 has ceased there is no future requirement to appoint auditors.

Approved by a resolution of the Board of Directors of Munich Re Syndicate Limited and signed

on its behalf.

R I White

D J Hoare

Independent Non-Executive Chair

Group Chief Underwriting Officer

February 2025

R I White (Feb 26, 2025 20:44 GMT)

R I White

Statement of Managing Agent’s Responsibilities

31 December 2024

The Directors of the Managing Agent are responsible for:

•

Preparing the Syndicate annual accounts in accordance with applicable law and

regulations.

•

Preparation and review of the iXBRL tagging that has been applied to the Syndicate

annual Accounts in accordance with the instructions issued by Lloyd’s, including

designing, implementing and maintaining systems, processes and internal controls to

result in tagging that is free from material non-compliance with the instructions issued by

Lloyd’s, whether due to fraud or error.

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:

•

Select suitable accounting policies and then apply them consistently;

•

Make judgements and estimates that are reasonable and prudent;

•

State whether applicable UK Accounting Standards have been followed, subject to any

material departures disclosed and explained in the notes to the Syndicate accounts; and

•

Prepare the Syndicate 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.

•

For the reasons stated in the Directors’ Report and Note 1, the financial statements have

not been prepared on a going concern basis.

The Managing Agent is responsible for keeping adequate 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 the prevention and detection of fraud and other

irregularities. The 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.

On behalf of the Board

R I White

Independent Non-Executive Chair

February 2025

R I White (Feb 26, 2025 20:44 GMT)

R I White

Independent Auditor’s Report to the Members of

Syndicate 1840

31 December 2024

Opinion

We have audited the Syndicate annual accounts of Syndicate 1840 (‘the Syndicate’) for the

year ended 31 December 2024 which comprise the Statement of Profit or Loss, the Balance

Sheet, the Statement of Changes in Member’s Balances, the Statement of Cash Flows and

the related notes 1 to 29, including a summary of significant accounting policies. The financial

reporting framework that has been applied in their preparation is applicable law including The

Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008,

United Kingdom Accounting Standards including FRS 102 ‘The Financial Reporting Standard

applicable in the UK and Republic of Ireland’ and FRS 103 ‘Insurance Contracts’ (United

Kingdom Generally Accepted Accounting Practice), and Section 1 of the Lloyd’s Syndicate

Accounts Instructions V2.0 as modified by the Frequently Asked Questions Version 1.1 issued

by Lloyd’s (the Syndicate Accounts Instructions).

In our opinion, the syndicate annual accounts:

•

give a true and fair view of the Syndicate’s affairs as at 31 December 2024 and of its loss

for the year then ended;

•

have been properly prepared in accordance with United Kingdom Generally Accepted

Accounting Practice; and

•

have been prepared in accordance with the requirements of The Insurance Accounts

Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the

Syndicate Accounts Instructions.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs

(UK)), The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)

Regulations 2008, the Syndicate Accounts Instructions, and other applicable law. Our

responsibilities under those standards are further described in the Auditor’s responsibilities for

the audit of the Syndicate annual accounts section of our report. We are independent of the

Syndicate in accordance with the ethical requirements that are relevant to our audit of the

Syndicate annual accounts in the UK, including the FRC’s Ethical Standard as applied to other

entities of public interest, and we have fulfilled our other ethical responsibilities in accordance

with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide

a basis for our opinion.

Emphasis of Matter – Closure of the 2022 Year of Account

We draw attention to the basis of preparation note 1 which explains that the 2022 year of

account of Syndicate 1840 has closed on 1 January 2025, transferring all assets and liabilities

to Syndicate 457 through a third-party reinsurance to close arrangement. Syndicate 1840 has

no successor year of account.

As a result, the Annual Accounts of Syndicate 1840 has been prepared under a basis other

than going concern.

Our opinion is not modified in respect of this matter.

Independent Auditor’s Report to the Members of

Syndicate 1840 (continued)

31 December 2024

Other Information

The other information comprises the information included in the Annual Accounts, other than

the Syndicate annual accounts and our auditor’s report thereon. The Directors of the managing

agent are responsible for the other information contained within the Annual Accounts.

Our opinion on the Syndicate annual accounts does not cover the other information and,

except to the extent otherwise explicitly stated in this report, we do not express any form of

assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other

information is materially inconsistent with the Syndicate annual accounts or our knowledge

obtained in the course of the audit or otherwise appears to be materially misstated. If we

identify such material inconsistencies or apparent material misstatements, we are required to

determine whether this gives rise to a material misstatement in the Syndicate annual accounts

themselves. If, based on the work we have performed, we conclude that there is a material

misstatement of the other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on Other Matters Prescribed by The Insurance Accounts Directive

(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008

In our opinion, based on the work undertaken in the course of the audit:

•

the information given in the managing agent’s report for the financial year in which the

Syndicate annual accounts are prepared is consistent with the Syndicate annual

accounts; and

•

the managing agent’s report has been prepared in accordance with applicable legal

requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the Syndicate and its environment obtained

in the course of the audit, we have not identified material misstatements in the managing

agent’s report.

We have nothing to report in respect of the following matters where The Insurance Accounts

Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 requires us to report

to you, if in our opinion:

•

the managing agent in respect of the syndicate has not kept adequate accounting

records; or

•

the Syndicate annual accounts are not in agreement with the accounting records; or

•

certain disclosures of the managing agents’ emoluments specified by law are not made;

•

we have not received all the information and explanations we require for our audit.

Responsibilities of the Managing Agent

As explained more fully in the Statement of Managing Agent’s Responsibilities set out on page

12, the managing agent is responsible for the preparation of the Syndicate annual accounts

and for being satisfied that they give a true and fair view, and for such internal control as the

managing agent determines is necessary to enable the preparation of the Syndicate annual

accounts that are free from material misstatement, whether due to fraud or error.

Independent Auditor’s Report to the Members of

Syndicate 1840 (continued)

31 December 2024

In preparing the Syndicate annual accounts, the managing agent is responsible for assessing

the Syndicate’s ability to continue in operation, disclosing, as applicable, matters related to its

ability to continue in operation and using the going concern basis of accounting unless the

managing agent either intends to cease to operate the Syndicate, or has no realistic alternative

but to do so.

Auditor’s Responsibilities for the Audit of the Syndicate Annual Accounts

Our objectives are to obtain reasonable assurance about whether the Syndicate annual

accounts as a whole are free from material misstatement, whether due to fraud or error, and

to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of

assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will

always detect a material misstatement when it exists. Misstatements can arise from fraud or

error and are considered material if, individually or in the aggregate, they could reasonably be

expected to influence the economic decisions of users taken on the basis of these Syndicate

annual accounts.

Explanation as to what extent the audit was considered capable of detecting

irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We

design procedures in line with our responsibilities, outlined above, to detect irregularities,

including fraud. The risk of not detecting a material misstatement due to fraud is higher than

the risk of not detecting one resulting from error, as fraud may involve deliberate concealment

by, for example, forgery or intentional misrepresentations, or through collusion. The extent to

which our procedures are capable of detecting irregularities, including fraud, is detailed below.

However, the primary responsibility for the prevention and detection of fraud rests with both

those charged with governance of the managing agent and management.

Our approach was as follows:

•

We obtained a general understanding of the legal and regulatory frameworks that are

applicable to the Syndicate and determined that the most significant are direct laws and

regulations related to elements of Lloyd’s Byelaws and Regulations, and the financial

reporting framework (UK GAAP), and requirements referred to by Lloyd’s in the Syndicate

Accounts instructions. Our considerations of other laws and regulations that may have a

material effect on the Syndicate annual accounts included permissions and supervisory

requirements of Lloyd’s of London, the Prudential Regulation Authority (‘PRA’) and the

Financial Conduct Authority (‘FCA’).

•

We obtained a general understanding of how the Syndicate is complying with those

frameworks by making enquiries of management, internal audit, and those responsible

for legal and compliance matters of the syndicate. In assessing the effectiveness of the

control environment, we also reviewed significant correspondence between the

Syndicate, Lloyd’s of London and other UK regulatory bodies; reviewed minutes of the

Board and Risk Committee of the managing agent; and gained an understanding of the

managing agent’s approach to governance.

•

For direct laws and regulations, we considered the extent of compliance with those laws

and regulations as part of our procedures on the related Syndicate annual accounts’

items.

Independent Auditor’s Report to the Members of

Syndicate 1840 (continued)

31 December 2024

•

For both direct and other laws and regulations, our procedures involved: making enquiries

of the Directors of the managing agent and senior management for their awareness of

any non-compliance of laws or regulations, enquiring about the policies that have been

established to prevent non-compliance with laws and regulations by officers and

employees, enquiring about the managing agent’s methods of enforcing and monitoring

compliance with such policies, and inspecting significant correspondence with Lloyd’s,

the FCA and the PRA.

•

The Syndicate operates in the insurance industry which is a highly regulated environment.

As such the Senior Statutory Auditor considered the experience and expertise of the

engagement team to ensure that the team had the appropriate competence and

capabilities, which included the use of specialists where appropriate.

•

We assessed the susceptibility of the Syndicate’s annual accounts to material

misstatement, including how fraud might occur by considering the controls that the

managing agent has established to address risks identified by the managing agent, or

that otherwise seek to prevent, deter or detect fraud. We also considered areas of

significant judgement and the impact these have on the control environment. Where this

risk was considered to be higher, we performed audit procedures to address each

identified fraud risk. These procedures included testing manual journals and were

designed to provide reasonable assurance that the Syndicate annual accounts were free

from fraud or error.

A further description of our responsibilities for the audit of the financial statements is located

on the Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities.

This description forms part of our auditor’s report.

Other Matter

Our opinion on the Syndicate annual accounts does not cover the iXBRL tagging included

within these Syndicate annual accounts, and we do not express any form of assurance

conclusion thereon.

Use of our Report

This report is made solely to the Syndicate’s members, as a body, in accordance with The

Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008.

Our audit work has been undertaken so that we might state to the Syndicate’s members those

matters we are required to state to them in an auditor’s report and for no other purpose. To

the fullest extent permitted by law, we do not accept or assume responsibility to anyone other

than the Syndicate and the Syndicate’s members as a body, for our audit work, for this report,

or for the opinions we have formed.

Angus Millar (Senior statutory auditor)

for and on behalf of Ernst & Young LLP, Statutory Auditor

London

February 2025

Statement of Profit or Loss

31 December 2024

Technical Account – General Business

For the year ended 31 December 2024

Note

2024

2023

£000

Gross premiums written

(250)

1,323

Outwards reinsurance premiums

134

(643)

Premiums written, net of reinsurance

(116)

680

Changes in unearned premium

Change in the gross provision for unearned premiums

357

1,788

Change in the provision for unearned premiums reinsurers’ share

(181)

(956)

Net change in provisions for unearned premiums

176

832

Earned premiums, net of reinsurance

1,512

Allocated investment return transferred from the non-technical

account

Other technical income, net of reinsurance

Claims paid

Gross amount

(967)

(340)

Reinsurers’ share

725

255

Net claims paid

(242)

(85)

Change in the provision for claims

Gross amount

915

(805)

Reinsurers’ share

(686)

604

Net change in provisions for claims

229

(201)

Claims incurred, net of reinsurance

(13)

(286)

Net operating expenses

(215)

(1,050)

Other technical charges, net of reinsurance

Balance on the technical account – general business

(150)

194

The Syndicate ceased underwriting with effect from 31 December 2022 and therefore there

are no component parts of the business to be separately classified and disclosed as

discontinued. The notes on pages 23 to 55 form an integral part of these annual accounts.

Statement of Profit or Loss (continued)

31 December 2024

Non-technical Account – General Business

For the year ended 31 December 2024

Note

2024

2023

£000

Balance on the technical account – general business

(150)

194

Investment income

Realised gains on investments

Unrealised gains on investments

Investment expenses and charges

Total investment return

Allocated investment return transferred to the general business

technical account

(18)

Loss on foreign exchange

(28)

(17)

Other income

Other expenses

(Loss)/Profit for the financial year

(178)

177

There were no recognised gains and losses in the year other than those reported in the

Statement of Profit or Loss and hence no Statement of Other Comprehensive Income has

been presented.

The Syndicate ceased underwriting with effect from 31 December 2022 and therefore there

are no component parts of the business to be separately classified and disclosed as

discontinued.

The accompanying notes from page 23 to 55 form an integral part of these financial

statements.

Balance Sheet - Assets

31 December 2024

As at 31 December 2024

Note

2024

2023

£000

Financial investments

141

Investments

141

Provision for unearned premiums

181

Claims outstanding

768

Reinsurers’ share of technical provisions

949

Debtors arising out of direct insurance operations

1,484

Debtors arising out of reinsurance operations

715

137

Other debtors

Debtors

723

1,621

Cash at bank and in hand

14,354

14,513

Other

Other assets

14,354

14,513

Deferred acquisition costs

116

Prepayments and accrued income

116

Total assets

15,188

17,340

Balance Sheet - Liabilities

31 December 2024

As at 31 December 2024

Note

2024

2023

£000

Members’ balances

8,543

7,931

Total capital and reserves

8,543

7,931

Provision for unearned premiums

357

Claims outstanding

100

1,023

Technical provisions

100

1,380

Creditors arising out of direct insurance operations

Creditors arising out of reinsurance operations

189

1,112

Reinsurers share of deferred acquisition costs

Other creditors including taxation and social security

6,356

6,903

Creditors

6,545

8,015

Accruals and deferred income

Total liabilities

6,645

9,409

Total liabilities, capital and reserves

15,188

17,340

The Syndicate annual accounts on pages 17 to 55 were approved by the Board of Munich Re

Syndicate Limited on 26

February 2025 and were signed on its behalf by

R I White

Independent Non-Executive Chair

February 2025

R I White (Feb 26, 2025 20:44 GMT)

R I White

Statement of Changes in Members’ Balances

31 December 2024

For the year ended 31 December 2024

2024

2023

£000

Members’ balances brought forward at 1 January

7,931

6,938

(Loss)/profit for the financial year

(178)

177

Cash call from members

790

816

Members’ balances carried forward at 31 December

8,543

7,931

Members participate on syndicates by reference to years of account and their ultimate result,

assets and liabilities are assessed with reference to policies incepting in that year of account

in respect of their membership of a particular year.

The notes on pages 23 to 55 form an integral part of these annual accounts.

Statement of Cash Flows

31 December 2024

For the year ended 31 December 2024

Note

2024

2023

£000

Cash flows from operating activities

(Loss)/Profit for the financial year

(178)

177

Adjustments:

Decrease in gross technical provisions

(1,272)

(983)

Decrease in reinsurers’ share of gross technical provisions

867

352

Decrease in debtors

976

1,000

Decrease in creditors

(1,484)

(1,041)

Investment return

(18)

(17)

Foreign exchange

Other

Net cash flows from operating activities

(1,078)

(495)

Cash flows from investing activities

Other

117

Net cash flows from investing activities

117

Cash flows from financing activities

Cash calls

790

816

Net cash flows from financing activities

790

816

Net (decrease)/increase in cash and cash equivalents

(171)

348

Cash and cash equivalents at the beginning of the year

14,513

14,292

Foreign exchange on cash and cash equivalents

(127)

Cash and cash equivalents at the end of the year

14,354

14,513

The notes on pages 23 to 55 form an integral part of these annual accounts.

Notes to the Financial Statements (continued)

31 December 2024

1. Basis of Preparation

The Syndicate comprises a single corporate member of Lloyd’s, Munich Re Capital

Limited, that underwrites insurance business in the London Market. The address of the

Syndicate’s managing agent is 1 Fen Court, London, EC3M 5BN.

The financial statements have been prepared in accordance with the Insurance Accounts

Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and applicable

Accounting Standards in the United Kingdom and the Republic of Ireland, including

Financial Reporting Standard 102. FRS 102 requires the application of Financial Reporting

Standard 103 (‘FRS103’) in relation to insurance contracts, and the Lloyd’s Syndicate

Accounts Instructions Version 2.0 as modified by the Frequently Asked Questions Version

1.1 issued by Lloyd’s. Furthermore they also comply with the provisions for Schedule 3 of

the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations

relating to insurance companies.

The financial statements have been prepared on the historical cost basis, except for

financial assets categorised as fair value through profit or loss that are measured at fair

value.

The financial statements are presented in Pound Sterling (‘GBP’), which is the Syndicate’s

functional currency. All amounts have been rounded to the nearest thousand, unless

otherwise indicated.

Restatement of comparative information

During 2024, Lloyd's introduced changes to the syndicate accounts process to rationalise

and standardise financial reporting across the market. As a result, certain comparative

information has been restated to ensure consistency with current year presentation and

compliance with the Lloyd's Syndicate Accounts Instructions. The changes comprise:

a) Reclassification changes

Certain financial statement line items have been reclassified whilst the underlying

amounts remain unchanged.

b) Aggregation changes

To align with Lloyd's reporting requirements whilst maintaining FRS 102 compliance,

certain items have been aggregated or disaggregated within the financial statements

and related notes. This includes the presentation of realised and unrealised gains and

losses on investments, which are now shown on a disaggregated basis in the Non-

technical account of the Statement of profit or loss.

The reclassification and aggregation changes have been applied retrospectively and had

no impact on previously reported profit, total assets, total liabilities, or total capital and

reserves.

Going Concern

As of the date of approval of the annual accounts, the 2022 year of account of Syndicate

1840 has been closed and is being reinsured to close into Syndicate 457 as at 1 January

2025. On this basis, the Syndicate is no longer a going concern. This does not affect the

balance sheet valuations in the annual accounts as the annual accounts have been

prepared on the basis of other than going concern.

Notes to the Financial Statements (continued)

31 December 2024

2. Use of Judgements and Estimates

In preparing these financial statements, the Directors of the Managing Agent have made

judgements, estimates and assumptions that affect the application of the Syndicate’s

accounting policies and the reported amounts of assets, liabilities, income and expenses.

The following critical judgements have been made in applying the Syndicate’s accounting

policies:

Claims Reserving

The measurement of the provision for claims outstanding involves judgements and

assumptions about the future that have a very significant effect on the amounts recognised

in the financial statements.

The provision for claims outstanding comprises the estimated cost of settling all claims

incurred but unpaid at the balance sheet date, whether reported or not. This is a

judgemental and complex area due to the subjectivity inherent in estimating the impact of

claims events that have occurred but for which the eventual outcome remains uncertain.

In particular, judgement is applied when estimating the value of amounts that should be

provided for claims that have been incurred at the reporting date but have not yet been

reported (‘IBNR’) to the Syndicate (see note 17).

The amount included in respect of IBNR is based on statistical techniques of estimation

applied by the Syndicate Managing Agent’s in house actuaries. The techniques used

generally involve projecting the development of claims over time from past experience,

with adjustment for more recent underwriting, having regard to variations in business

accepted and the underlying terms and conditions. The provision for claims also includes

amounts in respect of internal and external claims handling costs. For the most recent

years, where a high degree of volatility arises from projections, estimates may be based

in part on output from rating and other models of business accepted and assessments of

underwriting conditions.

In arriving at the level of claims provisions a margin is applied over and above the actuarial

best estimate so no adverse run-off deviation is envisaged.

Premium Estimates

The amount included in respect of premium is based on statistical techniques of estimation

applied by the Syndicate Managing Agent’s in house actuaries.

3. Significant Accounting Policies

The following principal accounting policies have been applied consistently in dealing with

items which are considered material in relation to the Syndicate’s financial statements.

(a)

Premiums Written

Gross premiums written reflect direct and inwards reinsurance business written during the

period, gross of commission payable to intermediaries, and exclude any taxes or duties

based on premiums.

Notes to the Financial Statements (continued)

31 December 2024

3. Significant Accounting Policies (continued)

(a)

Premiums Written (continued)

Estimated premium income in respect of facility contracts, for example binding authorities

and lines slips, are deemed to be written in a manner that reflects the expected profile of

the underlying business which has been written. Outwards reinsurance premiums are

accounted for in the same accounting period as the premiums for the related direct or

inwards business being reinsured. The earned proportion of premiums is recognised as

income. Premiums are earned from the date of attachment of risk over the indemnity

period based on the pattern of the risks underwritten.

(b)

Unearned Premiums

Written premiums are recognised as earned according to the risk profile of the policy.

Unearned premiums represent the proportion of premiums written in the year that relate

to unexpired terms of policies in force at the balance sheet date, calculated on the basis

of established earnings patterns or time apportionment as appropriate.

(c)

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. Premiums ceded and claims reimbursed

are presented on a gross basis in the technical account and Balance sheet as appropriate.

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.

(d)

Claims Provisions and Related Recoveries

Claims incurred comprise claims and claims handling expenses (both internal and

external) paid in the year and the movement in provision for outstanding claims and

settlement expenses. The Syndicate does not discount its liability for outstanding claims

nor the reinsurance share of outstanding claims.

Outstanding claims include an allowance for the cost of claims incurred by the balance

sheet date but not reported until after the year end. The amount of salvage and

subrogation recoveries is separately identified and, where material, reported as an asset

The liability for outstanding claims is estimated using the input of assessments for

individual cases reported to the Syndicate and widely accepted actuarial techniques for

the claims incurred but not reported (IBNR). The techniques generally use projections,

based on past experience of the development of claims over time, to form a view on the

likely ultimate claims to be experienced and an estimate of the expected ultimate cost of

more complex claims that may be affected by external factors, for example, court

decisions.

The two most critical assumptions with regards to claims provisions are that the past is a

reasonable predictor of the likely level of claims development and that the rating and other

models used for current business are fair reflections of the likely level of ultimate claims

to be incurred.

Notes to the Financial Statements (continued)

31 December 2024

3. Significant Accounting Policies (continued)

(d)

Claims Provisions and Related Recoveries (continued)

The Directors of the Managing Agent consider that the provisions for gross claims and

related reinsurance recoveries are fairly stated based on the information currently

available to them. However, the ultimate liability will vary as a result of subsequent

information and events, and this may result in significant adjustments to the amounts

provided. Adjustments to the amounts of claims provisions established in prior years are

reflected in the financial statements for the period in which the adjustments are ma

The methods used, and the estimates made, are reviewed regularly.

The reinsurers’ share of provisions for claims is based on calculated amounts of

outstanding claims and projections for IBNR, net of estimated irrecoverable amounts,

having regard to the reinsurance programme in place for the class of business, the claims

experience for the year and the current security rating of the reinsurance companies

involved. A number of statistical techniques are used to assist in making these estimates.

Reinsurance assets are assessed for impairment at each balance sheet date. A

reinsurance asset is deemed impaired if there is objective evidence, as a result of an

event that occurred after its initial recognition, that the Syndicate may not recover all

amounts due, and that event has a reliably measurable impact on the amount that the

Syndicate will receive from the reinsurer. Impairment losses are recognised in profit or

loss in the period in which the impairment loss is recognised.

(e)

Unexpired Risks Provision

Provision is made for unexpired risks arising from general insurance contracts where the

expected value of claims and expenses attributable to the unexpired periods of policies

in force at the balance sheet date exceeds the unearned premiums provision in relation

to such policies (after the deduction of any deferred acquisition costs). The provision for

unexpired risks is calculated by reference to classes of business which are managed

together.

Unexpired risk surplus and deficits are offset where in the opinion of the Directors the

business classes concerned are managed together and in such cases a provision for

unexpired risks is made only where there is an aggregate deficit.

At 31 December 2024 the Syndicate did not have an unexpired risks provision (31

December 2023: £nil).

(f)

Acquisition Costs

Costs incurred in acquiring general insurance contracts are deferred. Acquisition costs

include direct costs such as brokerage and commission, and indirect costs such as

administrative expenses connected with the processing of proposals and the issuing of

policies. The deferred acquisition cost asset represents the proportion of acquisition costs

which corresponds to the proportion of gross premiums written that is unearned at the

balance sheet date.

In addition to third party brokerage, acquisition costs include a proportion of Syndicate

costs including all box rent, underwriters’ employment costs, an allocation of

accommodation and IT costs.

Notes to the Financial Statements (continued)

31 December 2024

3. Significant Accounting Policies (continued)

(g)

Foreign Currencies

The Syndicate’s functional currency is GBP; The Syndicate’s presentational currency is

also GBP this achieves consistency with prior year reporting.

Transactions in foreign currencies are translated to the functional currency using the

exchange rates at the date of the transactions. The Syndicate’s monetary assets and

liabilities denominated in foreign currencies are translated into the functional currency at

the rates of exchange at the balance sheet date. Non-monetary assets and liabilities

denominated in foreign currencies that are measured at fair value are retranslated to the

functional currency at the exchange rate at the date that the fair value was determined.

Non-monetary items denominated in foreign currencies that are measured at historic cost

are translated to the functional currency using the exchange rate at the date of the

transaction. For the purposes of foreign currency translation, unearned premiums and

deferred acquisition costs are treated as if they are monetary items.

Differences arising on translation of foreign currency amounts relating to the insurance

operations of the Syndicate are included in the non-technical account.

(h)

Financial Assets and Liabilities

In applying FRS 102, the Syndicate has chosen to apply the recognition and

measurement provisions of IAS 39 Financial Instruments: Recognition and Measurement

(as adopted for use in the UK)/Chapters 11 and 12 of FRS102.

Classification

The accounting classification of financial assets and liabilities determines the way in which

they are measured and changes in those values are presented in the Statement of profit

or loss Financial assets and liabilities are classified on their initial recognition.

The initial classification of a financial instrument shall take into account contractual terms

including those relating to future variations. Once the classification of a financial

instrument is determined at initial recognition, reassessment is only required

subsequently when there has been a modification of contractual terms that is relevant to

an assessment of the classification.

Financial assets and financial liabilities at fair value through profit or loss comprise

financial assets and financial liabilities held for trading and those designated as such on

initial recognition.

Deposits with credit institutions, debtors, and accrued interest are classified as loans and

receivables.

Recognition

Financial instruments are recognised when the Syndicate becomes a party to the

contractual provisions of the instrument. Financial assets are derecognised if the

Syndicate‘s contractual rights to the cash flows from the financial assets expire or if the

Syndicate transfers the financial asset to another party without retaining control of

substantially all risks and rewards of the asset. A financial liability is derecognised when

its contractual obligations are discharged, cancelled, or expired.

Notes to the Financial Statements (continued)

31 December 2024

3. Significant Accounting Policies (continued)

(h)

Financial Assets and Liabilities (continued)

Recognition (continued)

Regular way purchases and sales of financial assets are recognised and derecognised,

as applicable, on the trade date, i.e. the date that the Syndicate commits itself to purchase

or sell the asset.

Measurement

A financial asset or financial liability is measured initially at fair value plus, for a financial

asset or financial liability not at fair value through profit or loss, transaction costs that are

directly attributable to its acquisition or issue.

Financial assets at fair value through profit or loss are measured at fair value with fair

value changes recognised immediately in profit or loss. Net gains or net losses on

financial assets measured at fair value through profit or loss includes foreign exchange

gains/losses arising on their translation to the functional currency, but excludes interest

and dividend income.

Loans and receivables and non-derivative financial liabilities are measured at amortised

cost using the effective interest method.

Identification and Measurement of Impairment

At each reporting date the Syndicate assesses whether there is objective evidence that

financial assets not at fair value through profit or loss are impaired. Financial assets are

impaired when objective evidence demonstrates that a loss event has occurred after the

initial recognition of an asset, and that the loss event has an impact on the future cash

flows on the asset that can be estimated reliably.

Objective evidence that financial assets are impaired includes observable data that

comes to the attention of the Syndicate about any significant financial difficulty of the

issuer, or significant changes in the technological, market, economic or legal environment

in which the issuer operates.

An impairment loss in respect of a financial asset measured at amortised cost is

calculated as the difference between its carrying amount, and the present value of the

estimated future cash flows discounted at the asset’s original effective interest rate.

Individually significant financial assets are tested for impairment on an individual basis.

The remaining financial assets are assessed collectively in groups that share similar credit

risk characteristics.

An impairment loss recognised on an amortised cost asset reduces directly the carrying

amount of the impaired asset. All impairment losses are recognised in profit or loss. An

impairment loss is reversed if the reversal can be related objectively to an event occurring

after the impairment loss was recognised. For financial assets measured at amortised

cost the reversal is recognised in profit or loss.

Off-setting

Financial assets and financial liabilities are offset and the net amount presented in the

balance sheet when, and only when, the Syndicate currently has a legal right to set off

the amounts and intends either to settle on a net basis or to realise the asset and settle

the liability simultaneously.

Notes to the Financial Statements (continued)

31 December 2024

3. Significant Accounting Policies (continued)

(i)

Investment Return

Investment return comprises investment income and movements in unrealised gains and

losses on financial instruments at fair value through profit or loss, less investment

management expenses, interest expense, realised losses and impairment losses.

Investment income comprises interest income, dividends receivable and realised

investment gains.

Dividend income is recognised when the right to receive income is established. Usually

this is the ex-dividend date for equity securities. Interest income on financial assets

measured at amortised cost is recognised using the effective interest method. For the

purpose of separately presenting investment income and unrealised gains and losses for

financial assets at fair value through profit or loss, interest income is calculated using the

effective interest method excluding transaction costs that are expensed when incurred.

For investments at fair value through profit or loss, realised gains and losses represent

the difference between the net proceeds on disposal and the purchase price

Unrealised investment gains and losses represent the difference between the fair value

at the balance sheet date and the fair value at the previous balance sheet date, or

purchase price if acquired during the year. Movements in unrealised investment gains

and losses comprise the increase/decrease in the reporting period in the value of the

investments held at the reporting date and the reversal of unrealised investment gains

and losses recognised in earlier reporting periods in respect of investment disposals of

the current period

Investment return is initially recorded in the non-technical account. The return is

transferred in full to the general business technical account to reflect the investment return

on funds supporting underwriting business.

(j)

Cash and Cash Equivalents

Cash and cash equivalents comprise cash balances and call deposits with maturities of

three months or less from the acquisition date that are subject to an insignificant risk of

changes in fair value, and are used by the Syndicate in the management of its short-term

commitments.

Cash and cash equivalents are carried at amortised cost in the Balance Sheet.

(k)

Taxation

Under Schedule 17 of the Finance Act 1997 Syndicates are not required to deduct basic

rate income tax from trading income. In addition, all UK basic rate income tax (currently

at 20%) deducted from Syndicate investment income is recoverable by Managing Agents

and consequently the distribution made to members or their members’ agents is gross of

tax. Capital appreciation falls within trading income and is also distributed gross of tax.

Notes to the Financial Statements (continued)

31 December 2024

Significant Accounting Policies (continued)

(k)

Taxation (continued)

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 balance sheet under the heading ‘other

debtors’.

No provision has been made for any overseas tax payable by the member on underwriting

results.

(l)

Pension Costs

The Managing Agent offers a Group Self Invested Pension Scheme. Pension

contributions relating to Syndicate employees are charged to the Syndicate and included

within net operating expenses.

Pension contributions relating to Syndicate Managing Agent employees who act on behalf

of the Syndicate are charged to the Syndicate as incurred and included within net

operating expenses.

(m)

Profit Commission

The Managing Agent does not charge any profit commission.

(n)

Deposits Received from Reinsurers

Deposits received from reinsurers includes other amounts received in advance from

reinsurers against future claims under the Syndicate's reinsurance arrangements. These

funds are held at amortised cost in the balance sheet.

(o)

Operating Expenses

Where expenses are incurred by the Service Company for the administration of the

Syndicate, these expenses are apportioned appropriately based on type of expense.

Expenses that are incurred jointly are apportioned between the Service Company and the

Syndicate on bases depending on the amount of work performed, resources used, and

the volume of business transacted.

(p)

Reinsurers’ Commission and Profit Participation

Reinsurers’ commissions and profit participations, which include reinsurance profit

commission and overriding commission, are treated as a contribution to expenses.

(q)

Debtors and Creditors

Insurance debtors and creditors include amounts due to and from agents, brokers and

insurance contract holders. These are classified as debt instruments as they are non

derivative financial assets with fixed or determinable payments that are not quoted on an

active market. Insurance debtors are measured at amortised cost less any provision for

impairments. Insurance creditors are stated at amortised cost. The Syndicate does not

have any debtors directly with policyholders, all transactions occur via an intermediary.

Notes to the Financial Statements (continued)

31 December 2024

3. Significant Accounting Policies (continued)

(q)

Debtors and Creditors (continued)

Reinsurance debtors and creditors include amounts due to and from reinsurers. These

are classified as debt instruments as they are non derivative financial assets with fixed or

determinable payments that are not quoted on an active market.

Reinsurance debtors are measured at amortised cost less any provision for impairments.

Reinsurance creditors are stated at amortised cost. Reinsurance debtor principally relates

to claims recoveries where the underlying claim has been settled and the recovery is due.

Reinsurance creditors are primarily premiums payable for reinsurance contracts and are

recognised as an expense when due.

Other debtors principally consist of amounts due from members and sundry debtors and

are carried at amortised cost less any impairment losses.

Other creditors principally consist of amounts due to related syndicates and other related

entities, profit commissions payable and other sundry payables.

(r)

Classification of Insurance and Reinsurance Contracts

Insurance and reinsurance contracts are classified as insurance contracts where they

transfer significant insurance risk. If a contract does not transfer significant insurance risk

it is classified as a financial instrument. All of the Syndicates written contracts and

purchased reinsurance contracts transfer significant insurance risk and therefore are

recognised as insurance contracts.

4. Risk and Capital Management

Introduction and Overview

This note presents information about the nature and extent of insurance and financial risks

to which the Syndicate is exposed, the Managing Agent’s objectives, policies and

processes for measuring and managing insurance and financial risks, and for managing

the Syndicate’s capital.

Risk Management Framework

The Board of Directors of the managing agent has overall responsibility for the

establishment and oversight of the Syndicate’s risk management framework and to review

and monitor the management of the risks to which the Syndicate is exposed. The Board

sets risk appetite annually as part of the Syndicate’s business planning and Solvency

Capital Requirement process. Risk appetite is subsequently reviewed by the Managing

Agent on a periodic basis. The Managing Agent has a Risk Forum which meets monthly

to review and update the risk register and to monitor performance against risk appetite.

The Risk & Capital Committee, a sub-committee of the Managing Agent’s Board, meets

throughout the year to review and challenge risk management and the use of the internal

model for capital calculation purposes.

The Managing Agent is required to comply with the requirements of the PRA, the FCA and

Lloyd’s. Lloyd’s requirements include those imposed on the Lloyd’s market by overseas

regulators, particularly in respect of US Situs business. The Compliance Officer monitors

Notes to the Financial Statements (continued)

31 December 2024

4. Risk and Capital Management (continued)

Risk Management Framework (continued)

regulatory developments and assesses the impact on Managing Agent policy. The

principal risks and uncertainties, in addition to the regulatory and compliance risk facing

the Syndicate and consequently MRCL is monitored in line with the six risk groups, of

which Insurance Risk is by far the most significant to the Syndicate.

Insurance Risk

Insurance risk arises from the possibility of an adverse financial result due to actual claims

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.

The insurance risk to which the Syndicate is exposed can be separated into underwriting

risk and reserve risk.

i. Underwriting Risk

Underwriting risk is the risk that the insurance premium will not be sufficient to cover future

insurance losses and associated expenses. This includes the risks that the premium is set

too low, provides inappropriate levels of cover, or that the actual frequency or severity of

claims events will be significantly higher than was expected during the underwriting

process.

ii. Reserve Risk

Reserve risk is the risk that the reserves established in respect of insurance claims

incurred are insufficient to settle the claims and associated expenses in full.

Management of Insurance Risk

A key component of the management of underwriting risk for the Syndicate is a disciplined

underwriting strategy that focuses on mitigating risk exposure by seeking to have a diverse

but balanced portfolio of risks across a number of underwriting classes written on a global

basis. A further key component of the management of portfolio volatility is via the

international distribution company (‘IDC’) network operating in established broker-based

markets around the world. These companies are focused on writing local market business

that would not necessarily be shown to the London market.

The annual business plan sets out the classes of business, the territories, average line

size and type of assured. These plans are the responsibility of the SBF Governance Sub

Group, approved by the Board and monitored by the Finance Sub Committee.

Contracts can contain a number of features which help to manage the underwriting risk

such as the use of deductibles, or capping the maximum permitted loss, or number of

claims (subject to local regulatory and legislative requirements).

Notes to the Financial Statements (continued)

31 December 2024

4. Risk and Capital Management (continued)

Management of Insurance Risk (continued)

It is the policy of the Managing Agent to purchase appropriate reinsurance to support the

business plan taking into consideration the Board’s risk appetite and risk retention as well

as a review of risk accumulation. With security being of paramount importance, the

Syndicate places as much of the programme as possible with reinsurers of the highest

calibre, subject to availability and market conditions. In addition to this the Syndicate

purchased significant additional quota share reinsurance as part of its risk management

strategy.

The claims development table in note 16 shows the actual claims incurred to previous

estimates for the last 4 years.

Concentration of Insurance Risk

The following table provides an analysis of the geographical breakdown of its gross written

premium.

USA

Canada

Australia

Rest of

the World

Total

2024

£000

Direct insurance

Marine, Energy, Aviation and

Transport

(20)

Fire and other damage to

property

(128)

Third party liability

(47)

Miscellaneous

(6)

(49)

(55)

Total Direct insurance

(6)

(128)

(47)

(69)

(250)

Reinsurance

Total

(6)

128

(47)

(69)

(250)

USA

Canada

Australia

Rest of

the World

Total

2023

£000

Direct insurance

Marine, Energy, Aviation and

Transport

Fire and other damage to

property

1,173

1,177

Third party liability

Miscellaneous

Total Direct insurance

1,173

1,323

Reinsurance

Total

1,173

1,323

Notes to the Financial Statements (continued)

31 December 2024

4. Risk and Capital Management (continued)

Insurance Risk (continued)

Management of Insurance Risk (continued)

ii. Sensitivity to Insurance Risk

The liabilities established could be significantly lower or higher than the ultimate cost of

settling the claims arising.

This level of uncertainty varies between the classes of business and the nature of the risk

being underwritten and can arise from developments in case reserving for large losses

and catastrophes, or from changes in estimates of claims IBNR.

The following table presents the sensitivity of the value of insurance liabilities disclosed in

the accounts to potential movements in the assumptions applied within the technical

provisions. 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 or loss for the year and member balance.

General insurance business sensitivities as at

Sensitivity

+5.00%

-5.00%

31 December 2024

£000

Claims outstanding – gross of reinsurance

(5)

Claims outstanding – net of reinsurance

(1)

General insurance business sensitivities as at

Sensitivity

+5.00%

-5.00%

31 December 2023

£000

Claims outstanding – gross of reinsurance

(51)

Claims outstanding – net of reinsurance

(13)

Financial Risk

The focus of financial risk management for the Syndicate is ensuring that the proceeds

from its financial assets are sufficient to fund the obligations arising from its insurance

contracts. The goal of the investment management process is to optimise the risk adjusted

investment income and risk adjusted total return by investing in a diversified portfolio of

securities, whilst ensuring that the assets and liabilities are managed on a cash flow and

duration matching basis. The main components of Financial Risk are Credit, Liquidity and

Market risks.

a) Credit Risk

Credit risk is the risk of financial loss to the Syndicate if a counterparty fails to discharge a

contractual obligation.

Notes to the Financial Statements (continued)

31 December 2024

Risk and Capital Management (continued)

Financial Risk (continued)

Credit Risk (continued)

The Syndicate is exposed to credit risk in respect of the following:

Reinsurers’ share of claims outstanding;

Amounts due from intermediaries;

Amounts due from reinsurers in respect of settled claims;

Loans and deposits with credit institutions; and

Cash and cash equivalents.

The nature of the Syndicate’s exposures to credit risk and its objectives, policies and

processes for managing credit risk have not changed significantly from the prior year.

Management of Credit Risk

The Syndicate limits the amount of cash and cash equivalents that can be deposited with

a single counterparty. The cash accounts held with Citibank NA, NatWest Group plc, and

Royal Bank of Canada are monitored daily and reported on a weekly basis.

Reinsurance is placed with counterparties that have a good credit rating. There is a limited

pool of approved reinsurers and any reinsurance that is placed with reinsurers not within

this pool requires the approval of certain Executive Directors. Protection is also provided

by a 75% quota share reinsurance programme with Munich Re. All reinsurance is subject

to regular internal review.

ii. Exposure to Credit Risk

The following table analyses the credit rating by investment grade of financial

investments, reinsurers’ share of claims outstanding, amounts due from reinsurers in

respect of settled claims, cash and cash equivalents, debtors arising out of direct

insurance operations and other debtors and accrued interest.

Year 2024

AAA

BBB

Other

Not

rated

£000

Total

£000

Loans and deposits with credit institutions

Reinsurers’ share of claims outstanding

Debtors arising out of direct insurance

operations

Debtors arising out of reinsurance

operations

715

Cash at bank and in hand

350 14,004

14,354

Other debtors and accrued interest

Total

1,144

14,009

15,188

Notes to the Financial Statements (continued)

31 December 2024

4. Risk and Capital Management (continued)

Financial Risk (continued)

Credit Risk (continued)

ii. Exposure to Credit Risk (continued)

Year 2023

AAA

BBB

Other

Not

rated

£000

Total

£000

Loans and deposits with credit institutions

101

141

Reinsurers’ share of claims outstanding

768

Debtors arising out of direct insurance

operations

1,484

Debtors arising out of reinsurance

operations

137

Cash at bank and in hand

343

14,170

14,513

Other debtors and accrued interest

Total

101

359

14,950

1,621

17,043

iii.

Financial Assets that are Past Due or Impaired

The Syndicate does not have any assets that are either passed due or impaired (2023:

£nil).

Liquidity Risk

Liquidity risk is the risk that the Syndicate will encounter difficulty in meeting obligations

arising from its insurance contracts and financial liabilities. The Syndicate is exposed to

calls on its available cash resources mainly from claims arising from insurance contracts.

In respect of catastrophic events there is also a liquidity risk associated with the timing

differences between gross cash out-flows and expected reinsurance recoveries and an

associated risk of gross funding of US Situs losses.

A liquidity risk policy exists that sets out the assessment and determination of what

constitutes liquidity risk. Compliance with the policy is monitored and exposures and

breaches are reported to the Risk and Capital Committee and the Finance Sub Committee

(‘FSC’).

The nature of the Syndicate’s exposures to liquidity risk and its objectives, policies and

processes for managing liquidity risk have not changed significantly from the prior year.

Notes to the Financial Statements (continued)

31 December 2024

Risk and Capital Management (continued)

Financial Risk (continued)

b) Liquidity Risk (continued)

Management of Liquidity Risk

The Syndicate’s approach to managing liquidity risk is to ensure, as far as possible, that

it will always have sufficient liquidity to meet its liabilities when they fall due, under both

normal and stressed conditions.

The Syndicate’s approach to managing its liquidity risk is as follows:

Forecasts are prepared and revised on a regular basis to predict cash outflows from

insurance contracts over the short, medium and long term;

The Syndicate maintains cash and liquid assets to meet calls on its insurance

contracts; and

The Syndicate regularly updates its contingency funding plans to ensure that

adequate liquid financial resources are in place to meet obligations as they fall due

in the event of reasonably foreseeable abnormal circumstances.

ii. Maturity Analysis of Syndicate Liabilities

The maturity analysis presented in the table below shows the remaining contractual

maturities for the Syndicate’s insurance contracts and financial instruments. For

insurance and reinsurance contracts, the contractual maturity is the estimated date when

the gross undiscounted contractually required cash flows will occur. For financial liabilities,

it is the earliest date on which the gross undiscounted cash flows (including contractual

interest payments) could be paid assuming conditions are consistent with those at the

reporting date.

The table below summarises the maturity profile of the Syndicate’s liabilities.

Undiscounted net cash flows

Year 2024

maturity

stated

0-1 yrs

1-3 yrs

3-5 yrs

>5 yrs

Total

£000

Claims outstanding

100

Creditors

6,545

Total

6,645

Undiscounted net cash flows

Year 2023

maturity

stated

0-1 yrs

1-3 yrs

3-5 yrs

>5 yrs

Total

£000

Claims outstanding

1,023

Creditors

8,015

Total

9,038

Notes to the Financial Statements (continued)

31 December 2024

Risk and Capital Management (continued)

Financial Risk (continued)

c) Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument or

insurance contract will fluctuate because of changes in market prices. Market risk

comprise two types of risk: interest rate risk and currency risk.

The objective of market risk management is to manage and control market risk exposures

within acceptable parameters, while optimising the return on risk. The nature of the

Syndicate exposures to market risk and its objectives, policies and processes for

managing market risk have not changed significantly from the prior year.

Management of Market Risks

For each of the major components of market risk the Syndicate has policies and

procedures in place which detail how each risk should be managed and monitored. The

management of each of these major components of major risk and the exposure of the

Syndicate at the reporting date to each major risk are addressed below.

For assets backing outstanding claims provisions, market risk is managed by matching

the duration and profile of the assets to the technical provisions they are backing, referred

to as Asset-Liability Matching. This helps manage market risk to the extent that changes

in the values of assets are matched by a corresponding movement in the values of the

technical provisions.

ii. Interest Rate 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, cash and cash equivalents.

The risk of changes in the fair value of these assets is managed by primarily investing in

short duration financial investments and cash and cash equivalents. The Investment

Committee monitors the duration of these assets on a regular basis, targeting an

investment portfolio duration that, in the event of changes in interest rates, always

maintains the internal capital requirements.

iii. Currency Risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument

will fluctuate because of changes in foreign exchange rates.

The Syndicate’s functional currency is Sterling and its exposure to foreign exchange risk

arises primarily with respect to transactions in United States dollars. The Syndicate seeks

to mitigate the risk by matching the estimated foreign currency denominated liabilities with

assets denominated in the same currency.

Notes to the Financial Statements (continued)

31 December 2024

Risk and Capital Management (continued)

Financial Risk (continued)

Market Risk (continued)

iv. Currency Risk (continued)

The table below summarises the exposure of the financial assets and liabilities to foreign

currency exchange risk at the reporting date, as follows:

Sterling

dollar

Euro

Canadian

dollar

Australian

dollar

Japanese

Yen

Other

Total

2024

£000

Investments

Reinsurers'

share of

technical

provisions

Debtors

719

723

Other assets

12,050

2,301

14,354

Prepayments

and accrued

income

Total assets

12,777

2,301

103

15,188

Technical

provisions

100

Provisions for

other risks

Deposits

received from

reinsurers

Creditors

4,484

2,063

6,545

Accruals and

deferred

income

Total liabilities

4,484

2,063

6,645

Total Capital

and reserves

8,293

238

8,543

Notes to the Financial Statements (continued)

31 December 2024

Risk and Capital Management (continued)

Financial Risk (continued)

Market Risk (continued)

iv. Currency Risk (continued)

Sterling

dollar

Euro

Canadian

dollar

Australian

dollar

Japanese

Yen

Other

Total

2023

£000

Investments

109

141

Reinsurers'

share of

technical

provisions

861

949

Debtors

1,534

1,621

Other assets

12,635

1,976

14,629

Prepayments

and accrued

income

Total assets

15,030

1,978

215

109

17,340

Technical

provisions

1,262

117

1,380

Provisions for

other risks

Deposits

received from

reinsurers

Creditors

5,942

2,011

8,015

Accruals and

deferred

income

Total liabilities

7,217

2,011

180

9,409

Total Capital

and reserves

7,813

(33)

109

7,931

v. Sensitivity Analysis to Market Risks

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 or loss account) and members’ balances.

2024

2023

Impact on

results

before

tax

Impact on

members’

balances

Impact on

results

before

tax

Impact on

members’

balances

£000

currency risk

10 percent increase in GBP/US dollar exchange rate

(245)

100

10 percent decrease in GBP/US dollar exchange rate

(201)

A 10% increase (or decrease) in exchange rates have been selected on the basis that

these are considered to be reasonably possible changes in these risk variables over the

following year.

Notes to the Financial Statements (continued)

31 December 2024

4. Risk and Capital Management (continued)

Financial Risk (continued)

Market Risk (continued)

v. Sensitivity Analysis to Market Risks (continued)

The sensitivity analysis demonstrates the effect of a change in a key variable while other

assumptions remain unchanged. However, the occurrence of a change in a single market

factor may lead to changes in other market factors as a result of correlations.

Capital Management

Capital Framework at Lloyd’s

Lloyd’s is a regulated undertaking and subject to the supervision of the PRA under the

Financial Services and Markets Act 2000 and in accordance with the Solvency II

Framework.

Within this supervisory framework, Lloyd’s applies capital requirements at member level

and centrally to ensure that Lloyd’s complies with Solvency II, and beyond that to meet its

own financial strength, licence and ratings objectives.

Although, as described below, the Lloyd’s capital setting processes use a capital

requirement set at the Syndicate level as a starting point, the requirement to meet

Solvency II and Lloyd’s capital requirements apply at the overall and member level only,

not at Syndicate level. Accordingly the capital requirement in respect of the Syndicate 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.

The Syndicate has only one member who is wholly for all underwriting liabilities and

meeting the capital requirement that Lloyd’s sets. As the Syndicate has ceased to function

as at 1 January 2025, the member’s capital requirement has also ceased.

As of December 2022, Lloyd's advised that we should use an SCR based on our own

assessment, with the caveat that it should not be lower than the Minimum Capital

Requirement ('MCR') absolute floor of EUR 4.0m.

Notes to the Financial Statements (continued)

31 December 2024

Risk and Capital Management (continued)

Capital Management (continued)

Lloyd’s Capital Setting Process (continued)

Given the run-off nature of the Syndicate and the size of the technical provisions, the SCR

calculated was significantly lower than the MCR absolute floor. Therefore, the MCR

absolute floor figure of EUR 4.0m was used as the one year SCR for the Syndicate.

Over and above this, Lloyd’s applies a capital uplift to the member’s capital requirement,

known as the Economic Capital Assessment (ECA). The purpose of this uplift, which is a

Lloyd’s not a Solvency II requirement, is to meet Lloyd’s financial strength, 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 or ‘FAL’), assets held within and managed

within a syndicate (Funds in Syndicate or ‘FIS’) as the member’s share of the members’

balances on each syndicate on which it participates.

All the assets less liabilities of the Syndicate, as represented in the members’ balances

reported on the balance sheet on page 20, represent resources available to meet

members’ and Lloyd’s capital requirements.

5. Analysis of Underwriting Result

An analysis of the underwriting result before investment return is set out below:

2024

Gross

premiums

written

Gross

premiums

earned

Gross

claims

incurred

Gross

operating

expenses

Reinsurance

balance

£000

Underwriting

result

£000

Direct insurance

Marine, aviation,

and transport

(20)

(8)

Fire and other

damage to

property

(128)

140

(48)

(97)

(32)

(37)

Third party liability

(47)

(35)

(11)

(12)

(27)

Miscellaneous

(55)

(110)

(9)

(96)

Total direct

insurance

(250)

107

(52)

(219)

(4)

(168)

Reinsurance

acceptances

Total

(250)

107

(52)

(219)

(4)

(168)

Notes to the Financial Statements (continued)

31 December 2024

Analysis of Underwriting Result (continued)

2024

Gross

premiums

written

Gross

premiums

earned

Gross claims

incurred

Gross

operating

expenses

Reinsurance

balance £000

Underwriting

result

£000

Additional

analysis

Fire and damage to

property of which is:

Specialities

(128)

140

(48)

(97)

(32)

(37)

Energy

Third party liability

of which is:

Energy

2023

Gross

premiums

written

Gross

premiums

earned

Gross

claims

incurred

Gross

operating

expenses

Reinsurance

balance

Underwriting

result

£000

Direct insurance

Marine, aviation,

and transport

(11)

Fire and other

damage to property

1,177

2,094

(1,037)

(1,044)

(175)

(162)

Third party liability

244

(45)

(51)

(106)

Miscellaneous

767

(52)

(78)

(341)

296

Total direct

insurance

1,323

3,111

(1,145)

(1,173)

(617)

176

Reinsurance

acceptances

Total

1,323

3,111

(1,145)

(1,173)

(617)

176

2023

Gross

premiums

written

Gross

premiums

earned

Gross claims

incurred

Gross

operating

expenses

Reinsurance

balance

Underwriting

result

£000

Additional

analysis

Fire and damage to

property of which is:

Specialities

1,177

2,094

(1,037)

(1,044)

(175)

(162)

Energy

Third party liability

of which is:

Energy

No gains or losses were recognised in profit or loss during the year on buying reinsurance

(2023: £nil).

Notes to the Financial Statements (continued)

31 December 2024

5. Analysis of Underwriting Result (continued)

The gross premiums written for direct insurance by destination of risk is presented in the

table below:

2024

2023

£000

United Kingdom

(250)

1,323

Total gross premiums written

(250)

1,323

6. Net Operating Expenses

2024

2023

£000

Acquisition costs

(63)

480

Change in deferred acquisition costs

116

513

Administrative expenses

166

180

Reinsurance commissions and profit participation

(4)

(123)

Net operating expenses

215

1,050

Total commissions for direct insurance business for the year amounted to:

2024

2023

£000

Total commission for direct insurance business

(63)

480

Administrative expenses include:

2024

2023

£000

Auditors’ remuneration:

fees payable to the Syndicate’s auditor for the audit of these financial

statements

fees payable to the Syndicate’s auditor and its associates in respect of

other services pursuant to legislation

Notes to the Financial Statements (continued)

31 December 2024

7. Key Management Personnel Compensation

The Directors of Munich Re Syndicate Limited received the following aggregate

remuneration charged to the Syndicate:

2024

2023

£000

Directors’ emoluments

Fees

There is no active underwriter for the Syndicate. The run off manager received the following

aggregate remuneration charged to the Syndicate.

2024

2023

£000

Emoluments

8. Staff Numbers and Costs

All employees are employed by MRSG UK Services Limited. The Syndicate and Managing

Agent have no employees. The average number of employees employed by the MRSG

UK Services Limited but working for the Syndicate during the year was as follows:

Number of employees

2024

2023

Administration and finance

Total

The following amounts were recharged to the Syndicate by the Service Company in

respect of payroll costs:

2024

2023

£000

Wages and salaries

106

167

Social security costs

Other pension costs

Total

130

206

Notes to the Financial Statements (continued)

31 December 2024

9. Investment Return

2024

2023

£000

Interest and similar income

From financial instruments designated at fair value through profit or loss

Interest and similar income

Other income from investments

From financial instruments designated at fair value through profit or loss

Gains on the realisation of investments

Losses on the realisation of investments

(1)

(2)

Investment management expenses

Total investment return

Transferred to the technical account from the non-technical account

Investment return on Funds in Syndicate

Impairment losses on debtors recognised in administrative expenses

The investment return was wholly allocated to the technical account.

10. Distribution

A cash call of £737k from members will be proposed in relation to the closing year of

account (2022) (2023: cash call of £790k was made in relation to the closing year of

account (2021)).

11. Financial Investments

Carrying value

Cost

2024

2023

2024

2023

£000

Shares and other variable yield securities and units in unit

trusts

Debt securities and other fixed income securities

Participation in investment pools

Loans secured by mortgages

Loans and deposits with credit institutions

141

Derivative assets

Syndicate loans to central fund

Other investments

Total financial investments

141

The amount ascribable to listed investments is £nil (2023: £nil). Included within Deposits

with credit institutions are Overseas deposits of £36k (2023: £141k) held at fair value.

Notes to the Financial Statements (continued)

31 December 2024

11. Financial Investments (continued)

The table below presents an analysis of financial investments by their measurement

classification.

2024

2023

£000

Financial assets measured at fair value through profit or

loss

141

Financial assets measured at fair value as available for

sale

Financial assets measured at amortised cost

Total financial investments

141

As the Syndicate is fully aligned, the Syndicate holds the capital supporting their

underwriting in their Syndicate’s premium trust funds. These funds are known as FIS. At

31 December 2024, the following amount was held as FIS:

2024

2023

£000

Funds in Syndicate (FIS)

9,280

Total funds in Syndicate

9,280

Valuation Hierarchy

The Syndicate classifies its financial instruments held at fair value in its balance sheet

using a fair value hierarchy based on the inputs used in the valuation techniques as

follows:

Level 1

– financial assets that are measured by reference to published quotes in

an active market. A financial instrument is regarded as quoted in an active market

if quoted prices 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.

Level 2 –

financial assets measured using a valuation technique based on

assumptions that are supported by prices from observable current market

transactions. For example, assets for which pricing is obtained via pricing services

but where prices have not been determined in an active market, financial assets

with fair values based on broker quotes, investments in private equity funds with

fair values obtained via fund managers and assets that are valued using the

Syndicate’s own models whereby the significant inputs into the assumptions are

market observable.

Level 3 –

financial assets measured using a valuation technique (model) based

on assumptions that are neither supported by prices from observable current

market transactions in the same instrument nor are they based on available market

data. Therefore, unobservable inputs reflect the Syndicate's own assumptions

about the assumptions that market participants would use in pricing the asset or

liability (including assumptions about risk). These inputs are developed based on

the best information available, which might include the Syndicate’s own data.

Notes to the Financial Statements (continued)

31 December 2024

11. Financial Investments (continued)

The table below analyses financial instruments held at fair value in the Syndicate’s balance

sheet at the reporting date by its level in the fair value hierarchy.

2024

Level 1

Level 2

Level 3

Assets

held at

amortised

cost

Total

£000

Shares and other variable yield securities and units

in unit trusts

Debt securities and other fixed income securities

Participation in investment pools

Loans secured by mortgages

Loans and deposits with credit institutions

Derivative assets

Syndicate loans to central fund

Other investments

Total financial investments

Derivative liabilities

Total

2023

Level 1

Level 2

Level 3

Assets

held at

amortised

cost

Total

£000

Shares and other variable yield securities and

units in unit trusts

Debt securities and other fixed income securities

Participation in investment pools

Loans secured by mortgages

Loans and deposits with credit institutions

141

Derivative assets

Syndicate loans to central fund

Other investments

Total financial investments

141

Derivative liabilities

Total

141

Information on the methods and assumptions used to determine fair values for each major

category of financial instrument measured at fair value is provided below.

Management performs an analysis of the prices obtained from pricing vendors to ensure

that they are reasonable and produce a reasonable estimate of fair value. Management

considers both qualitative and quantitative factors as part of this analysis. Examples of

analytical procedures performed include reference to recent transactional activity for

similar securities, review of pricing statistics and trends and consideration of recent

relevant market events.

At the reporting date Level 1 and Level 2 financial assets and liabilities were valued using

valuation techniques based on observable market data. All of the investments categorised

as Level 3 are fair valued based on the inputs to the valuation technique used.

Notes to the Financial Statements (continued)

31 December 2024

12. Debtors arising out of Direct Insurance Operations

2024

2023

£000

Due within one year

1,484

Due after one year

Total

1,484

13. Debtors arising out of Reinsurance Operations

2024

2023

£000

Due within one year

715

137

Due after one year

Total

715

137

14. Other Debtors

2024

2023

£000

Inter-syndicate balances

Other related party balances (non syndicate)

Amounts due from members

Other

Total

15. Deferred Acquisition Costs

The table below shows changes in deferred acquisition costs assets from the beginning of the

period to the end of the period.

2024

2023

Gross

Reinsurance

Net

Gross

Reinsurance

Net

£000

Balance at 1

January

116

635

Incurred deferred

acquisition costs

1,125

Amortised

deferred

acquisition costs

(116)

(1,638)

Foreign exchange

movements

(6)

Other

Balance at 31

December

116

Notes to the Financial Statements (continued)

31 December 2024

16. Claims Development

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.

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.

Balances have been translated at exchange rates prevailing at 31 December 2024 in all

cases.

Gross:

2020

2021

2022

Total

Pure underwriting year

£000

Estimate of gross claims

at end of underwriting year

2,280

184

one year later

3,319

1,240

two years later

3,416

1,301

three years later

3,405

Four years later

Estimate of gross claims

reserve

3,405

1,301

4,706

Provision in respect of prior year

Less gross claims paid

(3,400)

(1,206)

(4,606)

Gross claims reserve

100

Net:

2020

2021

2022

Total

Pure underwriting year

£000

Estimate of net claims

at end of underwriting year

570

one year later

830

310

two years later

854

326

three years later

851

four years later

Estimate of net claims reserve

851

326

1,177

Provision in respect of prior years

Less net claims paid

(850)

(302)

(1,152)

Net claims reserve

Notes to the Financial Statements (continued)

31 December 2024

17. Technical Provisions

The table below shows changes in the insurance contract liabilities and assets from the

beginning of the period to the end of the period.

2024

2023

Gross

provisions

Reinsurance

assets

Net

Gross

provisions

Reinsurance

assets

Net

£000

Claims outstanding

Balance at 1 January

1,023

(768)

255

209

(157)

Claims paid during the year

(967)

725

(242)

(340)

255

(85)

Expected cost of current year

claims

Change in estimates of prior

year provisions

(39)

1,145

(859)

286

Discount unwind

Foreign exchange movements

(8)

(1)

(7)

Other

Balance at 31 December

100

(75)

1,023

(768)

255

2024

2023

Gross

provisions

Reinsurance

assets

Net

Gross

provisions

Reinsurance

assets

Net

£000

Unearned premiums

Balance at 1 January

357

(181)

176

2,171

(1,152)

1,019

Premiums written during the

year

(250)

134

(116)

1,323

(643)

680

Premiums earned during the

year

(107)

(60)

(3,111)

1,599

(1,512)

Foreign exchange movements

(26)

(11)

Other

Balance at 31 December

357

(181)

176

Refer to Note 4 for the sensitivity analysis performed over the value of insurance liabilities,

disclosed in the accounts, to potential movements in the assumptions applied within the

technical provisions.

18. Discounted Claims

No claims provisions are discounted.

19. Creditors arising out of Direct Insurance Operations

2024

2023

£000

Due within one year

Due after one year

Total

Notes to the Financial Statements (continued)

31 December 2024

20. Creditors arising out of Reinsurance Operations

2024

2023

£000

Due within one year

189

1,112

Due after one year

Total

189

1,112

Other Creditors

2024

2023

£000

Inter-syndicate balances

Profit commissions payable

Other related party balances (non-syndicates)

6,356

6,903

Other liabilities

Total

6,356

6,903

22. Cash and Cash Equivalents

2024

2023

£000

Cash at bank and in hand

14,354

14,513

Short term debt instruments presented within other financial investments

Bank overdrafts

Total cash and cash equivalents

14,354

14,513

Only deposits with credit institutions with maturities of three months or less that are used by

the Syndicate in the management of its short-term commitments are included in cash and cash

equivalents.

Included within cash and cash equivalents are the following amounts which are not available

for use by the Syndicate because they are held in regulated bank accounts in overseas

jurisdictions:

2024

2023

£000

Cash at bank and in hand

142

251

Total cash and cash equivalents not available for use by the Syndicate

142

251

23. Analysis of Net Debt

At 1

January

Cash flows

Acquired

Fair value

and

exchange

movements

Non-cash

changes

At 31

December

2024

Cash and cash equivalents

14,513

(171)

14,354

Total

14,513

(171)

14,354

Notes to the Financial Statements (continued)

31 December 2024

24. Related Parties

These disclosure requirements are in addition to the requirement to disclose key

management personnel compensation. This disclosure is given in note 7.

Münchener

Rückversicherungs–Gesellschaft

Aktiengesellschaft

München

(‘Munich Re’)

Munich Re Syndicate Limited is wholly owned by Munich Re Specialty Group Ltd (MRSG),

which is wholly owned by Munich Re. The Syndicate placed a total of £nil outwards

reinsurance premium for the 2024 year of account (2023: £nil). This contract provided the

Syndicate with cover according to terms in the normal course of business. As at year end,

there was an outstanding balance of £486k (2023: £137k) due from Munich Re.

Munich Re Capital Limited (‘MRCL’)

MRCL is the corporate member of the Syndicate. MRCL’s immediate parent company is

MRSG. Apart from the members balances, there were no outstanding balances with the

Syndicate at the year end.

T E Artmann and D J R Hoare are directors of MRCL.

Munich Re Syndicate Limited (‘MRSL’)

During the year, the Syndicate paid fees of £nil (2023: £nil) to MRSL, the Managing Agent

of the Syndicate. MRSL’s immediate parent company is MRSG. As at year end there was

an outstanding balance of £6,356k (2023: 6,903k) due to MRSL from the Syndicate.

The Managing Agent has paid £208k (2023: £194k) in shared service recharges for the

ordinary day to day running costs related to the Syndicate.

MRSG UK Services Limited (’MRSGUKS’)

MRSGUKS, the Service Company, is a wholly owned subsidiary of MRSG which was set

up to become the sole employer within the sub group. There were no outstanding balances

with the Syndicate at the year end.

T E Artmann is a director of MRSGUKS

Munich Re Specialty Insurance (UK) Limited (‘MRSI’)

MRSI is an international distribution company (IDC), wholly owned by MRSG and

produces predominantly UK provincial Marine business. There were no outstanding

balances with the Syndicate at the year end.

T E Artmann, T Coskun, G K Hill and D J Hoare were directors of MRSI in 2024.

Groves, John & Westrup Limited ('GJW')

GJW is a dormant company. There were no outstanding balances with the Syndicate at

the year end.

G K Hill is a director of GJW.

Notes to the Financial Statements (continued)

31 December 2024

24. Related Parties (continued)

Munich Re Syndicate Singapore Pte Limited (‘MRSS’)

MRSS is a non-profit making IDC owned by MRSG and produces Marine business from

S.E. Asia exclusively. There were no outstanding balances with the Syndicate at the year

end.

T E Artmann is a director of MRSS.

Roanoke International Brokers (MENA) Limited (‘RIBML’)

RIBML is an insurance broker in the Middle East which is wholly owned by MRSG. There

were no outstanding balances with the Syndicate at the year end.

There were no directors in common between the Syndicate and RIBML for 2024.

Munich Re Syndicate Labuan Limited (‘MRSLAB’)

MRSLAB is a non-profit making IDC owned by MRSG and produces Marine business from

Malaysia. There were no outstanding balances with the Syndicate at the year end.

There were no directors in common between the Syndicate and MRSLAB for 2024.

Munich Re Specialty Group N.A Inc. (‘MRSG N.A.’)

Munich Re Specialty Group N.A. Inc. is a directly wholly owned company by MRSG and

produces Marine business from the USA. There were no outstanding balances with the

Syndicate at the year end.

T E Artmann is a director of Munich Re Specialty Group N.A.

Roanoke International Brokers Limited (‘RIBL’)

RIBL is an insurance broker wholly owned by MRSG. There were no outstanding balances

with the Syndicate at the year end.

There were no directors in common between the Syndicate and RIBL for 2024.

Munich Re Risk Solutions Ireland Limited (‘MRRSI’)

MRRSI is a wholly owned subsidiary of MRSG. There were no outstanding balances with

the Syndicate at the year end.

T Coskun was a director of MRRSI during the 2024 year.

25. Off-balance Sheet Items

There are no off-balance sheet items for Syndicate 1840.

26. Post Balance Sheet Events

On 1 January 2025 the 2022 year of account closed into Syndicate 457’s 2023 year of

account, thus concluding the business of Syndicate 1840. The amounts that are proposed

to be transferred to members are disclosed in note 10.

Notes to the Financial Statements (continued)

31 December 2024

27. Contingencies and Commitments

Syndicate 1840 does not have any contingent liabilities or commitments.

28. Foreign Exchange Rates

The following foreign currency exchange rates have been used for principal foreign

currency transactions:

2024

2023

Start-of-

period

Year-end

Average

Start-of-

period

Year-end

Average

rate

Sterling

1.00

Euro

1.15

1.21

1.18

1.13

1.15

US dollar

1.27

1.25

1.28

1.20

1.27

1.24

Canadian dollar

1.68

1.80

1.75

1.63

1.68

Australian dollar

1.87

2.02

1.94

1.77

1.87

Japanese Yen

179.72

196.83

193.51

158.71

179.72

174.66

29. Funds at Lloyds

Every member is required to hold capital at Lloyd’s, which is held in trust and known as

Funds at Lloyd’s (‘FAL’). These assets are in the form of letters of credit from Munich Re.

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 PRA requirements and resource criteria. FAL is determined by a number of

factors including the nature and amount of risk in respect of business that has been

underwritten by the member and the assessment of the reserving risk in respect of

business that has been underwritten. Since FAL is not under the management of the

Managing Agent, no amount has been shown in these financial statements by way of such

capital resources. However, the Managing Agent is able to make a call on the members’

FAL to meet liquidity requirements or to settle losses.