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Beat Special Purpose Arrangement 1416
Annual Report and Accounts for the year ended
Contents
Directors and administration .................................................................................................. 1
Managing Agent's report ....................................................................................................... 2
Statement of Managing Agent's responsibilities .................................................................... 9
Independent auditor’s report to the members of Syndicate 1416 ......................................... 10
Statement of profit or loss and other comprehensive income .............................................. 14
Statement of financial position ............................................................................................ 16
Statement of changes in Members' balances ...................................................................... 18
Statement of cash flows ...................................................................................................... 19
1. Basis of preparation ..................................................................................................... 20
2. Critical accounting estimates and judgements ............................................................. 20
3. Significant accounting policies ..................................................................................... 22
4. Analysis of underwriting result...................................................................................... 29
5. Technical provisions .................................................................................................... 30
6. Net operating expenses ............................................................................................... 31
7. Auditor’s remuneration ................................................................................................. 31
8. Key management personnel compensation and Director’s Emoluments ...................... 31
9. Staff numbers and costs .............................................................................................. 32
10. Investment return ........................................................................................................ 32
11. Debtors arising out of reinsurance operations ............................................................. 32
12. Creditors arising out of reinsurance operations. .......................................................... 32
13. Other creditors ............................................................................................................ 33
14. Related parties ............................................................................................................ 33
15. Disclosure of interests ................................................................................................. 34
16. Funds at Lloyd's .......................................................................................................... 34
17. Off-balance sheet items .............................................................................................. 34
18. Risk management ....................................................................................................... 35
19. Post balance sheet events .......................................................................................... 45
1
Directors and administration
Managing Agent
Directors
P A Jardine (Chairman)*
R P Barke
C V Barley
S Bradbury
E M Catchpole*
S Fisher*
L Harfitt
D B Jones
L J M McMaster
A F J Neden*
S D Redmond*
K Shah*
Non-Executive Directors*
Managing Agent's registered office
5th Floor
20 Gracechurch Street
London
EC3V 0BG
Managing Agent's registered number
1918744
Active Underwriter
A Cunningham
Bankers and investment managers
Barclays
Royal Bank of Canada
Citibank
New England Asset Management
Registered Auditor
Ernst & Young LLP
Signing Actuary
Ernst & Young LLP
2
Managing Agent's report
The Special Purpose Arrangement’s (“SPA”) Managing Agent is a company registered in
England and Wales. The Directors of the Managing Agent present their report for the year
ended 31 December 2024.
The financial statements herein have been prepared using the annual basis of accounting as
required by Statutory Instrument No 1950 of 2008, The Insurance Accounts Directive (Lloyd's
Syndicate and Aggregate Accounts) Regulations 2008 (“Lloyd’s Regulations 2008”).
Results
The result for calendar year 2024 is a profit of $3.41m (2023: profit of $6.98m).
The SPA presents its results under FRS102, the Financial Reporting Standard applicable in
the UK and Republic of Ireland. In accordance with FRS102, the Syndicate has identified its
insurance contracts and accounted for them in accordance with FRS103 Insurance Contracts.
Principal activity and review of the business
The SPA was established in October 2021 to underwrite a variable quota share of certain
classes of business from Syndicate 4242 (“Host Syndicate”) for risks incepting from 1 October
2021.
The 2022 underwriting year was the first full year of member participation. The SPA has a fixed
20% Quota share for 2022 and subsequent years across all classes of business underwritten
by the Host Syndicate. The quota share percentage is stated as a percentage of underwriting
facilities and open market policies (as the case may be) incepting during the year.
Gross written premium income by class of business for the calendar year was as follows:
2024
$’000
2023
$’000
Global D&F
10,477
14,124
Specialty Treaty Reinsurance
11,445
18,535
Cyber and Tech E&O
964
2,948
Alternative Risks Binders
13,015
17,080
E&O
6,019
7,370
Invoice factoring insurance
7
6
Directors & Officers
2,900
4,592
US Binders
21,627
18,553
Energy
5,782
3,221
Accident and Health
1,405
-
Credit
4,807
-
78,448
86,429
3
Managing Agent’s report continued
The SPA’s financial key performance indicators during the year were as follows:
2024
$’000
2023
$’000
Gross premiums written
78,448
86,429
Profit for the financial year
3,407
6,982
Net Combined ratio*
97.9%
90.7%
*The combined ratio is the ratio of net claims incurred and net operating expenses to net
premiums earned in the calendar year. Lower ratios represent better performance.
The performance of the SPA has been assessed by measuring, as a percentage of
underwriting capacity, the 36-month forecasted result on a funded accounting basis for an
individual underwriting year of account (“YOA”). The return on capacity for each underwriting
year is shown below.
Note that the 2022 underwriting year is now closed. As of 1 January 2025, the SPA has
successfully externally Reinsured-to-Close the 2022 and prior underwriting years first back
into the Host Syndicate and then to Syndicate 3500, managed by Riverstone Managing
Agency Limited. This crystalises the result for the SPA on these years providing certainty
despite the syndicate and market backdrop and no liabilities on the 2022 and prior underwriting
years will be passed to the SPA’s open underwriting years.
2024 YOA
Open
2023 YOA
Open
2022 YOA
Closed
Capacity ($’000)
75,000
81,250
70,313
Forecast result ($’000)
5,303
6,503
4,921
Forecast return on capacity (%)
7.1%
8.0%
7.0%
4
Managing Agent’s report continued
Principal risks and uncertainties
The SPA sets risk appetite annually, which is approved by the Agency as part of the SPA’s
business planning and Solvency Capital Requirement (“SCR”) process. The SPA is closely
aligned to the Host Syndicate’s risk appetite given the quote share arrangement. When
considering the items described below as the Host Syndicate, the SPA is also considered at
the same time. The Agency Risk and Solvency Committee meets at least quarterly to oversee
the risk management framework. The Syndicate Board, a sub-committee of the Agency Board,
reviews the risk profile as reflected in the risk register, and monitors performance against risk
appetite using a series of key risk indicators. The principal risk and uncertainties facing the
Syndicate are as follows:
Insurance risk
Insurance risk includes the risks that a policy will be written for too low a premium or provide
inappropriate cover (underwriting risk), that the frequency or severity of insured events will be
higher than expected (claims risk), or that estimates of claims subsequently prove to be
insufficient (reserving risk). The Syndicate Board and Underwriting Committee manages
insurance risk through challenge and oversight of the approved business plan, which sets out
targets for volumes, pricing, line sizes and retention by class of business. The Syndicate
Board then monitors performance against the business plan and the aggregation of risk
through exposure management reporting through the year. The Syndicate Board considers
any proposed underwriting that impacts the Syndicate’s Environmental, Social and
Governance (“ESG”) profile to ensure consistency with the agreed ESG approach. Reserve
adequacy is monitored through quarterly review by the Asta Actuarial team and the Reserving
Committee.
Credit risk
The key aspect of credit risk is reinsurance counterparty risk which is the risk of default by one
or more of the SPA’s reinsurers and intermediaries. The Host Syndicate’s policy is to only use
approved reinsurers, supported by collateralisation where required. The Agency Reinsurance
Security Committee sets approval and usage criteria, monitors reinsurer ratings and is required
to approve and oversee the application of the reinsurer approval policy. The Syndicate may
also be exposed to broker credit risk, in particular where risk transfer arrangements are in
place. Aged debt reporting for premiums is reviewed in the Syndicate Board.
5
Managing Agent’s report continued
Market risk
Market risk exposure impacting the SPA relates to fluctuations in interest rates or exchange
rates and inflation. The Host Syndicate is exposed to foreign exchange movements as a result
of mismatches between the currencies in which assets and liabilities are denominated. The
Agency’s policy is to maintain received income or incurred expenditure in the core currencies
in which they were received or paid. Any surplus or deficit in a core currency would be subject
to review by the Syndicate Board.
Investments are monitored through Investment Managers with quarterly Investment
Committees that review the performance, duration and ESG ratings for the investments. The
SPA is exposed to market risk and takes its share of investment return from the Host
Syndicate.
Liquidity risk
This is the risk that the SPA will not be able to meet its liabilities as they fall due, owing to a
shortfall in cash or can only meet obligations at excessive cost. To mitigate this risk the
Syndicate Board and Investment Committee of the Host Syndicate reviews cash flow
projections regularly and ensures that, where needed, the Host Syndicate has liquidity facilities
in place or has utilised the option of a cash call from Capital providers.
Operational risk
This is the risk that errors caused by people, processes, systems and external events lead to
losses to the SPA. The Agency seeks to manage this risk through a robust operational risk
and control framework including detailed procedure manuals and a thorough training
programme. This is underpinned by a structured programme of testing of processes and
systems by internal audit, who serve as an independent line of assurance, reporting directly to
the Chair of the Agency Audit Committee. Business continuity and disaster recovery plans
are in place and are regularly updated and tested.
Regulatory risk is the risk of loss owing to a breach of regulatory requirements or failure to
respond to regulatory change. The Agency is required to comply with the requirements of the
Financial Conduct Authority (FCA), Prudential Regulatory Authority (PRA) and Lloyd’s. Lloyd’s
requirements include those imposed on the Lloyd’s market by overseas regulators. The
Agency has a Compliance and Governance Director who manages a function that monitors
business activity and regulatory developments to assess any effects on both the Agency and
the SPA.
The Host Syndicate has no appetite for failing to adhere to the requirements of the FCA
Consumer Duty regulations and continues its focus on ensuring that it is treating customers
fairly. The Host Syndicate manages and monitors consumer duty risk through a suite of risk
indicators and reporting metrics as part of its documented consumer duty risk framework. The
consumer duty risk framework is consistently applied across all Asta syndicates and is
overseen by the Conduct Oversight Group (COG), which is an Agency Board Committee that
includes a non-executive director as a member who fulfils the role of Consumer Duty
Champion.
6
Managing Agent’s report continued
Group and strategic risk
Group Risk is the risk of contagion that arises from being associated with key stakeholders
and the impact that activities and events that occur within other connected or third parties has
on the business.
Strategic risk covers the risks faced by the Host Syndicate and SPA due to changes in
underlying strategy of the business or that of its key stakeholders (including strategic conflicts
of interest).
Going Concern
The Directors of the Managing Agent have prepared the annual accounts on a going concern
basis. In adopting the going concern basis, the SPA’s current and forecast solvency and
liquidity positions for the next 12 months and beyond has been reviewed. As part of the
consideration of the appropriateness of adopting the going concern basis, the Directors used
scenario analysis to assess the robustness of the SPA’s solvency and liquidity positions. See
note 1 for further information.
Future developments
The Host Syndicate will continue to transact the current classes of general direct insurance
and reinsurance business. If opportunities arise to write new classes of business, these will be
investigated at the appropriate time.
The capacity for the 2025 underwriting year is $68.7m (2024 underwriting year: $75.0m).
Please see note 19 for more details on future developments.
Environmental, Social and Governance (ESG) and sustainability
The Host Syndicate has documented a position with regard to ESG and sustainability, which
is submitted annually to Lloyd’s as part of business planning. The position has been developed
in alignment with Lloyd’s principles and expectations, broader regulatory requirements, and to
support the Syndicate’s strategic objectives. Lloyd’s published an updated version of its
“Insuring the Transition” Roadmap as well as its principles for doing business regarding
sustainability, and the Syndicate continues to ensure its approach aligns with those
expectations.
Following the Prudential Regulation Authority’s (PRA) Supervisory Statement in 2019 and
subsequent Dear CEO letter in 2020, Asta have built a climate change framework, applicable
to all syndicates, covering physical, transition and liability climate change risks, based on the
underlying business written by each syndicate. Asta’s managed syndicates accept climate
change risk where it is an inherent part of an insurance business model, providing it is
understood, managed, and controlled and/or compensated. There is no appetite for
uncontrolled, unmanaged exposure to the financial risks of climate change.
The framework ensures Board-level engagement and accountability with Lloyd’s and PRA’s
requirements and expectations, assigning clear responsibilities for managing the financial risks
associated with climate change. The Agency’s Chief Risk Officer, who is a Board member, is
responsible for the climate change framework, including identifying and managing financial
climate related risks.
7
Managing Agent’s report continued
Asta monitors regulatory guidance and expectations on managing the financial risks of climate
change.
Emerging risks
An emerging risk or opportunity is defined as “a developing issue, triggered externally, with
the potential to have a significant business impact but which may not be sufficiently understood
or accounted for”. The business impact in this case could represent a downside risk or an
upside opportunity. Emerging risks and opportunities include:
• The SPA’s insurable risks, as areas of potential future losses or new product offerings;
• Those risks that may affect a SPA’s ability to carry out normal business operations
and/or lead to unplanned significant costs/income;
• Both new risks and those which are re-emerging in a new context.
The Managing Agency and SPA continue to monitor the impact of emerging risks on the SPA
business, taking into account their impacts on the strategic direction of the SPA. Monitoring
takes place in various forums, including the Asta Emerging Risks and Opportunities Group
(“EROG”) which meets quarterly and considers emerging risks and opportunities from both an
internal and external lens. Specific areas of focus over the external environment across the
year at SPA and Asta level include:
• The geopolitical landscape from a tension and broader political risk impact, including
any exposures stemming from regional conflicts (e.g. Russia - Ukraine conflict).
• The heightened inflationary environment and subsequent volatility surrounding inflation
risk. This has also been considered by the Host Syndicate within their annual business
planning process and reserve reviews.
Directors
Details of the Directors of the Managing Agent that were serving at the date of signing these
financial statements are provided on page 1. Changes to Directors from the last report were
as follows:
K A Green Resigned 30 September 2024
A F J Neden Appointed 1 January 2025
S Fisher Appointed 1 February 2025
8
Managing Agent’s report continued
Disclosure of information to the auditor
So far as each person who was a Director of the Managing Agent at the date of approving the
report is aware, there is no relevant audit information, being information needed by the SPA
auditor in connection with the auditor's report, of which the auditor is unaware. Having made
enquiries of fellow Directors of the Agency and the SPA’s auditors, each Director has taken all
the steps that he or she ought to have taken as a Director to become aware of any relevant
audit information and to establish that the SPA’s auditor is aware of that information.
Auditor
The Managing Agent intends to reappoint Ernst Young LLP as the SPA’s auditor.
Syndicate Annual General Meeting
In accordance with the Syndicate Meetings (Amendment No 1) Byelaw (No 18 of 2000) the
Managing Agent does not propose holding an annual meeting this year; objections to this
proposal or the intention to reappoint the auditors for a further 12 months can be made by
Syndicate members within 21 days of this notice.
On behalf of the Board
C V Barley
Director
6 March 2025
9
Statement of Managing Agent's responsibilities
The Managing Agent is responsible for preparing the financial statements in accordance with
applicable law and regulations.
The Insurance Accounts Directive (Lloyd's Syndicate and Aggregate Accounts) Regulations
2008 require the managing agent to prepare financial statements at 31 December each year
in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable law) including FRS 102 the Financial Reporting
Standard applicable in the UK and Republic of Ireland. The financial statements 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 financial statements, the managing agent is required to:
• select suitable accounting policies and then apply them consistently subject to changes
arising on the adoption of new accounting standards in the year;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable Accounting Standards have been followed, subject to any
material departures disclosed and explained in the 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.
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 financial statements may differ from legislation
in other jurisdictions.
The Managing Agent is responsible for the preparation and review the iXBRL tagging that has
been applied to the Syndicate Accounts in accordance with the instructions issued by Lloyd’s,
including designing, implementing and maintaining systems, processes and internal controls
to result in tagging that is free from material non-compliance with the instructions, whether due
to fraud or error.
10
Independent auditor’s report to the members of Syndicate 1416
Opinion
We have audited the syndicate annual accounts of syndicate 1416 (‘the syndicate’) for the
year ended 31 December 2024 which comprise the Income Statement, the Statement of
Comprehensive Income, the Statement of Members’ Balances, the Statement of Financial
Position, the Statement of Cash Flows and the related notes 1 to 19, 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
profit for the year then ended;
➢ have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
➢ have been prepared in accordance with the requirements of The Insurance Accounts
Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the
Syndicate Accounts Instructions.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs
(UK)), The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008, the Syndicate Accounts Instructions, and other applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for
the audit of the syndicate annual accounts section of our report. We are independent of the
syndicate in accordance with the ethical requirements that are relevant to our audit of the
syndicate annual accounts in the UK, including the FRC’s Ethical Standard as applied to other
entities of public interest, and we have fulfilled our other ethical responsibilities in accordance
with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Conclusions relating to going concern
In auditing the syndicate annual accounts, we have concluded that the managing agent’s use
of the going concern basis of accounting in the preparation of the syndicate annual accounts
is appropriate.
Based on the work we have performed, we have not identified any material uncertainties
relating to events or conditions that, individually or collectively, may cast significant doubt on
the syndicate’s ability to continue as a going concern for a period of 12 months from when the
syndicate annual accounts are authorised for issue.
Our responsibilities and the responsibilities of the managing agent with respect to going
concern are described in the relevant sections of this report. However, because not all future
events or conditions can be predicted, this statement is not a guarantee as to the syndicate’s
ability to continue as a going concern.
11
Independent auditors’ report continued
Other information
The other information comprises the information included in the annual report, other than the
syndicate annual accounts and our auditor’s report thereon. The directors of the managing
agent are responsible for the other information contained within the annual report.
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; or
➢ we have not received all the information and explanations we require for our audit.
Responsibilities of the managing agent
As explained more fully in the Statement of Managing Agent’s Responsibilities on page 9, 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.
12
Independent auditors’ report continued
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. We also performed procedures to
understand the culture of compliance and governance including the obtainment and
review of the code of conduct, employee handbook and whistleblowing policy.
Furthermore in order to assess the internal views of risks and their likelihoods, we have
reviewed the risk register and risk event summary for the syndicate.
13
Independent auditors’ report continued
• For direct laws and regulations, we considered the extent of compliance with those
laws and regulations as part of our procedures on the related syndicate annual
accounts’ items.
• For both direct and other laws and regulations, our procedures involved: making
enquiries of the directors of the managing agent and senior management for their
awareness of any non-compliance of laws or regulations, enquiring about the policies
that have been established to prevent non-compliance with laws and regulations by
officers and employees, enquiring about the managing agent’s methods of enforcing
and monitoring compliance with such policies, 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, complex transactions, performance targets, economic or
external pressures and the impact these have on the control environment. Where this
risk was considered to be higher, on the valuation of net IBNR reserves and estimated
premium income, 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.
Robert Bruce (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
6 March 2025
14
Statement of profit or loss and other comprehensive income
Technical account – general business
For the year ended 31 December 2024
Notes | 2024 $’000 | 2023 $’000 |
Gross premiums written 4 | ||
Outward reinsurance premiums | ( | ( |
| Premiums written, net of reinsurance | ||
| Changes in unearned premium | ||
Change in the gross provision for unearned premiums | ( | |
Change in the provision for unearned premiums reinsurers’ share | ||
| Net change in provisions for unearned premiums 5 | ( | |
Earned premiums, net of reinsurance | ||
Allocated investment return transferred from the non-technical account 10 | ||
Other technical income, net of reinsurance | ||
Claims paid | ||
Gross amount | ( | ( |
| Reinsurers’ share | ||
Net claims paid | ( | ( |
Changes in the provision for claims | ||
Gross amount | ( | ( |
| Reinsurers’ share | ||
| Net change in provisions for claims 5 | ( | ( |
Claims incurred, net of reinsurance | ( | ( |
Net operating expenses 6 | ( | ( |
| Balance on the technical account – general business |
All the amounts above are in respect of continuing operations.
The notes on pages 20 to 45 form part of these financial statements.
15
Statement of profit or loss and other comprehensive income continued
Non-technical account – general business
For the year ended 31 December 2024
Notes | 2024 $’000 | 2023 $’000 |
| Balance on the technical account – general business | ||
Investment income | ||
Realised gains on investments | ||
Unrealised (losses)/ gains on investments | ( | |
Investment expenses and charges | ( | ( |
Allocated investment return transferred to the general business technical account 10 | ( | ( |
| (Loss) on foreign exchange | ( | ( |
| Profit for the financial year |
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.
All the amounts above are in respect of continuing operations.
The notes on pages 20 to 45 form part of these financial statements.
16
Statement of financial position
As at 31 December 2024
Notes | 2024 $’000 | 2023 $’000 |
Assets | ||
Investments | ||
Financial investments | ||
Deposits with ceding undertakings | ||
Reinsurers' share of technical provisions | ||
Provision for unearned premiums 5 | ||
Claims outstanding 5 | ||
Debtors | ||
Debtors arising out of direct insurance operations | ||
Debtors arising out of reinsurance operations 11 | ||
Other debtors | ||
Other assets | ||
Cash at bank and in hand | ||
Other | ||
Prepayments and accrued income | ||
| Deferred acquisition costs 5 | ||
Other prepayments and accrued income | ||
Total assets |
The notes on pages 20 to 45 form part of these financial statements.
17
Statement of financial position continued
As at 31 December 2024
Notes | 2024 $’000 | 2023 $’000 |
| Members’ balance and liabilities | ||
Capital and reserves | ||
| Members’ balances | ||
| Technical provisions | ||
| Provision for unearned premiums 5 | ||
Claims outstanding 5 | ||
| Creditors | ||
| Creditors arising out of direct insurance operations | ||
Creditors arising out of reinsurance operations 12 | ||
Amounts owed to credit institutions | ||
Other creditors including taxation and social security 13 | ||
Accruals and deferred income | ||
Total liabilities | ||
| Total liabilities, capital and reserves |
The notes on pages 20 to 45 form part of these financial statements.
The financial statements on pages 14 to 45 were approved by Board of Directors on 25
February 2025 and were signed on its behalf by:
R P Barke
Director
6 March 2025
18
Statement of changes in Members' balances
For the year ended 31 December 2024
| 2024 $’000 | 2023 $’000 | |
| Members’ balances brought forward at 1 January | ( | |
Total comprehensive income for the year | ||
| Payments of profit to members’ personal reserve funds | ( | |
Losses collected on closure of underwriting year | ||
Cash calls on open underwriting years | ||
Members agent fees | ||
Net movement on funds in syndicate | ||
Other | ||
| Members’ balances carried forward at 31 December |
19
Statement of cash flows
For the year ended 31 December 2024
Notes | 2024 $’000 | 2023 $’000 |
Cash flows from operating activities | ||
Profit for the financial year | ||
Adjustments: | ||
Increase in gross technical provisions | ||
| (Increase) in reinsurers’ share of technical provisions | ( | ( |
(Increase) in debtors | ( | ( |
(Decrease)/ Increase in creditors | ( | |
(Increase)/decrease in deposits received from reinsurers | ||
Movement in other assets/liabilities | ( | |
Foreign exchange | ||
Investment return | ( | ( |
Net cash flows from operating activities | ( | ( |
| Cash flows from investing activities | ||
Purchase of equity and debt instruments | ||
Sale of equity and debt instruments | ||
Investment income received | ||
Net cash flows from investing activities | ||
| Cash flows from financing activities | ||
Distribution of profit | ( | |
Collection of losses | ||
Injection/(release) of Funds in Syndicate | ||
Other | ||
| Net cash flows from financing activities | ( | |
Net increase/(decrease) in cash and cash equivalents | ||
| Cash and cash equivalents at the beginning of the year | ||
Foreign exchange on cash and cash equivalents | ||
| Cash and cash equivalents at the end of the year |
20
Notes to the financial statements
1. Basis of preparation
Statement of compliance
The financial statements have been prepared in accordance with The Insurance Accounts
Directive (Lloyd's Syndicate and Aggregate Accounts) Regulations 2008, applicable
Accounting Standards in the United Kingdom and the Republic of Ireland, including Financial
Reporting Standard 102 (FRS 102), Financial Reporting Standard 103 (FRS 103) in relation
to insurance contracts, and the Lloyd’s Syndicate Accounts Instructions Version 2.0 as
modified by the Frequently Asked Questions Version 1.0 issued by Lloyd’s.
The financial statements have been prepared on the historical cost basis, with the exception
of financial assets which are measured at fair value through the profit and loss account.
The financial statements are presented in USD, the functional currency of the SPA is USD. All
amounts have been rounded to the nearest thousand, unless otherwise indicated.
Going Concern
The Directors of the Managing Agent have assessed the SPA’s ability to continue as a going
concern. As part of this assessment, the Directors have considered cash forecasts, the
availability of financial resources, consistency of loss ratios, credit worthiness of reinsurers,
capital support for the existing underwriting years, business plans for future underwriting years
and availability of future capital support. Following this assessment, the Directors consider it
appropriate to adopt the going concern basis in preparing the annual report and financial
statements.
2. Critical accounting estimates and judgements
In preparing these financial statements, the Directors of the Managing Agent have made
judgements, estimates and assumptions that affect the application of the SPA’s accounting
policies and the reported amounts of assets, liabilities, income and expenses.
The following critical accounting estimates have been made in applying the Syndicate’s
accounting policies:
• Valuation of claims reserves
The measurement of the provision for claims outstanding involves judgements and
assumptions about the future that have a significant effect on the value 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.
Case estimates are generally set by skilled claims technicians applying their
experience and knowledge to the circumstances of individual claims. Critical
judgement is applied when estimating the value of amounts that should be provided for
21
Critical accounting estimates and judgements continued
claims that have been incurred at the reporting date but have not yet been reported
(IBNR) to the SPA. This is a source of significant estimation uncertainty.
The ultimate cost of outstanding claims is estimated using a range of techniques
including actuarial and statistical projections, benchmarking, case by case review and
judgement. Statistical techniques assume that past claims development experience
can be used as a basis to project ultimate claims costs. Typical methods employed
include, but are not limited to, the chain ladder method and the Bornhuetter-Ferguson
method, whilst plan and pricing loss ratios are also considered.
The reserving process will disaggregate the insured risks into reserving classes – these
are collections of risks of a similar profile. Each reserving class will be assessed
separately, and corresponding claims development patterns will be selected as bases
against which to forecast expected claims. Judgement is used to assess the extent to
which past trends may not apply in the future. When selecting historic data to use for
claims forecasting purposes, the suitability and reliability of the dataset is considered.
A dataset that most closely resembles the expected risk profile of a given reserving
class will be selected. The benchmark data provided by Lloyd’s is generally used
reserving development patterns, but these can be substituted by or blended with
additional data, providing that this additional data has an established track record and
is relevant.
Whilst the Directors consider that the claims reserves are fairly stated based on the
information currently available to them, the ultimate liability will vary as a result of
subsequent information and events.
Sensitivities relating to this critical judgement have been assessed in further detail in
note 18.
• Estimated premium income (“EPI”)
For the majority of assumed (inwards) reinsurance policies, EPI is initially used as the
basis for reporting gross premiums written. EPI is a measure of expected premium
income over the life of a policy. These estimates, typically supplied by the cedent, are
judgemental and could result in misstatements of revenue recorded in the financial
statements.
• Pipeline premium
Pipeline premium relates to premium that has likely been written as at the report date,
but due to reporting delays through the distribution chain, the premium has not yet
been reported to the SPA. Reasons for the reporting delay typically revolve around a
natural lag in receiving the premium bordereaux from brokers or coverholders –
bordereaux are generally produced monthly or quarterly in arrears. Pipeline premium
is included within Gross Premiums Written on the statement of profit of loss.
There is significant uncertainty when estimating pipeline premium. Estimates are
frequently based upon information provided by the business producers, or sometimes
a statistical approach is adopted based on past experience. Given that pipeline
premium relates to hypothetical policies that have been bound just before the balance
sheet date, the vast majority of this premium is usually unearned.
22
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 SPA’s financial statements.
Gross premiums
Gross written premiums comprise the total premiums receivable for the whole period of cover
provided by the contracts entered into during the reporting period, regardless of whether these
are wholly due for payment in the reporting period, together with any adjustments arising in
the reporting period to such premiums receivable in respect of business written in prior
reporting periods. They are recognised on the date on which the policy commences. This is
applicable to both direct premium and assured (inwards reinsurance) premium. Gross written
premiums are stated gross of brokerage payable to intermediaries, and exclude taxes and
duties levied on the policyholder.
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.
Ceded reinsurance premiums
Reinsurance written premiums comprise the total premiums payable for the whole cover
provided by contracts entered into the period, including portfolio premiums payable, and are
recognised on the date on which the policy incepts. Premiums include any adjustments arising
in the accounting period in respect of reinsurance contracts incepting in prior accounting
periods. They are recognised on the date on which the policy commences.
Provisions for unearned premiums
Unearned premiums are those proportions of premiums written up to the reporting date that
relate to periods of risk after the reporting date. In respect of general insurance business,
written premiums are recognised as earned over the period of the policy on a time
apportionment basis having regard where appropriate, to the incidence of risk. The proportion
attributable to subsequent periods is deferred as a provision for unearned premiums.
Unearned reinsurance premiums are those proportions of ceded premiums written up to the
reporting date that relate to periods of risk after the reporting date. Ceded reinsurance
premiums are earned on the same basis as the inwards business being protected.
Claims incurred
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 processed in the year. The provision for claims comprises amounts set aside for
claims notified and claims incurred, but not yet reported (IBNR). The SPA does not discount
its liability for outstanding claims.
The amount included in respect of IBNR is based on statistical techniques of estimation applied
by actuaries. These techniques generally involve projecting from past experience of the
development of claims over time to form a view of the likely ultimate claims to be experienced,
having regard to variations in the 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 the
business accepted and assessments of underwriting conditions. An element of IBNR can also
relate to specific large losses.
23
Significant accounting policies continued
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 and the claims experience for the
year. The SPA uses a number of statistical techniques to assist in making these estimates
where relevant.
Accordingly, the two most critical assumptions as regards 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.
The Directors consider that the provisions for gross claims and related reinsurance recoveries
are fairly stated on the basis of the information currently available to them. However, 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 made. The methods used,
and the estimates made, are reviewed regularly.
Unexpired risks
A provision for unexpired risks is made where claims and related expenses are likely to arise
after the end of the financial period in respect of contracts concluded before that date, are
expected to exceed the unearned premiums and premiums receivable under these contracts,
after the deduction of any acquisition costs deferred.
The provision for unexpired risks is calculated separately by reference to classes of business
which are managed together.
As at 31 December 2024, the SPA had a nil net unexpired risk provision, (2023: nil).
Reinsurance assets
The SPA cedes insurance risk in the normal course of business. Reinsurance assets represent
balances due from reinsurance companies. Amounts recoverable from reinsurers are
estimated in a manner consistent with the outstanding claims provision including IBNR or
settled claims associated with the reinsurer's policies and are in accordance with the related
reinsurance contract.
Reinsurance assets are reviewed for impairment at each reporting date, or more frequently if
an indication of impairment arises during the reporting year. Impairment occurs when there is
objective evidence as a result of an event that occurred after initial recognition of the
reinsurance asset that the SPA may not receive all outstanding amounts due under the terms
of the contract and the event has a reliably measurable impact on the amounts that the
Syndicate will receive from the reinsurer. The impairment loss is recorded in the statement of
profit or loss.
Gains or losses on buying reinsurance are recognised in the statement of profit or loss
immediately at the date of purchase and are not amortised.
Ceded reinsurance arrangements do not relieve the SPA from its obligations to policyholders.
24
Significant accounting policies continued
Acquisition costs
Acquisition costs comprise costs arising from the conclusion of insurance contracts, such as
intermediary brokerage and commissions. It is not the SPA’s policy to reallocate a portion of
indirect costs, such as the advertising costs or the administrative expenses connected with the
processing of proposals and the issuing of policies, to acquisition costs.
The deferred acquisition cost asset represents the proportion of acquisition costs
corresponding to the proportion of gross premiums written that is unearned at the balance
sheet date. Deferred acquisition costs are amortised over the period in which the related
premiums are earned.
Foreign currencies
Transactions denominated in currencies other than the functional currency are initially
recorded in the functional currency at the exchange rate ruling at the date of the transactions.
Monetary assets and liabilities (which include all assets and liabilities arising from insurance
contracts including unearned premiums and deferred acquisition costs) denominated in foreign
currencies are retranslated into the functional currency at the exchange rate ruling on the
reporting date.
Foreign exchange differences are recorded in the non-technical account.
The following currency exchange rates have been used for principal foreign currency
transactions:
2024
2024
2024
2023
2023
2023
Start of
Period Rate
End of
Period Rate
Average
Rate
Start of
Period Rate
End of
Period Rate
Average
Rate
GBP
USD
CAD
EUR
AUD
JPY
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).
The accounting classification of financial assets and liabilities determines the way in which
they are measured and changes in those values are presented in the statement of profit or
loss and other comprehensive income.
25
Significant accounting policies continued
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 are classified at initial recognition as either fair value
through profit and loss or designated at amortised cost. Investments in shares and other
variable yield securities, units in unit trusts, and debt and other fixed income securities are
designated as at fair value through profit or loss on initial recognition, as they are managed on
a fair value basis in accordance with the SPA’s investment strategy.
Deposits with credit institutions, debtors, and accrued interest are classified as loans and
receivables.
Financial instruments are recognised when the SPA becomes a party to the contractual
provisions of the instrument. Financial assets are derecognised if the SPA’s contractual rights
to the cash flows from the financial assets expire or if the SPA 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
expire.
Regular way purchases and sales of financial assets are recognised and derecognised, as
applicable, on the trade date, i.e., the date that the SPA commits itself to purchase or sell the
asset.
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.
A financial asset initially measured at the transaction price and subsequently measured as
amortised cost uses the effective interest method. The interest rate used is generally that as
stated in the loan agreement/bond (if applicable) or a standard market rate for a similar
product. The unwinding of the associated discount is subsequently recognised in the
statement of profit or loss.
Loans and receivables and non-derivative financial liabilities are measured at amortised cost
using the effective interest method, except Syndicate Loans to the Central Fund which are
measured at fair value through profit or loss.
Objective evidence that financial assets are impaired includes observable data that comes to
the attention of the SPA about any significant financial difficulty of the issuer, or significant
changes in the technological, market, economic or legal environment in which the issuer
operates.
26
Significant accounting policies continued
Impairment losses on available for sale financial assets are recognised by reclassifying the
losses accumulated in other comprehensive income to profit or loss. The net cumulative loss
that is reclassified from other comprehensive income to profit or loss is the difference between
the acquisition cost, net of any principal repayment, and the current fair value, less any
impairment loss recognised previously in profit or loss. If, in a subsequent period, the fair value
of an impaired available for sale debt security increases and the increase can be related
objectively to an event occurring after the impairment loss was recognised, the impairment
loss is reversed through profit or loss. Otherwise it is reversed through the statement of
comprehensive income.
Financial assets and financial liabilities are offset, and the net amount presented in the balance
sheet when, and only when, the SPA 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.
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.
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.
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 SPA in the management of its short-term commitments.
Cash and cash equivalents are carried at amortised cost in the statement of financial position.
Bank overdrafts that are repayable on demand and form an integral part of the Syndicate’s
cash management are included as a component of cash and cash equivalents for the purpose
of the statement of cash flows.
27
Significant accounting policies continued
Taxation
Under Schedule 19 of the Finance Act 1993 managing agents are not required to deduct basic
rate income tax from trading income. In addition, all UK basic rate income tax (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.
No provision has been made for any other overseas tax payable by members on underwriting
results or investment earnings. Any payments on account made by the Syndicate during the
year have been included in the balance sheet under the heading ‘other debtors’.
Profit commission
Profit commission is charged by the managing agent at 5%. Such commission is recognised
when the year of account becomes profitable but does not become payable until after the
appropriate year of account closes normally at 36 months.
Deposits with ceding undertakings
Deposits with ceding undertakings are funds held by Lloyd’s Europe on behalf of the Syndicate
to settle Part VII claims. These funds are held at amortised cost in the balance sheet.
Operating expenses
Where expenses are incurred by the Managing Agent for the administration of managed
syndicates, these expenses are apportioned using various methods depending on the type of
expense. Expenses which are incurred jointly are apportioned between the Managing Agent
and the Syndicate depending on the amount of work performed, resources used, and volume
of business transacted.
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.
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.
Where permitted under UK GAAP accounting standards, insurance creditors are netted off
against insurance debtors where the legally enforceable right to offset exists.
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.
28
Significant accounting policies continued
Reinsured-to-close (RITC)
The net reinsurance to close premium is determined based on estimated outstanding
liabilities and related claims settlement costs (including claims IBNR), net of estimated
collectible reinsurance recoveries, relating to the closed year of account and all previous
years of account reinsured therein. The estimate of claims outstanding is assessed on an
individual case basis and is based on the estimated ultimate cost of all claims notified but not
settled by the balance sheet date. It also includes the estimated cost of claims IBNR at the
balance sheet date. The reinsurer share is based on the amounts of outstanding claims and
projections for IBNR, net of estimated irrecoverable amounts, having regard to the
reinsurance programme in place. Statistical methods are used to assist in making these
estimates. The Directors consider that the estimates of gross claims and related reinsurance
recoveries are fairly stated based on the information currently available to them.
Bad Debt
Bad debts are provided for only where specific information is available to suggest a debtor
may be unable or unwilling to settle its debt to the Syndicate. The provision is calculated on a
case-by-case basis.
Funds withheld arrangement
The SPA's reinsurance agreement with the reinsured operates on a funds withheld basis,
with the reinsured holding the SPA's funds for each underwriting year in premium trust funds
for three years; after which, the balance is cleared between the Host Syndicate and SPA.
29
4. Analysis of underwriting result
An analysis of the underwriting result before investment return is presented in the table below:
2024
Gross
premiums
written
Gross
premium
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
Result
$’000
$’000
$’000
$‘000
$’000
$’000
Reinsurance
acceptances
78,448
79,717
(40,874)
(24,542)
(13,150)
1,151
2023
Gross
written
premiums
Gross
premium
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
Result
$’000
$’000
$’000
$‘000
$’000
$’000
Reinsurance
acceptances
86,429
78,617
(38,249)
(25,460)
(9,075)
5,833
All premiums were concluded in the UK.
The gross premiums written for direct insurance by underwriting location is presented in the
table below:
2024
2023
$’000
$’000
United Kingdom
78,448
86,429
European Union Member States
-
-
US
-
-
Rest of the world
-
-
Total gross premiums written
78,448
86,429
No gains or losses were recognised in profit or loss during the year on buying reinsurance
(2023: nil).
30
5. Technical provisions
2024
Gross
provisions
$’000
Reinsurance
assets
$’000
Net
$’000
Claims outstanding
Balance at 1 January
46,378
(10,445)
35,933
Claims paid during the year
24,196
(5,899)
18,297
Foreign exchange movements
(622)
106
(516)
Balance at 31 December
69,952
(16,238)
53,714
Unearned premiums
Balance at 1 January
41,030
(9,375)
31,655
Change in unearned premiums
(1,269)
(3,327)
(4,596)
Foreign exchange movements
(576)
-
(576)
Balance at 31 December
39,185
(12,702)
26,483
Deferred acquisition costs
Balance at 1 January
11,821
-
11,821
Incurred deferred acquisition costs
630
-
630
Foreign exchange movements
(1,427)
-
(1,427)
Balance at 31 December
11,024
-
11,024
2023
Gross
provisions
$’000
Reinsurance
assets
$’000
Net
$’000
Claims outstanding
Balance at 1 January
19,378
(3,887)
15,491
Claims paid during the year
26,873
(6,537)
20,336
Foreign exchange movements
127
(21)
106
Balance at 31 December
46,378
(10,445)
35,933
Unearned premiums
Balance at 1 January
32,853
(3,355)
29,498
Change in unearned premiums
7,812
(6,020)
1,792
Foreign exchange movements
365
-
365
Balance at 31 December
41,030
(9,375)
31,655
Deferred acquisition costs
Balance at 1 January
9,289
-
9,289
Incurred deferred acquisition costs
2,080
-
2,080
Foreign exchange movements
452
-
452
Balance at 31 December
11,821
-
11,821
31
6. Net operating expenses
2024
2023
$’000
$’000
Acquisition costs
(22,431)
(24,523)
Change in deferred acquisition costs
(630)
2,080
Reinsurance commissions and profit participation
5,104
2,553
Administration expenses
(6,585)
(5,570)
Net operating expenses
(24,542)
(25,460)
7. Auditor’s remuneration
2024
2023
$’000
$’000
Fees payable to the Syndicate’s auditor for the audit of these
financial statements
(95)
(77)
Other services pursuant to Regulations and Lloyd’s Byelaws
(48)
(39)
Fees payable to the Syndicate’s auditor and its associates in
respect of other services pursuant to legislation
(21)
(19)
Total
(164)
(135)
Auditors’ remuneration is included as part of administrative expenses in note 6.
8. Key management personnel compensation and Director’s
Emoluments
The aggregate emoluments of the Directors and staff of the Asta Group are charged to
companies of the Asta Group in accordance with the proportion of their time associated with
each company. Further disclosures regarding Directors’ emoluments are provided in the
financial statements of Asta Managing Agency Ltd.
No emoluments of the Directors of Asta Managing Agency Ltd were directly charged to the
Syndicate. No other compensation was payable to key management personnel.
The Active Underwriter did not charge any remuneration directly to the SPA.
32
9. Staff numbers and costs
Staff costs are recharged to the Host Syndicate from various service companies. Total
administration costs incurred by the Host Syndicate are used at the relevant quota share
percentage and form part of note 6 administration expenses rather than being broken down in
its constituent parts.
10. Investment return
2024
2023
$’000
$’000
Interest and similar income
858
180
Dividend income
-
-
Interest on cash at bank
1,169
402
Gains on the realisation of investments
610
371
Losses on the realisation of investments
(21)
(6)
Unrealised gains on investments
241
226
Unrealised losses on investments
(302)
4
Investment management expenses
(37)
(20)
Total investment return
2,518
1,157
11. Debtors arising out of reinsurance operations
2024
2023
$’000
$’000
Due within one year
25,531
1,225
Due after one year
67,116
75,910
Total
92,647
77,135
12. Creditors arising out of reinsurance operations.
2024
2023
$’000
$’000
Due within one year
1,475
350
Due after one year
7,963
10,973
Total
9,438
11,323
33
13. Other creditors
2024
2023
$'000
$'000
Profit commission payable
2,023
1,504
Total
2,023
1,504
14. Related parties
Asta Managing Agency Ltd (Asta) is the SPA's Managing Agent.
The ultimate parent company of Asta Managing Agency Ltd is Tennessee Topco Limited.
Asta Capital Ltd, the parent of Asta Managing Agency Ltd, is owned by the Davies Group but
maintains a level of independence by virtue of separate boards and a separate governance
structure. Other entities within the wider Davies Group provide insurance-related services to
the syndicates under Asta’s management. The provision of these services is managed by a
separate management team distinct from Asta, and these services are provided at an arm’s
length basis.
From time to time, Syndicates managed by Asta enter into (re)insurance contracts with one
another. All such transactions are subject to Asta’s internal controls which ensure that all are
compliant with Lloyd’s Related Party Byelaw provisions. All transactions are entered into on
normal market conditions.
Asta provides services and support to the SPA in its capacity as Managing Agent. This table
below details amounts expensed from Asta.
2024
2023
$'000
$'000
Managing Agent fees on insurance capacity
(527)
(560)
Service fees
(421)
(223)
Profit Commission
(497)
(81)
Recharges (expenses)
(5)
(84)
Total Expenses
(1,450)
(948)
Balance as at 31 December payable to the Managing Agent
(53)
(134)
34
15. Disclosure of interests
During 2024 Asta was the Managing Agent for the following syndicates on behalf of third-party
capital providers:
• Syndicates 1322, 1609, 1699, 1892, 1985, 1988, 2525, 2689, 2786, 3123, 4242 and
4747,
• Special Purpose Arrangement 1416,
• Syndicates-in-a-Box 1796, 1902, 1922, 1966, 2427, 2880, 3456 and 5183.
During 2024, Asta took on management of the following syndicates:
• Syndicate 1922 on 1 January 2024
• Syndicate 1966 on 13 June 2024
• Syndicate 2427 on 1 May 2024
• Syndicate 3123 on 1 July 2024.
On 1 January 2024, Asta reinsured to close Syndicate 2288 into Renaissance Re Syndicate
1458.
On 1 January 2025, Asta took on management of Syndicate 1618.
The agency also provides administrative services to syndicates and special purpose
arrangements, also undertaking several ancillary roles for other clients.
The Financial Statements of the Managing Agency can be obtained by application to the
Registered Office (see page 1).
16. Funds at Lloyd's
Every member is required to hold capital at Lloyd's which is held in trust and known as Funds
at Lloyd's (“FAL”). These funds are intended primarily to cover circumstances where Syndicate
assets prove insufficient to meet participating members' underwriting liabilities. The level of
FAL that Lloyd's requires a member to maintain is determined by Lloyd's based on PRA
requirements and resource criteria. FAL has regard to a number of factors including the nature
and amount of risk to be underwritten by the member and the assessment of the reserving risk
in respect of business that has been underwritten. Since FAL is not under the management of
the managing agent, no amount has been shown in these financial statements by way of such
capital resources. However, the managing agent is able to make a call on the members' FAL
to meet liquidity requirements or to settle losses.
17. Off-balance sheet items
The SPA has not been party to any arrangement, which is not reflected in its statement of
financial position, where material risks and benefits arise for the SPA. The Host Syndicate at
31 December 2024, had utilised $0m of the $25m trade loan arrangement with Barclays Bank
PLC (Barclays). This has expired as at the year end.
35
18. Risk management
a) Governance framework
The SPA’s risk and financial management framework aims to protect the SPA’s member
capital from events that might otherwise prevent the SPA from meeting its policyholder
obligations, while maximising the returns to its members. The Directors recognise the critical
importance of having efficient and effective risk management systems in place.
Asta maintains a risk management function for the SPA with clear terms of reference from the
Syndicate Board, its committees and sub committees.
Asta supplements this with a clear organisational structure with documented delegated
authorities and responsibilities from the main Asta Managing Agency board to the SPA who
perform the underwriting activities. Lastly, the SPA policy framework sets its risk management
and control and business conduct standards for operations. Asta reviews and monitors each
policy to ensure compliance with the policy throughout the SPA.
The Syndicate Board approves the risk management policies and meets regularly to approve
any commercial, regulatory and organisational requirements of such policies. These policies
define the identification of risk and its interpretation to ensure the appropriate quality and
diversification of assets, align underwriting and reinsurance strategy to the SPA goals, and
specify reporting requirements. The Syndicate Board places significant emphasis on the
assessment and documentation of risks and controls, including the articulation of the
Syndicate's risk appetite.
b) Capital management objectives, policies and approach
Capital framework at Lloyd's
The Society of Lloyd's (Lloyd's) is a regulated undertaking and subject to the supervision of
the Prudential Regulatory Authority (PRA) under the Financial Services and Markets Act 2000.
Within the supervisory framework, Lloyd's applies capital requirements at member level and
centrally to ensure that Lloyd's complies with Solvency II capital requirements, and beyond
that to meet its own financial strength, licence and ratings objectives.
Although Lloyd's capital setting processes use a capital requirement set at SPA level as a
starting point, the requirement to meet Solvency II and Lloyd's capital requirements apply at
overall and member level only respectively, not at SPA level. Accordingly the capital
requirement in respect of the SPA is not disclosed in these financial statements.
36
Risk management continued
Lloyd's capital setting process
In order to meet Lloyd's requirements, each SPA 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 SPA 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 SPA are subject to review by Lloyd's and
approval by the Lloyd's Capital and Planning Group.
The SCRs of each SPA are subject to review by Lloyd's and approval by the Lloyd's Capital
and Planning Group.
A SPA may be comprised of one or more underwriting members of Lloyd's. Each member is
liable for its own share of underwriting liabilities on the SPA on which it is participating but not
other members' shares. Accordingly, the capital requirement that Lloyd's sets for each
member operates on a similar basis. Each member's SCR shall thus be determined by the
sum of the member's share of the SPA SCR 'to ultimate'. Where a member participates on
more than one Syndicate/SPA, a credit for diversification is provided to reflect the spread of
risk, but consistent with determining an SCR which reflects the capital requirement to cover a
1 in 200 year loss 'to ultimate' for that member. Over and above this, Lloyd's applies a capital
uplift to the member's capital requirement, known as the Economic Capital Assessment (ECA).
The purpose of this uplift, which is a Lloyd's not a Solvency II requirement, is to meet Lloyd's
financial strength, licence and ratings objectives. The capital uplift applied for 2024 was 35%
of the member's SCR 'to ultimate'.
Provision of capital by members
Each member may provide capital to meet its ECA either by assets held in trust by Lloyd's
specifically for that member (funds at Lloyd's), held within and managed within a Syndicate
(funds in Syndicate) or as the member's share of the members' balances on each Syndicate
on which it participates. Accordingly, the ending members balances reported on the Statement
of Financial Position on page 19, represent resources available to meet members' and Lloyd's
capital requirements.
c) Insurance risk
The principal risk the SPA faces under insurance contracts is that the actual claims and benefit
payments or the timing thereof, differ from expectations. This is influenced by the frequency of
claims, severity of claims, actual benefits paid and subsequent development of
long-term claims. Therefore, the objective of the SPA is to ensure that sufficient reserves are
available to cover these liabilities.
The risk exposure is mitigated by diversification across a large portfolio of insurance contracts
and geographical areas. The variability of risks is also improved by careful selection and
implementation of underwriting strategy guidelines, as well as the use of reinsurance
arrangements.
37
Risk management continued
The SPA jointly purchases reinsurance with the Host Syndicate as part of its risk mitigation
programme. The reinsurance program is made up of a variety of proportional and non-
proportional contracts on both a losses occurring during and risk attaching during basis.
Amounts recoverable from reinsurers are estimated in a manner consistent with the
outstanding claims provision and are in accordance with the reinsurance contracts. The
placement of reinsurance is diversified such that it is neither dependent on a single reinsurer
nor are the operations substantially dependent upon any single reinsurance contract.
Sub committees of the Syndicate Board oversee the management of reserving risk. The use
of standardised and internal modelling techniques, as well as benchmarking and the review of
claims development are key in mitigating reserving risk. The purpose of these underwriting,
reinsurance and reserving strategies is to limit exposure to catastrophes or large losses based
on the SPA’s risk appetite as decided by the Syndicate Board.
The SPA uses both its own and commercially available risk management software to assess
catastrophe exposure. However, there is always a risk that the assumptions and techniques
used in these models are unreliable or that claims arising from an un-modelled event are
greater than those arising from a modelled event.
Key assumptions
The principal assumption underlying the liability estimates is that the future claims
development will follow a similar pattern to past claims development experience. This includes
assumptions in respect of average claim costs, claim handling costs, claim inflation factors
and claim numbers for each underwriting year. Additional qualitative judgements are used to
assess the extent to which past trends may not apply in the future, for example: once-off
occurrence; changes in market factors such as public attitude to claiming: economic
conditions: as well as internal factors such as portfolio mix, policy conditions and claims
handling procedures. Judgement is further used to assess the extent to which external factors
such as judicial decisions and government legislation affect the estimates.
Other key circumstances affecting the reliability of assumptions include variation in interest
rates, delays in settlement and changes in foreign currency rates.
Sensitivities
The claim liabilities are sensitive to the key assumptions that follow. It has not been possible
to quantify the sensitivity of certain assumptions, such as legislative changes, uncertainty in
the estimation process. The following analysis is performed for reasonably possible
movements in key assumptions with all other assumptions held constant, showing the impact
on net liabilities, profit and members' balances. The correlation of assumptions will have a
significant effect in determining the ultimate claims liabilities, but to demonstrate the impact
due to changes in assumptions, assumptions had to be changed on an individual basis. It
should be noted that movements in these assumptions are non-linear.
The method used for deriving sensitivity information and significant assumptions did not
change from the previous period.
38
Risk management continued
Sensitivity
General insurance business sensitivities as at 31
December 2024
+5.0%
$’000
-5.0%
$’000
Claims outstanding – gross of reinsurance
(3,498)
3,498
Claims outstanding – net of reinsurance
(2,686)
2,686
Impact on members balance
(2,686)
2,686
Impact on result
(2,686)
2,686
Sensitivity
General insurance business sensitivities as at 31
+5.0%
$’000
-5.0%
$’000
Claims outstanding – gross of reinsurance
(2,319)
2,319
Claims outstanding – net of reinsurance
(1,797)
1,797
Impact on members balance
(1,797)
1,797
Impact on result
(1,797)
1,797
Claims development
The tables below show the SPA’s cumulative incurred claims development, including both
claims notified and IBNR for each underwriting year, together with the cumulative payments to
date on a gross and net of reinsurance basis at the balance sheet date.
The SPA has elected to translate estimated claims and claims payments at a consistent rate
of exchange as determined by the balance sheet date.
Pure underwriting year
2022
2023
2024
Total
$’000
$’000
$’000
$’000
Estimate of ultimate gross claims
At end of first underwriting year
18,207
17,948
19,384
One year later
33,018
33,998
Two years later
32,716
Three years later
Less gross claims paid
9,078
5,970
1,097
Gross claims reserves
23,637
28,028
18,287
69,952
39
Risk management continued
The uncertainty associated with the ultimate claims experience of an underwriting year is
greatest when the underwriting year is at an early stage of development and the margin for
future experience potentially being more adverse than assumed is at its highest. As claims
develop, and the ultimate cost of the claims becomes more certain, the relative level of margin
should decrease. Due, however, to the uncertainty inherent in the claims estimation process,
initial reserves may not always be in a surplus. This is particularly so for large catastrophe
claims where uncertainly is initially great.
d) Financial risk
The focus of financial risk management for the SPA is ensuring that the proceeds from its
financial assets are sufficient to fund the obligations arising from its insurance contracts.
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss by failing
to discharge an obligation. The SPA has the following policies and procedures in place to
mitigate the exposure to credit risk:
• Reinsurance is placed with counterparties that have a good credit rating and
concentration of risk is avoided by following policy guidelines in respect of
counterparties' limits. If the counterparty is downgraded or does not have a good credit
rating, then collateral is sought to mitigate any risk. This is monitored by the Syndicate
Board.
The tables below show the maximum exposure to credit risk (including an analysis of financial
assets exposed to credit risk) for the components of the statement of financial position. The
maximum exposure is shown gross, before the effect of mitigation through collateral
agreements and the use of credit derivatives.
Pure underwriting year
2022
2023
2024
Total
$’000
$’000
$’000
$’000
Estimate of ultimate net claims
At end of first underwriting year
14,172
14,160
26,104
One year later
26,643
27,021
Two years later
26,202
Three years later
Less net claims paid
7,829
5,018
771
Net claims reserves
18,372
22,003
25,333
53,616
40
Risk management continued
2024
$’000
Neither
past due
nor
impaired
assets
Past due
but not
impaired
assets
Gross
value of
impaired
assets
Impairment
allowance
Total
Shares and other variable
yield securities and units in
unit trusts
-
-
-
-
-
Debt securities and other
fixed income securities
-
-
-
-
-
Loans and deposits with
credit institutions
-
-
-
-
-
Syndicate loans to central
fund
-
-
-
-
-
Other investments
-
-
-
-
-
Reinsurers’ share of claims
outstanding
16,238
-
-
-
16,238
Debtors arising out of
reinsurance operations
2,628
-
-
-
2,628
Debtors arising out of direct
insurance operations
-
-
-
-
-
Cash at bank and in hand
-
-
-
-
-
Overseas deposits
-
-
-
-
-
Other debtors and accrued
interest
113,844
-
-
-
113,844
Total
132,710
-
-
-
132,710
41
Risk management continued
2023
$’000
Neither
past due
nor
impaired
assets
Past due
but not
impaired
assets
Gross
value of
impaired
assets
Impairment
allowance
Total
Shares and other variable
yield securities and units in
unit trusts
-
-
-
-
-
Debt securities and other
fixed income securities
-
-
-
-
-
Loans and deposits with
credit institutions
-
-
-
-
-
Syndicate loans to central
fund
-
-
-
-
-
Other investments
-
-
-
-
-
Reinsurers’ share of claims
outstanding
10,445
-
-
-
10,445
Debtors arising out of
reinsurance operations
100
-
-
-
100
Debtors arising out of direct
insurance operations
-
-
-
-
-
Cash at bank and in hand
-
-
-
-
-
Overseas deposits
-
-
-
-
-
Other debtors and accrued
interest
98,381
-
-
-
98,381
Total
108,926
-
-
-
108,926
42
Risk management continued
The table below provides information regarding the credit risk exposure of the SPA at the
reporting date by classifying assets according to independent credit ratings of the
counterparties. AAA is the highest possible rating.
2024
$’000
AAA
AA
A
BBB
Other
Not
Rated
Total
Shares and other variable
yield securities and units in
unit trusts
-
-
-
-
-
-
-
Debt securities and other
fixed income securities
-
-
-
-
-
-
-
Loans and deposits with
credit institutions
-
-
-
-
-
-
-
Syndicate loans to central
fund
-
-
-
-
-
-
-
Other investments
-
-
-
-
-
-
-
Reinsurers’ share of claims
outstanding
-
-
16,238
-
-
-
16,238
Debtors arising out of
reinsurance operations
-
-
2,628
-
-
-
2,628
Debtors arising out of direct
insurance operations
-
-
-
-
-
-
-
Cash at bank and in hand
-
-
-
-
-
-
-
Overseas deposits
-
-
-
-
-
-
-
Total
-
-
18,866
-
-
-
18,866
43
Risk management continued
2023
$’000
AAA
AA
A
BBB
Other
Not
Rated
Total
Shares and other variable
yield securities and units in
unit trusts
-
-
-
-
-
-
-
Debt securities and other
fixed income securities
-
-
-
-
-
-
-
Loans and deposits with
credit institutions
-
-
-
-
-
-
-
Syndicate loans to central
fund
-
-
-
-
-
-
-
Other investments
-
-
-
-
-
-
-
Reinsurers’ share of claims
outstanding
-
-
10,445
-
-
-
10,445
Debtors arising out of
reinsurance operations
-
-
100
-
-
-
100
Debtors arising out of direct
insurance operations
-
-
-
-
-
-
-
Cash at bank and in hand
-
-
-
-
-
-
-
Overseas deposits
-
-
-
-
-
-
-
Total
-
-
10,545
-
-
-
10,545
Maximum credit exposure
It is the SPA’s policy to maintain accurate and consistent risk ratings across its credit
portfolio. This enables management to focus on the applicable risks and the comparison of
credit exposures across all lines of business.
During the year, no credit exposure limits were exceeded.
44
Risk management continued
Liquidity risk
Liquidity risk is the risk that the SPA may not have enough cash to pay insurance claims and
other liabilities. This risk is reduced by reviewing the SPA’s expected cash obligations on a
weekly basis and keeping adequate cash on deposit to meet those obligations. Further, a
Liquidity Committee meets monthly to review liquidity strength and forthcoming liquidity needs
on a monthly basis.
The table below summarises the maturity profile of the SPA’s financial liabilities based on
remaining undiscounted contractual obligations, including interest payable and outstanding
claim liabilities based on the estimated timing of claim payments resulting from recognised
insurance liabilities. Repayments which are subject to notice are treated as if notice were to
be given immediately.
2024
$’000
No stated
maturity
0-1 Year
1-3 Years
3-5 Years
> 5 years
Total
Claims
outstanding
-
25,353
26,534
10,776
7,289
69,952
Creditors
-
2,238
9,223
-
-
11,461
Total
-
27,591
35,757
10,776
7,289
81,413
2023
$’000
No stated
maturity
0-1 Year
1-3 Years
3-5 Years
> 5 years
Total
Claims
outstanding
-
16,237
17,173
7,797
5,171
46,378
Creditors
-
696
12,130
-
-
12,826
Total
-
16,933
29,303
7,797
5,171
59,204
45
Risk management continued
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 comprises
three types of risk: currency risk, interest rate risk and other price risk. Other price risk has
been assessed as negligible, given that the SPA does not invest in equities.
The objective of market risk management is to manage and control market risk exposures
within acceptable parameters, while optimising the return on risk.
a) 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.
Sensitivity to changes
The SPA transacts in US Dollars, with expenses settled in sterling however, the impact on
profit and members’ balances from changes to the relative strength of other currencies
against the US Dollar is immaterial.
b) Interest rate risk
Interest rate risk is the risk that the value or future cash flows of a financial instrument will
fluctuate in response to changes in market interest rates.
Floating rate instruments expose the Syndicate to cash flow interest risk, whereas fixed rate
instruments expose the Syndicate to fair value interest risk.
The SPA has no direct exposure to or concentration of interest rate risk. The Host Syndicate
is exposed to interest rate risk and the sensitivity and impact is disclosed in the Host
Syndicates annual accounts.
19. Post balance sheet events
The Syndicate will distribute the 2022 underwriting year profits to members during 2025. The
Directors evaluated other events after the balance sheet date through to 6 March 2025, the
date the SPA issued these annual accounts. As of 1 January 2025 the SPA has Reinsured-to-
Close (RITC) back into the Host Syndicate 4242 who has successfully externally RITC’ed in
to Syndicate 3500, managed by Riverstone Managing Agency Limited. These annual accounts
reflect the RITC transaction.
